Inflated Qihoo Bounces Back on Hot Air
After briefly considering a recent research report raising doubts about user numbers from Internet security software maker Qihoo 360 (NYSE: QIHU), investors seem to have brushed the information aside, preferring to believe the company’s hype. OK, I should probably be a little more fair and say that the recent bounce-back in shares for Qihoo, which I’ve previously criticized for its unethical business practices, was probably sparked by a strong earnings report this week that saw the company’s third-quarter profit nearly triple and revenues rise by even more. (English article) But what caught my attention were claims by the company that it now controls 57 percent of China’s Internet browser market, with about 235 million users. This sounded a bit high to me, as most people I know in China use more mainstream browsers from Microsoft (Nasdaq: MSFT), Mozilla and Apple (Nasdaq: AAPL). So I did a little analysis based on data for this site. According to that data, about half of the visitors to this site are in China. And yet the same data source says just 13 percent of visitors to this site use Qihoo’s browser. So assuming this site is roughly representative of the market, that means Qihoo browsers control just a quarter of the China Internet market at best, or less than half of what it claims. If the browser figure is so inflated, then I can only imagine how accurate Qihoo’s other numbers are. A report earlier this month from a small research house called Citron also called many of Qihoo’s Internet numbers into question, and said the company’s shares were extremely overvalued and should trade at about $5 per share, versus their price of $20 at the time. (previous post) Its shares briefly slipped about 15 percent to around $16.50 after that, but have come back following its earnings report came out and now trade around $17.60. I won’t question the authenticity of the company’s earnings, as I do believe they are probably honest for legal reasons if nothing else. But once Qihoo’s advertisers — who account for 73 percent of the company’s revenue — realize they’re not getting nearly the online audience that Qihoo claims, look for that part of the company’s business to drop considerably.
Bottom line: Qihoo 360 continues to post strong results on Internet user data that appears to be quite exaggerated, making it vulnerable to advertiser defections.
Related postings 相关文章:
◙ Report Takes Wind Out of Inflated Qihoo 奇虎遭遇Citron釜底抽薪
◙ Qihoo Goes to War With Mobile Browsers 奇虎360加强移动互联网布局
◙ Qihoo Loses Yet Another Lawsuit, But No One Cares 奇虎败诉不足为戒
