Tomahawk, WI 8/26/2013 (BasicsMedia) – Glu Mobile Inc. (NASDAQ:GLUU) is a leading worldwide developer and publisher of premium games for Smartphone and tablet devices. The Company has about 40 million monthly active users and makes money through advertisements and the sale of virtual goods such as weapons that enhance game play. Founded in 2001, Glu is headquartered in San Francisco with major offices outside Seattle, and overseas in Canada, China, and Russia. The company develops games based on its own brands, including Blood & Glory, Big Time Gangsta, Contract Killer, Contract Killer: Zombies, Deer Hunter, Eternity Warriors, Frontline Commando, Gun Bros, Samurai vs. Zombies Defense, and Stardom, as well as third-party licensed brands. It develops games on a wide range of platforms, including iOS, Android, Windows Phone, Google Chrome, and MAC OS. Its unique technology platform enables its titles to be accessible to a broad audience of consumers globally.

The performance of the company has been below par which can be seen in its share price, which is trading near to its 52-week low. The company which recently reported its second quarter earnings posted revenue of $23.2 million, down from $29.8 million a year earlier. Smartphone games accounted for $21.8 million of that revenue, with $20.4 million coming from products with a premium business model.

For 3Q, non-GAAP revenues are expected to be between $19.6 million and $21.0 million and Non-GAAP Smartphone revenues are expected to be between $18.8 million and $20.2 million. Non-GAAP gross margin is expected to be approximately 67%.

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The decline in the company’s profitability and its price has been mainly due to its inability to keep up with changing trends in the gaming business. The company initially was a prime mover in the emerging market for mobile games. However, Glu has struggled to keep pace as the business has shifted towards a free-to-play, service-based model.

The Company also closed its office in Brazil and reduced its work force in San Fransisco & Kirkland. The problem increased this May, when it laid off 68 employees across its studios in San Francisco, Kirkland and Beijing. Currently, the company is focusing on the rapidly growing Asian market for which it opened an office in South Korea. The Company recently signed distribution deals with the leading Korean mobile platforms Kakao and SK Planet. It is now in the process of adding another office in Japan and India which they feel has a huge potential in the Smartphone games.

The Uncertain Future

The Future of the company seems to be uncertain. Nevertheless, few points have been short listed by them to bring back the company on track.

First, to cut down its losses, it has transitioned back to its third-party publishing mode, which now happens to be a core component of the company’s operations. This is also the reason why it cut back on its teams in the States. With the vision of expanding its business in Asia, it has moved in the right direction.

Secondly, in a major development GLUU announced that it has started its operations in Japan and Korea which would be led by Shinsuke Mori and Jay Kim to fuel growth in third party publishing.

“Glu continues to expand across Asia at a rapid pace and we are pleased to add the expertise of Shinsuke Mori and Jay Kim to our team,” said Chris Akhavan, Glu Mobile President of Publishing. “We anticipate that their deep knowledge of the Japanese and Korean gaming markets will strengthen our 1st and 3rd party growth. Glu remains focused on forging new relationships in Asia while continuing to bring great content to more gamers across the region.”

Thirdly, Glu’s a deal with MGM Interactive is seen as a supportive step for the company. The deal has given Glu an initial injection of $10 million. The agreement also states that Glu will be able to develop games based on 007 James Bond and RoboCop (a famous 1987 action blockbuster). In fact the ROBOCop game has already been developed and would be released in next few quarters.

Glu reports that in total it will be launching about 6 new games this year, including new versions of Deer Hunter, Eternity Warriors, and Frontline Commando, as well as games in the motocross genre this year. It is estimated to launch around 12 or more titles in the succeeding 2014.

The Takeaway

Investors have burnt their pockets heavily in the last year where share price has lost its value by 50%. The company whose market capitalization stands at $159.4M is trying hard to make things work according to their terrain. They have now focused on the Asian market and completely went off the air in Latin America. Nevertheless, its still a long way to go for the company before it can give handsome returns to the investors. Until the company gets its way, it’s better to wait and watch!

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