Bottom line: Tim Cook’s latest trip to China and Google’s new investment in a Chinese voice recognition technology firm reflect efforts by both to build up app-making infrastructure to thrive in the increasingly important market.
Google invests in voice technology firm
Leading high-tech giants Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) are both in the China headlines today, led by the third visit this year to the country by Apple CEO Tim Cook to promote app development for his company’s iPhones. Meantime, Google is in the headlines for its new investment in a fast-growing maker of an app that uses voice recognition technology, which many companies believe will be central to mobile devices of the future.
Neither of these stories is huge and instead both are mostly incremental, underscoring the growing importance that China is playing in the global market for high-tech gadgets. In recognition of that fact, Apple realizes it needs to build a robust field of locally-based app developers to make sure its iPhones can maintain their place in the world’s largest smartphone market. Read Full Post…
Bottom line: LeTV’s latest hired car services investment and high-profile poaching of top talent from a rival look similar to the recent rapid rise and sputtering of Xiaomi, and the company could follow a similar trajectory by this time next year.
LeTV steals top talent from Youku Tudou
After watching the meteoric rise of online video sensation LeTV (Shenzhen: 300104) over the past year, I’m quickly tiring of this company and its hyperactive diversification strategy. The latest move in that drive is taking LeTV onto the road, with word the company is investing a hefty $700 million for a controlling stake of struggling private car services firm Yidao Yongche.
At the same time, other media are reporting that LeTV has just stolen a top executive from chief rival Youku Tudou (NYSE: YOKU), which announced last week it has received a buyout offer from e-commerce giant Alibaba (NYSE: BABA). Anyone feeling a sense of deja vu from these latest 2 LeTV headlines, and from LeTV’s meteoric rise in general, would be correct. Read Full Post…
Bottom line: Shanda Games’ imminent de-listing could be followed by a behind-the-scenes consolidation by one or more savvy private equity firms to create a major new online game firm capable of challenging NetEase or even Tencent.
Shanda Games heads for de-listing door
Faded online gaming pioneer Shanda Games (Nasdaq: GAME) is finally heading for greener pastures, releasing what’s likely to be its final earnings report as its shareholders get set to vote on a plan to privatize the company. Shanda Games’ road to privatization has been long and tortured, and is only now finally coming to completion after its initial announcement nearly 2 years ago. (previous post) But that said, I do have to commend Shanda’s strong-willed founder and chief Chen Tianqiao for finally getting the job done.
From a broader perspective, Shanda’s departure continues a trend that has seen online game companies de-listing en mass, after their stocks struggled for years due to stiff competition. In an interesting twist to that trend, these gaming laggards have been one of the few groups to actually complete privatizations among the 3 dozen US-traded Chinese companies that announced such buyouts earlier this year. Read Full Post…
Bottom line: Beijing needs to accelerate reform of traditional media in the face of rising challenges from players like Alibaba and Baidu, or risk seeing many of these state-run companies fall into irrelevance.
Alibaba challenges traditional media to speed up reform
A wave of mega-mergers sweeping through China’s Internet over the last 2 years saw its biggest deal to date announced late last week, when e-commerce leader Alibaba (NYSE: BABA) offered $4.6 billion for the more than 80 percent of leading online video site Youku Tudou (NYSE: YOKU) it doesn’t already own. The move marked the latest challenge to China’s traditional media industry, which has been monopolized for years by state-run broadcasters and printed publications.
If this latest mega-deal gets completed, a new Youku Tudou with access to Alibaba’s cash and other vast resources will almost certainly accelerate its challenge to traditional media by aggressively rolling out compelling new on-demand products and premium content. Read Full Post…
Bottom line: Alibaba could make a bid for Weibo in the next 6 months, in a deal that would share many similarities with its newly launched blockbuster offer for Youku Tudou.
Weibo next on Alibaba’s M&A menu?
China’s Internet is buzzing over the industry’s biggest acquisition to date with Alibaba’s (NYSE: BABA) offer for Youku Tudou (NYSE: YOKU), but that deal could presage an even higher-profile one that sees the fading Twitter-like Weibo (Nasdaq: WB) follow a similar fate. Or even more intriguing, Alibaba could make a potential play for Weibo’s parent and founder Sina (Nasdaq: SINA), in a move that would spell the end for China’s leading web portal and one of its oldest Internet firms.
There would be many similarities between such a deal and the Alibaba offer for leading online video site Youku Tudou deal announced late last week. Investors appear to also believe such a deal could possible, based on stock reactions to the blockbuster deal that would see Alibaba pay $4.6 billion for the more than 80 percent of Youku Tudou it doesn’t already own. Weibo shares leaped 13.4 percent after the deal was announced, second only to Youku Tudou’s own 22 percent jump. Read Full Post…
Bottom line: LeTV’s fledgling e-commerce business could rise quickly but may also experience growing pains that bring negative publicity, as media start to tire of the company’s constant hype and its fortunes start to stagnate.
LeTV jumps into e-commerce
Online video sensation LeTV(Shenzhen: 300104) has never been one to do anything quietly, and that’s true once more with its sudden jump into the hotly contested e-commerce space. In its usual high-profile fashion, LeTV has sent out emails to reporters detailing its huge success with a recent e-commerce promotion, and also its launch of a US e-commerce site.
But the media weren’t giving to much ink to LeTV’s hype, and instead focused on negative reports of logistical problems connected to its recent promotion on September 19. Such problems don’t come as a huge surprise for an e-commerce newcomer like LeTV, which is far better known for its online video service than Inernet shopping. Read Full Post…
Bottom line: Jiuxian’s decision to list in China and Dangdang’s continued effort to de-list from New York show that low-quality Chinese firms will have difficulty getting attention from US investors and are probably better listing in their home market.
Jiuxian wine cellar to list on China’s OTC
Two news items continue to show a growing distaste for New York by Chinese web firms, led by word that veteran online wine seller Jiuxian has just received approval for an IPO on China’s over-the-counter (OTC) board. The second items comes from veteran e-commerce site Dangdang (NYSE: DANG), whose outspoken CEO is quoted complaining about his company’s low valuation and saying his plans are moving forward to de-list from New York and re-list in China.
The most commonly heard theme to these stories is that Chinese firms can get better valuations in their home market than New York, because their names are more recognized in China. But another theme that gets far less attention is that many of these complaining companies are simply low-quality products whose only real attraction is their “made in China” label. Read Full Post…
Bottom line: New global initiatives by Alibaba and JD.com are largely cosmetic and could bring some short-term support to their stocks, but both will need to show results to satisfy investors over the longer term.
Alibaba, JD in outbound migration
China’s 2 leading e-commerce firms are in a sudden migratory mood, with Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) both announcing the opening of new offices in the US and Europe. At the same time, Alibaba has also declared that the headquarters for its annual November 11 Singles’ Day shopping extravaganza will migrate, leaving its original location in the company’s hometown of Hangzhou to set up a new shop in Beijing.
The sudden migratory story looks squarely aimed at investors, who want to see these domestic e-commerce giants laying the groundwork for future growth beyond their home China market. But while opening new offices may look nice on the surface, the US and European markets that both companies are targeting will be extremely tough due to competition from entrenched local players and global giant Amazon (Nasdaq: AMZN). Read Full Post…
Bottom line: Mark Zuckerberg’s increasingly blatant groveling in his effort to bring Facebook to China could backfire if he’s not careful, and instead he should work behind the scenes and be patient for approval that could come within the next 1-2 years.
Top China Internet official visits Facebook last December
There’s still more than 2 months left in the year, but I’m already giving my “China Brown Noser of the Year” award to Facebook (Nasdaq: FB) founder Mark Zuckerberg, who has become quite unabashed about doing anything he can to win favor from Beijing. Chinese President Xi Jinping was front and center on the Facebook chief’s radar screen during his recent visit to the US, where Zuckerberg managed to attend 2 high profile events where China’s most powerful man was present.
I previously wrote about the first event in Seattle where numerous US tech leaders were also present. (previous post). But it was the latter White House event later in the week that prompted me to give Zuckerberg the dubious honors as China brown noser supreme. That’s because reports earlier this week revealed that Zuckerberg actually approached Xi at the White House dinner and requested an honorary name for his unborn daughter from the Chinese president. Read Full Post…
Bottom line: The latest global acquisitions by Tsinghua Unigroup and Unisplendour show the company still aims to build a global IT services and hardware giant, which could culminate with a new bid for Micron in 2017.
Unigroup makes major boardroom acquisition
The ambitious Tsinghua Unigroup may have abandoned its controversial bid for leading US memory chip maker Micron (Nasdaq: MU) for now, but the Chinese high-tech wannabe certainly isn’t giving up on its global aspirations. That’s my interpretation of the company’s latest moves, which include its hiring of a Taiwanese executive with ties to Micron, as well as the recent purchase of a major stake in leading US hard drive giant Western Digital (Nasdaq: WDC) by a sister company.
Unigroup and sister company Unisplendour‘s names have appeared all over the map this past year, as they form a steady string of major equity tie-ups with the likes of leading global chip maker Intel (Nasdaq: INTC) and IT services and hardware giant Hewlett-Packard (NYSE: HPQ). But the companies’ ambitious plans to create an IT services and hardware megaplex similar to IBM’s (NYSE: IBM) hit a major roadblock over the summer, when Unigroup had to scrap its plans to buy Micron due to potential political opposition in Washington. (previous post) Read Full Post…
Bottom line: A scandal involving inflated sales reporting by workers at SouFun could cause the company to miss 2015 revenue guidance, and reflects pressures that China Internet firms are facing due to a slowing home economy.
SouFun uncovers inflated sales by employees
Just when it was beginning to claw its way back to favor with investors, real estate services website SouFun (NYSE: SFUN) is being rocked by a scandal after an internal probe revealed that some employees were inflating their new orders. The latest reports say SouFun has verified it fired some workers after uncovering the issue, though there’s no word on the magnitude of the problem.
More broadly speaking, this kind of report highlights the stresses that SouFun and rivals like E-House (NYSE: EJ) are facing due to a sharp slowdown in China’s overheated real estate market. That slowdown has caused prices to stagnate and transaction volumes to also tumble as buyers and sellers wait to see how the market will trend. That’s critical for companies like SouFun, since they depend on transactions for a big part of their business. Read Full Post…
