Gree Plans Acquisitions to Expand Beyond Social-Gaming Apps

Gree Inc. is planning acquisitions outside its social-gaming core as it heads for a fourth straight quarter of declining revenue.

“We’ve narrowed down targets,” said Jin Akiyama, a Gree director and former investment banker at Merrill Lynch & Co. in Tokyo. “We want to aggressively expand new businesses,” he said without giving details of potential deals.

Gree is seeking new sources of growth as rising use of smartphones, which offer free or inexpensive game apps, saps its sales of social games designed to run on feature phones. The company combined game development divisions in San Francisco and Tokyo last month to make new apps more quickly and cheaply and has aimed to cut its workforce about 9 percent through early retirement, said Akiyama.

The Japan-U.S. combination was aimed at “narrowing down potential best-hit apps for sale and strengthening new-product pipeline management,” Akiyama said. “We are excited about the release of new apps as early as February.”

Gree joins rival Tokyo-based gamemaker DeNA Co. in seeking acquisition opportunities outside gaming. DeNA Chief Executive Officer Isao Moriyasu last month said his firm seeks to expand its e-commerce and mobile entertainment businesses.

Gree gained 7.9 percent, the most since Aug. 15, to 932 yen at the close of trading in Tokyo. The shares pared this year’s decline to 30 percent. DeNa rose 3.8 percent, while the benchmark Nikkei 225 Stock Average was little changed.

DeNA, operator of the Mobage network, has dropped 33 percent this year in Tokyo trading as mobile subscribers shift to smartphones from an earlier generation of handsets that relied on the gamemaker’s platform to download titles.

Sales of Gree will probably drop 13 percent from a year earlier to 34.3 billion yen in the three months ending December, according to the average of six analyst estimates compiled by Bloomberg. The company posted a third straight quarter-on-quarter sales drop in the three months ended September.

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