Value context and insight. lkm@koreatimes.co.kr
Kakao restructures money-losing affiliate
Former Kakao Enterprise CEO Baek Sang-yeop / Courtesy of Kakao Enterprise
By Lee Kyung-min
By Lee Kyung-min
Kakao Enterprise, the business-to-business (B2B) subsidiary of Kakao Corp., said it will fortify cloud-based businesses, in a move to restructure the money-losing entity which is certain to extend years of losses that began in 2021. Its net loss came to 161.2 billion won ($119.9 million) in 2022, steeper than the 96.3 billion won registered a year earlier. The net figure for 2020 was a profit of 67.8 billion won.
Kakao Enterprises CEO Baek Sang-yeop has resigned, ending his three-year stint. He will be succeeded by the firm's cloud division head and vice president Lee Kyung-jin. Most of the almost 1,000 Kakao Enterprise employees will find new positions in the local IT titan's subsidiaries.
Baek put out a notice on the firm intranet server, May 12, saying that cloud-centered business models with great growth potential and high investment values will be the priority of the restructuring.
“We will seek and promote exit, sales and the transfer of non-core projects with relatively low growth and investment value,” he said. “In the process, the restructuring will focus on and allocate more resources to cloud-based projects.”
The incoming CEO Lee said that he will make a recommendation to the company board that his monthly income for the next six months be no more than that of minimum wage workers. It is part of a commitment to a rapid turnaround of the once-thriving subsidiary.
The appointment of Lee will be finalized at the board meeting and shareholder meetings.
The cloud expert had two decades of experience in related fields before joining the enterprise subsidiary. Lee oversees cloud developments, strategies, infrastructure building and digital transformation (DX).
AI chatbot image of Kakao Enterprise / Courtesy of Kakao Enterprise
The share price of Kakao, the parent firm of Kakao Enterprise, is not likely to rebound in the first half, according to local brokerages.
Mirae Asset Securities, Hanwha Investment & Securities, Kyobo Securities, Kiwoom Investment & Securities and Hana Securities revised Kakao's price outlook.
Hanwha's Kim So-hye said the much-awaited rebound will not come before July. “A meaningful rebound in profit will take shape in the second half of the year,” she said in a report.
“The recent fall in the stock prices reflects lingering global geopolitical and macroeconomics concerns and the share price rebound signal will not come before the profit rebound signal.”