A major investor in Square Enix, 3D Investment Partners, has released a scathing report, sparking a potential shareholder revolt! In a 100-page presentation, they criticize the company's management and urge fellow shareholders to speak up.
The Investor's Concerns:
3D Investment Partners believe Square Enix's management is underperforming, especially under the new president, Takashi Kiryu. They highlight a concerning revenue growth rate of -4% from FY2022/3 to FY2025/3, making Square Enix the only company in its industry with negative growth. The operating profit margin is also significantly lower than its peers, at 13% compared to the industry average of 28%.
Financial Woes:
The investor's report paints a dire picture, showing a 32% drop in operating income, from ¥59,261 million to ¥40,580 million. The Return on Equity (ROE) has also taken a hit, dropping from 19% to 7%. Impairment losses over the past decade have been remarkably high, totaling ¥32,028 million, with a massive ¥22,087 million loss in FY2024/3.
Diversification Dilemma:
The investor argues that Square Enix's non-game businesses lack synergy with its core gaming operations, leading to a significant conglomerate discount. This issue, they believe, is a major factor in the company's market valuation struggles.
Doubts on Future Plans:
3D Investment Partners are skeptical about the effectiveness of Square Enix's medium-term business plan for FY2025/3 to FY2027/3 in addressing these issues. They've sought answers from the president since July 2024 but received only a brief email in response, dismissing their concerns.
Shareholder Action:
Unsatisfied with the president's response, 3D Investment Partners have taken their concerns directly to other shareholders, encouraging them to review the presentation and share their thoughts on various aspects of the company's strategy and operations.
Coincidence or Calculated?
Interestingly, this investor backlash comes soon after Square Enix's controversial decision to automate QA with AI, which led to layoffs. Former director Jacob Navok's comments about AI hate being driven by emotion rather than logic add another layer to this complex situation.
What do you think about this investor's critique? Is it a fair assessment of Square Enix's management issues, or are there other factors at play? Share your thoughts in the comments, and let's discuss the future of this gaming giant!
