The Worst IPO of 2014 & 4 More Stories You Can't Miss Today

ONE-HIT WONDER? – The year is still young so no one's saying it can't be topped, but so far King Digital Entertainment has the worst IPO debut of 2014. The maker of the mobile game Candy Crush Saga went public yesterday and its stock promptly fell more than 15 percent from its IPO price of $22.50. It was always a tough sell – King, while highly profitable ($569 million last year) and with an impressive growth rate, is also too dependent on its star game, which pop culture relevancy is already starting to wane. "The case for caution is worry that King turns out to be a one-trick pony," writes the Economist's Schumpeter blog. "In the fourth quarter of 2013, Candy Crush Saga brought in 78% of its gross bookings, a measure roughly equivalent to revenue. Worse, bookings from Candy Crush Saga have started to fall, pulling down total revenue."

Investors are also scarred by the story of Zynga, which casual social games could not be avoided on Facebook in 2012. After going public at the height of its glory, the company had a couple strong months on the market then nosedived. Its stock is now worth less than a third of what it was then. King has recognized the problem and is diversifying its offering, even buying TV ads for another IP, Farm Heroes Saga, which sounds eerily like Farmville, that game that made – and unmade – Zynga. King is, however, arguably better than Zynga at adapting to mobile and less dependent on the Facebook platform. (Business 101, Lo?c Le Meur once wrote here: don't build in someone else's yard.)

A silver lining? The anticipated IPO put a spotlight on the mobile gaming industry, writes Influencer Kevin Chou, CEO of Kabam. "Everyone’s understanding of the model is critical, and we all need to be good narrators when telling the story," he wrote in his "State of Video Games" post Monday. "Regardless of King’s IPO outcome, the waiting game has been a winning time for all its players."

––––––––––

RIPPING RIFT – The Kickstarter community is angry over Facebook's purchase of Oculus VR. Oculus is the first billion-dollar company to come out of the crowdfunding site, after it raised more than $2 million in 2012 and sold this week for $2 Billion, and that could be cause for celebration. But Facebook's image is no longer that of the cool startup built by a college dropout – it is Corporate America (capital C, capital A). And Oculus is now joining them there, "going from cool to uncool in a minute", as one Reddit contributor put it. Seeing the little guy bought up by a Silicon Valley giant that might use it for advertising and other monetization schemes runs against the ethos of many Kickstarter contributors. From one backer, "rogeraususa":

I am saddened that the independent dream that was Oculus is now selling out to Facebook. Honestly, I feel that every single donor should get a "kickback/refund" from that $2 Billion (they'd still have plenty left over!) to put towards a kickstarter project that isn't a masquerading golddigger. The whole idea of Kickstarter is to support people in making the world a better place through original ideas and technology, not selling out to corporate America.

The whole thread is worth reading. Kickstarter too is being accused, though they couldn't control what happens in a company in which they have no equity. They take their commission and move on. At least, this is an opportunity to remind everyone that the "sharing economy" – a vast umbrella under which all companies seem to want to reside lately – is not all puppies and daisies. Oculus is first a business and it made a business decision. An opportunity too to revive the debate on equity crowdfunding –

––––––––––

FAILING GRADE – For the second time in three years, Citi failed the federal stress tests – the only one of the 5 major US banks to fail to convince the Fed. Central bankers said they had concerns over the “overall reliability of Citigroup’s capital planning process.” They're asking the bank to submit a new plan before they can increase dividends or buy back stocks. That means, in short, the Fed isn't quite sure Citigroup would hold up in case of a financial shock. “The Fed is saying that the bank’s financial processes are not where they should be, and this is five years after the crisis,” said Mike Mayo, the CLSA banking analyst, to the New York Times. “It is not as though they haven’t had time to clean up their act.” Though the bank is sitting on comfortable capital reserves, its international operations, particularly in Mexico, are raising eyebrows.

––––––––––

MERGER FEVER – Not to be outdone by Comcast and Time Warner Cable, America's two major satellite TV providers – Dish and DirecTV – are considering a merger, too. According to Bloomberg, Dish Chairman Charlie Ergen approached DirecTV CEO Mike White about a deal, but White is unconvinced because he doesn't think federal regulators will let it happen. The two companies are directly competing in several markets and an attempt to merge was already rejected in 2002. “Given the rapidly changing industry dynamics, everyone should be talking to everyone, and if you’re not you might be left behind,” said Walt Piecyk, an analyst with BTIG LLC, to Bloomberg. “I highly doubt that DirecTV is the only company that Ergen has spoken with.”

––––––––––

AT LAST – Big day for Microsoft, which is launching – finally – Microsoft Office for iPad. Business Insider calls it the company's most important product release in years and it may not be hyperbole. Office is a cash cow for Microsoft, while revenue from Windows have flattened (mobile, anyone?). The problem for the Redmont giant is that Office is a software suite for people using desktops and laptops, and those devices are on the way out. So it was high time to bring it to the mobile world. Or is it past time? Sure, there'll always be a need for word processing in business, but think – how much of it are you already doing in the cloud, on Google docs or whatever platform you'll be publishing on? (All my drafts and research notes are saved here on LinkedIn, and I can count on one hand the number of local files I use. You?) For many Mac users, the iPad served to introduce them to Apple's own Office-like suite, iwork. Or Quip, or Evernote... The tech world's usage of technology may not be that of the whole world, but it usually indicates where the world is going. So today's release might be, as the New York Times puts it, the world's most lucrative software suite coming to these past few years' most lucrative device, but it may be coming to it too late.

Photo: albert_hsieh / Flickr

Are you a die-hard Microsoft Office user? An Oculus backer? A King investor? If you have insider knowledge of these or other topics in the news today, write your own post explaining what's happening. Share the URL here in the comments mentioning me or tweet @LinkedInPulse. (Want to write, but don't yet have access? Leave your info here.)