Tencent’s Timi gaming studio generated $10 billion in 2020 – Sources

(Reuters) – Chinese tech giant Tencent’s Timi Studios, maker of popular video games Honor of Kings and Call of Duty Mobile, generated revenue of $10 billion last year, two people with direct knowledge of the matter told Reuters.

The $10 billion would make Timi the world’s largest developer, the sources say, which many industry watchers had suspected to be the case.

It also provides a hefty basis for its ambitions to move beyond mobile games and compete directly with global heavyweights developing expensive “AAA” titles on platforms such as desktop computers, Sony’s PlayStation, Nintendo’s Switch and Microsoft’s Xbox.

In a recruitment notice last month, a Timi engineer wrote that the company aims to create a new AAA game that resembles the virtual community from the movie Ready Player One, and will “compete head-to-head against big powers from Japan, Korea, Europe and U.S.”

Tencent is building studios overseas, including one for Timi and one for Lightspeed and Quantum, both in Los Angeles, with the goal of creating content with original intellectual property that has global appeal.

Tencent aims eventually to derive half its game revenue from overseas, from 23 percent in the fourth quarter of 2019, the most recently available figure.

Many major studios are turning to Tencent for support to convert their “hardcore” desktop or console games to mobile. Such games feature long sessions and in-depth storytelling or battles, with some including multiplayer online role-playing or online battle arenas.

Last week, Tencent reported 156.1 billion yuan ($23.79 billion) in overall online game revenues for 2020 but did not break down revenue for individual studios, which are run independently and compete with each other.

Timi’s proceeds accounted for 40% of the game revenue, said the two people.

Of Tencent’s remaining gaming revenue last year, its Lightspeed and Quantum studio, the developer of PUBG Mobile, another top-grossing game, contributed 29%, the people said, while 26% was proceeds from publishing for other developers. Aurora Studios Group, boosted by its Moonlight Blade Mobile title, contributed 3%, the people said.

The sources declined to be identified because the information is not public.

Tencent did not immediately reply to a Reuters request for comment.

Tencent, which has benefited from a surge in paying gamers, said last week its online games revenue rose 29% to 39.1 billion yuan in the fourth quarter.

($1 = 6.5619 Chinese yuan renminbi)

Greensill administrator unable to verify invoices underpinning loans to Gupta: FT

(Reuters) – Greensill Capital’s administrator has been unable to verify invoices underpinning loans to Liberty Steel owner Sanjeev Gupta, the Financial Times reported on Thursday.

Greensill’s administrator, Grant Thornton, has received denials from companies listed as debtors to the steel group stating that they had never done business with Gupta, the FT report added.

Insolvent finance firm Greensill collapsed last month, days after losing investor funding and insurance coverage for its supply chain financing business.

Liberty is part of the GFG Alliance, a conglomerate owned by the Gupta family and one of the biggest customers of Greensill Capital.

Grant Thornton and GFG Alliance declined to comment on the report. Reuters was not immediately able to reach Greensill Capital.

Grant Thornton, which is looking to regain the money owed to Greensill in its role as administrator to the collapsed firm, last month approached companies that were listed as debtors to Gupta’s Liberty Commodities trading firm, the FT report added.

Earlier on Thursday, Gupta cautioned creditors against pulling the plug on Liberty Steel, saying he had garnered huge interest from financiers willing to refinance billions of dollars in debt owed to failed lender Greensill Capital. He did not give details on any specific offers.

IT firm Atos shares slump 18% after accounting issues disclosed

PARIS (Reuters) – Shares in French IT consulting firm Atos fell sharply on Thursday after the company disclosed that auditors had found accounting errors at two of the firm’s U.S. units.

Atos shares were down 18% in early trading on the Paris bourse, then recovered some ground and were trading down 13.8 % at 0805 GMT. Citi downgraded its outlook on the stock to neutral, citing the accounting issues.

The entities affected were Atos IT Solutions and Services Inc., and Atos IT Outsourcing Services LLC, which between them represent about 11% of Atos’s consolidated turnover, Atos said in a statement.

Atos said that as part of a regular audit of its accounts, its accountants had identified problems with financial reporting “leading to several accounting errors”.

It said it hired external firms to investigate whether those errors had let to a material misstatement of financial performance, but said there was not enough time to complete this work before the regular audit was published.

“As of today, the Group has not identified misstatements on the two U.S. entities that are material for the consolidated financial statements,” the company statement said.

“Atos is committed to the highest standards and the Group is strongly enhancing its preventive controls and processes through a comprehensive action plan.”

The French firm said in January it had made an approach to buy U.S. rival DXC Technology in what it called a “friendly transaction”. In February, they decided to end the talks.

Atos shares have fallen since the deal talks were announced, with investors questioning the rationale for the acquisition, and have since languished near the bottom of France’s blue-chip CAC 40 share index.

JPMorgan analysts wrote in a research note on Wednesday that Atos “dinged investors’ view of its ambitions when it announced that it was looking at a friendly takeover of DXC. Now accounting issues could set the company back a bit further.”

Exclusive: MUFG Securities loses $270 million to U.S. related clients

TOKYO (Reuters) – The securities unit of Japan’s Mitsubishi UFJ Financial Group said on Wednesday its loss related to an unnamed U.S. client was estimated around $270 million, after it flagged potential losses of around $300 million a day before.

The loss will be reflected in the first quarter for the next financial year starting in April, Mitsubishi UFJ Securities Holdings Co Ltd said in a statement.

‘Next phase’ of criminal probe into Trump finances: Finding witnesses

Investigators in a criminal probe of former U.S. President Donald Trump’s real-estate business are combing through millions of pages of newly acquired records with an eye toward identifying witnesses who can bring the documents to life for a jury, say two people familiar with the probe.

Some of the case’s key figures are well-known. Trump’s former attorney and fixer, Michael Cohen, met on Friday with prosecutors in the Manhattan District Attorney’s office, his eighth such interview. And District Attorney Cyrus Vance Jr’s team is interested in getting testimony from the Trump Organization’s long time chief financial officer, Allen Weisselberg, according to the two people familiar with the investigation.

But a growing universe of people, institutions and agencies are being scrutinized by Vance’s prosecutors as potential witnesses in the case.

Prosecutors are looking to gather information and testimony from bankers, bookkeepers, real-estate consultants and others close to the Trump Organization who could provide insights on its dealings, according to interviews and court filings. The process of identifying all witnesses and targets could take months.

“The next phase is identifying targets” for subpoenas and testimony, said one person familiar with the case.

Vance has not accused Trump or his associates of wrongdoing but is examining, among other things, whether property values were manipulated to reduce Trump’s taxes or obtain other economic benefits. The case is being heard by a grand jury that will decide whether there is evidence to indict Trump or his associates.

Vance’s investigators need insiders who can provide the narrative behind any conflicting numbers on Trump’s financial records and testify to Trump’s knowledge and intent, said former prosecutors of white-collar fraud cases.

“Even in the most heavily document-dependent case, you need witnesses to tell the story,” said Reed Brodsky, a longtime white-collar defense lawyer and former federal prosecutor.

The Supreme Court forced Trump’s longtime accountants Mazars USA to comply with a subpoena on March 1. Since then, investigators have poured through Trump’s tax filings, business documents and internal correspondence, looking for discrepancies between information provided to creditors and data given to tax authorities, said two people familiar with the probe.

Forensic accounting specialists at FTI Consulting Inc, retained by Vance, are helping analyze the tax records, said a source with knowledge of the matter.

Vance’s investigation is one of two known criminal probes of the former president. Reuters has identified four other ongoing investigations involving Trump and at least 17 active lawsuits.

A lawyer for Trump declined to comment on the probes.

In Vance’s investigation, Mark Pomerantz, a former federal prosecutor hired last month as a special assistant, is leading the interviews with some witnesses. Pomerantz, 69, prosecuted Gambino crime family boss John Gotti’s son in the 1990s and is known for his expertise in white-collar crime.

ACCOUNTANTS, APPRAISERS

Several potential key figures in Vance’s investigation are current or former employees of outside companies – from financial and real estate consultants to legal advisors – with inside knowledge of Trump’s dealings, according to court filings and the two people familiar with the investigation.

Some performed crucial roles for many years, such as Mazars accountant Donald Bender. His signature is on the tax returns of the Donald J. Trump Foundation, which was dissolved in 2018 after a probe by the New York attorney general found that the organization misused charitable funds. Trump was ordered to pay more than $2 million in damages.

Bender has led the team managing Trump’s accounts at Mazars for more than a decade, court records show. He has worked for Mazars since 1981 and helps steer its real-estate practice. Mazars’ predecessor companies began working for Trump’s father, Fred, in the 1950s.

Bender was the only Mazars’ accountant singled out by name in Vance’s subpoena seeking records between 2011 and 2018, including “all communications” between Donald Bender and any representative of Trump’s businesses.

Illustrating Bender’s importance in Trump’s empire, Weisselberg testified in 2008 that, when Trump met with representatives from Forbes magazine to discuss his net worth, Weisselberg made sure Bender was there to help answer questions.

Bender and Mazars did not respond to requests for comment.

Real estate brokerage Cushman & Wakefield Plc, which worked for the Trump Organization for many years, could also figure prominently in Vance’s investigation, legal experts say. Chicago-based Cushman was subpoenaed in a separate New York state attorney general’s probe of Trump’s company, and Cushman staff have given sworn testimony.

Both probes have shown keen interest in the values that Trump attached to conservation easements – agreements to preserve open space on his properties in exchange for tax breaks, court records show.

Based on a Cushman appraisal, Trump claimed a $21.1 million value for an easement at his Seven Springs estate north of New York City, based on the lost profits from luxury homes he could have built. Cushman was also the appraiser on a $25 million easement at a Trump golf course in Los Angeles that has been scrutinized in the attorney general’s investigation.

Cushman did not respond to a request for comment.

Vance’s investigators have also requested records and spoken with officials from Trump’s two biggest creditors, Deutsche Bank AG and Ladder Capital Corp, Reuters has previously reported. Both firms declined to comment.

THE INSIDERS

Vance’s investigation will likely rely heavily on Trump’s closest associates – people who can address the key question of what Trump was thinking when he made the financial claims now under scrutiny. Only a core group of Trump’s confidantes can address that state-of-mind question, which is critical to proving criminal intent.

They include Weisselberg, 73, who began working for Trump’s father, Fred, in 1973. Legal experts and a source familiar with the investigation say prosecutors’ apparent goal is to convince Weisselberg to cooperate. Also under scrutiny are Weisselberg’s adult sons – one who has worked for the Trump Organization. The other son worked for Ladder Capital, though there’s no evidence he was involved in Ladder’s loans to Trump.

Vance has not said whether prosecutors are talking with Allen Weisselberg or his sons. None of the three Weisselbergs have been charged with wrongdoing. A lawyer for Allen Weisselberg declined to comment.

Jennifer Weisselberg – the former wife of Allen’s older son, Barry Weisselberg – told Reuters that she has spoken with Vance’s office five times since November. The day after the first interview, she said, DA investigators visited her to retrieve tax and financial records for her and her former husband.

She acknowledged that prosecutors have shown interest in an apartment in a Trump-owned building where she and her former husband lived rent-free for seven years – an arrangement that could have legal implications if it represented compensation not properly reported in tax filings.

Barry Weisselberg managed an ice-skating rink that Trump operates in Central Park. A lawyer representing him did not respond to a request for comment.

Jennifer Weisselberg said she believed her father-in-law would never testify against Trump voluntarily. She envisions Allen Weisselberg flipping only if he or his sons are facing prosecution. But no one, she said, knows more about Trump’s finances.

The most visible cooperator in the criminal investigation is Cohen, Trump’s personal lawyer for nearly a decade. He is serving a three-year sentence after pleading guilty in 2018 to crimes including tax evasion, orchestrating “hush money” payments to two women who said they’d had affairs with Trump, and lying to Congress about negotiations over a proposed Trump development in Moscow that never materialized. Cohen is in home confinement due to the coronavirus pandemic.

Trump has attacked Cohen’s credibility by highlighting how he lied under oath. Legal experts say Trump’s attorneys could make similar arguments if Cohen becomes a key witness. At his sentencing, Cohen took “full responsibility” for his actions but claimed he made the payments at Trump’s direction.

Cohen told Reuters he has evidence to overcome any questions about his credibility. “Unfortunately for Trump, I have backed up each and every question posed by the district attorney’s office,” Cohen said, by providing “documentary evidence.”

If prosecutors can corroborate Cohen’s testimony, his story could be “very powerful before a jury,” said Brodsky, a partner at Gibson, Dunn & Crutcher. “The government loves people who plead guilty to crimes, take the stand and say … ‘I participated in a crime with that person sitting right there at the defense table, Donald J. Trump.’”

Source: Reuters

Steeper and higher: U.S. bond tantrum averted, but worries remain

NEW YORK (Reuters) – Markets may be less fearful of a “taper tantrum” after the Federal Reserve’s latest meeting, but the prospect of higher yields and a steeper yield curve is likely to remain a major focus for investors.

This is especially true if the United States continues to outpace most of the world in its rebound from last year’s COVID-19 fueled economic decline.

GRAPHIC: Still depressed –

Reuters Graphic

Fed Chair Jerome Powell on Wednesday pledged to keep rates at record lows for years to come, despite expectations of a sharp acceleration in growth and inflation this year as the COVID-19 crisis ebbs.

The dovish comments sent yields on the benchmark 10-year Treasury note, which move inversely to bond prices, down from the 13-month high touched earlier in the session to close at 1.6462%.

For investors concerned that rising yields would continue disrupting some areas of the stock market by dimming the allure of sectors such as technology, the Fed’s comments came as a relief.

Despite the increase, yields remain low by historical standards after a four-decade bull market in bonds that was accelerated by the Fed’s response to the great financial crisis more than a decade ago.

The recent rise, which took the 10-year to a high of 1.69% from 0.50% in August, has also been less violent than some yield surges of the past. It took roughly seven months for 10-year Treasury yields to rise by about 120 basis points, compared with a rise of about 137 basis over a four-month period in 2013.

GRAPHIC: Steeper and steeper –

Reuters Graphic

STEEPER AND STEEPER

One factor that has grabbed investors’ attention in the recent move has been a faster rise in yields on longer-dated bonds compared with those on shorter-dated debt, as seen in the gap between yields on two- and 10-year Treasury notes.

Yields on longer-dated bonds tend to outpace shorter-term yields when the market expects an environment of stronger growth, higher inflation or interest-rate increases by the Federal Reserve.

Right now the spread is the widest it has been since 2015.

GRAPHIC: Taper tantrum –

Reuters Graphic

TANTRUM MINUS THE TAPER

Investors have also been worried about a possible repeat of the “taper tantrum” that markets experienced in 2013, when yields jumped on expectations of a tapering of stimulus. In 2013 this occurred after then-Fed Chair Ben Bernanke told lawmakers the Fed could reduce its pace of purchases of assets that had been propping markets.

Though Powell’s comments may have temporarily assuaged those concerns, they are likely to creep up again if burgeoning economic growth continues to fuel speculation of sooner-than-expected monetary tightening.

GRAPHIC: The biggest slice –

Reuters Graphic

Higher yields have slowed a blistering rally in technology and other growth stocks that have helped lead the S&P 500 on a 80% rally from last year’s lows.

Rising yields can be particularly harmful to tech stocks, which make up about 27% of the S&P 500 by market capitalization, as they threaten to erode the value of their longer term cash flows.

At the same time, the increase in yields have helped lift financials and some other undervalued stocks, accelerating a rotation from growth to value that has gripped markets this year.

Russell’s 1000 “growth” index is up 1% for the quarter-to-date, versus a gain of 11% for its value counterpart.

GRAPHIC: Playing catch-up –

Reuters Graphic

MORE BANG FOR THE BUCK

Higher yields could also boost the attractiveness of the U.S. dollar relative to other major currencies. The dollar index, which is down about 10% from late March last year, has seen a limited boost so far. Persistently higher yields along with a rise in “real” yields – adjusted for inflation – could provide a lift to the dollar, helping the dollar index pull away further from the near 3-year low touched in January.

Goldman holds top rank in activism defense, Spotlight takes No. 2 spot

Goldman Sachs ranked as the top financial adviser to companies targeted by activist investors in 2020, holding onto the top ranking for the second straight year, according to Refinitiv data published on Monday.

During 2020, Goldman advised on 49 campaigns, including Twitter, EBay and Harley Davidson , down modestly from 53 in 2019.

The top 10 advisers worked on 186 campaigns last year, when the pandemic curbed activism, compared with 197 in 2019.

Morgan Stanley, which held the No. 1 spot for several years, slipped to the No. 3 position, having worked on 26 campaigns in 2020 after 44 campaigns in 2019.

Spotlight Advisors, which works for both companies and activists, moved into the No. 2 spot with 31 campaigns.

Bank of America, Lazard and Evercore followed with 22, 17 and 14 engagements respectively.

Various providers compile league tables that are often used as data points to woo new clients. But they seldom tell the entire story, bankers say, noting that discrepancies can arise because many companies fend off activists privately and ask their advisers to stay silent about their involvement.

Elliott Management held onto its spot as the busiest activist, having launched 17 campaigns last year after 11 in 2019.

Olshan Frome Wolosky was the busiest law firm, working on 85 engagements for activists. Vinson & Elkins LLP, which handled 47 campaigns, including six for activists and 41 for companies, followed in the No. 2 spot. Sidley Austin LLP tied V&E with 41 company engagements and ranked in the No. 3 spot.

Innisfree and Okapi Partners were the top proxy solicitors.

Exclusive: Canada judge rejects Huawei CFO’s push – U.S. extradition case

A Canadian judge has rejected Huawei CFO Meng Wanzhou’s request to add additional affidavit evidence in her U.S. extradition case, according to a ruling released on Friday.

But the judge has provisionally allowed parts of an expert’s report that Meng’s team requested be permitted into evidence, subject to further submissions about its relevancy, the ruling showed.

Ant Group CEO Simon Hu resigns

(Reuters) – China’s Ant Group Chief Executive Officer Simon Hu has unexpectedly resigned amid a regulatory-driven overhaul of the financial technology giant’s business, the first top management exit since a scuppered $37 billion initial public offering.

Hu, who was named chief executive of the Alibaba Group Holding affiliate in 2019, will be replaced by company veteran and Executive Chairman Eric Jing, Ant said in a statement on Friday.

Hu’s exit from the company comes as Ant is working on plans to shift to a financial holding company structure following intense regulatory pressure to subject it to rules and capital requirements similar to those for banks.

That pressure abruptly scuttled Ant’s IPO last year, which would have been the world’s biggest.

Hu resigned for personal reasons, Ant said in a statement, without elaborating.

“Following the board’s thorough discussions, we have decided to respect Simon’s personal request and support him fully in his new mission,” Jing said in an internal memo, an excerpt of which was seen by Reuters.

Jing will continue in his current role as chairman, he said.

U.S.-listed shares in billionaire Jack Ma’s Alibaba dropped as much as 3.9% in the morning trade on Friday.

Hu’s departure is the first major management change since the IPO was scrapped. He was one of the key executives responsible for managing the company’s mega dual-listing in Hong Kong and Shanghai.

FINANCIAL PROBLEMS

Ma’s business empire has been at the centre of a crackdown following an Oct. 24 speech in which he blasted China’s regulatory system.

Regulators have since been tightening scrutiny of the country’s technology sector, with Alibaba taking much of the heat. The regulator launched an official anti-trust probe into Alibaba in December.

Ma, who is not known for shying away from the limelight, disappeared from the public eye for about three months, prompting frenzied speculation about his whereabouts. He re-emerged in January in a 50-second video appearance.

Ant’s financial holding structure is expected to weigh on its valuation, as the fintech firm was valued as a technology firm in its previous fundraising rounds. Typically, valuations are much higher on technology firms than on financial companies.

The change in management also comes days after some Ant staff expressed frustration on social media for not being able to sell the company shares they own after Chinese regulators abruptly halted the company’s market debut.

Jing told Ant employees that the company would review its staff incentive programmes and roll out some measures starting from April to help solve their financial problems, according to two people who saw the messages.

The listing in November of Ant, whose businesses include consumer lending and insurance products distribution, would have made some of the company’s employees millionaires or billionaires.

Although Ma has stepped down from corporate positions and earnings calls, he retains significant influence over Alibaba and Ant and promotes them globally at business and political events.

Hu joined Ant in 2005 and has worked in various roles in the group as well as at Alibaba, according to his LinkedIn profile.

Jing has been Ant’s executive chairman since 2018 and before that he held various positions at the company including president and chief operating officer, according to his profile on the World Bank website. He joined Alibaba in 2007.

Rolls-Royce plunges to worse than expected $5.6 billion loss

British engine-maker Rolls-Royce plunged to a worse than expected 4 billion pound ($5.58 billion) loss in 2020 as the pandemic stopped airlines flying, but stuck to its outlook for cash outflow to improve in 2021.

Rolls-Royce’s model of charging airlines for the number of hours its engines fly meant its income dried up last year when travel stopped. It was forced to raise 5 billion pounds from shareholders and in loans to buffer against the uncertainty.

Rolls-Royce posted group underlying pre-tax loss of 4 billion pounds for last year compared to the 3.1 billion pound loss forecast by analysts.

Its cash outflow, the measure most watched by analysts, of 4.2 billion pounds was in line with consensus, and Rolls guided that it would improve this year to an outflow of 2 billion pounds, with the figure turning positive during the second half.

That improvement depends on airlines flying 55% of 2019 levels during 2021. Rolls-Royce said its assumption is for travel to gradually improve this year, accelerating in the second-half as vaccine programmes progress.

Blaming tightening travel restrictions in the early part of this year, the company had already warned that its 2021 cash outflow would be worse than previously expected.

($1 = 0.7175 pounds)