Swedish gaming giant takes hit on stock exchange after deal falls through
Sweden's Embracer said it is lowering its outlook after a major strategic partnership fell through.
"Late last night, we were informed that one major strategic partnership that has been negotiated for seven months will not materialise," Embracer CEO Lars Wingefors said in a comment.
Wingefors added that the decision by the unnamed prospective partner to pull out was "unexpected".
According to Embracer, which owns the "Borderlands" franchise and the licence for popular game "Tomb Raider", the deal included more than $2 billion in "contracted development revenue over a period of six years".
It would have also allowed catch-up payments for "already capitalised costs for a range of large-budget games" and would have notably improved "medium-to-long-term profit".
Coupled with a number of delayed titles, the cancelled partnership meant the company was lowering its projections for its 2023/2024 financial year.
Embracer is now expecting to generate seven to nine billion kronor ($657 million to $845 million) in adjusted EBIT (earnings before interest and taxes) for the year, compared to the previously expected 10.3 to 13.6 billion kronor.
When the Stockholm stock exchange closed Wednesday, shares in Embracer were down by more than 44 percent.
At the same time, the publisher reported a 121-percent increase in net sales to 37.7 billion kronor for its full financial year, which runs from April to March.
Its net profit more than quadrupled from 976 million to 4.45 billion kronor.
The publisher, based in the western Swedish town of Karlstad, has been on an acquisition spree for several years and recently announced a huge "Lord of the Rings" game with Amazon.
According to Embracer it has 138 internal game development studios and morethan 16,600 employees in over 40 countries.
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"Late last night, we were informed that one major strategic partnership that has been negotiated for seven months will not materialise," Embracer CEO Lars Wingefors said in a comment.
Wingefors added that the decision by the unnamed prospective partner to pull out was "unexpected".
According to Embracer, which owns the "Borderlands" franchise and the licence for popular game "Tomb Raider", the deal included more than $2 billion in "contracted development revenue over a period of six years".
It would have also allowed catch-up payments for "already capitalised costs for a range of large-budget games" and would have notably improved "medium-to-long-term profit".
Coupled with a number of delayed titles, the cancelled partnership meant the company was lowering its projections for its 2023/2024 financial year.
Embracer is now expecting to generate seven to nine billion kronor ($657 million to $845 million) in adjusted EBIT (earnings before interest and taxes) for the year, compared to the previously expected 10.3 to 13.6 billion kronor.
When the Stockholm stock exchange closed Wednesday, shares in Embracer were down by more than 44 percent.
At the same time, the publisher reported a 121-percent increase in net sales to 37.7 billion kronor for its full financial year, which runs from April to March.
Its net profit more than quadrupled from 976 million to 4.45 billion kronor.
The publisher, based in the western Swedish town of Karlstad, has been on an acquisition spree for several years and recently announced a huge "Lord of the Rings" game with Amazon.
According to Embracer it has 138 internal game development studios and morethan 16,600 employees in over 40 countries.
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