Tencent announces First Restructuring in Six Years
Last Sunday, the Chinese giant Tencent announced the start of restructuring. The announcement took place against the background of the unfavorable situation in the gaming industry of China.
This is reported by Reuters. It also clarifies that a significant drop in the company’s market value (the share price fell by $83 from January to September) is due to not one, but a number of factors.
Tencent’s Shanghai office (photo: The Wall Street Journal)
Firstly, the blocking of new releases by local regulators, as we wrote in detail a little earlier.
A similar situation has been worrying market analysts since spring and making investors nervous.
Secondly, an inarticulate international strategy. Despite owning shares of top Western gaming companies, Tencent rarely enters foreign markets with its own products and is not very successful (the American version of Arena of Valor is not nearly as successful as the Chinese one).
Thirdly, the company’s debt obligations are growing now. The reason for the latter is strategic investments, for which she took money. At the end of the second quarter of this year, they amounted to $36.2 billion.
Exactly how the restructuring will help solve these problems is unclear. According to Tencent, the initiative will combine three existing content business groups into one, as well as create a new group that will focus on cloud and smart technologies. In addition, a technology committee will be created to help strengthen the company’s R&D.
