GDANSK (Reuters) -Poland’s Ten Square Games plans to cut its workforce by 25%, or about 120 people, by the end of April and suspend two major projects, it said on Monday, blaming a challenging economy and an unstable mobile games market.
The company said it will stop development of its ‘Undead Clash’ and ‘Fishing Masters’ projects and book a 14.3 million zloty write-down ($3.39 million) for the former and a 11.4 million zloty write-down for the latter.
At 1025 GMT Ten Square Games shares were down 4.8%, hitting the bottom of Poland’s wig40 index.
“We have decided to end work on two projects – Undead Clash and Fishing Masters – and to significantly reduce employment in areas outside the company’s main products,” CEO Maciej Zuzalek said in a statement.
“This will allow us to focus Ten Square Games’ resources and energy on the development of the main titles – Fishing Clash and Hunting Clash – in the coming months, and prepare for the further scaling of Wings of Heroes.”
The company will give a final figure for the write-downs in its first-half report, after calculating the amount of severance pay for layoffs. The games write-downs will be included in the company’s second-quarter results.
“The decision to take project write-downs and layoffs comes as a negative surprise to the market,” said Erste Group analyst Piotr Bogusz in report published on Monday.
“More than a month ago, TEN took a partial write-down of expenditures on Undead Clash and a write-down of the Magical District game, and less than 3 weeks ago, management did not indicate a risk that any of the remaining projects would be terminated.”
This may worsen investor sentiment towards the management board and the company, Bogusz said.
He added that the company’s focus on cost optimization and cash generation, with no option to increase bookings due to a potential successful new game launch, may lead to further derating of its valuation ratios.
($1 = 4.2200 zlotys)
(Reporting by Maria Gieldon; Editing by Louise Heavens, Susan Fenton and Jan Harvey)
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Source: The Print
