Playing Candy Crush? Didn’t Think So: Opening Line

Aug. 13 (Bloomberg) -- King Digital Entertainment plunged after hours yesterday after reporting lagging sales of the game in the second quarter, dropping as much as 26 percent. Bloomberg’s Tom Giles reports on “In The Loop.” (Source: Bloomberg)

How was your game of Candy Crush on the way in this morning? Did you get the little fruit things all lined up?

King Digital Entertainment (KING) plunged after hours yesterday after reporting lagging sales of the game in the second quarter, dropping as much as 26 percent, and it’s not looking too healthy this morning either. It’s trading in Europe at a little north of $14 after settling at $18.20 in New York.

It’s because Candy Crush is pretty much over, and those who are surprised that a video game you’ve been playing on Facebook or your phone for two years now is no longer the must-have piece of entertainment are probably among those still enthralled by Gangnam Style.

“Candy Crush declined more than we had expected,” Sonali Basak quotes King CEO Riccardo Zacconi as saying during the conference call yesterday.

Really? Wasn’t much of a surprise here. This product isn’t exactly Grand Theft Auto.

The stock has dropped 19 percent since its IPO on March 25, and we’re surprised that’s all. We’re surprised also that this is a publicly traded company.

Same with Zynga (ZNGA), which priced at $10, opened at $11 and now trades for $2.86.

What is surprising is that our screen showed 11 of the 13 analysts who cover the company had buy/overweight/outperform ratings on the stock going into yesterday, with the other two rating the shares at neutral or the equivalent. Among them we saw price targets of $24, $28, even $31.

Photographer: Simon Dawson/Bloomberg

A user plays the "Candy Crush Saga" puzzle game on an Apple Inc. iPhone 5. Close

A user plays the "Candy Crush Saga" puzzle game on an Apple Inc. iPhone 5.

Close
Open
Photographer: Simon Dawson/Bloomberg

A user plays the "Candy Crush Saga" puzzle game on an Apple Inc. iPhone 5.

Not so today. Five ratings were reduced overnight to hold or equivalent, and the price targets have come down (although that $31 marker is still flying under the flag of Cowen & Co.).

Now you tell us.

Who knows how or where lightning strikes?

We hear Psy is also trying for another hit.

***

Today’s main economic indicators are retail sales at 8:30 a.m. EDT and business inventories at 10 a.m.

Deere, Macy’s, SeaWorld, NetApp and Cisco are the prominent companies reporting earnings today.

Overnight, China said new credit plunged to 273.1 billion yuan ($44.3 billion) in July, the lowest total since the financial crisis, factory-output unexpectedly slowed to 9 percent and retail sales increased 12.2 percent, less than analysts’ estimates.

Japan said its GDP shrank an annualized 6.8 percent in the second quarter, less than the median forecast of 7 percent yet still the biggest decline since March 2011.

A short time ago, the BOE said the amount of slack in the U.K. economy is about 1 percent of GDP and shrinking faster that anticipated, and said annual wage growth will be about 1.25 percent in the fourth quarter, down from the figure of 2.5 percent estimated in May.

***

- Fighters from Southeast Asia and France are joining the Islamic State. - While the U.S. weighs further efforts to rescue Yezidis trapped in northern Iraq, Syrian Kurdish fighters have been carving out an escape route for them. - Meanwhile, al-Maliki is making further efforts to resist stepping down. - Also, a New York Times reporter was injured in the crash of a helicopter aiding Yezidis, the headline of the New York Times story reports. Also, there were other people in the helicopter, and the pilot died. - The SEC is examining alternative mutual funds, the Wall Street Journal reports. - Hillary Clinton, who just undercut Obama’s foreign policies the other day, is trying to smooth things over with him as she heads up to Martha’s Vineyard. - There is a lot of corn, and a lot of oil. - AOL is raising capital. - Crude is leaking into the Mississippi River in Louisiana after a docked oil tanker was struck by a stray grain tanker. - Hertz failed to report earnings on time because its accounting is a mess. - Police in St. Louis won’t name the police officer who shot and killed an unarmed teenager, which has sparked looting and protests and a no-fly zone. - Hockey in the Bronx is getting closer. - The wife of an American imprisoned in North Korea is begging for his release. - So much for South Korea’s space program. - We had a hunch the two white flags atop the Brooklyn Bridge were a tribute by two German artists to the bridge’s German-born engineer, John Roebling. - What’s the over/under at Sturgis this year? - Darwin strikes again. - The L.A. Clippers belong to Steve Ballmer now. - Norm MacDonald’s tribute to Robin Williams turns Twitter into an art form. - Good night, Lauren Bacall. What a dame.

***

Turns out we weren’t entirely off base the other day when wondering about the legality of Amazon.com (AMZN)’s pricing tactics with vendors. Then again, we weren’t entirely on base, either.

What they’re doing is legal, period.

We kind of figured, but there is a bit of vindication to see in today’s story by Todd Shields and David McLaughlin that some people are at least smelling smoke.

“It appears to me that they are getting very close to the line,” Joseph Tabacco, former senior trial attorney at the U.S. Justice Department’s antitrust division, tells our reporters. “If you look at their dominant market share of online books and paper books, and the growth of their market share, I think you could make a very compelling argument that they have monopoly power,” he said in unpublished remarks.

That said, dominating a market doesn’t always equate to a monopoly, Seth Bloom, a former general counsel of the U.S. Senate’s antitrust subcommittee, said in an interview. It becomes a problem when a company uses improper means to maintain its dominance.

It’s not hard-nosed business than rankles us. We just don’t like bullies.

***

Give Obama enough time and he might succeed in completely dismantling all the faith among those who thought he might have been a different breed.

The Guantanamo Bay stuff went totally nowhere, the domestic spying probably makes Dick Cheney aroused, the babble about an open and transparent administration turned to B.S., the oppression of the press is pretty much world class, and there’s probably other stuff we’re forgetting about.

Sorry, but Amnesty International’s report from the other day that found “abundant and compelling evidence” of war crimes, torture and unlawful killings in Afghanistan as recently as last year is more depressing than Robin Williams’s suicide.

This reportedly abundant and compelling evidence was then “systematically covered up or disregarded,” the Daily Beast reports. None of the cases in AI’s investigation into more than 140 civilian deaths, including pregnant women and at least 50 children, were followed up.

“President Obama has admitted that ‘we tortured’ people in the past -- but this is not the Bush administration, this is torture happening under Obama,” said Joanne Mariner, the author of the report, according to the Daily Beast story.

***

The hypocrisy factor isn’t helping the president, either.

With one face he’s ripping companies for inversions, and with the other he’s thanking his political donors who meanwhile are engineering some of these tax dodges.

Maybe that’s a little harsh.

Richard Rubin and Annie Linskey have identified more than 20 donors to the administration who are involved in inversion deals, including Blair Effron of Centerview Partners, Evercore’s Roger Altman, former Duke Energy Chairman Jim Rogers, and Adobe Systems CEO Shantanu Narayen.

The president’s stance is explained by Robert Weissman, president of Public Citizen, as commendable because Obama is biting the hands that feed him, and because hands that feed money to politicians come from a “very narrow band of rich people,” he tells Rubin and Linskey.

But Obama didn’t begin with any full disclosure when coming out against the practices of his backers, nor is he saying he’s giving the money back or will stop taking it from the inverters.

***

Speaking of full disclosure, Mike Bloomberg (disclaimer here) is a proponent of gun control. But that’s not why we’re taking up this item.

It’s because the account of the super-rich in the state of Washington who are powering a potential ballot initiative on background checks veers into the notion of states’ rights, which is the kind of political principle your typical gun-rights backer would support, and we love tension.

With legislators unwilling to tackle the issue, billionaires like Bill Gates, Steve Ballmer and Tom Steyer are pumping money behind the initiative to expand checks to gun sales online or at gun conventions.

“It’s blindingly obvious that everybody who buys a gun ought to get a background check,” Rich Barton, the gun-owning founder of Expedia and Zillow tells Alison Vekshin. “This is a small step toward protecting ourselves as citizens against gun violence that is perpetrated by people with records or mental states that might get caught by a background check.”

***

Our French brother-in-law, who speaks about zero words of English, posted an article (in French) to his Facebook page about how Robin Williams’s daughter quoted from “The Little Prince” in her tribute to her father after his death.

The classic book was written by Antoine de Saint-Exupéry, who was from Lyon, the capital of Rhône-Alpes. The region contains the department of Savoie, and there is no purer archetype of a Savoyard than Florent. Brawny and gentle, fiercely independent, uncompromising when it matters most. Long after France had officially become France, Savoie was still sticking its thumb in France’s eye up until it finally joined le club in 1860.

Anyway, unlike here in the U.S., where a foreign film is subtitled, in France it will be overdubbed. “Dead Poets Society,” “Good Will Hunting,” “Good Morning, Vietnam” -- all these films that are part of the Williams oeuvre are just as beloved over there as they are here, but what Flo doesn’t know is that he’s never seen them.

Because he’s never heard Robin Williams’s voice.

Think about that for a minute. In the acting world, your voice is your “instrument,” and Flo and the rest of France -- and doubtless millions of others in countries around the world - - had, all along, been listening to the equivalent of Charlie Parker playing a clarinet.

Nothing in Williams’s work was as marvelous as his voice, his antic, peripatetic, roller-coaster, seemingly limitless voice. To think of some French voiceover guy subbing for Williams with “Bon-Jour Vietnam!,” or making any attempt at the passion that Williams hurled from his heart and lungs in “Dead Poets Society” makes our head spin.

Ceux qui n’ont jamais entendu votre voix ne vous connaîtront jamais vraiment, monsieur. Votre mort nous rend tous triste.

***

Now we know how Capitol Records must have felt when Sinatra left.

Brian Sullivan, the big man who used to be a special contributor to Opening Line, now has his own regular vehicle. Actually, we’d been pushing for it for a long time. All those notes he used to send around the newsroom, which we gladly appropriated because it was like a free drink, are now forming the basis of a daily weather snapshot that will help traders and travelers alike.

Today’s entry answers the question that we, surrounded by giant trees looming over the Opening Line bureau, would rather not think about:

Where are the Atlantic hurricanes? By Aug. 13 last year, he writes, we had already had four named storms, and we had had six each by now in 2012 and 2011.

We won’t spoil the answer, but it’s safe to say, they’re coming.

Welcome to the team, Sully. We knew you when.

To contact the reporter on this story: C. Thompson in Wilmington at cthompson1@bloomberg.net

To contact the editor responsible for this story: Marty Schenker at mschenker@bloomberg.net

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