Last week was a busy one for Glu Mobile.

Not only did it release its Q2 FY12 financials, it also announced it had doubled its headcount with the acquisition of two companies, Blammo Games and Griptonite Games. To cap it all off, news leaked it had let go a bunch of executives.

Inbetween these two events, I spoke to CEO Niccolo De Masi about how the company was performing.

Highlighting two significant elements of the financials, De Masi kicked off pointing out that for the first time, the majority of Glu's revenues now came from its smartphone business, while for the first time in some years, its sales were up quarter-on-quarter.

Yet it's not all good news.

Bite of the Apple

"The Tapjoy situation has impacted revenues so that's the negative, and our feature phone revenue declines every quarter so in Q3, we have to run really fast to make up the feature phone decline as well as the advertising decline," he explains, of the different trends.

"We're looking to in-app purchases and Android to make up the difference."

Focusing on Apple's decision to stop companies using incentivised downloads, a lucrative business for Glu, De Masi originally hoped other advertising models would replace the missing revenue. The transition hasn't taken place on a one-on-one basis however.

"I'm very bullish on advertising when there's inventory and when you're allowed to operate it," he says.

"Replacing incentivised advertising, we've had great success with video ads, but there's not always enough premium inventory. We need to be able to get the advertisers more educated. But in the long run, whether it's iAd or something else, I think there will be revenue there."

Welcome to the family

Equally strategic for the Glu's future will be the performance of its acquisitions. Blammo Games is a fairly straight forward deal, as it's a start up formed by the former head of Capcom Mobile's Canadian studio, Christopher Locke, who worked on the massively successful Smurfs' Village game.

"Glu hasn't crushed it in the casual space in the same way we have with action-adventure," De Masi says.

"Half of the top grossing games on the App Store are resource management, so we can only grow to a certain size without having some substantial properties in that category."

Making a move

As a traditional work-for-hire console-oriented studio with little mobile experience, Griptonite Games is a more complex sell.

"It's a people buy. It has around 200 staff, 10 or 11 teams," explains De Niccolo.

"The reason we think it's interesting is we have experience in transitioning our internal teams from feature phone development to freemium smartphone. We're very optimistic about our ability to make Griptonite a highly valuable part of our business over the next six to nine months."

Combined with Glu's existing teams in Russia, China, Brazil and its San Francisco HQ, the plan is the company will have the capacity to work on 20 games simultaneously; something De Masi hopes will make the company profitable quicker, albeit at the cost of increasing costs in the short term.

Glu has stated it expects the deals to increase its smartphone revenues 'at least 90 percent by the second half of 2012'.

"We're all about volume, quality and support," De Niccolo argues.

"Each team can either put out a new game or support an existing one. The ideal utopia for Glu is to have 20 teams supporting 20 successful games because that's the most profitable thing for us to do.

"Of course, you're never going to have that so the business will be a mixture of trying to launch new successes and supporting existing successes. This time next year, we'll be supporting more than the five franchises we're currently supporting."

So long partner

Although not made explicit (partly because the interview was prior to news of the layoffs), it seems one casualty of the acquisitions has been its gPartners program.

Launched in March, this is/was a thirdparty publishing initiative in which Glu worked with external developers to expand the number of games it could release.

Some legacy activity is likely to be ongoing, but with many of the key executives behind gPartners let go, it seems unlikely to be the priority it once was.

"Griptonite and Blammo were both part of our gPartners program, so if nothing else, it's an interesting avenue to be able to have strategic conversations," De Niccolo says.

He adds; "The way the model is going to end up working is with an established stable of developers, because you put so much time into training them that you have to make sure you have a relationship that will go more than one game. You'll probably see us go deeper with fewer partners."

It's a similar situation in terms of looking at other acquisition targets.

"We have 600 staff. That's about the same headcount when I joined Glu although what they do has changed. We have less porting and more server-side development now," De Niccolo says.

"We're happy with that. We're not on a roll up. Our focus now is to make what we have really valuable."