Kakao Enterprise to Fortify Cloud-Based Business to Restructure Money-Losing Entity
Key Highlights :
Kakao Enterprise, the business-to-business (B2B) subsidiary of Kakao Corp., is taking steps to restructure its money-losing entity by fortifying cloud-based businesses. The company has been in the red since 2021, and losses are expected to continue for the foreseeable future. To lead the restructuring, former Kakao Enterprise CEO Baek Sang-yeop has resigned and 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 be reassigned to other subsidiaries within the IT titan. In a notice on the firm intranet server, Baek said that cloud-centered business models with great growth potential and high investment values will be the priority of the restructuring. He added that the restructuring will focus on and allocate more resources to cloud-based projects, while seeking and promoting exit, sales and the transfer of non-core projects with relatively low growth and investment value.
Incoming CEO Lee Kyung-jin has committed to a rapid turnaround of the once-thriving subsidiary, and has recommended to the company board that his monthly income for the next six months be no more than that of minimum wage workers. Lee has two decades of experience in related fields and oversees cloud developments, strategies, infrastructure building and digital transformation (DX).
Local brokerages have revised Kakao's price outlook, with the share price closing at 456,600 won on May 12. However, analysts do not expect a meaningful rebound in the stock prices before July, with a meaningful profit rebound not expected until the second half of the year. The recent fall in the stock prices reflects lingering global geopolitical and macroeconomics concerns.
Kakao Enterprise is taking the necessary steps to restructure its money-losing entity and fortify cloud-based businesses. Incoming CEO Lee Kyung-jin is committed to a rapid turnaround of the company and will be supported by the almost 1,000 employees who will be reassigned to other subsidiaries within the IT titan. While a meaningful rebound in profit is not expected until the second half of the year, Kakao Enterprise is taking the right steps to ensure a successful restructuring.
