Qihoo, Vancl Fend Off New Attacks 奇虎、凡客和人人承受压力

By newsdoug on December 7, 2011

Qihoo, Vancl, Renren take beating Chinese Web firms continue to come under attack as they stare at a Web bubble that is showing early signs of bursting, with listed companies fending off assaults from short sellers and others struggling to retain employees amid the latest rumors of cash crunches and layoffs. The latest trio to face such assaults include web security software firm Qihoo 360 (NYSE: QIHU), leading clothing retailer and IPO candidate Vancl, and struggling social networking services site Renren (NYSE: RENN), which are all putting out various fires in their ranks. Qihoo, after coming under attack from a small research house called Citron last month (previous post) questioning many of its user numbers, has come under assault again by Citron with more similar allegations. Qihoo has come out with its own statement blasting Citron and explaining to worried investors why all its numbers are accurate. (company announcement) I previously said I wouldn’t be surprised if Citron’s claims are at least partly accurate (previous post), though investors so far seem to be giving Qihoo the benefit of the doubt. The company’s stock still trades at around $18, not far from the level it was at when Citron issued its first report and far higher than the $5 per share that Citron estimated Qihoo shares were worth. Meantime, Vancl is fending off reports from an anonymous blogger that it is facing a cash crunch as it repeatedly delays its planned New York IPO. (Chinese article) Vancl has denied the posts, which apparently carry some credibility due to the recent departure of a company vice president and reports in September that it was cutting 5 percent of its workforce. (previous post) Reports earlier this week that Vancl has just received $230 million in new venture funding (previous post) would seem to indicate the company has ample cash for now, but clearly it is feeling pressure to raise even more as competition rages in China’s e-commerce space. Last but not least there’s Renren, which is reportedly getting ready to offer its shares to all employees to let everyone “enjoy the company’s success.” (Chinese article) The only problem is that Renren’s shares now trade at about $3.50, or one-quarter of their $14 IPO price in May. To me this plan looks like desperation in a bid to retain Renren workers, many of whom are probably having doubts about their company’s future.

Bottom line: Assaults on Qihoo 360, Vancl and Renren are the latest signs of turbulence as China’s Internet bubble starts to burst, with many more to come.

Enjoy this blog? Please spread the word :)