Bottom line: Google’s new opening of an experience center in Shenzhen is the latest signal of a planned return to China, which could include the launch of a Google Play Store and Nexus smartphones in the market by year-end.
Google opens experience center in Shenzhen
After a few months of relative silence, global Internet titan Google (Nasdaq: GOOG) is back in the China headlines with a new move that’s restarting talk of a return to the market after a 6-year absence. This particular China homecoming has now been in the headlines for about a year, meaning it’s not really new and would be quite a disappointment if it doesn’t happen. Still, China is a notoriously difficult place to do business, especially in sensitive high-tech areas involving the Internet, and there’s still a small chance such a homecoming plan could collapse. Read Full Post…
Bottom line: Autohome’s shares will come under pressure after a mass defection of its middle management, most likely to start a rival company, while Ku6 is likely to close shop within the next 2 years following its de-listing from New York.
Mid-level managers leave Autohome en masse
A couple of new twists are bubbling through the headlines in a wave of buyout offers for US-listed Chinese companies, led by the latest signs that a privatization for online car site Autohome (NYSE: ATHM) is effectively dead. Those signs are coming in reports of a wave of resignations by mid-level company executives, following a failed management-led buyout bid. Meantime, online media site Ku6 Media (Nasdaq: KUTV) has formally completed its own buyout offer, meaning this insignificant player that was once a leader in China’s new media space will probably de-list very soon and could disappear completely within the next 2 years. Read Full Post…
Bottom line: Kingsoft’s write-down in the value of its investments in 21Vianet and Xunlei could auger a sale of its stakes in both companies, following a failed privatization bid for 21Vianet and little hope for a Xunlei recovery.
Kingsoft writes down 21Vianet, Xunlei investments
A week after data center operator 21Vianet (Nasdaq: VNET) became the second US-listed Chinese company to abandon its privatization bid, one of the financial backers that was leading that bid is providing some hints at what led to its actions. That’s my interpretation of the new disclosure from software maker Kingsoft (HKEx: 3888) saying it has written down $125 million related to slumps in the values of its investments in 21Vianet and also in struggling online video downloading site Xunlei (Nasdaq: XNET). Read Full Post…
Bottom line: A rumored Chinese purchase of 80 percent of AC Milan, together with a new Chinese soccer buy in Australia and NBA purchase in the US, show a recent Chinese buying spree of western sports teams continues to gain momentum.
China in 3 new foreign sports team investments
China’s roll into western sports teams continues, led by word that a Chinese group including Baidu’s (Nasdaq: BIDU) chief Robin Li is on the cusp of a deal to buy 80 percent of soccer club AC Milan for 750 million euros. But that group isn’t the only one making soccer headlines, as a Shenzhen businessman has also reportedly bought Australia’s Newcastle United Jets club. And my prediction that someone in China would make a bid for an NBA club in the US is also in the news, with word that a businessman from southern Fujian province has purchased a small stake in the Minnesota Timberwolves. Read Full Post…
Bottom line: Baidu will suffer more damage to its revenue and profits after new actions by China’s Cyberspace Administration, creating a potential opportunity for Bing or even Yahoo in China’s lucrative search market.
Baidu’s search woes offer opportunity for Bing, Yahoo
The woes for Internet search giant Baidu (Nasdaq: BIDU) continue, with word that China’s Internet censor is ordering the already hobbled company to cleanse itself of inappropriate sites in its search results. But whereas previous crackdowns have focused on politically sensitive content, this latest crackdown focuses on sites of companies that may be engaged in fraud or making inflated or bogus claims. The entire situation looks set to make a major dent in Baidu’s growth story, and could even see the company’s revenue shrink as it finds a new equilibrium.Read Full Post…
Bottom line: Autohome’s attempt at a management-led buyout failed due to difficulties financing such a large deal, and Qihoo’s new attempt to finance its buyout with crowd funding-style tactics points to similar problems.
Ping An takes over Autohome boardroom
New developments in 2 of the biggest privatizations of US-listed Chinese companies are casting a spotlight on the difficulty many of these cases face, especially bigger deals that require billions of dollars in funding to succeed. The first case has the management team at online car specialist Autohome (NYSE: ATHM) losing its battle to take the company private, following a high-profile battle with its largest stakeholder. The second has software security specialist Qihoo 360 (NYSE: QIHU) reportedly turning to crowd funding-style tactics to try and raise money for its own buyout, hinting at financing difficulties for a privatization that values the company at more than $9 billion. Read Full Post…
Bottom line: A spike in short-selling of China e-commerce stocks led by JD.com and Alibaba is cyclical and unrelated to their longer-term prospects, and a bounce-back is likely by year-end.
Short sellers gobble up JD stock
It seems even a new partnership with global retailing giant Walmart (NYSE: WMT) can’t help sagging shares of JD.com (Nasdaq: JD), China’s second largest e-commerce company, which has recently become flavor of the day among short sellers. That’s the word coming from a new Bloomberg report, which says short seller interest in JD’s stock reached a record high in mid June, after already doubling over the previous month. This story isn’t really new, as I wrote about a similar short-selling boom for shares of JD rival Alibaba (NYSE: BABA) a couple of weeks ago also. Read Full Post…
Bottom line: The MIIT should be commended for resisting pressure by China’s 3 telcos to ban free private voice services for enterprise customers, but should move quickly to show it will license such service providers like DingTalk and WeChat.
DingTalk halts free enterprise voice service
The ongoing battle between China’s big 3 state-run telecoms carriers and an emerging field of private sector challengers was in the headlines last week, when rumors emerged that the regulator was set to stop private firms from offering free voice services for business customers. The move looked set to potentially shut down popular services provided by Internet giants Tencent(HKEx: 700), Alibaba (NYSE: BABA) and others, before the regulator clarified that licenses were needed for companies to provide such voice services. (Chinese article) Read Full Post…
Bottom line: Qunar looks like the latest Chinese buyout candidate to become involved in a contested bidding war, while Autohome is unlikely to succeed in efforts to stop the sale of a stake in the company by its largest shareholder.
Qunar gets surprise buyout offer
A flurry of headlines from the wave of privatizations by US-listed Chinese companies are in the news as the week winds down, led by word that online travel site Qunar (Nasdaq: QUNR) has become the latest to get a buyout offer. Qunar wasn’t the only one lining up to leave New York, as game specialist Sky-mobi (Nasdaq: MOBI) also announced its own plan to go private. Meantime, a hotly contested privatization by online car specialist Autohome (NYSE: ATHM) has taken a few new twists, and wind power equipment maker Ming Yang (NYSE: MY) says it has just completed its own previously announced privatization. Read Full Post…
Bottom line: Alibaba’s victory in a shareholder lawsuit is partly justified due to its pre-IPO disclosure that piracy is a major risk for the company, but it still should have disclosed a recent government report sharply criticizing it on the matter.
Alibaba triumphs in shareholder lawsuit
E-commerce giant Alibaba (NYSE: BABA) is a master at influencing public opinion through its own hype, but is far less successful with government officials who often view its aggressive ways with more skepticism. With that background in mind, the company’s new courtroom victory in a shareholder lawsuit looks like a refreshing nod of approval from a government source, setting it apart from the usual cheers from fans of the company’s stock. I would probably agree with that view, even though in this case I’m not sure I completely agree with the judge’s decision. Read Full Post…
Bottom line: Baidu’s new move into economic indexes looks like a smart use of big data but is also risky due to potential interference from Beijing, and stands a 30-40 percent chance of becoming a significant revenue source.
Baidu gets into index business
When it comes to economic indexes in China, Beijing holds a strong lock over the market due to its unique ability to collect the necessary data needed to compile broad national snapshots. But there’s also a political element to the story due to the sensitivity of economic growth and issues like unemployment. That makes leading search engine Baidu’s (Nasdaq: BIDU) decision to enter the business look both savvy and also slightly risky. But if Beijing doesn’t interfere, the plan looks like a potential new revenue source that would also raise Baidu’s profile by taking advantage of its mountains of big data. Read Full Post…
