Qihoo IPO: Let the Buyer Beware

I previously wrote about Internet security company Qihoo 360’s pending IPO (previous post) as one to be wary of, and now that call looks worth repeating as the company moves one step closer to giving investors a taste of what it has to offer. Now it seems that Qihoo, led by the controversial Zhou Hongwei, has filed to list on the New York Stock Exchange in an offering to raise $200 million (English article; Chinese article) On paper, at least, the company looks worthy of consideration. It turned profitable last year, and saw its revenue grow nearly 80 percent from 2009. But it’s anyone’s guess what’s behind the growth, especially if underhanded schemes like Qihoo’s hijacking of Tencent’s (HKEx: 700) popular QQ browser last year are among Zhou’s bag of tricks. Given his reputation as a lighting rod for lawsuits, I’d still say investors — especially ones averse to litigation — would be better served leaving their money out of this one.

Bottom line: A history of contentious litigation make Qihoo 360 an investor hot potato as it takes its first steps towards a $200 million New York IPO.