NetEase Makes Buzz With Buyback, Pigs 网易回购股票和养猪重大决策或在即

By newsdoug on December 2, 2011

NetEase founder sees IPO in pigs There’s a mini-flurry of news out about online game specialist NetEase (Nasdaq: NTES), as the normally low-key company generate some buzz, perhaps in the prelude to a bigger announcement about the future of its portal business. None of the latest news is that exciting, but it’s all interesting nonetheless. In perhaps the biggest news, the company has joined many of its US-listed peers in announcing a share buyback program worth up to $50 million, a relatively small amount but still significant enough to blip onto investor radar screens. (English article) The news helped to lift NetEase shares nearly 3 percent on Wall Street, outpacing the broader market but still a relatively modest move for this kind of company. In a more intriguing piece of news, the company’s soft-spoken founder Ding Lei has said an IPO is in store for his separate pig-raising business next year. (Chinese article) He made the comments in the city of Ningbo at an event centered on agriculture, which seems to be Ding’s relatively newfound passion as he also invests in red wine. The pig venture could actually be an interesting investment proposition, considering China’s love for pork and the country’s recent concerns about food safety. This kind of big publicly-listed pork company could easily become an industry leader, as this kind of massive producer can better guarantee food quality and safety. In one additional tidbit, NetEase is also reporting on its own news page that it has officially launched a social networking site (SNS) called Lofter. This is probably the least interesting news, as Sina (Nasdaq: SINA) launched a similar product earlier this year to complement its Weibo microblogging service (previous post), and both products will have to compete with more established sites operated by Renren (NYSE: RENN) and Kaixin. From my perspective, this recent flurry of news could be a prelude to a decision on what NetEase plans to do with its Internet portal, which was its main business many years ago but later took a back seat to games that now make up the bulk of its revenue. The company said earlier this year it is aiming to revitalize its portal and spin it off (previous post), and I expect this new flurry of news could presage an announcement soon about the portal’s future.

Bottom line: A recent flurry of news from NetEase could presage an announcement about future plans for its portal business, involving a potential sale or public listing.

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