Bottom line: The new connection between the Shanghai and Hong Kong stock exchanges will make China tech stocks accessible to Chinese investors, and could prompt more companies to abandon New York for Hong Kong IPOs
HK-Shanghai link opens doors for Chinese tech buyers
The newly launched link between the Hong Kong and Shanghai stock markets should breathe new life and stability into China’s volatile stock markets by making shares of mainland-listed firms accessible to sophisticated Western buyers with billions of dollars to invest. But equally exciting is a bumper crop of new investment opportunities that will soon become available to Chinese investors, who will finally gain access to wide range of top domestic high-tech firms that for years were beyond their reach. Read Full Post…
Bottom line: Qunar could experience some short-term loss of business due to the withdrawal of Home Inns properties from its site, and its open platform business model makes it prone to such problems.
Home Inns checks out of Qunar lodge
Signs of turmoil are coming from the lodge operated by Qunar (Nasdaq: QUNR), with word that the online travel agent has just lost a major customer with the abrupt departure of leading budget hotel chain Home Inns (Nasdaq: HMIN). The departure of such a major customer, if true, would mark a big blow to Qunar, which had a recent similar break-up with chief rival Ctrip (Nasdaq: CTRP). Home Inns’ decision is motivated by different reasons than Ctrip’s, which I’ll explain shortly. But the 2 spats highlight the fact that Qunar’s business model, which centers on an open platform for third-party travel agents, is far more prone to problems than traditional travel sites that directly sell products like hotel rooms and air tickets to consumers. Read Full Post…
Bottom line: Alibaba’s new mega bond will pressure it to find good uses for its huge cash pile, while Tencent’s Warner Music tie-up is part of a new wave of deals to monetize its SNS platforms.
Alibaba plans mega bond offer
Leading Internet companies Alibaba (NYSE: BABA) and Tencent (HKEx: 700) are both in the headlines today with major new deals, spotlighting their growing need to stay in the news to remind investors why they are valued so high. The larger of the 2 news bits has Alibaba planning to raise a hefty $8 billion through a bond offer, while the other has Tencent in a major new tie-up with Warner Music, one of the world’s top record labels.
I was mostly impressed by the sheer size of Alibaba’s bond offer plan, which is easily the largest I’ve seen by a Chinese Internet company. Tencent launched its own $5 billion bond program earlier this year, but has had to offer the notes in several tranches due to the huge size. (previous post) Baidu raised its own $1.5 billion in a bond offer 2 years ago, and in June announced plans for another major offering without specifying any specific fund-raising targets. (previous post) Read Full Post…
Bottom line: Shares of Sina and Youku Tudou will continue to be laggards due to their cloudy outlooks, and Youku Tudou could face even greater pressure if it doesn’t sell itself to a larger buyer like Alibaba.
Sina’s Q3 results fail to excite
Today marks the high point of the third-quarter earnings season for Internet companies, with leading web portal Sina (Nasdaq: SINA) and top online video site Youku Tudou (NYSE: YOKU) posting results that didn’t impress investors too much. Both companies reported operating losses for the quarter, even though each managed to pare those losses from previous periods. But the bottom line for Sina was anemic growth in its core advertising revenue, while Youku Tudou’s biggest trouble sign came from ballooning costs. Youku Tudou isn’t being helped either by an ongoing government crackdown against online video operators. Read Full Post…
Bottom line: An anti-corruption crackdown at Baidu is in line with a national campaign, but is unlikely to allay suspicion that the company manipulates search results to benefit itself and advertisers.
Baidu campaign snares 5 for corruption
A new report on an anti-corruption operation that snared 5 workers at Internet search leader Baidu (Nasdaq: BIDU) caught my attention for a number of reasons. At the broadest level, this campaign casts a spotlight on the kind of corruption that is rampant at many Chinese companies, where employees often use their position to earn extra cash by accepting bribes from people they do business with.
The bust is also the latest sign that private companies are joining the growing national anti-corruption campaign led by President Xi Jinping. Last but certainly not least, this move casts a spotlight on some of the less-than-transparent things that Baidu does to earn money from advertisers, who are often eager to pay extra to see their names appear high on search result lists. Read Full Post…
Bottom line: Tencent’s new WeChat-based free voice service could stand a good chance of success, but will face challenges due to technical issues and resistance from China’s traditional telcos.
WeChat launches free voice calling service
Internet giant Tencent (HKEx: 700) has just announced new quarterly results that show slowing growth for its core social networking (SNS) and gaming units, but everyone is far more interested in the low-key launch of a new free voice calling feature on its wildly popular WeChat platform. The new function, called WeChat phone book, lets users make real-time phone calls for free by routing them over the Internet, and is similar to that offered by the much older Skype. But unlike Skype, which only allows free calls to other Skype users, the new Tencent service allows users to make free calls to anyone with a fixed- or mobile phone account. Read Full Post…
Bottom line: Alibaba will to focus on globalization to maintain momentum for its overvalued stock, but the shares are likely to pull back in the first half of next year due to overvaluation.
Alibaba sales jump on Double Eleven
This year’s November 11 shopping day belonged to e-commerce leader Alibaba (NYSE: BABA), even though I’m just slightly reluctant to write too much about this overhyped company. But I would be remiss if I didn’t mention some of the impressive numbers that Alibaba logged during this year’s Double-Eleven Singles Day event, led by its headline total sales of 57.1 billion yuan ($9.3 billion), up 63 percent from last year. The market didn’t seem too impressed with the growth, with Alibaba’s shares tumbling 3.9 percent in the US trading day after the end of the Chinese shopping binge. Read Full Post…
Bottom line: Xiaomi’s new $1.5 billion funding is smaller than expected but gives it a strong valuation, as its small investments in Youku Tudou and iQiyi look like a smart way to quickly build up its product ecosystem.
Xiaomi gets rich valuation from new funding
There’s no shortage of news this week on hyperactive smartphone sensation Xiaomi, which is showing up at least 3 major headlines as it lands major new funding and explores potential tie-ups with China’s top 2 online video sites as well as faded smartphone pioneer BlackBerry (Toronto: BB). I almost have to catch my breath after writing all of that, as any one of these 3 stories would normally qualify as major news. The fact that all 3 are coming at the same time testifies to Xiaomi’s ability to do big deals, and its charismatic CEO Lei Jun may soon take the title for China’s most hyperactive tech leader from the current holder of that title, Alibaba (NYSE: BABA) founder Jack Ma. Read Full Post…
Bottom line: The Commerce Ministry should mediate an industrywide settlement over Alibaba’s claims to the Double Eleven Trademark to prevent the dispute from disrupting the nation’s e-commerce development.
Regulator should mediate Double Eleven dispute
As the buying frenzy builds to a crescendo on this year’s November 11 Singles Day, e-commerce giant Alibaba (NYSE: BABA) should be commended for turning an ordinary day of the year into a shoppers paradise that now generates more sales than any other major retailing day in the world. (company announcement)
But this year’s binge-buying day has also seen some controversy, as Alibaba’s flagship Tmall shopping site reportedly made behind-the-scenes threats to some media warning them not to run advertisements featuring the Double Eleven moniker. Tmall reportedly said such ads violated its trademarks, and indeed Alibaba has registered several trademarks related to the “Double Eleven” name that is a Chinese shorthand for the eleventh day of the eleventh month each year. (previous post) Read Full Post…
Bottom line: Mobile SNS firm Momo is likely to raise far less than the $300 million it has targeted for its IPO, as it kicks of a mini-surge of loss-making Chinese tech firms racing to list in New York by year end.
Momo kicks off year-end IPO rush
A record year of fund raising for Chinese firms on Wall Street could still have some life left, with word of another major offering plan by Momo, operator of mobile-based social networking (SNS) service. The company’s plan to raise up to $300 million would have looked ambitious at this time last year, when New York IPOs by Chinese firms were just starting to gain momentum after a nearly 3 year deep freeze. But that kind of target has become the norm in the current climate, and I expect we could see a flurry of similar-sized offerings over the next 5 or 6 weeks before the final curtain comes down on a banner year for Chinese tech IPOs in 2014. Read Full Post…
Bottom line: Shanda is likely to sell a controlling stake of its Cloudary online literature unit to an outside buyer, possibly Tencent, as part of a drive to hand over management of its major units to strategic partners.
Shanda’s Cloudary in rumored sale
The slow-motion break-up of former online entertainment high-flyer Shanda Interactive is back in the headlines, with reports the company has sold its online literature unit to Internet heavyweight Tencent (HKEx: 700). This particular rumor looks logical enough for reasons I’ll give shortly. But I’ve heard so many rumors about sale of part of all of Shanda over the past year that I’ll only believe this latest report when we hear an official confirmation. What’s clear from these latest reports is that Shanda founder and chairman Chen Tianqiao continues to look for opportunities to sell part or all of his company, as he reportedly grows restless with his lackluster businesses whose growth has stalled. Read Full Post…
