Things are looking cloudy for Shanda Interactive, the formerly listed entertainment company whose core online game unit appears to be going through some turmoil even as its more promising online literature unit faces its own separate headwinds. Shanda was once a superstar in its space, making headlines when it became the country’s first new media entertainment firm to make a New York IPO in 2004. But it has struggled in the last 3 years, as its core online game unit Shanda Games (Nasdaq: GAME) saw its growth shrivel and many of its other initiatives bombed.
Tag Archives: Shanda
Crisis-Hit China Firms Gain Banking Ally 国开行贷款助中国概念股私有化
It seems that short sellers aren’t the only ones trying to make some quick money from the confidence crisis plaguing US-listed Chinese stocks, with word that state-owned lender China Development Bank (CDB) is also trying to capitalize on the situation by providing loans to help some companies privatize. If true, the reports would just mark the latest twist in a saga that started more than a year ago when short sellers began to expose a series of accounting scandals at US-listed Chinese firms, sparking a sell-off in their shares. CDB’s move may also auger the start of a bigger wave of privatizations that could see some big US- and Hong Kong-listed companies go private as well.
Shanda Cloudary IPO Glides Ahead 盛大文学推进IPO计划
The literature unit of online game giant Shanda Interactive seems determined to move forward with its plan for a New York IPO despite a weak investor climate, landing $15 million in new funds from venture investor Orbis as it forges ahead. This kind of late-stage investment is clearly designed to generate some buzz for an offering that looks slightly interesting to me, but may still have limited appeal for the average Wall Street investor worried about recent volatility in US-listed China stocks after a series of accounting scandals last year. This latest investment also seems aimed at setting a valuation for the unit, Shanda Cloudary, again as Shanda Interactive looks to raise as much cash as possible to help pay down its big debt from its own recent privatization. (previous post) Let’s have a look at the actual news, which has Orbis taking a 1.875 percent stake in Cloudary for its $15 million investment, valuing the company at a relatively modest $800 million. (Chinese article) That’s far less than Shanda Interactive was worth when it delisted earlier this year. It’s also about two-thirds of the value of Shanda’s only other listed unit, Shanda Games (Nasdaq: GAME), reflecting the fact that this literature unit may have big potential as a supplier of online literature even though it generates significantly less revenue than Shanda’s core online gaming business. Shanda filed to list Cloudary last year but had to withdraw the plan when market sentiment plummeted. It refiled the plan earlier this year (previous post), reflecting its urgent need for new cash even as broader market sentiment remained weak. The only major Chinese company to make a New York listing so far this year, discount online retailer Vipshop (NYSE: VIPS), was a major failure, and lingering negative sentiment forced one of the year’s only other China IPO candidates, auto rental firm China Auto, to withdraw its offering just before the final pricing last month. (previous post) From my perspective, I’ve always thought the Cloudary IPO looked like an interesting proposition, as online literature is clearly a big growth market as rapidly growing numbers of Chinese mobile Internet users look for interesting things to read on their tablet PCs and smartphones. As an early entrant to this market, Cloudary looked well positioned to become a major player in the space. What’s more, the company surprised the market last month when it announced its first-ever modest profit of about 3 million yuan for the first quarter of this year. Profitability has been rare among the stream of Chinese Internet companies to make IPOs over the last 2 years, so that fact could help ease investor concerns, even though Cloudary’s sudden move into the profit column, while not surprising based on recent trends, also may have been assisted by some accounting maneuvers. Regardless of that, I still do think the company’s potential, its relatively strong income statement and relatively modest valuation could mean it may actually succeed in becoming only the second Chinese Internet company this year to make a New York IPO, providing an interesting investment opportunity for anyone who likes this emerging growth area.
Bottom line: A new round of fund-raising indicates Shanda is moving ahead with the IPO for its Cloudary online literature unit, which could receive moderate investor interest.
Related postings 相关文章:
◙ Shanda Cloudary Wows Investors With Profit 盛大文学利润令投资者惊叹
Baidu, Sina in Smart Cellphone Tie-Ups 百度、新浪在智能手机领域的合作
After witnessing a steady stream of puzzling moves into the smartphone space by Internet companies in recent months, I’m happy to say I’m finally seeing 2 new moves that I like by sector leaders Baidu (Nasdaq: BIDU) and Sina (Nasdaq: SINA). The rush into smartphones has seen many major Internet firms launch their own new products in the last 12 months, from Internet giant Tencent (HKEx: 700) to e-commerce giant Alibaba, security software specialist Qihoo 360 (NYSE: QIHU) and game operator Shanda. Clearly these companies are trying to grab a share of the fast-growing mobile Internet market, which could easily overtake traditional desktop web surfing in just a few years with the explosion of 3G services and smartphones. But rather than partner with strong players using existing mobile platforms, many of these new initiatives are pairing with less experienced cellphone makers like home electronics giants Haier and Changhong, meaning their chances of success are very limited. That’s why I like these 2 new deals with Baidu and Sina, which will see each company partner with a strong smartphone player in a very targeted way rather than trying to develop completely new models. In Baidu’s case, China’s leading search engine is reportedly close to a deal that will see its mobile search engines pre-installed on Apple’s (Nasdaq: AAPL) wildly popular iPhones sold in China. (English article) Meantime, Sina has signed a deal that will see its popular Weibo microblogging service featured prominently on the home screen of a second-generation smartphone model developed for China by Taiwan’s HTC (Taipei: 2498), another strong handset maker. (Chinese article) Let’s look quickly at the Apple-Baidu deal first, as that’s the bigger of the 2 and looks like a smart move for both companies. Apple’s iPhones are quite popular in China, but their high price tag means the models now command a much smaller portion of the market than cheaper smartphones using Google’s (Nasdaq: GOOG) free Android operating system. So this move should help Apple to gain some share by providing easier access to China’s most popular search engine. From Baidu’s perspective, inclusion of its search engine on iPhones should help it gain more dominance in the mobile Internet, an area it doesn’t dominate nearly as much as it does for traditional desktop web searching. The Sina-HTC tie-up should also benefit both of its partners, giving Sina greater exposure for Weibo as it tries to monetize the popular microblogging service in the run-up to an eventual IPO. The tie-up could also provide a sales lift for HTC, whose fortunes have sputtered recently, as Weibo enthusiasts might be more likely to buy this new smartphone model. I hope we see more tie-ups like this in the months ahead, as they look like smart ways to gain share in the emerging mobile Internet. In the meantime, look for these other initiatives involving self-developed smartphones from Alibaba, Shanda and others to be quietly retired in the months ahead after they find few or no buyers after their roll-outs.
Bottom line: New tie-ups by Sina and Baidu look like good highly focused moves to gain share in the crowded mobile Internet market by pairing with established smartphone makers.
Related postings 相关文章:
◙ Russia’s DST Builds More Valuation Froth 俄罗斯DST助长中国互联网企业估值虚高
China Auto IPO Crashes 神州租车的IPO之梦告吹
The winter for China IPOs in New York has officially moved into deep freeze with the official announcement that car rental specialist China Auto, the first Chinese company to file for a US listing back in January, has formally scrapped the offering. (Chinese article) The official withdrawal, made in a filing to the US securities regulator, marks the end of a choppy story that saw the money-losing China Auto filled with optimism when it initially filed for a Nasdaq IPO to raise up to $300 million in January, hoping that US investor skepticism towards Chinese companies had eased following a confidence crisis the previous year due to a series of accounting scandals. The first signs that perhaps the climate hadn’t improved too much came in the next couple of months, when China Auto’s IPO failed to make much progress, presumably due to lack of investor interest. The situation got worse still when online discount retailer Vipshop (NYSE: VIPS) did finally become the first Chinese company to list in the US in March, but only after it had to drastically scale back the offering due to anemic demand. (previous post) And even then, its shares priced below their original range and dropped sharply in their first few trading days. Despite that dismal performance, China Auto moved ahead with its own offering, which also met with anemic demand that forced it to halve the size of its original capital raising plan. But even that reduced plan soon looked ambitious, and it ended up suspending the offering just hours before it was set to price in late April. (previous post) The aborted offering means we could soon go an entire year with just one new listing for a Chinese company in the US. The last major listing before the current freeze came back in August last year, when online video company Tudou (Nasdaq: TUDO) forged ahead with its IPO despite a weak market, with the result that the stock dropped sharply on its trading debut. (previous post) The CEO of the New York Stock Exchange’s operator said in an interview earlier this week that only 7 Chinese companies went public on NYSE Euronext stock exchanges last year, a third of the 22 companies that made IPOs on its exchanges in 2010 when Chinese companies — especially in the Internet sector — were investor darlings. (English article) If current trends continue, we could see just 1 company list on the NYSE for all of 2012, which undoubtedly would be a low not seen for many years. There’s still a possibility we could see 1 or 2 other offerings proceed, especially one for Shanda’s online literature unit, Cloudary, which appears to be moving forward after the company reported a surprising profit in its latest quarter. (previous post) But if that IPO also fizzles, which is a strong possibility, look for the winter for Chinese IPOs in New York to easily continue until this fall, and quite possibly through the end of the year.
Bottom line: China Auto’s official withdrawal of its New York IPO shows the current winter for US-listed Chinese offerings continues, and could easily last through the end of the year.
Related postings 相关文章:
◙ Shanda Cloudary Wows Investors With Profit 盛大文学利润令投资者惊叹
◙ IPOs: China Auto Slashes, People’s Daily Marches Ahead IPOs:神州组车减，人民网启动
Tencent E-Commerce: Another Money Loser IPO 腾讯电商：将又一个失败的
I was amused to read this morning that Internet titan Tencent (HKEx: 700) may choose its money-losing e-commerce platform for its first IPO, following its recent reorganization into 6 business units to allow each of those areas to sink or swim by themselves. The reports are a bit unclear about the timing of a potential IPO, and indeed say that such an offering is just one possibility for the newly formed unit as it seeks to raise more money to eventually create a broader e-commerce platform, presumably similar to Alibaba’s highly successful TMall. (English article) If that’s the case, I hope that executives are reading the newspapers these days, as investor appetite for money-losing Chinese Internet IPOs is extremely low these days and showing no signs of improving anytime soon. The only company to make an overseas Internet IPO this year so far has been Vipshop (NYSE: VIPS), a money-losing discount retailer, and that was a complete disaster. Other potential offerings from Shanda’s online literature unit, called Cloudary, and leading group buying site LaShou have all been delayed or disappeared completely, although Shanda appears to be moving ahead with its offer after its surprise disclosure that Cloudary recently turned profitable. (previous post) In terms of Tencent’s e-commerce business, it seems to me like the unit’s biggest asset is the Tencent name itself, since Tencent is clearly China’s biggest Internet firm and its leading player in online games and instant messaging. On the other hand, Tencent has had much less success in areas like e-commerce, which rely on an older, more cash-rich demographic of users unlike games and its instant messaging that tend to draw people in the 15-25 year old age range. Tencent’s newly formed e-commerce unit contains its older Paipai online auctions business, also known as C2C, along with a more recently established B2B platform that I’ve never heard of. The unit’s new head says that one of its strengths is its strong social networking element, which presumably helps to create a community among online buyers. Social networking is certainly one of Tencent’s strengths, but I doubt whether its core base of young users, with their low consuming power, would be very attractive to most e-commerce sellers. All that said, I wouldn’t expect to see Tencent make an IPO for this new e-commerce unit anytime soon due to the current frosty market. If I were advising Tencent founder Pony Ma on how to proceed, I would tell him to make an IPO first for one of the company’s more successful units, such as its social networking or online games business, which would certainly create a bit more excitement among investors. But if e-commerce does go first in the march to market for these new little Tencents, look for weak investor interest and a stock that probably won’t go anywhere but down after its trading debut.
Bottom line: Tencent’s spin off and potential IPO for its money-losing e-commerce unit looks like a poor choice for its first IPO following its recent reorganization.
Related postings 相关文章:
◙ Tencent: Preparing for Breakup? 腾讯或为分拆铺路
◙ Shanda Cloudary Wows Investors With Profit 盛大文学利润令投资者惊叹
◙ Tencent in Monopoly Spotlight; Baidu Next? 腾讯被诉垄断 下一个是百度吗？
Baidu Smartphones Set to Stumble 百度进军智能手机市场或以失败告终
I don’t like to sound too negative for 2 days in a row, but one day after predicting failure for PC giant Lenovo’s (HKEx: 992) new smart TV initiative I have to give a similar forecast for the recent rush into smartphones by a growing number of Chinese Internet players, with search leader Baidu (Nasdaq: BIDU) leading the charge. Chinese media have been buzzing for the last few days about Baidu’s new offering, a low-end smartphone that runs on the company’s self-developed operating system and was co-developed with TV maker Changhong (Shanghai: 600839). (Chinese article; English article) Baidu’s move follows the announcement of similar self-developed smartphones from online game specialist Shanda and Internet security firm Qihoo 360 (NYSE: QIHU), and the latest reports that online game specialist NetEase (Nasdaq: NTES) may also be getting into the space. (English article) Let’s have a closer look at the Baidu smartphone initiative, as that one is the most advanced, following the previous roll-out of an original Baidu model that failed to gain much attention under a partnership with Dell (Nasdaq: DELL). This latest tie-up with Changhong differs from the Dell model in that it is significantly cheaper, costing just 899 yuan, or about $140. I’ve looked at pictures of the new phone, and while a photo doesn’t always tell the full story, the handset truly does look clunky and cheap. I’m a bit surprised that Baidu is partnering with such unexperienced companies, first with Dell and now Changhong, in this initiative that is no doubt costing a lot of money. Dell is more known for its computers than cellphones, though the 2 product types do share some similarities. Changhong is known almost exclusively for its TVs, which have almost nothing in common with smartphones. That said, I really don’t expect much if any success for this new Baidu-Changhong model, which will have to compete with much more attractive low-cost smartphones from fast-growing domestic firms ZTE (HKEx: 763; Shenzhen: 000063) and Huawei, which mostly use Google’s (Nasdaq: GOOG) popular and reliable Android operating system. In fact, Baidu’s initiative looks like an attempt to imitate Google with Android, acknowledging the increasing importance of the mobile Internet. I applaud Baidu for putting big resources into this important new area, but honestly believe its smartphone initiative is set for failure. If Baidu wants to increase its chances of success, it could start by partnering with a major smartphone maker rather than Changhong, though I suspect many such players would be reluctant to form such a tie-up. Meantime, I would make similar predictions for the other smartphone initiatives from Shanda, Qihoo and now NetEase. I’m not sure why all these companies are taking such steps, as the smartphone market is already quite crowded with much more experienced and resource-rich players like Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). Perhaps all these companies just have too much money and are looking for a place to spend it.
Bottom line: Baidu’s smartphone initiative is likely to fail due to competition and inexperience, but could stand a better chance of success with better manufacturing partners.
Related postings 相关文章:
◙ Huawei Follows ZTE to Lower Profits 继中兴之后华为利润也降低
Renren: China’s Next Gaming Company? 人人网：中国下一个网游企业？
Renren (NYSE: RENN) has reported a widening loss that should normally be worrisome, and yet investors seem to be focusing on surprising strength in the online game business for this leading social networking site, which could perhaps finally lead it to its goal of long-term profits. The upbeat news for Renren’s game business comes as another major online game developer, Japan’s Nexon (Tokyo: 3659), is also reporting strong growth in its China business, testifying to the resilience of this market dominated by teen-agers and 20-somethings who seem less like to reduce spending on their hobby even as China’s economy shows signs of slowing. In fact, the slowing economy hit Renren’s other main business, advertising, in the first quarter, with ad sales climbing an anemic 15 percent as the business experienced a “challenging period”, Renren said in its results announcement. The advertising slowdown is hardly unique to Renren, with other major ad-dependent companies also like Sohu (Nasdaq: SOHU) and Phoenix New Media (NYSE: FENG) also reporting weakness in the most recent quarter. But while Renren’s advertising revenue reached just $9.3 million for the quarter, online game revenues soared 90 percent to $17.5 million, meaning games now account for more than half of Renren’s revenue. Despite that rise, the company’s net loss ballooned to $13.6 million, far bigger than the $2.6 million a year earlier. Investors clearly seemed to be focused on the upbeat story in online games, bidding up Renren shares by nearly 3 percent in after-hours trading after the results came out. If online games can continue growing at a similar rate, the business could potentially lead Renren to the elusive goal of long-term profitability, although such a shift would make the company look more like an online game company competing with names like Shanda Games (Nasdaq: GAME) and NetEase (Nasdaq: NTES) rather than a social networking company like Facebook. If that happened, Renren certainly wouldn’t be the first to make such a transition, as NetEase itself started out as a portal company before becoming a gaming giant, and gaming leader Tencent (HKEx: 700) also rose to fame on the back of its popular QQ instant messaging platform. Of course, the big risk in moving into online games is becoming dependent on individual game titles as a major revenue source, meaning one needs to develop or license a steady stream of new games to stay successful. Meantime, Nexon, supplier of a popular gaming title to Tencent, has said its China sales also rose similarly by nearly 90 percent in the first quarter and should remain robust throughout the year, even as the broader China online game market is only expected to grow about 12 percent. (English article) All that says that there’s still plenty of growth opportunity in China’s online game market despite the broader economic slowdown, though companies with popular titles and a wider arrange of complementary social networking offerings like Renren and Tencent could be better positioned to thrive in the current climate.
Bottom line: An unexpectedly rapid growth in gaming revenue could help lead Renren into the profit column by the end of this year, transforming it into an online game play.
Related postings 相关文章:
◙ NetEase: Still a Gamer With WoW Renewal 网易续签《魔兽世界》运营权
Shanda Cloudary Wows Investors With Profit 盛大文学利润令投资者惊叹
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
News Digest: April 14-16, 2012 报摘： 2012年4月14-16日
The following press releases and media reports about Chinese companies were carried on April 14-16. To view a full article or story, click on the link next to the headline.
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◙ Qihoo (NYSE: QIHU) Anti-Monopoly Lawsuit Against Tencent (HKEx: 700) to Start April 17 (Chinese article)
◙ Renault (Paris: RENA), Dongfeng (HKEx: 489) Sign Outline China Deal: Sources (English article)
◙ iCafe8 (Shenzhen: 300113) to Acquire Shanda Subsidiary Jisheng (English article)
◙ China Mobile (HKEx: 941) to Launch Commercial 4G Network in Hong Kong in Q4 (Chinese article)
◙ Microsoft’s (Nasdaq: MSFT) Leung Quits as Head of China, Prompting Reshuffle (English article)
◙ Latest calendar for Q1 earnings reports (Earnings calendar)
News Digest: April 10, 2012 报摘： 2012年4月10日
The following press releases and media reports about Chinese companies were carried on April 10. To view a full article or story, click on the link next to the headline.
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◙ Baidu’s (Nasdaq: BIDU) Lekutian Repositions, Launches Store Operations Service (English article)
◙ China’s Mobile Internet User Base Reaches 356 Mln (English article)
◙ LDK Solar (NYSE: LDK) Implements Large-Scale Lay-Offs – Source (Chinese article)
◙ Shanda Sells Non-Core Assets in Post-Privatization Clean-Up (Chinese article)
◙ Muddy Waters Says to Soon Release Short Selling Report on HK-Listed China Firms (Chinese article)
