Bottom line: Sohu’s plan to list its Sogou search unit has a 50-50 chance of happening this year, while AirMedia’s 2-year-old privatization plan is likely to close within that period.
Sohu talks IPO for Sogou — again
A couple of IPOs are in the headlines as we head into the new week, led by an often-discussed offering by perennial third-place search engine Sogou, which is co-owned by Internet titan Tencent (HKEx: 700) and second-rate portal Sohu (Nasdaq: SOHU). At the same time, another second-rate company, AirMedia (Nasdaq: AMCN), has slashed the proposed buyout price for its attempt to go private, reflecting the company’s own troubles.
Both of these stories have a bit of the “who cares?” element for long-term investors, since neither company is one that has particularly strong long-term prospects. But they do both reflect the larger realm of smaller Chinese Internet and media companies that are struggling for attention, as investors get mesmerized by giants like Tencent, Alibaba(NYSE: BABA) and JD.com(Nasdaq: JD). Read Full Post…
Bottom line: China’s apparent partial blockage of some Whatsapp functions for brief periods is unlikely to end with a total blockage, mostly because the service is used almost exclusively by foreigners.
Whatsapp temporarily blocked in China
Foreign media are buzzing about what appears to be the blockage of some functions on Whatsapp, with the obvious implication that a full blockage of the the popular instant messaging app could be next. This particular story has a few interesting angles, led by the fact that Whatsapp isn’t used by very many Chinese and also that it’s owned by social networking giant Facebook (Nasdaq: FB).
There are a also a number of precedents to go by, none of which looks too positive for the future of Whatsapp. Just about every other major global social networking app has been blocked in China by now, including Facebook itself, as well as Twitter (NYSE: TWTR) and Japan-listed Line (Tokyo: 3938). But there are a few notable exceptions that have been allowed to keep operating in China, one of which is Whatsapp and two others being the Microsoft (Nasdaq: MSFT) owned Skype and LinkedIn. Read Full Post…
Bottom line: A new scandal involving results that favor a major advertiser on Baidu’s mapping service could have a minor impact on the company’s stock during the next week, but is mostly an embarrassment.
Doctors criticize Baidu maps
A year after taking a beating over questions about the reliability of its search results, stumbling Internet titan Baidu (Nasdaq: BIDU) is back in the headlines over similar queries about results given by its popular mapping service. This time Baidu has quickly responded to the criticism from a group of doctors who are questioning the prominence of a powerful hospital group in search results on the mapping service, blaming the issue on a glitch and saying it is moving to correct the problem.
That’s far different from the last crisis, arguably the biggest in Baidu’s history, which began last spring when the story of a duped cancer patient made the rounds like wildfire on China’s Internet. In that instance, Baidu was slow to respond to the claims from a patient, who had already died at the time, that he was fooled by a cancer hospital whose name looked like a genuine search result but was really just an advertisement. Read Full Post…
Bottom line: LeEco is likely to spin off its new energy car unit by the end of the year following the departure of founder Jia Yueting from the listed company, while it could also close its smartphone division.
LeEco set to spin off car unit?
In what looks like a major turning point for the foundering LeEco(Shenzhen: 300104), the company’s charismatic but embattled founder has relinquished his role as chairman at the publicly listed firm. This particular news came out just as people were leaving home for work last night, so it’s still not completely clear on what exactly has happened.
But it appears that one of the companies that had agreed to provide a major cash infusion, a real estate developer named Sunac (HKEx: 1918) was refusing to hand over the funds because it said certain unspecified conditions weren’t met from its agreement. Thus it appears that Jia’s departure from the listed company, and probably most of LeEco in general, was probably the big sticking point. Read Full Post…
Bottom line: Tencent’s roll-out of time playing limits for teenager gamers for a popular new title looks aimed at preventing a regulatory intervention, while its new TCL tie-up could presage a spin-off of its video business.
Tencent limits teenage gamers
Internet titan Tencent(HKEx: 700) is in a couple of headlines as the US observes its Independence Day holiday, starting with word that it’s limiting teenagers from playing too much of a very popular new title. The other headline has the company teaming up with TV stalwart TCL (HKEx: 1070; Shenzhen: 000100) in a new smart TV tie-up.
The only real common thread to these headlines is that they both involve Tencent, though each does spotlight a certain pattern that’s quite typical for China’s most successful Internet company. In the first case, the game story spotlights Tencent’s strong record at developing and operating games, which are its largest source of revenue. The TCL story highlights Tencent’s fondness for making strategic minority investments, often with mixed results. Read Full Post…
Bottom line: The resignation of Xunlei’s founder as CEO, even as he retains his chairman’s title, could indicate a sale is coming soon, with the most likely buyer as Xiaomi.
Big shifts happening in Xunlei boardroom
The incredible shriveling online video company Xunlei (Nasdaq: XNET) is making a tiny splash in the headlines as we head toward the weekend, with word that its founder is relinquishing his position as CEO. The move seems potentially significant, since one of the main obstacles that keeps more companies from being acquired in China is resistance by their founders to relinquish their “empires” to someone else.
In this case, Xunlei’s empire is rapidly vanishing, as it gets overtaken by larger rivals like Baidu’s (Nasdaq: BIDU) iQiyi and video services operated by Tencent (HKEx: 700) and Sohu (Nasdaq: SOHU). That may mean that no one really wants Xunlei anymore, including ordinary stock investors. The company’s shares have been on a downward trajectory since its Nasdaq IPO three years ago, and now trade at $3.24 apiece, about a quarter of their IPO price of $12. Read Full Post…
Bottom line: A major altercation between a customer and deliveryman from STO Express underscores the intense competition in the sector, which puts huge pressure on couriers and companies in general.
STO delivers controversy
An incident making the rounds in Chinese media is highlighting just how brutally competitive the parcel delivery business has become — literally. The incident is quite appalling but not really too surprising, with reports that courier STO Express (Shenzhen: 002468) has fired a deliveryman who seriously beat a customer who filed a complaint about him.
This particular incident comes just a day after I wrote about the latest IPO by a parcel delivery firm, Best Inc, which is hoping to raise up to $750 million in New York. (previous post) That IPO is noteworthy because Best is still losing massive money, unlike most of the other courier companies that have made listings, even though the industry’s brutal competition makes it hard for me to believe the others are as profitable as they say. Read Full Post…
Bottom line: JD.com is likely to pass Baidu this week and become China’s third most valuable internet company, while Weibo’s stock is likely to enter a period of correction while it awaits an official live broadcasting license.
JD on cusp of overtaking Baidu
The era of the Internet triumvirate of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700), often called the BAT, is on the cusp of ending, as up-and-comer JD.com (Nasdaq: JD) looks set to pass Baidu in terms of market value. Meantime, I suspect the end of another era is coming for the soaring Weibo (Nasdaq: WB), which had some of the wind knocked out of its sails following some strict words from China’s heavy-handed regulator.
We’ll focus mostly on the Baidu/JD transition here, as that really does seem to mark a changing of the guard in China’s dynamic Internet sector. That move has seen Baidu experience a longer-term stagnation, as its core search business comes under assault from a few other newer players and it fails to find new revenue sources to offset the loss. On the other hand, JD.com seems unable to do any wrong these days, and is starting to resemble US titan Amazon (Nasdaq: AMZN) in the sense that people don’t really care whether it makes money. Read Full Post…
Bottom line: Alibaba’s launch of its popular Tmall into several markets with large Chinese populations shows it is still looking for a strong overseas formula, underscoring its dependence on China for the foreseeable future.
Tmall marches into Singapore
E-commerce juggernaut Alibaba (NYSE: BABA) is making its latest global expansion noise with word that it will launch a version of its popular B2C Tmall online marketplace targeting overseas buyers in Southeast Asia. I have to admit I’m not completely sure about the significance of the move, since the company already has a wide ranging network covering a number of overseas markets through its AliExpress and Lazada services.
The bottom line seems to be that Alibaba is taking a somewhat fragmented and multi-brand approach to the overseas market, as it searches for formulas for success in an area that so far has been somewhat elusive. The company only derives about 10 percent of its revenue from overseas operations at the moment, despite numerous attempts to develop markets outside China. Read Full Post…
Bottom line: Alibaba may have to tone down its aggressive style of data collection from its business partners following a tiff with SF Express, but its business won’t face any major impact.
SF takes on Cainiao in data wars
A conflict involving leading courier SF Express (Shenzhen: 002352) and Alibaba’s (NYSE: BABA) Cainiao logistics arm was all over the headlines at the end of last week, in a clash of titans that saw the pair suddenly sever their business relationship. At the center of the issue was data, and Alibaba’s near obsession with getting its hands on every piece of data possible as it tries to build up a big data empire.
But just as quickly as it consumed the headlines, this particular clash appears to have been resolved with some mediation by the government. There are a number of lessons in all this, but the biggest seems to be that Alibaba will need to rein in its bullying tactics that it wields by virtue of its huge market dominance. Otherwise it could face the wrath of companies like SF Express, and ultimately a commerce regulator that might decide the e-commerce juggernaut is unfairly abusing its near monopoly on the market. Read Full Post…
Bottom line: Ongoing crises being faced by LeEco-backed Yidao and Coolpad are likely to deepen in the month ahead, as each company gets abandoned by its major stakeholder and is forced to grapple with rapidly deteriorating business.
Coolpad releases preliminary 2016 results
Two companies snapped up by former online video superstar LeEco (Shenzhen: 300104) are in the crisis headlines this morning, with smartphone maker Coolpad (HKEx: 2369) and car services operator Yidao both driving rapidly towards financial collapse. The first headline has Coolpad announcing preliminary results for 2016 that look quite alarming, as an ongoing back-and-forth with its auditor adds more worries to its story.
The second story has Yidao promising its increasingly unhappy unpaid drivers they will finally get their money late this month, as it tells the world it’s in the process of raising new funds. And if you believe that one, I have a nice bridge to sell you in Brooklyn. Read Full Post…
