The Wall Street Journal - 13.03.2020

B4| Friday, March 13, 2020 ***** THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

GameStopCorp. is facing a

renewed threat from a group

of shareholders upset with the

videogame retailer’s perfor-

mance.

A group including Hestia

Capital Partners LP and Permit

Capital Enterprise Fund LP

sent a letter to the Grapevine,

Texas, company’s board, urg-

ing it to appoint a stockholder

representative as a director.

The investors collectively

own about 7.5% of GameStop’s

shares, up from roughly 1.3%

at this point last year. At that

time, the group called for the

company to refresh its board

and boost stock buybacks, and

threatened a proxy fight if

they were rebuffed.

GameStop, which had just

ended an effort to sell itself,

went on to buy back stock—

well above the current level—

and name a new chief execu-

tive, and Hestia and Permit

entered a cooperation agree-

ment with the company in

April. As part of the agree-

ment, the company said it

would appoint an independent

director from among candi-

dates nominated by the inves-

tor group. In return, the group

agreed to refrain from publicly

expressing concerns until

Thursday.

In that period, the shares

have lost more than half of

their value as sales and reve-

nue have fallen. GameStop

shareholders have lost 85% of

their investment in the past

five years, the group wrote.

“If we cannot convince the

board that adding a represen-

tative of a large stockholder is

valuable, we are prepared to

nominate candidates for elec-

tion to the board at this year’s

annual meeting,” said the let-

ter, which the funds released

publicly Thursday morning.

The company had no imme-

diate comment.

BYCORRIEDRIEBUSCH

Investors

Push for

GameStop

Board Seat

U.S., where the soaring popu-

larity of TikTok has attracted

the attention of some Ameri-

can lawmakers concerned that

its Chinese roots could lead to

it censoring content to ap-

pease Beijing. The company

has been contemplating ways

to distance itself from its im-

age as a Chinese company for

months, according to people

familiar with the matter.

Appointing executives to

run Bytedance’s business in

China will insulate Zhang Yim-

ing from any perceived influ-

ence from Beijing, said a per-

son familiar with the matter.

That could help shield Byte-

dance from mounting scrutiny

by U.S. lawmakers.

“Chinese authorities will

not reach him for some sensi-

tive issues in the future,” the

person said. “Since Yiming’s

not running Chinese business.”

In a note to employees,

Zhang Yiming said he plans to

visit all the regions where

Bytedance operates over the

next three years. By the end of

2020, he said, Bytedance will

increase its workforce to

100,000 employees around the

world from more than 60,000

currently.

“As we grow, we face many

challenges,” he wrote in the

note. “In response to business

challenges, we have been con-

stantly optimizing and adjust-

ing the company’s organiza-

tional methods.”

In China, Zhang Nan, who

goes by Kelly, will oversee op-

erations and management of

products including Douyin and

the popular news-aggregating

app Toutiao, the company

said. Zhang Lidong will be in

charge of nonproduct opera-

tions, including strategy, part-

nerships and public relations.

Bytedance’s 2017 acquisi-

tion of the startup Musical.ly,

a move key to TikTok’s success

in the U.S. because of Musi-

cal.ly’s user base there, is un-

der review by the Committee

on Foreign Investment in the

U.S. for potential national-se-

curity risks.

In an effort to distance it-

self from its image as a Chi-

nese firm, the company has

considered setting up a global

headquarters outside China,

according to people familiar

with the matter. Singapore,

London and Dublin were on

the shortlist, one person said.

Earlier this week, TikTok

said it is opening a new facil-

ity in Los Angeles in May. The

new facility, called the “trans-

parency center,” would allow

outside observers to view how

teams at the company moder-

ate content, it said.

BEIJING—Bytedance Inc.,
the Chinese owner of the pop-
ular short-video app TikTok, is
appointing two executives to
oversee its business in China,
freeing founder and Chief Ex-
ecutive Zhang Yiming to focus
on issues in the U.S. and other
overseas markets where the
company is betting on growth.
Zhang Yiming will continue
to serve as global chief execu-
tive of Bytedance, focused on
building up the company’s
management team around the
world and long-term strate-
gies, the company said in a
statement Thursday.
Meanwhile, Zhang Nan,
chief executive of Douyin—
China’s domestic version of
TikTok—is stepping into the
newly created role of chief ex-
ecutive of the company’s China
operations. Zhang Lidong, se-
nior vice president, will take
over as chairman. The three
Zhangs aren’t related.
The move comes as Byte-
dance faces challenges in the

BYSHANLI
ANDYOKOKUBOTA

TikTok Owner Taps China Team

Bytedance names two

to lead domestic

operations as CEO

steers world strategy

The company faces U.S. concerns over possibleChinese state influence. Bytedance’s offices in Beijing.

GIULIA MARCHI FOR THE WALL STREET JOURNAL

that with clear visibility of

where business stood, it ex-

pected revenue to come in at

about $5.7 billion. That, how-

ever, fell short of analysts’ pro-

jected $5.94 billion, according

to FactSet.

Broadcom shares closed

down 11% for the day at

$218.78, and fell 9% to $200 in

after-hours trading.

AppleInc., Broadcom’s larg-

est customer, accounting for

roughly 20% of its revenue last

year, last month warned that it

would likely fall short of quar-

terly revenue projections due

to the coronavirus outbreak.

Wireless products were

down sharply from the year

earlier, Chief Executive Hock

Tan said in an earnings call.

The company had fueled

speculation of a possible sale

of the wireless business after

saying in December that it con-

sidered wireless as one of sev-

eral noncore businesses. On

Thursday, Broadcom said it

had decided to keep the opera-

tions.

Mr. Tan pointed to the sup-

ply agreements to provide

wireless components for Apple

products through 2023. Broad-

com estimated the contracts, in

addition to an agreement last

year to supply Apple with ra-

dio-frequency units, would

generate about $15 billion in

revenue.

On Thursday, Broadcom re-

ported a 19% drop in first-

quarter profit, before dividends

on preferred stock, to $385

million, or 74 cents a share. On

an adjusted basis, which ex-

cludes costs tied to acquisi-

tions and other items, profit

fell to $5.25 a share from $5.55

a share a year earlier.

Meanwhile, revenue from

continuing operations rose to

$5.86 billion from $5.79 billion

a year earlier.

Analysts surveyed by Fact-

Set expected a profit of $1.42 a

share, or $5.33 a share on an

adjusted basis, and roughly $6

billion in revenue.

Broadcom’s semiconductor

business, which accounts for

the bulk of revenue and has

weighed on results in recent

quarters, fell 4% from the year

earlier but was partially offset

by a 19% revenue growth in the

infrastructure software seg-

ment.

On Thursday, Mr. Tan said

in his call with analysts that

the semiconductor business

has been improving and that

he had not seen any material

impact in the most recent

quarter from the pandemic.

Chip makerBroadcomInc.
on Thursday pulled its finan-
cial projections for the year,
citing uncertainty around the
coronavirus pandemic, and
said it would push debt pay-
ments to the second half of the
year or earlier if conditions im-
prove.
The company had projected
about $25 billion in revenue
for the year that ends Nov. 1
and pledged to pay down about
$4 billion in debt.
Instead, Broadcom offered a
revenue forecast for the quar-
ter that ends in April, saying

BYMARIAARMENTAL

Broadcom Pulls Yearly Guidance Over Outbreak