EA is reportedly seeking a sale or a merger

Electronic Arts is actively (and persistently) looking for a buyer or another company willing to merge with it, according to Puck. The video game company reportedly held talks with a number of potential buyers or partners, including Disney, Apple and Amazon. It’s unclear which were interested in fully purchasing EA and which were looking to merge, but in case of a merger, Puck said EA is seeking a deal that would allow Andrew Wilson to remain chief executive of the combined company.

EA approached Disney in March in an attempt to forge “a more meaningful relationship” that would go beyond licensing deals, according to the source. However, Disney decided not to push forward, perhaps because it’s currently focused on its nascent streaming service. The publication said the idea of a merger between EA and ESPN, which Disney partly owns, is being floated around in the industry.

Among all the potential partners, however, it was perhaps Comcast who got the closest to a deal. Comcast CEO Brian Roberts reportedly approached Wilson with an offer to merge NBCUniversal with EA. Under the deal, Roberts would take majority control of the merged company, but Wilson would remain chief executive. The people involved didn’t agree over the price of the sale and the structure of the combined entity, though, and the agreement fell through within the last month. 

EA remains a company of its own for now, but Puck said it has become more emboldened in its quest to find a sale or a merger since Microsoft announced that it’s snapping up Activision Blizzard for $68.7 billion, so that might not be be the case for long. It’s worth noting that Sony also revealed that it’s buying Destiny studio Bungie for $3.6 billion shortly after Microsoft announced the acquisition.

EA spokesperson John Reseburg told Puck that the company would not comment “on rumors and speculation relating to [mergers and acquisitions].” Reseburg added: “We are proud to be operating from a position of strength and growth, with a portfolio of amazing games, built around powerful IP, made by incredibly talented teams, and a network of more than half a billion players. We see a very bright future ahead.”

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一時は1ドル＝131円台まで円安が進んだ。本当に「円安は悪い」のだろうか（写真：つのだよしお／アフロ） ここのところ進んだ円安に対して、方々から「悪い円安」論の大合唱が聞こえる。筆者の手元にある経済誌の最新号を見てみよう。 「悪い円安論」でほぼ一色に まず、『週刊東洋経済』（5月21日号）は、「緊急リポー…

Coinbase reportedly pauses hiring amid plummeting crypto market

In the wake of the cryptocurrency market crashing, Coinbase said this week it was joining a number of tech companies by slowing down its hiring plans for this year. More details have emerged about Coinbase’s efforts to cut costs after The Information obtained emails that were sent to employees.

The company is said to have frozen hiring for two weeks (though it will honor offers that have already been sent) and put new projects on hold. It is also reportedly trying to reduce how much it spends on hosting services.

Along with not hiring as many people as it previously expected to this year, Coinbase is looking to minimize employee attrition. According to the report, the company is giving workers more shares. Coinbase’s stock has dropped by over 75 percent in the last six months.

Coinbase is said to have paused some projects, such as a business banking initiative, while it focuses on increasing revenue from core products, including retail and institutional trading. It’s reportedly planning to offer retail customers more cryptocurrencies and to expand operations outside of the US.

When asked for comment, a Coinbase spokesperson directed Engadget to a tweet thread from chief product officer Surojit Chatterjee. While the company is renewing focus on its “high-impact products” and trying to “improve efficiencies by seeking improvements in developer productivity,” Chatterjee noted that Coinbase doesn’t plan to stop investing in strategic and venture projects. “We believe the down market is a great time to build for the longer term,” Chatterjee wrote.

The company revealed in its first-quarter earnings report last week that, at $1.16 billion, net revenue fell by 27 percent year-over-year and by over half from the previous quarter. Trading volume also dropped. Amid a hiring spree (it’s said to have brought in more than 1,200 new employees this year), operating expenses increased by nine percent from the previous quarter to $1.7 billion. Coinbase had a net loss of $430 million in Q1. All of that was before the cryptocurrency market nosedived earlier this month.

Stablecoin TerraUSD (which is supposed to be pegged to the value of the US dollar) and sister token Luna effectively collapsed, causing a ripple effect to other cryptocurrency prices. Though it has since rebounded a bit, the price of bitcoin also dipped below $26,000 for the first time in 16 months last week amid a sell off that saw over $200 billion wiped from the crypto market in one day.

Coinbase’s shift in hiring strategy reflects a broader trend among prominent tech companies. Meta and Uber are among the major businesses that are cutting costs and slowing down recruitment plans. Meanwhile, Netflix laid off around 150 staff in the US this week and canceled some animated projects. The company’s stock plummeted after it reported its first-ever quarterly drop in subscriber numbers last month.

The ‘villain’ in Reddit’s GameStop investor saga is shutting down

Reddit’s war over GameStop stock has claimed a major casualty. Bloomberg and The New York Times report Melvin Capital, the hedge fund considered the nemesis of the meme stock affair, is shutting down. Fund owner Gabe Plotkin told investors that the “appropriate next step” after steep losses was to liquidate assets and return cash to investors, and that it was time to “step away” from managing others’ capital. At least half of the cash will transfer by May 31st, with the rest coming by June 30th.

Melvin Capital had been a successful fund, starting 2021 with over $12 billion. However, its public bet against GameStop and other struggling companies made it one of the largest victims of a GameStop-centric investing spree by people coordinating across Reddit and social networks. Plotkin’s fund reported a 53 percent loss in January 2021, and it took a $2.75 billion cash infusion to soften the blow and keep losses down to 39 percent for the year.

The GameStop saga wasn’t the only factor involved, however. While a recovery appeared possible, Melvin posted a 23 percent loss through April that was partly linked to poor stock positions. The fund was clearly in peril after the Reddit battle — it’s just that some miscalculations finished the company once and for all.

Reddit speculators shifted their attention to BlackBerry and other companies in the aftermath of the GameStop drama, and there hasn’t been fallout on par with Melvin’s in the months since. Still, the shutdown illustrates the power of coordinated internet investors — they can demolish conventional stock managers in the right circumstances.

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価値がドルと1対1で連動するとされていた仮想通貨の「Terra(LUNA)」でデペッグ(ドル連動の崩壊)が発生し、LUNAと連動していたTerraUSD(UST)も99.99％下落して事実上無価値になった問題で、LUNAの関連団体が担保のために保有していたビットコインが保有していたビットコインが持ち主不明の口座に送金され、、行方が分から…

Elon Musk faces a federal probe over late disclosure of his initial Twitter stake

The US Securities and Exchange Commission (SEC) is investigating Elon Musk’s belated disclosure of his purchase of more than 5 percent of Twitter’s share, The Wall Street Journal reports. The lag allowed him to purchase more stock without alerting other shareholders, something that may have saved him a significant amount of money. Musk is also facing a lawsuit from Twitter shareholders and a separate FTC probe over the same matter. 

Musk disclosed his purchase of the shares on April 4th, 10 days later than the law requires. According to the WSJ‘s expert, he likely saved over $143 million by not reporting the trade, as the share price may have been higher had the market known about his stake. He eventually acquired 9.2 percent of Twitter, which made him the company’s largest shareholder. 

In his initial filing, Musk said he was a passive shareholder, but the following day he filed a form that showed more involvement, including an offer to join the board of directors. A week later, he submitted an offer to buy Twitter for $44 billion, which has been approved by Twitter’s board. Musk has said that he’ll unlock the “extraordinary potential” of the site and that the deal will be good for free speech. 

Musk has butted heads frequently with the SEC over the past few years. In February, he asked a judge to overturn his agreement with the SEC that required him to get approval for tweets, accusing the Commission of conducting a “harassment campaign.” That request was denied, as was Musk’s request to block an SEC subpoena related to possible insider trading. 

Musk was also hit with a class-action lawsuit over his Twitter investment. The SEC appears to have a good case against Musk for the late disclosure, but it’s not yet clear what it plans to do. However, the lawsuit is unlikely to stop Musk’s purchase of Twitter, according to the WSJ. 

EV maker Canoo is in danger of going out of business

Electric vehicle maker Canoo has warned investors it’s running low on funds as it works toward bringing its products to market. It said that, due to the timing of the announced funding and some other factors, it has “substantial doubt about the company’s ability to continue as a going concern.”

“We have been clear about our philosophy of raising capital judiciously and will continue with this disciplined approach,” CEO Tony Aquila said in a statement. “We have more than $600 million in accessible capital to support Start of Production (SOP). As operators and investors, we have significant experience raising capital in challenging markets — and the best way to raise capital is to achieve your goals. We will continue to raise when needed, bridge to milestones and be in a position to take advantage of improving market conditions. We are focused on long term value creation for our customers and shareholders.”

Canoo reported a $125.4 million net loss in its first-quarter earnings (compared with $15.2 million in Q1 2021). It burned through $120.3 million in the first three months of the year, up from $53.9 million a year earlier. That left it with cash and cash equivalents of $104.9 million as of the end of March.

The company projects operating expenses of between $95 million and $115 million this quarter, as well as $85 million to $105 million in capital expenditures. As it stands, Canoo is not generating revenue.

The EV maker says it had built 39 Gamma lifestyle vans as of the end of March, with 17 of those now on the road. According to Reuters, company leaders said in an earnings call that it’s making up to just 12 vehicles a week and is focusing on fleet customers for the time being. Canoo claims it has received more than 17,500 pre-orders with a projected value of $750 million, and added that it secured a deal with NASA to provide Artemis ground crew transportation vehicles.

The company has had a turbulent history, as TechCrunch notes. It’s been the subject of an SEC investigation into factors such as the departure of certain executives and the SPAC merger with Hennessy Capital Acquisition Corp that took it public. Canoo has also been beset by production delays.

Netflix’s ad-supported plan and password sharing fees may arrive this year

Although Netflix had long said its service wouldn’t include ads, it revealed last month that it will actually roll out a cheaper, ad-supported plan. Co-CEO Reed Hastings said on an earnings call that plans for that tier would be firmed up “over the next year or two.” However, it seems the company is looking to offer the option even sooner. It reportedly suggested in an internal memo that an ad-supported version of the streaming service will emerge later this year.

Executives told staff in the note that they want to introduce an ad-supported plan in the last three months of 2022, according to The New York Times. What’s more, the note suggested the tier will be introduced around the same time as an extra fee for subscribers who share their passwords with people living at different addresses.

In the memo, Netflix is said to have noted that, outside of Apple TV+, every major streaming platform offers a lower-cost, ad-supported plan. Those include Hulu, HBO Max and Peacock. The company reportedly said that some of its competitors have still been able to “maintain strong brands” while showing commercials.

Meanwhile, Netflix recently said that more than 222 million households are paid subscribers. However, it claimed more than 100 million households are watching Netflix on someone else’s account without paying for access. On the earnings call, chief operating officer Greg Peters said that while the company is “not trying to shut down that sharing,” it is “going to ask you to pay a bit more to be able to share.” Netflix started testing an extra fee for account sharers in Peru, Chile and Costa Rica in March.

After years of impressive growth, Netflix suddenly has a big issue when it comes to subscriber numbers, which fell for the first time last quarter. It lost 200,000 members (largely due to shutting down its service in Russia) and it thinks it may lose as many as another two million this quarter. With its stock nosediving by over 50 percent in the last month, the company is hoping an ad-supported tier and extra charges for password sharing will help increase revenue.

Peloton’s huge loss highlights how hard it’ll be to turn things around

Peloton has posted a heavy quarterly loss for the first quarter, indicating that it has a lot of work to do in order to correct course. The company made a net loss of $757.1 million in the first three months of the year (Q3 of Peloton’s 2022 fiscal year). Not only was that a worse result than expected, it’s a massive decrease from the $8.6 million loss it posted for the same period in 2021.

Revenue dropped from $1.262 billion a year ago to $964 million. Operating expenses, meanwhile, grew by 101 percent year-over year to $920 million. Peloton says those represented 95.4 percent of total revenue for the quarter, compared with 36.3 percent a year earlier.

One of the company’s biggest challenges has been handling its stockpile of connected fitness equipment in the wake of a sales decline as more people return to office life. “We have too much [inventory] for the current run rate of the business, and that inventory has consumed an enormous amount of cash, more than we expected, which has caused us to rethink our capital structure,” CEO Barry McCarthy, who took on the job in February, wrote in a letter to shareholders. “We believe the inventory will sell eventually, so this is primarily a cash flow timing issue, not a structural issue.”

Around the time McCarthy was appointed, Peloton announced it would cut 2,800 jobs, or around 20 percent of the corporate workforce. Rumors swirled in February that the company was an acquisition target for several suitors, with the likes of Amazon and Nike said to be interested.

Although it won’t be easy for the company to get back on track, Peloton at least has a plan to turn things around. It aims to return to positive free cash flow in its 2023 fiscal year.

Last month, it announced an upcoming increase to subscriptions along with price cuts for many of its connected fitness machines. There are several reasons why Peloton is banking more heavily on subscriptions. For one, subscription revenues rose by 55 percent year-over-year to $369.9 million. The company now has 7 million members, and McCarthy has a long-term goal of reaching 100 million. “Our users are highly engaged, and our subscriber churn rate is less than 1 percent, which is the best I’ve seen,” McCarthy, a former Netflix and Spotify executive, said.

McCarthy said the pricing changes could help the company deliver “roughly $40 million of incremental revenue monthly.” The increased cost of the All-Access plan doesn’t kick in until June 1st, but McCarthy says there’s only been a small increase in user attrition and the move will generate an extra $14 million in revenue each month if that level of churn holds.

Cutting prices on some hardware models has led to a 69 percent increase in daily unit sales too. So far, that move has increased revenue by $25 million per month. The company also plans to keep testing a program that will combine an All-Access subscription plan with rentals of its equipment.

McCarthy noted that Peloton is revamping its workforce as it shifts from a hardware- to a software-focused company. The recent job cuts factor into the company’s plan to increase annual run-rate savings to at least $800 million by its 2024 fiscal year. It also signed a binding commitment letter to borrow $750 million in five-year term debt from JP Morgan and Goldman Sachs.

Meanwhile, Peloton says more than half a million users have tried Lanebreak, its first gamified workout, on Bike and Bike+. The company expects to lean “more into gaming content in response to the success of Lanebreak.”