Bottom line: 21Vianet could get a new privatization offer from Tsinghua Unigroup by year end, following withdrawal of a previous bid; while Xiaomi chief Lei Jun may start selling non-core assets to raise money for his struggling company.
Buyout group scraps 21Vianet bid
Data center operator 21Vianet (Nasdaq: VNET) has finally done the inevitable and formally scrapped its de-listing plan, becoming the second company to do so among some 40 US-listed Chinese firms trying to privatize from New York. This particular move has been coming for a while now, and signs appeared as early as May that 21Vianet was abandoning its privatization plans. But new Chinese media reports are casting some light on why this particular bid collapsed, and it appears the reasons are linked to struggling smartphone maker Xiaomi, whose chief and co-founder Lei Jun was helping to finance the deal. Read Full Post…
Bottom line: Smartisan is likely to close or get sold by the end of this year, possibly to Meizu, while Xiaomi’s valuation is likely to fall by up to half when it returns to private investors for new funding with a year.
No near-term IPO for Xiaomi
A couple of fund-raising stories involving smartphone makers Smartisan and Xiaomi are in the headlines, reflecting in different ways the intense pressure each is feeling due to stiff competition that could soon claim a major victim. One headline has everyone buzzing over a recent share sale to raise cash by the founder of Smartisan, a highbrow niche brand set up by China’s most famous English teacher Luo Yonghao. The other has Xiaomi chief Lei Jun saying that his company may make an IPO in 2025, in what looks like a sarcastic response to a reporter’s question. Read Full Post…
Bottom line: Reports of big sales target reductions could point to a looming slowdown for Huawei, as it tries to move out of low-end smartphones and into an increasingly saturated higher end of the market.
Huawei set for slowdown?
After posting phenomenal growth over the last year to become the world’s third biggest smartphone brand, China’s Huawei may be seeing a slowdown that’s reportedly prompting it to sharply cut its sales targets for this year. If the reports are true, the downward revision would mark a sudden reversal for Huawei, which has been posting sales growth in the 50-60 percent range since the middle of last year when its recent surge began. Such a shift would hardly be unprecedented in the fast-changing smartphone world, though it would come as a slight surprise since the company’s phones have become quite popular here in China, approaching the status of global superstar Apple (Nasdaq: AAPL). Read Full Post…
Bottom line: A Beijing court’s finding that Apple’s iPhone 6 infringed on a small company’s designs looks flawed, and the judge should be commended for allowing sales to continue pending an appeal of the case.
Beijing court rules against Apple in product design case
Apple (Nasdaq: AAPL) is suffering what looks like yet another setback in China, with word that a Beijing court has found the iPhone maker guilty of stealing product designs from an obscure smartphone maker in south China. But a closer look at the reports shows that perhaps even the Beijing judge that made the ruling realizes how ridiculous the case is, and has allowed Apple to continue selling its iPhone 6 phones in China pending an appeal. Such an appeal is likely to take months or perhaps even a year, by which time iPhone 6 sales will probably be insignificant anyhow. Read Full Post…
Bottom line: Lenovo’s investment in the smart car business looks like a necessary step for an important new growth area, but its choice of LeEco as partner looks more dubious.
Lenovo invests in LeEco’s car business
I’ve been quite bearish on stumbling PC giant Lenovo (HKEx: 992) these days, but at least I have to commend the company for trying something new to jump-start its fading fortunes. That’s my initial assessment, on reading reports that Lenovo has invested in the smart car business of online video superstar LeEco (Shenzhen: 300104), formerly known as LeTV. But that said, even if the reports are true, Lenovo seems to be coming to the smart car story slightly late, and I also have serious doubts about the suitability of LeEco as its choice of partner. Read Full Post…
Bottom line: New remarks by TSMC Chairman Morris Chang could signal a revival of several stalled mainland investments in Taiwan’s microchip sector, with new focus on creating mechanisms to prevent IP theft.
TSMC remarks hint at revival of China-Taiwan chip deals
New reports are citing one of Taiwan’s most influential technology executives saying he welcomes investment from China, offering a tantalizing new path to the island for Chinese high-tech firms who so far have been rebuffed in such moves. The new signals are coming from the chairman of leading Taiwanese high-tech chip maker TSMC (Taipei: 2330), who is saying he could accept a Chinese investor as a strategic stakeholder as long as the company doesn’t require a place on his company’s board. Read Full Post…
Bottom line: A bidding war for iKang could see prices rise above the current highest offer of $25 per ADS, while a buyout bid for TCL Communication will be priced at a slight premium to the current stock price and meet with little resistance.
iKang attracts new buyout offer
The twisted privatization tale of private clinic operator iKang (Nasdaq: KANG) has just taken a new turn, with its receipt of another buyout offer from Yunfeng Capital, the private equity investor with ties to e-commerce giant Alibaba (NYSE: BABA). This development makes Yunfeng the third party to bid for iKang, which has easily become the most contested of some 40 US-listed Chinese companies trying to privatize from New York. Meantime, a far less contested buyout offer has just come in Hong Kong, where faded cellphone maker TCL Communications (HKEx: 2618) has just received a buyout offer from its China-listed parent. Read Full Post…
Bottom line: Micromax’s plan to sell smartphones in China is likely to sputter due to intense competition, while Huawei stands a 50-60 percent chance of becoming one of the world’s top 2 smartphone brands by 2020.
India’s Micromax eyes China smartphone market
It seems the smartphone road connecting China and India isn’t just one-way, with word that leading Indian brand Micromax is planning to enter the intensely cut-throat Chinese market. Meantime, Chinese leader Huawei is looking beyond its home market and to the rest of the globe, with its brash smartphone chief declaring his target of passing Apple(Nasdaq: AAPL) and Samsung (Seoul: 005930) to take the world’s smartphone crown within 5 years. Read Full Post…
Bottom line: Microsoft probably took a 10-20 percent stake in Xiaomi as part of the pair’s new alliance, and could use the Chinese company as its primary vehicle for participating in the mobile devices market.
Xiaomi lines up with Microsoft
The high-tech world is buzzing today with news of a major new tie-up between Microsoft (Nasdaq: MSFT) and struggling smartphone maker Xiaomi, in a pairing that has interesting implications on many levels. At the biggest level, this alliance looks strikingly similar to an earlier one that ultimately saw Microsoft purchase the core smartphone business of former global leader Nokia. At another level, the alliance could give Xiaomi a powerful ally to help revive its fading fortunes, including a partner that could help it to move into the lucrative but difficult US market. Read Full Post…
Bottom line: New sales of Alibaba and Lenovo shares by big stakeholders partly reflect disappointment in each stock’s performance by the seller, as both companies face issues that could stunt their medium-term growth.
Big stakeholders sell Alibaba, Lenovo shares
The folks at e-commerce giant Alibaba (NYSE: BABA) and PC leader Lenovo (HKEx: 992) are licking their wounds today, after each was dumped by a major major shareholder. In the first case longtime backer SoftBank has just sold off a big chunk of its Alibaba holdings, raising a hefty $7.9 billion in the process. The second deal has Internet giant Google (Nasdaq: GOOG) looking to sell about $200 million worth of Lenovo stock. Alibaba and SoftBank are trying to put a positive spin on their development, but the bottom line is that both Alibaba and Lenovo stock have become disappointments recently for all investors. Read Full Post…
Bottom line: Xiaomi’s Brazilian retrenchment will ultimately become a withdrawal from the country, and reflects a lack of preparation and understanding when it entered the market a year ago.
Brazil vexes Xiaomi
The bad news keeps coming for sputtering smartphone maker Xiaomi, which is retrenching its Brazilian operation less than a year after entering the market. I have to admit that reports on this latest setback reflect a recent media fascination with any sort of failure for Xiaomi, which was once a media darling with its hip-and-trendy smartphones and slick marketing campaigns. But that said, this particular setback does look a bit more serious than some of the other recent bad news, as it appears to mark a big disappointment in a market where Xiaomi had big hopes. Read Full Post…
