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Renren Inc. (NYSE: RENN) latest Business and Financial News , by former Reuters journalist Doug Young based in China.

News Digest: May 15, 2012 报摘： 2012年5月15日

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The following press releases and media reports about Chinese companies were carried on May 15. To view a full article or story, click on the link next to the headline.

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◙ China Mobile (HKEx: 941) Responds to Obstacles in US, Believes Will Get License (Chinese article)

◙ Suning.com (Shenzhen: 002024) Launches Wine Channel (English article)

◙ DTS (Nasdaq: DTSI), Lenovo (HKEx: 992) Bring High-Definition Audio to Smart TVs (Businesswire)

◙ Renren (NYSE: RENN) Announces Unaudited Q1 Financial Results (PRNewswire)

◙ Vipshop (NYSE: VIPS) Reports Q1 Financial Results (PRNewswire)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

Shanda Cloudary Wows Investors With Profit 盛大文学利润令投资者惊叹

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Despite a dismal climate for US-listed Chinese stocks, online entertainment specialist Shanda appears to be moving ahead with a long-delayed IPO for its Cloudary online literature unit by attempting to wow investors with something they haven’t seen in a while: a profit. If Cloudary does indeed make it to market, it would become only the second Chinese firm to make a public listing in New York this year, as US investors have largely shunned Chinese stocks following a series of accounting scandals last year. The only company to make an offering so far this year has been a money-losing online discount retailer named Vipshop (NYSE: VIPS), whose March IPO was a resounding flop. (previous post) Another money-losing firm, auto rental specialist China Auto was all set to make a New York IPO to raise around $100 million last month, when it abruptly halted the deal due to anemic demand just before its shares were set to price. (previous post) Shanda had indicated earlier this year it was planning to refile for the Cloudary IPO, which it had to abort last summer after sentiment turned sharply negative due to all the accounting scandals and a constant stream of short seller attacks. Now it has submitted a new filing to the US securities regulator, surprising everyone by announcing that Cloudary posted its first-ever profit of about $3 million in the first quarter of 2012. (Chinese article) If that’s true, the company would indeed have a rare asset in its profitable bottom line, contrasting sharply with most of the Chinese companies that have gone public over the last year and a half, starting in late 2010 when such firms were an investor favorite. Names like online video site Youku (NYSE: YOKU) and social networking site Renren (NYSE: RENN) all have yet to report a profit despite making public offerings during that period, and online retailer Dangdang (NYSE: DANG), one of the few profitable companies at the time of its offering, has fallen deeply into the loss column since then due to stiff competition. So against that backdrop, Shanda’s Cloudary offering actually could look quite attractive and may potentially even draw some moderate investor interest if it moves ahead. When news of this offering first surfaced last year, I said it actually looked relatively attractive, as online literature was a growing area, driven by a boom in demand from users of e-readers, smartphones and tablet PCs looking for material to read on these mobile devices. Furthermore, Shanda appears to be a relative leader in the area, and could earn a premium for being the first to make an IPO in this category. Of course the big risk could be that Shanda, aware that investors aren’t interested in money-losing companies, has used accounting tricks to make Cloudary profitable for this latest reporting quarter, and that the company could slip back into the loss column in the current quarter. I suspect the truth is somewhere in between, that Cloudary is probably still losing money but is perhaps is quite close to becoming profitable on a sustained basis perhaps by the end of this year. All that said, look for investors to show some moderate interest in this offering when it moves forward, providing a welcome relief for the beleaguered IPO market.

Bottom line: Shanda Cloudary’s latest regulatory filing including a first-quarter profit shows it is moving ahead with its New York IPO plan, which could attract moderate interest from investors.

Related postings 相关文章:

◙ IPO Chill Bites LaShou, China Auto 中资企业赴美上市连遭冷遇

◙ China IPO Winter Goes On as Vipshop Flops 唯品会大跌，中国IPO冬季持续

◙ Outlook Cloudy As Shanda Refiles for Literature IPO 盛大文学重启赴美IPO计划

Sohu Disappoints Again, LDK Cuts Inspire 搜狐再次令人失望，江西赛维裁员鼓舞人心

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As China returns to work after a long May Day holiday, the latest earnings released from online portal Sohu (Nasdaq: SOHU) and struggling solar firm LDK (NYSE: LDK) are showing that numbers don’t always tell the complete story, or at least not by themselves. In Sohu’s case, many of the numbers look good on the surface, but closer examination points to a sharp advertising slowdown that is already showing signs of hitting the broader Internet sector. Meanwhile, a highly troubled LDK has encouraged investors simply by filing its long-delayed fourth quarter report just before the final deadline, and also by announcing mass layoffs. Let’s look at Sohu first, which reported that revenue rose 30 percent in the first quarter of this year, but that its profit fell by a similar amount. (company announcement) The profit decline obviously wasn’t very helpful, nor was guidance that showed advertising growth would continue to slow. What’s more, Sohu said revenue from its Sogou search engine, hyped in previous quarters as a major new growth area, would roughly double in the current quarter — down sharply from the 184 percent growth in the first quarter and the nearly 250 percent jump in last year’s third quarter. The broader message was clearly not very positive, prompting a sell-off that has seen Sohu shares sink 10 percent since the results were announced. That followed a trend set by online search leader Baidu (Nasdaq: BIDU), whose shares have sagged 5 percent since it delivered a similar message with its latest earnings last week. (previous post) Look for other ad-dependent firms like leading portal Sina (Nasdaq: SINA) and social networking leader Renren (NYSE: RENN) to follow with similar messages in the weeks ahead. Meantime, LDK’s battered shares received a minor but surprising lift from the company’s latest results, in which it reported a massive $600 million loss in last year’s fourth quarter, as net revenue plunged by about half and looked set to tumble further in the current quarter as the global solar industry struggles in its worst-ever downturn. (company announcement) Some might say there was little to be excited about, but clearly some investors saw some light in the report, bidding up LDK’s shares by 7 percent the day after the numbers came out. Investors were apparently encouraged by comments that LDK has cut more than 5,000 jobs this year, and some were also undoubtedly happy that the company managed to file its fourth-quarter report before an April 30 deadline, after which it would have faced possible delisting. The storm is hardly over for LDK, though early signs of improvement for the entire solar sector could eventually help the company to pare its losses if it can managed to stay in business.

Bottom line: Sohu’s latest results point to a sharp advertising slowdown in the months ahead, while LDK will survive for another quarter after managing to report its results just before a deadline.

Related postings 相关文章:

◙ Slowing Ad Revenue Weighs on Phoenix 凤凰新媒体看淡广告收入前景

◙ Apple Feasts on China, Baidu Burps 苹果在华享受盛宴，百度盛宴停顿

◙ LDK Cuts, Suntech Waits As Solar Winter Nears End 太阳能行业冬季将结束：赛维裁员，尚德等待

Facebook Keeps Calling on China Facebook继续推动进军中国市场

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Facebook may be making global headlines for its upcoming mega IPO, but the social networking giant is making much quieter headlines in China as well, where local media are saying it has been meeting with potential joint venture partners in its long-stated pursuit of entering the market. (English article) All this comes amid a broader opening up of China’s tightly controlled media space, which is also seeing the website of the People’s Daily, the official newspaper of the Communist Party, roaring towards a landmark IPO that, not surprisingly, is seeing huge investor demand. Let’s look at the latest Facebook talk first, which has media saying founder Mark Zuckerberg has made a number of low-key recent trips to China to meet with potential joint venture partners. There’s no reason to believe the reports aren’t true, as Zuckerberg has been very open about wanting to enter China and has made a number of trips to the country. Those include an official visit in late 2010 where he reportedly met with a number of partners including search leader Baidu (Nasdaq: BIDU), and another lower-profile visit just last month where he was spotted shopping in Shanghai in what was described as a personal visit. (previous post) My sources told me last year that Beijing had laid down a number of conditions that would make it difficult for Facebook to come to China, including requiring it to self-censor any China site it operated and also to make any information on the site available to the central government. (previous post) While such conditions looked like a deal killer at that time, Zuckerberg’s determination to enter the market, which includes a recent campaign to hire local Chinese engineers (previous post), seem to indicate he is willing to play by Chinese rules. I admire his determination, but should also point out that if and when Facebook ever does come to China, it will receive the same scrutiny, criticism and negative publicity that western organizations gave to Internet giants like Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO) when they entered the market. Facebook will also face stiff competition from established players Renren (NYSE: RENN) and Kaixin, which dominate the market but are having more difficulty finding profits there. Given Zuckerberg’s determination, I would say that China will be one of his top priorities after the IPO, and I could see the company entering the market as soon as late this year. Meantime, the People’s Daily has put out its own self-congratulatory statement in the run-up to its domestic IPO, saying it has tripled the size of the original offering due to strong demand and will sell shares that value the company at an 18 percent premium to its peers. (English article) As I’ve said before, I expect this IPO to be a huge success due to strong support from cash-rich party members and their associates. The stock could also do well in the longer term due to its party connections, but I wouldn’t look for anything too exciting in terms of growth or business initiatives due to the company’s political nature.

Bottom line: The latest reports on Facebook’s China plans indicate the company is aggressively aiming to enter the market, with a potential new joint venture possible by the end of this year.

Related postings 相关文章:

◙ Facebook, NY Times Make New China Moves Facebook和纽约时报在华新动向

◙ Despite China Rebuff, Facebook Going Back for More Facebook明知山有虎，偏向虎山行

◙ Twitter Eyeing China? Twitter想进中国？

 

New Crackdown Spotlights Social Networking Risk 新的打压凸显社交网络风险

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It’s a beautiful spring day here in Shanghai, and if you’re an avid microblogger you’re probably getting up and perusing the latest news and gossip on Sina’s (Nasdaq: SINA) popular Weibo service to read and pass on to your friends the latest news about your favorite celebrity or social issue. But a quick attempt to pass on someone else’s posts with your own insightful comments attached is suddenly impossible — blocked by Weibo itself as punishment from Beijing for spreading rumors, underscoring again the perils big companies face when setting up shop in China’s social networking realm. (English article) The news that Sina’s Weibo and another popular microblogging service from Tencent (HKEx: 700) are both being punished for spreading rumors should come as a surprise to no one, though enthusiastic investors who purchased stock of both companies on big hopes for their microblogging services might decide that Monday is a good time to sell some of their shares. The reports on what happened are actually quite detailed, saying both Sina and Tencent angered Beijing by allowing rumors to spread on their services that troops had moved into the nation’s capital as part of a coup attempt that never happened. Beijing has always been sensitive about any kind of rumor that could foment social unrest, and those sensitivities will only increase this year as the nation prepares for a major handover of power from the current leaders following the end of their official 10-year term in office. What’s interesting in this situation is the very public way in which the matter is being handled, with news of the false rumors and unspecified punishment both appearing in a report from Xinhua, the central news agency considered the voice of the Communist Party itself. No specifics of the punishment have been disclosed, and I suspect both Sina and Tencent will face limits on their microblogging operations and perhaps some small fines over the short term. But the longer term implications could be much more worrisome, with both companies facing big consequences — including even a possible shut-down — if they commit any similar transgressions in the year ahead during the sensitive power handover. That could pose a big risk to both companies, as well as other microblogging services, as all have now officially been warned that Beijing won’t tolerate any political rumors in the months ahead. That means all these services will undoubtedly delete any political postings on their services that are even remotely political for fear of offending Beijing, which could easily anger many of their millions of users who will no longer be able to post many of their thoughts online. Advertisers will also undoubtedly think twice about wanting to play in such a dangerous space, where their ads could not only suddenly become in accessible but they could also risk angering Beijing by doing business with companies accused of spreading rumors. This latest development comes only months after Beijing announced its “real name” policy for all microblogging sites, requiring them to register all their users by their real names, again as a measure to try and curb rumor mongering and other unsavory activities such as scams. (previous post) Sina, Tencent, NetEase (Nasdaq: NTES) and other microblog site operators aren’t the only ones at risk, as other social networking site operators like Renren (NYSE: RENN) and Kaixin, whose services are more similar to Facebook, could just as easily be accused of spreading rumors and also be punished. To anyone considering buying shares of any of these companies, I would just reiterate that they may have good great growth potential due to the size of China’s Internet market — which recently passed 500 million users — but they also come with huge risk. Especially in the coming year with the leadership change, these companies will have to be especially careful about what they allow on their sites, and can risk punishment or closure at any time. At the same time they face the risk of punishment by their own users, who might become frustrated with all the new restrictions and could easily end up abandoning their accounts.

Bottom line: The latest punishment for Sina and Tencent microblogging services for spreading rumors  underscores the big risks China Internet companies face due to political considerations.

Related postings 相关文章:

◙ Real Name Registration: Burden or Not for Weibo? 实名制会否成为新浪微博的负担？

◙ Sina Gets Serious on Weibo 新浪开始严肃对待微博

◙ Microblog Clampdown: Only Chapter 1? 实名制向网络行业吹去冷风

NetEase Name Change: Spin-Off Coming 网易更名：预示业务分拆

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So, when is the dropping of the .com suffix from a company’s name big news? The answer: When you’re an Internet veteran like NetEase (Nasdaq: NTES), whose new announcement that it plans to formally change its name from NetEase.com to simply NetEase Inc will fuel expectation that the company is nearing a spin-off of its portal business, its oldest asset since it originally went public in the late 1990s. In a decidedly low-key announcement, NetEase said it has scheduled a rare extraordinary general shareholder meeting for March 29, at which owners of its stock will be asked to approve the name change. (company announcement) China Internet historians will note that NetEase began its life as a web portal operator, competing directly with China’s other 2 web stalwarts, Sina (Nasdaq: SINA) and Sohu (Nasdaq: SOHU). But its path diverged about a decade ago, when it found more success as an operator of online games, which now account for the large majority of its revenue. During that time, the company’s portal business, which includes a popular email service, started to languish, even though it remains a well-known and respected brand to this day. Realizing there may still be some value in the portal business, NetEase made signals last year that it  might spin off the unit in a bid to breathe new life into it by making it stand on its own. (previous post) Since then, industry buzz has also surfaced that the portal could make a nice asset to sell  or put into a joint venture with another Internet site operator, which could use the portal to diversify its own holdings and drive traffic to its core site. The number of such potential buyers could be huge, running the range from social networking sites like Renren (NYSE: RENN) to video sites like Youku (NYSE: YOKU) and perhaps even one or 2 e-commerce sites like Dangdang (NYSE: DANG). I haven’t heard any specific rumors about M&A talks, but this name change by NetEase looks like it is paving the way for the company to make a big move soon. If I were a gambler, I would bet we will see some kind of deal involving the portal business by September. What that deal will be is still probably under discussion, with a sale, joint venture or even a spin-off into a separate publicly listed company all possible. I think the joint venture is probably the most likely, as NetEase would like to retain a stake in this asset since it is so closely identified with the company. At the same time, the joint venture structure would allow NetEase to delegate management of the portal to someone else to let it focus on its core online game business.

Bottom line: NetEase’s pending name change means a spin-off of its portal business is likely in the next 6 months, with a new joint venture the most likely option.

Related postings 相关文章:

◙ NetEase Sharpens Up Messaging in Run-Up to Portal Spin-Off 网易剥离门户网站 再度磨砺电邮服务

◙ NetEase Looks to Reinvigorate Portal 网易似要重振门户

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

Slowing Ad Revenue Weighs on Phoenix 凤凰新媒体看淡广告收入前景

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The latest sign of an advertising slowdown on the Internet is coming from the high-flying Phoenix New Media (NYSE: FENG), whose investors did some profit-taking in Tuesday trade before the company announced impressive fourth-quarter results that saw its ad revenue double even as it predicted the rate of increase would slow quite a bit in the first quarter. (company announcement) Shares of Phoenix tumbled nearly 6 percent in Tuesday trade, though they bounced back slightly after-hours after the results came out. The company, the new media arm of Phoenix Satellite Television (HKEx: 2008), said its fourth-quarter advertising revenue jumped by just over 100 percent to $24 million, helping to drive a 200 percent increase in its net profit. But clearly the more worrisome element was Phoenix’s outlook for the current quarter, in which it forecast that ad revenue growth will slow to about 70 percent — meaning the rate of increase will slow by about a third. As a result, the company expects its growth rate for total revenues to fall by even more, about 50 percent, to about 35 percent in the current quarter. In fact, I’ve been predicting this slowdown for a while as China’s Internet companies, once flush with investor cash, start to burn through their money piles and either go out of business or cut back sharply on their ad spending. Earlier this week, popular online men’s fashion retailer Masa Maso said it was planning to slash its 2012 advertising budget by 50 percent, as it focused more on getting repeat business from existing customers rather than the costlier proposition of finding new ones through aggressive advertising. (previous post) The slowdown is likely to hit most companies that rely heavily on advertising for their revenue, from search leader Baidu (Nasdaq: BIDU) down the food chain to leading portal Sina (Nasdaq: SINA) and online video and social networking sites like Youku (NYSE: YOKU) and Renren (NYSE: RENN). Baidu previously forecast that growth for its revenue — nearly all of which comes from advertising services — would slow in the current quarter to 75 percent from 82 percent in last year’s fourth quarter. Premier names like Baidu are likely to see the smallest effect from the slowdown, although even Baidu could see its revenue growth rate slip below 50 percent by year end. Meantime, look for much bigger slowdowns at less attractive ad platforms like Youku and Renren, with names like Sina and Phoenix likely to be somewhere in the middle when the nascent downturn starts to accelerate.

Bottom line: Outlook from Phoenix New Media is the latest indicator of a looming ad slowdown, which will sharply curb growth at firms dependent on ad revenue.

Related postings 相关文章:

◙ Fashion E-tailer Cuts Point to Ad Slowdown 玛萨玛索削减广告投入

◙ Baidu’s Strong Growth Underwhelms 百度业绩持续强劲增长将投资者期望抬升过高

◙ Sohu Fails to Inspire With Latest Results 搜狐最新财报缺乏利好激励

Fashion E-tailer Cuts Point to Ad Slowdown 玛萨玛索削减广告投入

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There’s an interesting report in the domestic media saying popular online men’s fashion retailer Masa Maso is planning to slash its advertising budget by half this year, a move that will probably be repeated throughout the industry as many e-commerce firms, most of them losing money, go into cash conservation mode in their struggle to survive. Of course that also bodes poorly for companies that depend heavily on such ad spending for their revenue, from search leader Baidu (Nasdaq: BIDU), which gets nearly all its revenue from advertisers, to web portals like Sina (Nasdaq: SINA) and Sohu (Nasdaq: SOHU) and video and social networking sites likes Youku (NYSE: Youku) and Renren (NYSE: RENN). Let’s look at the report itself, as it does contain some details that show how the situation could play out. It cites a Masa Maso executive saying the company began slashing its ad spending in the second half of last year as part of a strategy to focus more on customer retention, in what looks like a roundabout way of saying it finally realized it had to cut costs and become profitable or risk going bankrupt. (English article) Most significantly, the executive says Masa Maso will focus its limited spending on search advertising, reflecting a broader trend that will see e-commerce firms and other advertisers probably cut back on ad platforms with more marginal returns in favor of ones with better track records. That should play to the advantage of search, which obviously means that Baidu could suffer less than others when the looming spending downturn becomes a major tide. Meantime, I would expect portal operators like Sina to also do relatively well in the coming downturn, as they tend to attract more mainstream audiences that would appeal more to advertisers. Companies most likely to take the biggest hit are specialty players, especially ones that cater to younger demographics who have less money to spend and thus are  less attractive to advertisers. That category includes many money-losing companies such as video sharing sites like Youku and social networking ones like Renren, which means that these companies might have to wait longer still to achieve their quest for sustainable profits. I expect this report from Masa Maso reflects a sharp slashing of ad budgets for 2012 in general, meaning we should start to see some of the damage show up when companies that depend on ads for their revenue start reporting their first-quarter results in April and May. When that happens, look for investor dollars to flow to the big names like Baidu and Sina, while shares of less popular advertising platforms like Youku and Renren could take a hit.

Bottom line: A slash in advertising by a major fashion retailer reflects broader cuts by e-commerce firms this year, which will soon show up in ad-dependent firms’ bottom lines.

Related postings 相关文章:

◙ Baidu’s Strong Growth Underwhelms 百度业绩持续强劲增长将投资者期望抬升过高

◙ Sohu Fails to Inspire With Latest Results 搜狐最新财报缺乏利好激励

◙ Sina Results: Not So Diversified After All 新浪仍依赖广告,突围遇阻

Sina Gets Serious on Weibo 新浪开始严肃对待微博

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After months of frustration for investors, Sina (Nasdaq: SINA) has finally laid out a detailed plan for how it will earn money from Weibo, with company executives forecasting the highly popular but unprofitable microblogging service will produce “meaningful” money by the second half of this year. Investors clearly liked what they heard, bidding up Sina’s shares by 12 percent in New York trading the day after CEO Charles Chao made his comments on a conference call to discuss Sina’s otherwise unimpressive fourth-quarter results. (English article; results announcement) I’ve had a glance at the plan, and it looks like a mixed bag of some things that are likely to work and some that probably won’t. In the first category, the most promising part is Sina’s plan to sign up enterprise customers and launch an ad display system on Weibo, which now boasts more than 250 million users. (English article) These 2 approaches look smart because they both target business customers, who are probably quite happy to pay big bucks for a chance to reach Weibo’s millions of users. Less interesting are Sina’s plans to roll out a growing number of paid services for Weibo users, including paid gaming services. In one of its few previously announced Weibo monetization initiatives, Sina said in January it would offer a premium version of Weibo for users who wanted to pay for extras like getting SMS mobile phone notifications when they received new posts to their accounts. (previous post) That announcement was greeted with mostly yawns, as everyone, myself included, knows it’s very difficult to get people to start paying for services that they’ve previous gotten for free — especially the big majority of Weibo users who are under 30 and don’t necessarily have lots of cash to spend. Of course, execution will be key in all of this, as it’s easy to say you’re going to target enterprise customers but not necessarily as easy to create products that those customers will want. Facebook has been quite successful at making this transition, though the road has been less smooth for Twitter, the global microblogging giant. In China the story is the same, with Baidu (Nasaq: BIDU) a clear leader at monetizing the huge traffic that flows through its search engine while local Facebook equivalent Renren (NYSE: RENN) has had more difficulty. Given Sina’s long history and relatively strong record at executing this kind of strategy, I would say its chances of making some significant money from Weibo by the end of this year are good. If that happens, I would look for an IPO of this high-profile unit as soon as mid-2013.

Bottom line: Sina’s plans to target corporate customers to monetize its Weibo service looks like a smart move, though plans to get money from ordinary users look more problematic.

Related postings 相关文章:

◙ Sina Tests Weibo Demand With Paid Offering 新浪试水微博增值收费服务

◙ Twitter Eyeing China? Twitter想进中国？

◙ Sina’s Weibo Suffers New Setback With Lawsuit 吉林市驻京办可能起诉新浪微博

Confidence Crisis Easing For US China Stocks 中国概念股信任危机缓和

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While it’s never too smart to call a major market turnaround, growing signs are emerging that last year’s confidence crisis for US-listed China stocks may have finally turned a corner, with a strong rebound on the horizon if the broader market remains healthy. The first 2 months of the year have seen several positive developments for Chinese stocks in New York, following a disastrous 2011 that most would rather forget as their shares were pummeled by a series of accounting scandals that undermined the entire sector. Sensing that the worst of the crisis is over, 3 Chinese companies have filed for new US listings in the last few weeks, betting that investors will once again be interested in the China growth story. At the same time, short sellers and lawyers who seized on the crisis to make quick bucks have found far less success in some of their most recent attacks, indicating investors are once again giving Chinese companies the benefit of the doubt now that many more questionable firms have been de-listed. The nascent return of confidence is most evident in the share prices for many US-listed Chinese firms, some of which fell by 50 percent or more last year at the height of the crisis that began with attacks on 2 names, financial services company Longtop Financial and timber firm Sino-Forest. Both companies saw their shares tumble after short sellers questioned different aspects of their accounting, and Longtop was ultimately de-listed. Since bottoming out in mid December, shares of many industry stalwarts that were dragged down in the crisis have posted a strong recovery, with Internet search leader Baidu (Nasdaq: BIDU) and top web portal Sina (Nasdaq: SINA) both up about 20 percent since mid-December. Even smaller names have joined in the rally, with social networking site Renren (NYSE: RENN) and online video site Youku (NYSE: YOKU) both up by 30 or more. Equally significant has been the failure of a number of short seller attacks, which netted big bucks for companies last year. Muddy Waters, whose name became synonymous with the attacks after its successful assault on Sino-Forest last year, has found much less success with a more recent attack on Focus Media (Nasdaq: FMCN). Focus shares initially fell sharply after Muddy Waters questioned some of its data late last year, but have rallied sharply since then and are now close to their pre-attack levels. A similar attack late last year on security software firm Qihoo 360 (NYSE: QIHU) has also failed to convince investors, with the company’s stock now trading near pre-attack levels after initially falling more than 10 percent. At the same time, a series of recent investor lawsuits designed to seize on a drop in the share price of IT outsourcing firm Camelot Information Systems (NYSE: CIS) has also failed to dent the company’s stock price, again indicating investors may feel the worst is past and these Chinese companies are now more trustworthy. As the confidence creeps back, a small trickle of Chinese companies have decided to test their luck with the New York IPO market. Car rental firm China Auto was first out of the gate when it filed for an offering in January, ending several months with no major new Chinese listings. It was followed this month by e-commerce firm Vipshop and Shanda Cloudary, which initially filed for an IPO last year but had to pull the offering due to poor investor sentiment at the height of the crisis. The real test of whether the worst is really past will lie in the weeks ahead, as these 3 offerings go to market and meet with either investor interest or more skepticism. I personally think China Auto could do well, though the 2 Internet offerings could meet with more tepid interest as both are still losing money. Still, if these 3 can post even modest success, which looks like a strong possibility, it could signal the crisis has truly turned the corner, meaning a solid rally may be in store for these stocks for the rest of the year.

Bottom line: Growing signs are emerging that the confidence crisis for US-listed China stocks may be over, with 3 upcoming IPOs providing a strong test of a turning point for the battered sector.

Related postings 相关文章:

◙ Outlook Cloudy As Shanda Refiles for Literature IPO 盛大文学重启赴美IPO计划

◙ Citron Keeps Up Qihoo Assault 香橼继续攻击奇虎

◙ Sharks Continue to Circle China Stocks 在美上市中国企业将持续面临做空和法律诉讼压力

Renren Growth Continues, Profits Elusive 人人网营收增长 盈利仍未可期

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A day after social networking site Kaixin released some limited financial information hinting it may soon restart its stalled IPO process, its chief rival, publicly listed Renren (NYSE: RENN) has released its own preliminary fourth quarter results telling investors not to expect a profit anytime soon. The news sent a chill over Renren stock, which tumbled by more than 6 percent in after-hours trading. In fact, the preliminary announcement doesn’t look all that bad in terms of top line growth, despite the gloom profit outlook. (company announcement) The company said it will meet its expectation for fourth-quarter revenue growth in the 50-55 percent range, and said it should be able to maintain that rate for this year — a positive outlook since Kaixin said its own revenue growth last year came in at a more modest 41 percent. (previous post) But on the more worrisome level, Renren said it should post an operating loss of around $16 million for the fourth quarter, continuing a trend of widening losses from a company that was briefly profitable before sinking into the loss column last year. Furthermore, Renren said it will not be profitable this year, as it focuses instead on building up its business. While I applaud Renren for its honesty and also its focus on long-term growth over short-term profits, the widening of its losses will surely come as a major disappointment for investors, who thought they were buying into a company that was already profitable when Renren first listed its shares last year. Since then Renren’s stock has moved steadily downward, and at its current level of around $5 is at less than half the IPO price of $14 per share. The company is trying to beef up its offerings by investing heavily in online video, which is a hot area now dominated by players like Youku (NYSE: YOKU) and Tudou (Nasdaq: TUDO). Again, I applaud this kind of diversification drive, though I also question Renren’s approach, as it might be better served by forming a strategic alliance with an existing player rather than building up its own online video business. Kaixin made a step in that direction when it sold a stake in itself to leading Internet firm Tencent (HKEx: 700) last fall, which looks like a smarter approach to me. At the end of the day, it really doesn’t matter how either of these companies find its route to sustained profits, as long as they do find such a route. I’m not completely convinced that either company has found such a formula yet, which could mean more turbulence ahead for Renren stock and similar volatility for Kaixin if and when it makes its IPO, which could be soon as it seeks to capitalize on hype from Facebook’s upcoming listing.

Bottom line: Renren’s latest preliminary results announcement show the company is still at least a year away from its goal of sustained profits, boding poorly for its stock this year.

Related postings 相关文章:

◙ Kaixin Looks to Cash in on Facebook Effect 开心网似乎在利用Facebook效应

◙ Kaxin Buys Time With Tencent Tie-Up 开心网与腾讯合作堪称一箭双雕

◙ Renren Finds Video Bargain in China Web Bubble 人人网低价收购56网 凸显中国互联网困境