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CD Projekt Q1 net profit misses expectations

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CD Projekt’s first-quarter net profit fell 64.7% to 32.5 million zlotys ($8.87 million), missing market expectations, hurt by the costs of fixing its flagship “Cyberpunk 2077” game after its troubled launch, while foreign exchange losses also hit results.

“Cyberpunk 2077,” featuring Hollywood star Keanu Reeves, was one of the most anticipated games last year. It was delayed three times, and after a bug-ridden premiere it has been delisted from Sony’s PlayStation Store for more than five months.

CD Projekt did not say how many units of “Cyberpunk 2077” it sold in the quarter. Analysts have said sales were likely low, due to its absence from the PlayStation Store and release of a major patch just in late March.

“Lower than usual net profitability is mainly due to continuing depreciation of Cyberpunk 2077 development expenditures, work on updating the game, and R&D activities related to future projects,” chief financial officer Piotr Nielubowicz said in a statement.

Analysts had expected net profit of 80 million zlotys and revenue of 219 million zlotys.

CD Projekt has been working on fixing Cyberpunk since it premiered. Selling costs rose 79.6% to 62.1 million zlotys in the quarter.

It booked 16.2 million zlotys in financial costs in the quarter compared to 107,000 zlotys a year earlier due to negative exchange rate differences, resulting also from settlements of large volume of trade receivables generated by the December 2020 release of “Cyberpunk 2077”.

Battered by Cyberpunk’s launch, CD Projekt plans to start parallel high-budget developments from 2022, as well as look for merger and acquisition opportunities.

Its future sales growth, though, depends on its ability to re-engage Cyberpunk players. It confirmed plans to publish free downloadable content and update both Cyberpunk and The Witcher 3 to next generation consoles in the second half.

Last year, the company’s shares hit an all-time high of 464.2 zlotys in the run-up to Cyberpunk’s launch, but have lost over 60% of their value.

(Reporting by Anna Pruchnicka; editing by David Evans and David Gregorio)

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Britain in talks with 6 firms about building gigafactories for EV batteries

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Britain is in talks with six companies about building gigafactories to produce batteries for electric vehicles (EV), the Financial Times reported on Wednesday, citing people briefed on the discussions.

Car makers Ford Motor Co and Nissan Motor Co Ltd, conglomerates LG Corp and Samsung, and start-ups Britishvolt and InoBat Auto are in talks with the British government or local authorities about locations for potential factories and financial support, the report added .

 

(Reporting by Kanishka Singh in Bengaluru; Editing by Himani Sarkar)

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EBay to sell South Korean unit for about $3.6 billion to Shinsegae, Naver

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EBay will sell its South Korean business to retailer Shinsegae Group and e-commerce firm Naver for about 4 trillion won ($3.6 billion), local newspapers reported on Wednesday.

EBay Korea is the country’s third-largest e-commerce firm with market share of about 12.8% in 2020, according to Euromonitor. It operates the platforms Gmarket, Auction and G9.

Shinsegae, Naver and eBay Korea declined to comment.

Lotte Shopping had also been in the running, the Korea Economic Daily and other newspapers said, citing unnamed investment banking sources.

South Korea represents the world’s fourth largest e-commerce market. Driven by the coronavirus pandemic, e-commerce has soared to account for 35.8% of the retail market in 2020 compared with 28.6% in 2019, according to Euromonitor data.

Shinsegae and Naver formed a retail and e-commerce partnership in March by taking stakes worth 250 billion won in each other’s affiliates.

($1 = 1,117.7000 won)

 

(Reporting by Joyce Lee; Editing by Edwina Gibbs)

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Canada launches long-awaited auction of 5G spectrum

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Canada is set to begin a hotly anticipated auction of the mobile telecommunications bandwidth necessary for 5G rollout, one that was delayed more than a year by the pandemic.

The 3,500 MHz is a spectrum companies need to provide 5G, which requires more bandwidth to expand internet capabilities.The auction, initially scheduled for June 2020, is expected to take several weeks with Canadian government selling off 1,504 licenses in 172 service areas.

Smaller operators are going into the auction complaining that recent regulatory rulings have further tilted the scales in the favour of the country’s three biggest telecoms companies – BCE, Telus and Rogers Communications Inc – which together control around 90% of the market as a share of revenue.

Canadian mobile and internet consumers, meanwhile, have complained for years that their bills are among the world’s steepest. Prime Minister Justin Trudeau’s Liberal government has threatened to take action if the providers did not cut bills by 25%.

The last auction of the 600 MHz spectrum raised C$3.5 billion ($2.87 billion) for the government.

The companies have defended themselves, saying the prices they charge are falling.

Some 23 bidders including regional players such as Cogeco and Quebec’s Videotron are participating in the process. Shaw Communications did not apply to participate due to a $16 billion takeover bid from Rogers. Lawmakers and analysts have warned that market concentration will intensify if that acquisition proceeds.

In May, after Canada‘s telecoms regulator issued a ruling largely in favour of the big three on pricing for smaller companies’ access to broadband networks, internet service provider TekSavvy Inc withdrew from the auction, citing the decision.

Some experts say the government has been trying to level the playing field with its decision to set aside a proportion of spectrum in certain areas for smaller companies.

Gregory Taylor, a spectrum expert and associate professor at the University of Calgary, said he was pleased the government was auctioning off smaller geographic areas of coverage.

In previous auctions where the license covered whole provinces, “small providers could not participate because they could not hope to cover the range that was required in the license,” Taylor said.

Smaller geographic areas mean they have a better chance of fulfilling the requirements for the license, such as providing service to 90% of the population within five years of the issuance date.

The auction has no scheduled end date, although the federal ministry in charge of the spectrum auction has said winners would be announced within five days of bidding completion.

($1 = 1.2181 Canadian dollars)

 

(Reporting by Moira Warburton in Vancouver; Editing by David Gregorio)

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