Bottom line: Unigroup’s bid for Micron may be near death due to lack of interest from Micron and growing US political opposition, though Unigroup could revive its pursuit after next year’s presidential election.
Unigroup abandons Micron bid?
The blockbuster deal that had China’s Tsinghua Unigroup mulling a bid for leading US memory chip maker Micron (Nasdaq: MU) appears to be near death, with neither side commenting on the situation more than a month after news of the courtship first broke. It’s now been 4 weeks now since we’ve heard anything on the $23 billion deal from either Micron or Unigroup, the ambitious microchip maker connected to Tsinghua University, China’s leading sciences university.
But Micron’s share price hasn’t stayed quiet during that time, and has moved steadily downward to its current level of about $17.20. That represents a drop of 14 percent from a recent high of $19.90 in late July, when investors were still hoping that Unigroup would make a bid at $21 per share. While neither side has commented on the deal lately, one powerful US senator did come out last week and express his opposition. Read Full Post…
Bottom line: Qihoo could drop its privatization plan and launch a buyout offer for Coolpad, in a bid to protect its joint venture with Coolpad and stop a rival offer for the company from LeTV.
Bidding war shaping up for Coolpad?
A new media report is detailing an intriguing behind-the-scenes clash taking place between security software specialist Qihoo 360 (NYSE: QIHU) and online video company LeTV (Shenzhen: 300104), with big stakes involved for both sides. If the report is true, Qihoo is quickly finding itself in a difficult position that could end with collapses for its recent privatization bid or its joint venture partnership formed late last year with smartphone maker Coolpad (HKEx: 2369).
The clash is pitting 2 of China’s highest-profile Internet executives against each other, with Qihoo’s outspoken CEO Zhou Hongyi coming under a surprise attack from younger rival LeTV CEO Jia Yueting. In this case it appears Zhou may soon have to choose between going forward with his plans to privatize Qihoo, or abandon that plan and instead mount a counter-offensive to prevent LeTV from making a bid to take control of Coolpad. Read Full Post…
Bottom line: Lenovo should write-off its Motorola investment as a failure, and focus its smartphone efforts on building up its own brand rather than relying on more acquired foreign names.
Lenovo in need of Motorola write-off
PC giant Lenovo (HKEx: 992) repeated a frequent pattern last year when it purchased a former global leader, Motorola, with plans to resuscitate the struggling brand to boost its own smartphone business. It repeated yet another pattern last week when it said that early efforts to revive Motorola were failing, undermining its own profits and sparking one of the worst sell-offs for its shares in recent memory.
Having learned once more the difficulties of reviving broken western brands, Lenovo should now take the bold step of considering a complete write-off of its $2.9 billion Motorola purchase, or at least relegating the brand to niche status. The setback also shows more broadly why Lenovo and other globally-minded Chinese companies need to abandon the strategy of buying struggling global brands at bargain prices, and instead should focus on developing their own names. Read Full Post…
Bottom line: Lenovo’s attempt to make Motorola the flagship for its smartphone business looks set to fizzle, in a major setback for the company’s drive into mobile devices.
Moto sales on downward slide
I’ve predicted gloom and doom before for PC giant Lenovo (HKEx: 992), China’s first truly global high-tech brand, and each time the company has proven me wrong. But Lenovo’s latest quarterly financial report really does look like cause for concern once more, showing results that can only be described as terrible. Anchoring the misery was a huge sales plunge for its recently acquired Motorola brand, which was meant to become a cornerstone for Lenovo’s emerging smartphone business.
In some ways this particular cycle looks like deja vu, since Lenovo followed a similar pattern when it burst onto the global stage a decade ago with its landmark purchase of IBM’s (NYSE: IBM) PC business. That acquisition also later created major headaches for Lenovo, and resulted in a massive restructuring that ultimately laid the groundwork for the company to become the world’s leading PC brand. Read Full Post…
Bottom line: Lack of buzz around Xiaomi’s launch of production in India and Lenovo’s new line of ZUK smartphones reflect fatigue that is rapidly consuming domestic Chinese brands due to rampant competition in their home market.
More fatigue signs in China smartphone market
Signs of fatigue continue to grow in China’s overheated smartphone market, where rampant competition and unending price wars these last 2 years have led to saturation and a rapid slowdown. That fatigue is visible in 2 of the latest headlines, one of which has former superstar Xiaomi failing to garner much buzz as it launches production in India to jump-start its stalling growth. The other has the struggling Lenovo (HKEx; 992) launching its own new brand of smartphones, as it also faces lackluster performance for its current lineup sold under its own name and the Motorola brand it acquired last year.
China’s smartphone market is the world’s largest, but also the most competitive due to the presence of many homegrown domestic players. That reality has forced many mid-sized and smaller names to seek tie-ups with wealthier partners, and forced everyone to look abroad for growth as profits shriveled at home. Adding to the woes, China’s smartphone market has been contracting this year, with sales falling 4.3 percent in the first quarter after several years of explosive growth. Read Full Post…
China has developed a sudden appetite for global microchip makers, with the latest reports saying several Chinese suitors are pursuing a purchase of the telecoms chip business of US-based MarvellTechnology (Nasdaq: MRVL). This kind of consolidation is sorely needed in the global microchip sector, especially in the telecoms area, where many smaller companies are having trouble competing with global titans Qualcomm (Nasdaq: QCOM) and Taiwan-based MediaTek (Taipei: 2454).
An interesting twist to this story has seen Chinese state-backed firms emerge as some of the main consolidators in this trend, reflecting Beijing’s desire to build up a local chip-making sector. Despite years of trying and billions of dollars in investment, China has yet to find success in building a homegrown chip giant that can challenge big global names like Qualcomm, Intel (Nasdaq: INTC) and Taiwan’s TSMC (Taipei: 2330). Read Full Post…
Bottom line: The purchase of Micron by Tsinghua Unigroup offers a good chance for Sino-US confidence building if Washington signals it will fairly consider such a deal and Unigroup demonstrates its actions are commercially driven.
Micron sale offers chance to boost Sino-US trust
A potential mega-deal that would see China’s Tsinghua Unigroup buy leading US memory chip maker Micron Technology (Nasdaq: MU) could become a major trust-building exercise between China and Washington if handled properly, but could also quickly end in an angry war of words if the opposite occurs. Both sides need to take important steps to ensure fair trade in the case, which is sensitive because it involves the acquisition of a US high-tech leader by a company with close ties to China’s top science university.
For its part, Unigroup could take steps to show its independence from Tsinghua University, and more broadly to show that it is a commercially-focused business that doesn’t make decisions based on government orders or support. For its part, Washington could signal it is willing to consider a deal that appears to pose no threat to national security, even though it would see a major technology company taken over by a Chinese peer. Read Full Post…
Bottom line: Second-quarter smartphone data confirms recent trends that have shown a surge for Huawei and Apple, while Lenovo and Samsung struggle and Xiaomi also faces rapidly slowing growth.
Huawei consolidates spot as world’s No 3 smartphone maker
The latest smartphone sales figures are out, showing a recent surge for Huawei and strong but slowing growth for Xiaomi, as Chinese brands continued to take 3 of the top 5 global spots. Meantime, the same chart shows the lackluster Lenovo (HKEx: 992) continued to stumble as it failed to find an audience for its products, and global leader Samsung (Seoul: 005930) also continues to struggle.
The latest second-quarter figures from IDC come as another smaller data tracking firm IHS Technology released its own numbers showing Xiaomi continued to rule the China roost and even boosted its share of the market. Meantime, Samsung continued to slip in the world’s biggest smartphone market, falling a notch to barely stay in the top 5 brands. Read Full Post…
Bottom line: Huawei’s accelerating smartphone sales reflect its growing momentum in China, and could prompt it to consider spinning off the unit for a potential IPO in its drive to become more transparent.
Huawei News
Smartphones power Huawei resurgence
Growing momentum for its smartphone business has become the driving force behind a resurgent Huawei, which has just reported solid first-half revenue growth that is showing signs of accelerating after a recent slowdown. That’s good news for Huawei, but less promising for domestic rivals like Lenovo (HKEx: 992), Xiaomi and Coolpad (HKEx: 2369), which are struggling for direction in a crowded Chinese smartphone market where global giant Apple (Nasdaq: AAPL) has also shown signs of a recent resurgence.
Huawei hasn’t been too generous in providing financial data for the first half of the year, saying only that revenue jumped by 30 percent to 176 billion yuan ($28 billion). (company announcement; Chinese article) For anyone who tracks the global market, that figure is already more than double the $12.5 billion in first half sales reported by Ericsson (Stockholm: ERICb), Huawei’s leading rival in its traditional networking equipment core area. Read Full Post…
Bottom line: Apple could lose its crown as China’s best-selling smartphone brand by the end of the year, as it faces growing competition from domestic names looking for a bigger slice of the high-end market.
China loses crown as top iPhone market
Global smartphone pioneer Apple (Nasdaq: AAPL) has just released its latest quarterly results, which as usual contain very selective bits of information about the China market that are revealing but make it difficult to draw very strong conclusions. One emerging trend appears to have Apple coming under growing threat from Chinese brands eying the higher end of the market. That’s my quick conclusion based on Apple’s admission that China fell to second place among its global markets in its latest reporting quarter, after briefly grabbing the top spot from the US during the previous quarter.
Of course everything is relative, and Apple still looks quite strong in China with iPhone sales in its Greater China market up an impressive 87 percent in its latest reporting quarter. (English article) But that said, there’s really no reason that the US should have retaken the top spot from China during the quarter, since both countries now receive their new iPhones at roughly the same time. Read Full Post…
Bottom line: Qihoo’s new Dazen smartphones stand a low chance of success, even if they provide better quality to comparably priced rivals, due to their late entry to the overheated ultra low-end of China’s smartphone market.
Qihoo unveils Dazen smartphone
About a half year after announcing its intent to enter China’s crowded smartphone space, software security specialist Qihoo (NYSE: QIHU) has unveiled its new product under a brand name that sounds clever and catchy but is decidedly downscale. Qihoo has just announced that its new smartphones will carry the brand name of Dazen, and will sell for a bargain basement price of 899 yuan, or about $150.
The move appears to be an extension of Qihoo’s longtime strategy of selling products cheaply or even giving them away for free, and then using those products as a marketing tool for its other paid products and services. But in this case the strategy of going after the ultra low end looks a bit questionable, since that part of the market is already quite crowded and many brands are believed to be losing money. Read Full Post…
