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: A Beijing visit by Microsoft CEO Satya Nadella hints that a settlement will soon be announced in the 3-year-old anti-trust probe against the company, which could include a fine of more than $1 billion.
Microsoft’s Nadella back in China
Just weeks after Apple (Nasdaq: AAPL) CEO Tim Cook came to China on a trip partly aimed at damage control, Microsoft’s (NYSE: MSFT) CEO Satya Nadella is in Beijing on a similar mission involving a long-running anti-trust probe against the world’s biggest software company. The trip, and the fact that it was probably leaked by Microsoft, hints that the nearly 3-year-old probe against the company is nearing completion and we could soon see China announce corrective action against the company. A similar series of events unfolded before last year’s anti-trust settlement of a similarly long Beijing probe against US telecoms chip giant Qualcomm (Nasdaq: QCOM). Read Full Post…
Bottom line: China should abandon its model of trying to develop proprietary technology through government-backed initiatives, and focus instead on supporting leading private companies like Huawei to develop such products.
Qualcomm JV developing special server chip for China
China has started down a familiar but flawed path to creating its own cutting edge-technology, with reports last week that a joint venture backed by US telecoms giant Qualcomm (Nasdaq: QCOM) is developing a special microchip for the China market for use in computer servers that power the Internet. The effort looks strikingly similar to previous ones that typically saw China work with big foreign companies to develop technologies to compete with existing global products and standards. Read Full Post…
Bottom line: Baidu’s stock won’t suffer more short-term damage from a recent series of transparency scandals, but its reputation could suffer over the longer term.
Baidu software under fire
Leading search engine Baidu (Nasdaq: BIDU) is fast becoming synonymous with the word “opaque” due to long-standing practices that have helped it become one of China’s most valuable Internet companies, often by exploiting unsuspecting consumers. Following a recent series of scandals involving various opaque practices, the company is back in the headlines after a number of apps from its mobile assistant store landed on a malware black list from China’s telecoms regulator.Read Full Post…
Bottom line: Privatization plans by Autohome and iKang will face long delays due to shareholder resistance and rival bids, while Wanda Commercial’s similar buyout will proceed soon after some technical issues are resolved.
Autohome, iKang take buyout clashes to court
Three of the larger privatization bids by offshore-listed Chinese firms are running into snags, hinting at a growing wave of resistance to such offers considered by many as too low and opportunistic. Two of the most colorful tales involve online car site Autohome (NYSE: ATHM) and private clinic operator iKang (Nasdaq: KANG), whose management-led buyout deals both hit snags due to unexpected third-party developments. In the latest twist to those stories, Autohome is now taking legal action to prevent a separate share sale that could kill its own management-led buyout bid; while iKang is playing legal games with a rival bidder that trumped an original management-led buyout plan. Read Full Post…
Bottom line: Alibaba will avoid being penalized in a new SEC probe, but may be forced to modify some of its aggressive accounting practices in a compromise with the US securities regulator.
Alibaba in new SEC probe
I’m beginning to understand why e-commerce giant Alibaba(NYSE: BABA) has been aggressively building a team of Washington lobbyists, following announcement of its latest clash with a US government agency. This time it’s the securities regulator that’s tussling with the aggressive Alibaba, with word that the US Securities and Exchange Commission is investigating the company for potential illegal accounting practices. The SEC is already well acquainted with Alibaba, following another unrelated probe of the company last year related to piracy in its online marketplaces. Read Full Post…
Bottom line: Tencent’s new disclosure that it processes more than 500 million daily mobile financial transactions highlights its rapid growth in the space, pushing market leader Alipay to accelerate its own expansion into Asia.
WeChat wallet creeps up on Alipay
It’s rare to see Internet giant Tencent’s (HKEx: 700) tech-savvy but reclusive chief Pony Ma do interviews or make public appearances, so when he does it’s always reason to take notice. In this case Ma has disclosed new figures that show just how rapidly Tencent is moving into the mobile financial transactions business, rapidly encroaching on an area previously dominated by Alibaba (NYSE: BABA) affiliate Alipay. A separate headline also reflects to some extent the pressure that Alipay is feeling, with reports that its parent Ant Financial is accelerating its recent move into several major Asian markets. Read Full Post…
Accused of poor regulation and unfair competition by traditional import-export traders, cross-border e-commerce in China has been subject to new regulations since the beginning of April. Over the long term, the new regulation is expected to improve the shopping experience by focusing on the quality of goods.
With over 5,000 cross-border online trading platforms and more than 200,000 enterprises involved, e-commerce has become a major force for foreign trade into and out of China. In 2015, cross-border consumer deals settled online reached $ 40 billion, up 50 percent, representing over 6 percent of the total consumer e-commerce sector. China’s Commerce Ministry estimates the broader cross-border e-commerce market is much larger, growing at an average rate of 30 percent to reach up to $1 trillion by 2018. (analysis report) Read Full Post…
Bottom line: Shanda’s purchase of 12 percent of LendingClub reflects its new investment focus on global financial services, while Tencent’s pursuit of a major Finnish game maker is consistent with its previous M&A strategy.
Tencent eyes Finland’s Supercell
Major outbound M&A deals involving 2 of China’s largest private firms are in the headlines today, with new moves by private equity investor Shanda and Internet giant Tencent (HKEx: 700) reflecting their latest buying priorities. The first deal has Shanda buying a large stake in LendingClub (NYSE: LC), the peer-to-peer (P2P) US lending pioneer whose shares have tumbled recently due to a scandal involving some of its loans. The other headline has Tencent looking to take control of Finnish game maker Supercell, in a deal that would be its biggest acquisition of all time valued at several billion dollars. Read Full Post…
Bottom line: New revelations about Baidu’s fees for endorsing certain companies and including them in special zones on its website are the result of a business dispute and are unlikely to attract major attention from China’s Internet regulators.
Sofang protests Baidu fees
Just as Baidu (Nasdaq: BIDU) starts to recover from a major scandal involving misleading online search results, the Internet giant is coming under attack for similar tactics from a major online real estate services firm called Sofang.com. In this case Sofang’s move looks somewhat opportunistic, taking advantage of the earlier recent scandal to draw attention to another one of Baidu’s less-than-transparent practices involving fees for special treatment on its various websites. Read Full Post…
Bottom line: China Mobile’s retirement of its Internet-based texting and video services reflect its inability to compete with private providers of such services, and underscores its growing position as a slow-growth network operator.
China Mobile shutters Internet text, video services
In a move that was long overdue, leading wireless carrier China Mobile (HKEx: 941; NYSE: CHL) has thrown up the white flag with a symbolic surrender to WeChat, Youku and the many other private companies that have steadily stolen its new business opportunities. In this case the surrender comes in the form of formal retirements for China Mobile’s Internet-based Fetion texting service, and also its lesser known mobile video product.
Fetion was once hugely popular in China, allowing users to send SMS text messages for free by routing them over the Internet. China Mobile was an early innovator in creating that kind of “over the top” (OTT) service that took advantage of the mobile Internet. But more recently it has rapidly lost that position to more nimble private companies like Tencent (HKEx: 700) and Youku. Read Full Post…
