I've been racking my brain for the last couple of days trying to make sense of the news that Niccolo de Masi is leaving Hands-On Mobile, after just 3mos as its CEO, to run Glu Mobile. My first thought was that Hands-On was in such disarray, and so late to the smartphone game, that the restructuring I hoped was afoot turned out not to be worth pursuing in the end. My second thought was that Glu got so desperate in their protracted CEO search that they put more money on the table than a 29 year-old could possibly refuse... 'til I read their latest 8-K. Then I had a conversation today with an industry veteran who posed a novel, and ultimately, more interesting theory. What if de Masi is bringing Hands-On with him? What if this move is the precursor to a merger between the two companies?... now that's juicy!
From Glu's perspective this could be attractive because Hands-On allegedly still has a pile of cash left in the bank from the $29mil sale of its Korean division to EA in May 2008. For public Glu, with a depressed stock price vacillating on either side of $1 and a healthy appetite for cash, this could be an attractive fix. Glu would also benefit from Hands-On's valuable World Poker Tour license, which has been a cash cow since 2005, and its legacy Guitar Hero licenses (also big earners), which would be a nice complement Glu's newly launched Guitar Hero 5 title. For the investors in Hands-On, including Executive Chairman Dan Kranzler, this could finally be a way to go public... like they've been planning since the mobile paleolithic. It would also give Hands-On much improved smartphone capability (an area where Glu is finally getting its shit together) and restore its once impressive international distribution capabilities. Moreover, this move could create a real competitor, another $100mil+ (or close to it) game publisher, in an industry segment that's recently looked a lot like a two horse race between EA Mobile and Gameloft.
What do you readers think?
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Possible but I strongly doubt it cause of following reasons
ReplyDelete1. Both companies dont have a powerful management
2. Both dont have a vision
3. Both dont have big own brands - the brands you mentioned are very expensive. You could see last year how fast brands are moving away from one company to another PES from Konami for example, Segas Sonic,...
4. I doubt Hands-On has enough cash left from the EA/Korea Deal and the European Management Buyout (C2M)
5. Glu also missed the Smartphone market and all the social gaming is a big hype and bubble where both want to move in but they are again too late.
6. What will really bring both companies further? 100mil+ Revenues? Glu has the same sales channels and even better ones than Hands-on.
7. Did Hands-on had any sucess with their developer program for the US? What did Hands-on really done since they sold all their units?
8. Who is really still working at Hands-on?
9. Going public can be realised cheaper for Dan!
The only reason why they could do it is for me pure panic. Glu will try to sell the company to others not to hands-on.
But perhaps they can than find another cool cooperate name. Keep us posted.
I think it's a good hypothesis Jeremy but I'm leaning towards the theory that Niccolo decided to jump from a smaller sinking ship to a larger sinking ship because, no matter what happens, he can't lose. If Glu turns around and the share price rises, he's a hero. If it continues to languish and slide further, everyone will say "no one could've turned around that train wreck" and he's still teflon.
ReplyDeleteIn terms of cash, HOM has been burning it big time since the Korean sale and I doubt there's much left. Their GH products have been pulled off decks and that revenue must be drying up quickly. As for WPT, doesn't Glu have WSOP and wouldn't really have an appetite for something that will cannibalize one of their top hitters?
Anyway, I still like the thinking and it would be a pretty great mobile entertainment story to start out the new decade! My prediction is that one of those two companies won't be around to see 2012!