Square shares take a nosedive as confidence fades
Exclusive access to downgrade report behind stock plummet inside!
SquareSoft’s share price has taken a knock overnight, dropping by five percent. The mini-frenzy of stock offloading was triggered by Goldman Sachs removing Square from its recommended buy-in list.
Squares new rating reads, ‘market outperform’ which indicates that Goldman Sachs believes Square will struggle to meet its immediate cashflow and sales projections.
This news comes as Final Fantasy XI, the company’s first MMORPG, prepares to hit Japanese shelves on the sixteenth of this month.
Eri Sato, chief analyst at Goldman Sachs’ Tokyo office, and the man behind the downgrade, has exclusively shared with us the report that saw the overnight decline. It reads, “Fundamentals unchanged, but the shares have risen with a positive momentum; lowering our rating to MO from RL: The share price has risen 78% since the beginning of the year as the result of a successful restructuring effort. We are lowering our rating to Market Outperformer (MO) from Recommended List (RL) as the share price has reached our target price of Y2800 and a substantial rise beyond that is unlikely.”
It goes on: “Successful structural change has paved the way for recovery in core business: In FY2001, Square announced that it would write off losses related to the film business (the company posted an extraordinary loss of Y14.1 billion in the first half last term), removed Digicube from its consolidated accounts as part of a reorganisation of the business group, and made other changes aimed at paring away businesses peripheral to its main business. Square also shored up its sagging financial position by privately placing shares worth Y14.9 billion with Sony Computer Entertainment. The company began a restructuring of its online business which involved revamping business models for the PlayOnline (POL) operations and Final Fantasy XI. Under the leadership of Yoichi Wada, who became president last year, the company clearly is moving toward achieving last year's goal of 'getting back to the core business.' This fiscal year, Square aims to strengthen the package business, and the company is now ready to begin supplying software compatible with Nintendo hardware.”
Expect to see more as it breaks. We are looking forward to the next SquareSoft shareholder meeting with extra anticipation. Always a fiery affair, with a five percent loss in stock value to ponder, this one should make for very interesting viewing.
Squares new rating reads, ‘market outperform’ which indicates that Goldman Sachs believes Square will struggle to meet its immediate cashflow and sales projections.
This news comes as Final Fantasy XI, the company’s first MMORPG, prepares to hit Japanese shelves on the sixteenth of this month.
Eri Sato, chief analyst at Goldman Sachs’ Tokyo office, and the man behind the downgrade, has exclusively shared with us the report that saw the overnight decline. It reads, “Fundamentals unchanged, but the shares have risen with a positive momentum; lowering our rating to MO from RL: The share price has risen 78% since the beginning of the year as the result of a successful restructuring effort. We are lowering our rating to Market Outperformer (MO) from Recommended List (RL) as the share price has reached our target price of Y2800 and a substantial rise beyond that is unlikely.”
It goes on: “Successful structural change has paved the way for recovery in core business: In FY2001, Square announced that it would write off losses related to the film business (the company posted an extraordinary loss of Y14.1 billion in the first half last term), removed Digicube from its consolidated accounts as part of a reorganisation of the business group, and made other changes aimed at paring away businesses peripheral to its main business. Square also shored up its sagging financial position by privately placing shares worth Y14.9 billion with Sony Computer Entertainment. The company began a restructuring of its online business which involved revamping business models for the PlayOnline (POL) operations and Final Fantasy XI. Under the leadership of Yoichi Wada, who became president last year, the company clearly is moving toward achieving last year's goal of 'getting back to the core business.' This fiscal year, Square aims to strengthen the package business, and the company is now ready to begin supplying software compatible with Nintendo hardware.”
Expect to see more as it breaks. We are looking forward to the next SquareSoft shareholder meeting with extra anticipation. Always a fiery affair, with a five percent loss in stock value to ponder, this one should make for very interesting viewing.
Companies:
Square
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