Today I want to take a look at the latest developments from 2 companies that have both tried to play in the US stock markets, but ultimately found out that international investors can be a fickle group. In both cases, outdoor advertising specialist Focus Media and group buying specialist LaShou discovered that foreign equity markets can be quite lucrative and prestigious, especially for up-and-coming Chinese firms that can make successful IPOs. But both firms have also discovered those same markets can also be brutal places for Chinese companies that aren’t used to dealing with sophisticated institutional investors, hedge funds and short sellers that are active in those markets.
As today marks the unofficial end of a long earnings season, I thought I would take a look at the latest numbers from Sina (Nasdaq: SINA) and Dangdang (NYSE: DANG), 2 former superstars that are trying to make difficult transitions to remain relevant on the Chinese Internet. Frankly speaking, the numbers from both companies don’t look very exciting and seem to reflect continuing difficulties at both companies. But investors seem to be overlooking the troubles and instead are focusing on the few bits of good news in the reports, with shares of both companies posting solid gains after their financials came out. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 17. To view a full article or story, click on the link next to the headline.
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Sina (Nasdaq: SINA) Reports Q1 Results (PRNewswire)
After years of inactivity, China’s Internet sector has seen a sudden flurry of M&A deals with potential to consolidate the fragmented space and create some truly world class companies that could one day compete with the likes of Amazon and Google. While commercial factors are mostly behind this sudden M&A spring, Beijing could also play a limited role by encouraging more consolidation, helping to lay the foundation for a vibrant and sustainable Internet sector that could become a global leader. Read Full Post…
A sudden flurry of activity has caught my attention at Sohu (Nasdaq: SOHU), one of China’s oldest Internet portals, which has splashed into the headlines several times in the last couple of months after years of being ignored by investors. What has most caught my attention most this time around was a comment in one of the recent reports that Sohu founder and Chairman Charles Zhang was recently experiencing some kind of emotional fatigue, which leads me to wonder if the company may be headed for a breakup. Read Full Post…
SNS moves beyond idle chatter in after Ya’an quake
The Ya’an earthquake now already 2 weeks ago has cast an interesting new spotlight on China’s vibrant field of social networking services (SNS), showing a different side to these sites that are largely seen as little more than frivolous, time-wasting toys. As a frequent user of Chinese sites like Sina (Nasdaq: SINA) Weibo, Tencent (HKEx: 700) WeChat and Facebook (Nasdaq: FB), I can personally testify that I mostly use these sites to fill up idle time at home or on the subway, often when I’m trying to procrastinate or am just feeling bored. But these sites are suddenly earning new praise as a critical communication tool during the Ya’an earthquake, arguably the first major global disaster since SNS services began their meteoric rise less than a decade ago. Read Full Post…
Less than 2 weeks after buying a major stake in leading Chinese microblogging site Sina (Nasdaq: SINA) Weibo, e-commerce leader Alibaba is back on the acquisition track with word that it’s on the cusp of another deal to buy a similar strategic stake in mapping services firm AutoNavi (Nasdaq: AMAP). While this newest deal would be a bit smaller than the Weibo tie-up, it marks the latest transaction in a nascent M&A wave among China tech firms that looks set to gain momentum during the rest of the year. Read Full Post…
Media are buzzing today with word that talks have broken down in a landmark deal that would see PC giant Lenovo (HKEx: 992) buy the low-end server business from IBM (NYSE: IBM), in a multibillion dollar deal that would have been Lenovo’s largest purchase ever. But my observation from years of reporting this kind of deal is that the story isn’t over yet, and this disagreement is just a negotiating ploy by both sides before they resume their talks and reach a deal. The reason is simple: both sides want to see this deal happen, because it makes too much strategic sense for either to abandon.
Note: Since originally writing this post, Sina and Alibaba have formally announced their tie-up. (company announcement) Under the deal, Alibaba has purchased 18 percent of Sina Weibo for $586 million, valuing Weibo at about $3.3 billion. The pair said they expect the alliance to generate $380 million in revenue for Weibo over the next 3 years. Sina shares jumped nearly 10 percent after the news came out.
Weibo, Alibaba in new tie-up
It looks like I may have been premature in declaring last month that talks for a tie-up between leading web portal Sina (Nasdaq: SINA) and e-commerce leader Alibaba were dead. According to the latest reports, the pair have resuscitated their negotiations that began late last year and later collapsed due to disagreement over a valuation for Sina’s popular Weibo microblogging platform. Now media are reporting the talks have quietly resumed in recent weeks, and a deal could be announced very soon. (English article; Chinese article) Read Full Post…
Internet search leader Baidu (Nasdaq: BIDU) can’t seem to do anything right these days, even when it posts quarterly earnings results that look relatively respectable to me. I suspect that the same short-term traders who bid up Baidu’s stock to meteoric heights in the years after its 2005 IPO are now trying to make more money by short selling the company. That’s my best explanation for the 8 percent sell-off in Baidu stock in after-hours trade after it posted its latest quarterly earnings report. If the losses carry into the regular Friday session, Baidu could easily see its market capitalization drop below the $30 billion mark as its stock tests new lows not seen for more than 3 years. Read Full Post…
A new media report is underscoring the importance of games for the future of China’s mobile app developers, who are desperately looking for ways to monetize the big sums of money they spend developing such applications. Social networking sites Sina (Nasdaq: SINA) Weibo, Tencent (HKEx: 700) and Renren (NYSE: RENN) are all good examples of companies that have quickly built up communities of tens and even hundreds of millions of users by developing popular desktop and mobile apps. But earning money from those huge communities has proven much more difficult, as all of these companies are quickly discovering. In that environment, games have emerged as one of the few things that users of these popular apps are actually willing to pay for. Read Full Post…
