The Korea Herald

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Is Kakao chief Lim too young to head messenger giant?

By 김영원

Published : Sept. 26, 2016 - 16:07

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[THE INVESTOR] Despite the high profile debut as CEO of the nation’s largest mobile messenger a year ago, Kakao chief Lim Ji-hoon has been far short of bringing a breath of fresh air to Kakao.

The firm’s operating profit in the April-July period, at 26.6 billion won ($24 million), was up 132.8 percent from the same period last year, but the improvement was largely due to the takeover of music streaming service firm Loen Entertainment earlier this year, which earned 17.8 billion won of operating profit.

When the Loen Entertainment’s contribution is deducted, Kakao’s operating profit drops to 8.8 billion won, down 24.6 percent from the second quarter of last year. 


Kako CEO Lim Ji-hoon Kako CEO Lim Ji-hoon


Market analysts remain skeptical over Kakao’s new growth engines as well, especially those in the offline-to-online businesses.

“Kakao’s operating costs for Kakao Driver, a chauffeur service, as well as other new mobile O2O services, such as Kakao Parking, and Kakao Home Clean are expected to increase due to the launch of those services,” said Lee Min-a, KTB Investment and Securities, in an investment report, adding the firm’s mobile advertising business will also likely suffer a sales drop due to seasonal factors in the third quarter.

Kakao’s mobile ad business in the second quarter saw its revenue decrease to 136.2 billion won, down 12.1 percent from last year while its local rival Naver’s revenue in the ad business improved 29.4 percent to 722.9 billion won during the same period.

Reflecting the grim outlook of its businesses down the road, Kakao’s shares, which stood at 123,400 won apiece on Sept. 23 last year when the 36-year old CEO took the helm, took a dive to 83,600 won on the same day this year.

Some market watchers even forecast that Kakao could take drastic decisions by replacing Lim who is considered too young to lead a business, if he keeps posting disappointing results in the coming months.

“Despite the high expectations on the young CEO in the beginning, many now seem to be skeptical, doubting his competence as a leader,” an industry source said.

By Kim Young-won (wone0102@heraldcorp.com)