Technology

Assassin’s Creed maker Ubisoft sinks to more than seven-year low after slashing guidance, cancelling games

Published

2 years ago

January 12, 2023

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In this photo illustration, the Ubisoft video game company logo seen displayed on a smartphone.

Igor Golovniov | SOPA Images | LightRocket via Getty Images

Ubisoft shares plunged 21% on Thursday after the French video game maker reduced revenue guidance, cancelled three titles and pushed back the release of its upcoming Skull and Bones game.

The company’s share price slumped as low as 18.80 euros apiece shortly after the market opened, hitting its lowest level in more than seven years. The stock has since pared losses slightly and was last trading at around 20 euros, down 16% from the Wednesday close.

In a trading update on Wednesday, Ubisoft lowered net bookings guidance for the third quarter of 2022 to 725 million euros, down from an earlier target of 830 million euros. The company forecast full-year net bookings would likely fall 10% after an earlier projection called for an increase of 10%.

The company, which is best known as the publisher of hit franchises including Assassin’s Creed and Far Cry, cited poor performance of its Mario + Rabbids Sparks of Hope and Just Dance 2023 titles, as well as a challenging economic environment.

“There’s a fair amount of “battening down the hatches” going on globally as it relates to the games industry,” Lewis Ward, research director of gaming at IDC, told CNBC.

“There were huge 20-30% revenue surges when COVID hit, and in 2023 we’re dealing with ongoing denouement of the COVID-induced spending spike, plus concerns about a potential recession and ongoing inflationary and supply chain challenges in North America and Europe especially, plus, of course, the ongoing fallout of Russia’s invasion of Ukraine.”

Consumers are cutting back on discretionary purchases in response to higher prices and borrowing costs. Gaming has especially come under pressure. The industry was expected to contract 4.4% year-on-year to $182 billion, according to a November forecast from market research firm Ampere Analysis.

Ubisoft is the third gaming firm this week to issue a disappointing trading update. Devolver Digital and Frontier Developments posted profit warnings on Monday, citing a weak trading environment in December.

“This reveals that the macro-economic environment is having an impact on premium games sales to an extent,” Piers Harding-Rolls, research director for games at Ampere Analysis, told CNBC via email.

“However, I think it is likely that the economic backdrop will impact some companies more than others,” he added. “For example, we’ve already noted how the biggest AAA console releases have sold well — FIFA, God of War, CoD [Call of Duty] — so I think it’s too early to assume all major publishers will be in the same position as these three companies.”

The gaming industry seeing increased consolidation, including Microsoft’s mega acquisition of Call of Duty publisher Activision Blizzard and Sony’s purchase of Destiny developer Bungie. Analysts view Ubisoft as a potential takeover target. Its share price sank more than 38% in 2022, wiping off 3 billion euros from the company’s market value.

In September, Tencent upped its stake in the company in a deal that made the Chinese tech giant Ubisoft’s largest shareholder. The purchase gave Tencent an overall stake of 11%, including indirect ownership, and an option to increase its interest further to up to 17%.

Analysts at the time said that the stake purchase had dampened hopes of a takeover. As part of the deal, Tencent won’t be able to sell its shares for five years and can’t increase its direct stake in Ubisoft beyond 9.99% for a period of eight years.

Ubisoft said Wednesday that it would depreciate around 500 million euros of capitalized research and development and narrow its focus to fewer titles. It shelved three unannounced game projects and delayed the release of its upcoming Skull and Bones pirate game until a period between early 2023 to 2024.

The company hopes to cut costs by about 200 million euros through a mix of targeted restructuring, divestment of “non-core” assets, and employee attrition. It has about 1.4 billion euros of cash and non-cash equivalence on its balance sheet.

Technology

Tesla launches refreshed Model Y in China to fend off domestic rivals

Published

4 hours ago

January 10, 2025

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Tesla launched a revamped version of its Model Y in China.

Tesla

Tesla on Friday announced a revamped version of its popular Model Y in China, as the U.S. electric car giant looks to fend off challenges from domestic rivals.

The Model Y will start at 263,500 Chinese yuan ($35,935), with deliveries set to begin in March. That is 5.4% more expensive than the starting price of the previous Model Y.

A spokesperson for Tesla China said that the new Model Y is only open for pre-sale in the Chinese market, rather than being launched globally.

Tesla’s Model Y refresh comes after the auto giant this month reported its first ever annual decline in overall deliveries for 2024.

Elon Musk’s electric vehicle firm is facing heightened competition around the world, from startups and traditional carmakers in Europe. In China, the company continues to face an onslaught of rivals from BYD to newer players like Xpeng and Nio.

Jason Low, principal analyst at Canalys, notes that the Tesla Model Y was the best-selling EV in China in 2024 and that the popularity of the car “remains high.” However, he noted that the competition in the sports utility vehicle (SUV) segment with vehicles priced between 250,000 yuan and 350,000 yuan “has been fierce.”

“Tesla must showcase compelling smart features, particularly a unique but well localized cockpit and services ecosystem,” as well as “effective” semi-autonomous driver assistance features “to ensure its competitiveness in the market,” Low added.

Tesla is offering a number of incentives for customers to buy the Model Y including a five-year 0% interest financing plan.

The new Model Y can accelerate from 0 kilometers per hour to 100 kilometers per hour in 4.3 seconds, Tesla said, exceeding the speed capabilities of the previous vehicle. The Model Y Long Range has a further driving range on a single charge versus its predecessor.

Tesla has not introduced a new model since it began delivering the Cybertruck in late 2023, which starts at nearly $80,000.

Investors have been yearning for a new mass-market model to reinvigorate sales. Tesla has previously hinted that that a new affordable model could be launched in the first half of 2025.

Despite Tesla’s headwinds, the company’s stock is up nearly 70% over the last 12 months, partly due to CEO Musk’s close relationship with U.S. President-elect Donald Trump.

Technology

World’s biggest chipmaker TSMC posts record 2024 revenue as AI boost continues

Published

7 hours ago

January 10, 2025

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World's biggest chipmaker TSMC posts record 2024 revenue as AI boost continues

The logo for Taiwan Semiconductor Manufacturing Company is displayed on a screen on the floor of the New York Stock Exchange on Sept. 26, 2023.

Brendan Mcdermid | Reuters

Taiwan Semiconductor Manufacturing Co. posted December quarter revenue that topped analyst estimates, as the company continues to get a boost from the AI boom.

The world’s largest chip manufacturer reported fourth-quarter revenue of 868.5 billion New Taiwan dollars ($26.3 billion), according to CNBC calculations, up 38.8% year-on-year.

That beat Refinitiv consensus estimates of 850.1 billion New Taiwan dollars.

For 2024, TSMC’s revenue totaled 2.9 trillion New Taiwan Dollars, its highest annual sales since going public in 1994.

TSMC manufacturers semiconductors for some of the world’s biggest companies, including Apple and Nvidia.

TSMC is seen as the most advanced chipmaker in the world, given its ability to manufacture leading-edge semiconductors. The company has been helped along by the strong demand for AI chips, particularly from Nvidia, as well as ever-improving smartphone semiconductors.

“TSMC has benefited significantly from the strong demand for AI,” Brady Wang, associate director at Counterpoint Research told CNBC.

Wang said “capacity utilization” for TSMC’s 3 nanometer and 5 nanometer processes — the most advanced chips — “has consistently exceeded 100%.”

AI graphics processing units (GPUs), such as those designed by Nvidia, and other artificial intelligence chips are driving this demand, Wang said.

Taiwan-listed shares of TSMC have risen 88% over the last 12 months.

TSMC’s latest sales figures may also give hope to investors that the the demand for artificial intelligence chips and services may continue into 2025.

Foxconn, which assembles Apple’s iPhones, reported its highest-ever fourth quarter revenue this week, as it notched strong demand for AI servers.

Meanwhile, Microsoft this month said that it plans to spend $80 billion in its fiscal year to June on the construction of data centers that can handle artificial intelligence workloads.

CNBC’s Jordan Novet contributed to this report.

Technology

Supreme Court set to hear oral arguments on challenge to TikTok ban

Published

14 hours ago

January 10, 2025

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Supreme Court set to hear oral arguments on challenge to TikTok ban

Tik Tok creators gather before a press conference to voice their opposition to the “Protecting Americans from Foreign Adversary Controlled Applications Act,” pending crackdown legislation on TikTok in the House of Representatives, on Capitol Hill in Washington, U.S., March 12, 2024.

Craig Hudson | Reuters

The Supreme Court on Friday will hear oral arguments in the case involving the future of TikTok in the U.S., which could ban the popular app as soon as next week.

The justices will consider whether the Protecting Americans from Foreign Adversary Controlled Applications Act, the law that targets TikTok’s ban and imposes harsh civil penalties for app “entities” that continue to carry the service after Jan.19, violates the U.S. Constitution’s free speech protections.

It’s unclear when the court will hand down a decision, and if China’s ByteDance continues to refuse to divest TikTok to an American company, it faces a complete ban nationwide.

What will change about the user experience?

The roughly 115 million U.S. TikTok monthly active users could face a range of scenarios depending on when the Supreme Court hands down a decision.

If no word comes before the law takes effect on Jan. 19 and the ban goes through, it’s possible that users would still be able to post or engage with the app if they already have it downloaded. However, those users would likely be unable to update or redownload the app after that date, multiple legal experts said.

Thousands of short-form video creators who generate income from TikTok through ad revenue, paid partnerships, merchandise and more will likely need to transition their businesses to other platforms, like YouTube or Instagram.

“Shutting down TikTok, even for a single day, would be a big deal, not just for people who create content on TikTok, but everyone who shares or views content,” said George Wang, a staff attorney at the Knight First Amendment Institute who helped write the institute’s amicus briefs on the case.

“It sets a really dangerous precedent for how we regulate speech online,” Wang said.

Who supports and opposes the ban?

Dozens of high-profile amicus briefs from organizations, members of Congress and President-elect Donald Trump were filed supporting both the government and ByteDance.

The government, led by Attorney General Merrick Garland, alleges that until ByteDance divests TikTok, the app remains a “powerful tool for espionage” and a “potent weapon for covert influence operations.”

Trump’s brief did not voice support for either side, but it did ask the court to oppose banning the platform and allow him to find a political resolution that allows the service to continue while addressing national security concerns.

The short-form video app played a notable role in both Trump and Democratic nominee Kamala Harris’ presidential campaigns in 2024, and it’s one of the most common news sources for younger voters.

In a September Truth Social post, Trump wrote in all caps Americans who want to save TikTok should vote for him. The post was quoted in his amicus brief.

What comes next?

It’s unclear when the Supreme Court will issue its ruling, but the case’s expedited hearing has some predicting that the court could issue a quick ruling.

The case will have “enormous implications” since TikTok’s user base in the U.S. is so large, said Erwin Chemerinsky, dean of Berkeley Law.

“It’s unprecedented for the government to prohibit platforms for speech, especially one so many people use,” Chemerinsky said. “Ultimately, this is a tension between free speech issues on the one hand and claims of national security on the other.”