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Core Insights - Saudi Arabia's Public Investment Fund (PIF) has liquidated nearly 12 stocks listed in the U.S. during Q3, including Pinterest and Linde, reducing its U.S. equity holdings to the lowest level in a year [1] - The fund's U.S. stock portfolio value has decreased to $19.4 billion, representing an approximate 18% quarter-over-quarter decline, marking the lowest level since 2025 [1][2] - PIF continues to hold shares in Uber and Electronic Arts but has slightly reduced its stake in Lucid Group [1][3] Exits and Position Changes - Significant exits include: - Cummins: -1,095,578 shares, value change of -$358.80 million, with a price change of +29% [2] - Linde: -436,350 shares, value change of -$204.73 million, with a price change of +1.2% [2] - Air Products: -268,165 shares, value change of -$75.64 million, with a price change of -3.3% [2] - Avery Dennison: -231,662 shares, value change of -$40.65 million, with a price change of -7.6% [2] Top Holdings - PIF's major holdings in the U.S. include: - Uber: 72,840,541 shares valued at $7.14 billion, accounting for 3.5% of the portfolio [3] - Electronic Arts: 24,807,932 shares valued at $5.00 billion, accounting for 9.9% of the portfolio [3] - Lucid Group: 177,088,867 shares valued at $4.21 billion, accounting for 22% of the portfolio [3] - Take-Two Interactive: 11,414,680 shares valued at $2.95 billion, accounting for 6.2% of the portfolio [3] Strategic Focus - The recent divestments align with PIF's strategy to focus on domestic investments to support Saudi Arabia's economic diversification plan [2][4] - PIF aims to invest $70 billion post-2025, primarily within Saudi Arabia, with $57 billion already allocated for 2024 [5] - Further details on PIF's investment strategy for 2026-2030 are expected to be released early next year [5]

Summary of Key Points Core Viewpoint The Public Investment Fund (PIF) has significantly reduced its holdings in US equities, indicating a strategic shift in investment focus. Group 1: PIF Holdings Overview - PIF's US equity holdings decreased to $19.4 billion in Q3 2025 from $23.8 billion in Q2 2025, marking a reduction of $4.4 billion [2] - The fund exited nine companies and all options contracts of 42 companies, while maintaining its investments in six firms [2] Group 2: Specific Company Holdings - Lucid Group's holdings remained at 177.1 million shares, with a value increase from $3.736 billion to $4.213 billion, a change of $476.3 million [4] - Electronic Arts maintained its holdings at 24.8 million shares, with a value increase from $3.962 billion to $5.004 billion, a change of $1.042 billion [4] - Uber's holdings remained at 72.8 million shares, with a value increase from $6.796 billion to $7.136 billion, a change of $340.2 million [4] - Take-Two Interactive's holdings remained at 11.4 million shares, with a value increase from $2.772 billion to $2.949 billion, a change of $177 million [4] - Clarivate's holdings remained at 1.3 million shares, with a value increase from $57.8 million to $68 million, a change of $10.2 million [6] Group 3: Notable Changes in Holdings - PIF exited its positions in several companies, including Air Products & Chemicals, Cummins Inc., Visa Inc., and Walmart, among others, indicating a strategic divestment [4][6] - Lucid Group executed a 1-for-10 reverse stock split in September 2025, reducing its authorized share capital from 15 billion shares to 1.5 billion shares [3][4]

Market Overview - The stock market was mixed, with the Nasdaq under pressure due to weakness in megacap tech stocks following CoreWeave's disappointing quarterly earnings report, leading to a decline of over 15% in its stock [1] - The S&P 500 and Dow advanced as investors rotated out of tech and into sectors like health care, energy, and consumer staples [1] Company Updates Boeing - Boeing delivered 53 jets in October, bringing its total for 2025 to 493, with 39 deliveries being 737 MAX jets [1] - The FAA approved Boeing to increase 737 production to 42 jets per month from 38, indicating a gradual increase in deliveries [1] - Boeing recorded a non-cash charge of $4.9 billion in Q3 due to delays in the certification process for its 777-9 program, pushing the first delivery to 2027 [1] Goldman Sachs - Goldman Sachs is set to earn its largest fee ever for a mergers and acquisitions deal, amounting to $110 million for advising on the $55 billion take-private transaction of Electronic Arts [1] - This fee is significant for Goldman's investment banking division, which has seen a rebound in M&A activity and IPOs after years of dormancy [1] Dover - Dover's shares rose 2.5% after announcing a $500 million accelerated share repurchase (ASR) program, expected to complete by November 12 [1] - The ASR follows a better-than-expected Q3 earnings report and positive outlook for next year, with CEO Richard Tobin indicating no revenue declines forecasted for the portfolio [1] DuPont - DuPont announced a $500 million ASR as part of a $2 billion share repurchase program, with shares hitting a new high and rallying nearly 20% since splitting from Qnity Electronics [1]

Core Insights - Saudi Arabia has significantly invested in the gaming industry, with over $70 billion spent in the past five years, indicating a strong commitment to becoming a major player in the global gaming market [3][5][12] - The acquisition of Electronic Arts (EA) by a Saudi investment consortium marks a pivotal moment in the country's gaming ambitions, as it seeks to expand its influence and cultural output through gaming [1][14] - The Saudi Public Investment Fund (PIF) has established a dedicated gaming subsidiary, Savvy Games Group (SGG), with an initial capital reserve of approximately $38 billion, focusing on global gaming investments and acquisitions [9][12] Investment and Acquisition Strategy - In 2020, Saudi Arabia began its aggressive investment strategy in gaming, highlighted by the acquisition of a 51% stake in SNK, a prominent game developer [8][9] - SGG has made substantial investments in various gaming companies, including a $30 billion acquisition of a 5.01% stake in Nintendo, positioning itself as a significant player in the gaming industry [9][10] - The recent acquisition of EA, along with investments in companies like Scopely and partnerships with major gaming firms, showcases Saudi Arabia's ambition to dominate the gaming landscape [14][26] Cultural and Economic Impact - The Gamers8 esports event in Riyadh, with a prize pool of $45 million, reflects Saudi Arabia's growing influence in the esports sector, surpassing traditional gaming events like the League of Legends World Championship [12][14] - The gaming market in Saudi Arabia is projected to generate approximately $1.19 billion in revenue in 2024, with expectations to grow to $1.64 billion by 2028, indicating a robust growth trajectory [18][19] - The region's gaming players exhibit high spending potential, with an average payment capability of $46, aligning with the global trend of increasing gaming consumption [18][30] Future Prospects and Challenges - Saudi Arabia aims to attract global gaming talent and companies, offering incentives for developers to establish operations in the country, which could enhance its gaming ecosystem [21][22] - Despite significant financial investments, the challenge remains for Saudi Arabia to cultivate original game development and creativity, as it currently lacks influential homegrown titles [25][30] - The ongoing global trend of layoffs in the gaming industry presents an opportunity for Saudi Arabia to recruit talent and enhance its gaming capabilities [19][31]

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Financial Performance - Total net revenue for the fiscal quarter ended September 30, 2025, was $1,839 million, down 9% year-over-year[126] - Live services and other net revenue was $1,221 million, down 7% year-over-year[126] - Net revenue attributable to digital full game downloads was $1,478 million, an increase of 10% from $1,343 million in 2024[123] - Net revenue for the three months ended September 30, 2025 was $1,839 million, a decrease of $186 million or 9% compared to the same period in 2024[157] - Full game net revenue for the three months ended September 30, 2025 was $618 million, down $98 million or 14% year-over-year, primarily due to a decline in EA SPORTS College Football[160] - Live services and other net revenue for the three months ended September 30, 2025 was $1,221 million, a decrease of $88 million or 7% compared to the same period in 2024, driven by lower sales of extra content for Apex Legends[162] - For the six months ended September 30, 2025, net revenue was $3,510 million, a decrease of $175 million or 5% compared to the same period in 2024[163] - The composition of net revenue for the six months ended September 30, 2025 included $907 million from full game sales and $2,603 million from live services and other[164] - Full game net revenue for the six months ended September 30, 2025, was $907 million, a decrease of $59 million, or 6 percent, compared to the same period in 2024[165] - Live services and other net revenue for the six months ended September 30, 2025, was $2,603 million, down $116 million, or 4 percent, year-over-year[166] Net Bookings - Net bookings for the three months ended September 30, 2025, were $1,818 million, a decrease of 13% compared to $2,079 million in 2024[129] - Live services and other net bookings were $1,118 million, down 10% year-over-year[129] Operating Income and Expenses - Operating income was $200 million, down 48% year-over-year[126] - Gross margin was 75.9%, down 2 percentage points year-over-year[126] - Research and development expenses for the six months ended September 30, 2025, increased by $115 million, or 9 percent, compared to the same period in 2024[174] - Marketing and sales expenses for the three months ended September 30, 2025, increased by $32 million, or 12 percent, year-over-year[176] - General and administrative expenses for the three months ended September 30, 2025, decreased by $8 million, or 4 percent, compared to the same period in 2024[179] Cash Flow and Stockholder Returns - The company returned $423 million to stockholders through capital return programs, including repurchasing 2.3 million shares for approximately $375 million[126] - During the six months ended September 30, 2025, the company returned $846 million to stockholders, including $750 million from repurchasing 5.3 million shares and $96 million from quarterly cash dividends[194] - Net cash provided by operating activities for the six months ended September 30, 2025, decreased by $207 million compared to the same period in 2024[186] - Cash and cash equivalents as of September 30, 2025, were $1,148 million, a decrease of $988 million from March 31, 2025[185] Debt and Financing - The company entered into a Merger Agreement on September 28, 2025, to be acquired by a Consortium[119] - The company entered into a $500 million unsecured revolving credit facility on March 22, 2023, with no amounts outstanding as of September 30, 2025[192] - The company believes its cash, cash equivalents, short-term investments, and available financing will be sufficient to meet material cash requirements for the next 12 months[193] Market Risks - The company is exposed to various market risks, including changes in foreign currency exchange rates and interest rates, which have experienced significant volatility[199] - A hypothetical adverse foreign currency exchange rate movement of 10% could result in potential declines of $249 million in the fair value of foreign currency forward contracts used in cash flow hedging[204] - As of September 30, 2025, a hypothetical 150 basis point increase in interest rates would have resulted in a $1 million, or 1%, decrease in the fair market value of the company's short-term investments[207] - The company employs foreign currency forward contracts to hedge anticipated exposures related to foreign currency-denominated sales and expenses, with maturities generally of 18 months or less[201] - The company believes that the risk of counterparty nonperformance in its foreign currency forward contracts is not material, although financial market disruptions could affect this[203] Revenue Recognition - The company recognizes revenue for service-related performance obligations for digitally-distributed games over an estimated eight-month period beginning in the month of sale[145] - The estimated change in the offering period for service-related performance obligations will move the recognition of approximately $78 million in net revenue from fiscal year 2026 into fiscal year 2027[146] - The company expects a decrease in net revenue of $8 million and net income of $6 million for the three and six months ended September 30, 2025 due to the change in the Estimated Offering Period[146] Other Financial Information - Packaged goods revenue for the three months ended September 30, 2025 was $217 million, down $24 million or 10% year-over-year[158] - Full game downloads for the three months ended September 30, 2025 were $401 million, a decrease of $74 million or 16% compared to the same period in 2024[158] - The company does not have any off-balance sheet arrangements as of September 30, 2025[198] - The company's short-term investments were classified as available-for-sale securities, recorded at fair value as of September 30, 2025[206] - As of September 30, 2025, approximately $737 million of the company's cash and cash equivalents were domiciled in foreign tax jurisdictions, all available for repatriation without a material tax cost[195]

Core Insights - Electronic Arts (EA) reported a significant decline in earnings and revenues for the second quarter of fiscal 2026, with earnings per share at $1.21, down 43.7% year over year, and revenues at $1.84 billion, a decrease of 9.2% year over year [1][8] Financial Performance - Net bookings for the fiscal second quarter totaled $1.82 billion, down 12.6% year over year, with full-game net bookings at $700 million, a decline of 15.9% year over year, and live services net bookings at $1.12 billion, down 10.3% year over year [2] - Full-game revenues, accounting for 33.6% of total revenues, decreased 13.7% year over year to $618 million, with full-game download revenues down 15.6% to $401 million and packaged goods revenues falling 10% to $217 million [3] - Live services and other revenues, making up 66.4% of total revenues, decreased 6.7% year over year to $1.22 billion [3] Revenue Breakdown - Revenues from consoles declined 11.8% year over year to $1.21 billion, while revenues from PC & Other decreased 3.3% to $352 million, and mobile platform revenues fell 4.2% to $275 million [4] Operating Metrics - GAAP gross profit decreased 11% year over year to $1.4 billion, with gross margin contracting by 200 basis points to 75.9% [5] - Operating expenses increased 0.9% year over year to $1.2 billion, rising as a percentage of revenues from 58.5% to 65% [5] - GAAP operating income decreased 47.9% year over year to $200 million, with the operating margin contracting from 19% to 10.9% [6] Balance Sheet and Cash Flow - As of September 30, 2025, EA had $1.26 billion in cash and short-term investments, down from $1.63 billion as of June 30, 2025 [7] - Net cash provided by operating activities was $130 million for the quarter and $1.87 billion for the trailing twelve months [7] - EA repurchased 2.3 million shares for $375 million during the quarter, totaling 17.5 million shares for $2.5 billion over the trailing twelve months [7] Dividend and Acquisition - The company declared a quarterly cash dividend of 19 cents per share, payable on December 23, 2025, to stockholders of record as of December 3, 2025 [8] - EA announced a definitive agreement for acquisition by an investor consortium in an all-cash transaction valued at approximately $55 billion, pending regulatory and shareholder approval [9]

Industry Personnel - EA 联合创始人 Bing Gordon 加入 Sui 基金会担任顾问 [1] Industry Focus - Bing Gordon 以《模拟人生》和《指环王》等经典作品而闻名 [1]

Group 1 - EA has been acquired by a consortium led by Saudi Arabia's Public Investment Fund and Silver Lake Partners for $55 billion, marking the largest all-cash privatization deal in history [1] - The privatization is expected to be completed by Q1 2027, but its effects on EA have already begun to manifest [1] Group 2 - EA has partnered with AI startup Stability AI to integrate generative AI technology into its game development process, aiming to enhance the speed and quality of game asset creation [3] - The collaboration will focus on developing AI models and tools, including a "smart brush" for generating 2D textures and 3D environments with accurate color and lighting [3] Group 3 - Some EA employees express skepticism about the effectiveness of AI tools, claiming that the implementation has made their work more cumbersome rather than efficient [6][8] - Reports indicate that EA's internally developed AI tool, ReefGPT, frequently outputs erroneous code, necessitating manual intervention [6] Group 4 - A humorous meme created by EA employees reflects their confusion and frustration regarding the company's AI strategy, highlighting a disconnect between management's push for AI and employees' understanding of its application [8] - The current landscape of AI in the workplace presents challenges, as employees must adapt to new tools while managing their existing workflows [10] Group 5 - A report from Bain Capital indicates that while over two-thirds of software companies have deployed generative AI tools, actual usage rates among developers remain low, with productivity gains reported at only 10% to 15% [12] - EA's management is aware of the limitations of AI tools but feels compelled to promote them due to financial pressures stemming from a $20 billion debt incurred during the privatization [13] Group 6 - EA's financial performance is declining, with a reported total revenue of $7.4 billion for FY2025, down 0.81% year-over-year, and a net profit of $1.121 billion, down 11.94% [15] - The company has provided a bleak revenue forecast of $7.1 billion for FY2026, indicating significant revenue pressure and a need to cut costs through AI implementation [15]