WEIBO TALK: TCL’s Valuation Envy, JD Looks Back At Dangdang
Internet executives were busy quashing a number of rumors on their microblogs this week, with smartphone sensation Xiaomi trying to stamp out reports of bitter relations with SNS giant Facebook (Nasdaq: FB), and e-commerce giant Alibaba (NYSE: BABA) quashing talk of a major new investment in South Korea. But some of the more interesting chatter focused on the concept of company valuations, and just how widely such valuations can vary for China’s dynamic tech firms.
At the same time, a coming flurry of year-end parties began to kick off in the run-up to the Chinese New Year holiday that’s just a month away. The microblogging realm saw e-commerce giant JD.com (Nasdaq: JD) singing its own praises at the company’s annual party, taking a shot at fast-fading rival Dangdang (NYSE: DANG) in the process. At around the same time, a stumbling Sina Weibo (Nasdaq: WB) also held an annual awards ceremony for notable microbloggers, in its own attempt to remain relevant in the social networking realm.
Let’s begin this week’s microblogging round-up with the valuation talk, which was sparked by some comments made by Wei Jianglei, senior vice president of leading web portal Sina (Nasdaq: SINA), and some responses by Li Dongsheng, chairman of leading TV maker TCL (Shenzhen: 000100). To put things in perspective, China’s 3 leading Internet companies by valuation are Alibaba, Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU), with respective values of $240 billion, $185 billion and $77 billion.
By comparison, Lenovo (HKEx: 992), which is the world’s largest PC maker and one of China’s largest tech firms by sales, only has a market value of about $14 billion. The picture grows even dimmer for TCL (Shenzhen: 000100), which is worth just $6 billion, even though it’s one of the world’s largest TV makers. By comparison, the much younger smartphone superstar Xiaomi received a lofty valuation of $45 billion when it raised new funds earlier this month, making it nearly 8 times more valuable than TCL.
Sina’s Wei Jianglei got the valuation discussion started when he puzzled over TCL’s purchase earlier this month of the faded Palm brand, which was once a smartphone pioneer but later fell into obscurity. (microblog post) He compared TCL to Lenovo, the latter of which has used a similar brand acquisition strategy to go global but has been more successful and is now worth twice as much as TCL.
TCL’s chief Li Dongsheng responded by expressing his own frustration over his company’s low market value, and looked enviously at Xiaomi’s recent figure. (microblog post) But then he rightly points out that the market is the best judge of a company’s performance, and therefore financial markets are the best determiner of a company’s value.
The tone was more upbeat in the chatter coming from JD.com, China’s second largest e-commerce company, which was celebrating a banner year with its own year-end party. JD got a lofty valuation when it went public in the US last year, and is now worth about $33 billion, even though it’s still losing money. That reality was almost certainly on the mind of JD’s public relations chief Yan Yuelong, who used the celebratory occasion to take a shot at rival Dangdang, which was one of China’s earliest e-commerce sites.
While Dangdang’s history dates back much longer than JD’s, the former currently has a market value of just $728 million, meaning JD is 45 times more valuable. Yan, speaking during the festivities at JD’s party, recalls that Dangdang’s chief Li Guoqing previously said that JD didn’t understand e-commerce and wouldn’t do well in the space. (microblog post) I’ll admit that I was also an earlier doubter of JD, though it’s clearly managed to prove both me and Li Guoqing wrong.
Finally there was Sina Weibo, which was once China’s dominant social networking company but has been rapidly overtaken by Tencent’s WeChat and other more mobile-friendly apps like Momo (Nasdaq: MOMO) in the last 2 years. Sina Weibo is still a major player in the space, though its market value looks rather modest at just $2.6 billion. It was trying to show its continued relevance on the Chinese Internet with a year-end ceremony where it gave awards to some of the year’s most influential microbloggers.
Within the tech realm, 2 award recipients included Lenovo CEO Yang Yuanqing and Chen Ou, CEO of the recently listed online cosmetics seller Jumei International (NYSE: JMEI), who both were named among the year’s most “capricious microbloggers”. Both Yang and Chen responded with their own comments on their awards, though neither was particularly insightful. (Yang’s post; Chen’s post)
Instead, the more revealing detail was the lack of any other major tech names on the list, and only Yang really qualities as an A-list tech executive. People who do business in China know that companies often pay to win such awards, and executives are only honored if they agree to come to pick up their awards. While many tech executives still have their own Weibo accounts, I suspect that most declined to put their names in contention for these new awards. That reflects the very real fact that Weibo’s attraction and influence are rapidly fading, as more web surfers flock to different services like WeChat.
