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China Mobile Games (CMGE) Continues Descent Amidst Firings

|Includes:China Mobile Games & Entertainment Group Ltd (CMGE)

At 9:30 AM This morning, the GeoTeam alerted its Premium members of a "call to action" short trade opportunity in China Mobile Games (NASDAQ:CMGE), stating:

"CMGE: News on China internet portals state that China Mobile Games' President was fired along with 9 mangers and 2 Vice presidents."

The stock was trading down 14% to around $16.25 at the time.

Later we elaborated on the situation, putting out a quick note on the situation knowing that the news would be quickly digested by the market. The stock is now trading down 25% to around $14.16.

Our note stated that China Mobile Games (CMGE) executives were fired, and shares were weak:

"...

China Mobile Games (CMGE) shares are weak in early trading this morning, down over 14% to around $16.25. We could not find a reason for the declining price in any U.S. press or internet portals. However, our China due diligence team identified articles in China stating that China Mobile Games' president was fired along with 9 managers and 2 vice presidents. Here is a translated transcript from a related article:

"CMGE issued an internal notice that CMGE removed Mr. Ying Shuling from the president position. Along with Mr. Ying Shuling, vice president Sun Jingzhi, Vice president Du Xinxing, Chenxing Game general manager Min Shuzhong, Zhuoxin Game general manager Wang Kun, distribution and supportive center director Du Juan, Oversea distribution Group vice general manager Yang Bin, platform supportive group R&D center assistant general manager Luo Xiao, procurement director are also removed from their positions. All these persons shall surrender their assignment and office suppliers within three days. These persons only can come back to work upon company's further notice."

At this time no specific reasons were provided in the related articles as to why these individuals were fired, but we have identified rumors:

1. Ying Shuling (President) was not "getting along " with CEO Xiao Jian and other senior executives;

2. Ying Shuling, (President) was "taking advantage of his authority to purchase products from a related company to make additional money."

We encourage the company to issue a press release to discuss this issue more thoroughly.

..."

Obviously, we will be monitoring this story as it plays out and have taken full advantage of the trade.

Disclosure: The author is short CMGE.

Stocks: CMGE