Bottom line: Lenovo’s latest results show a company on the cusp of prolonged downturn over the next 2-3 years, as efforts to resuscitate its ailing smartphone business look set to sputter.
Lenovo stands at a crossroads
When is a $714 million loss good news? It appears the answer is when your name is Lenovo(HKEx: 992), the world’s biggest PC maker, which has just thrilled investors by reporting the massive loss in its latest quarterly results. It seems investors were braced for even worse, expecting a loss of just over $800 million due to a previously announced $923 million one-time charge as it cleared out massive inventory of its low-end smartphones that have failed to find a market in China or overseas.
Of course I’m being slightly sarcastic in my assessment, since such a massive loss is never a good thing and Lenovo in this case simply wasn’t losing as money as quickly as many were expecting. But the better-than-expected result still sparked a rally for Lenovo’s shares in Hong Kong, with the stock finishing up nearly 6 percent after an earnings report that was quite uninspired otherwise. Read Full Post…
Bottom line: Tencent’s recent cash-raising frenzy probably signals a major equity investment coming in the next few months, with a merged Meituan-Dianping or Activision as the most likely targets.
Tencent raises more cash via syndicated loan
Tencent(HKEx: 700) may be the lowest-key of China’s big 3 Internet companies, but the company has been far louder on the money- raising scene by borrowing billions of dollars in cash lately. The social networking (SNS) giant has raised billions through a series of bond issues over the last year, and now looks set to raise another $1.5 billion through a syndicated loan that it’s reportedly negotiating with several major western lenders.
All this raises the question of what exactly Tencent is targeting with all the new cash. The company has been the least acquisitive of China’s big 3 Internet companies, which include itself, Alibaba(NYSE: BABA) and Baidu(Nasdaq: BIDU), amid a major consolidation in China’s Internet over the last 2 years. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 13. To view a full article or story, click on the link next to the headline.
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China’s Postal Savings Bank Nears $8 Bln Stake Sale Ahead of IPO (English article)
Lenovo (HKEx: 992) Posts First Quarterly Loss in 6 Years (English article)
JD.com (Nasdaq: JD) Announces Singles Day Orders Up 130 Pct (GlobeNewswire)
Ele.me Confirms to Receive Investment from Car Services Provider Didi (Chinese article)
MSCI to Include Chinese ADRs in Benchmarks as Xi Focuses on Tech (English article)
Bottom line: Alibaba’s 60 percent sales growth on Singles Day is truly impressive, but was almost certainly boosted by merchants that delayed logging transactions on its network until the 24-hour period to help meet their sales targets.
Alibaba shatters Singles Day sales record
The numbers are in, and e-commerce juggernaut Alibaba (NYSE: BABA) has posted a record performance for this year’s Singles Day online shopping extravaganza that has surprised even me for the margin by which it surpassed last year’s record. I’ll end the suspense right away and reveal that Alibaba posted 91.2 billion yuan ($14.3 billion) worth of sales over its platforms during the 24-hour online shopping binge, up more than 50 percent from last year’s $9.3 billion. (company announcement)
To put that in perspective, Alibaba posted $112 billion in gross merchandise value (GMV) for goods sold over all its platforms in this year’s entire second quarter. That means the Singles Day total is equal to 13 percent of its entire total for the 3 months through September, quite impressive for a single day. Read Full Post…
Bottom line: An unexpected mid-sized transaction between Baidu and Perfect World could indicate the former is preparing to buy the latter, with an aim to building up a major new player in the online gaming and literature spaces.
Baidu eyeing Perfect World?
Leading search engine Baidu(Nasdaq: BIDU) has reportedly just sold its online literature unit to the recently privatized Perfect World, in a rare reversal for China’s big Internet companies that have been far more active as buyers over the last 3 years. The deal is relatively small, with a reported sale price of 1.2 billion yuan, or about $190 million.
Media are focusing on the fact that Baidu paid far less when it bought the literature unit for a reported 190 million yuan from the same Perfect World just 2 years ago, meaning Baidu earned quite a nice profit on the investment. But more intriguing is the possibility that this move could presage an acquisition of Perfect World by Baidu, which looks quite logical for a number of reasons I’ll describe shortly. Read Full Post…
Bottom line: A deal for Alibaba to buy a minority stake in Hong Kong’s SCMP looks logical despite dubious sourcing in reports on such talks, and could help to revive the group’s flagging fortunes by bringing in new partnerships and other resources.
Alibaba eyes traditional media with SCMP investment rumors
Just days after word emerged of a major shake-up in the newsroom of the South China Morning Post (HKEx: 583), new reports are saying that Chinese e-commerce giant Alibaba(NYSE: BABA) may be interested in a major investment or even outright purchase of Hong Kong’s leading English-language newspaper. Sourcing on the reports is quite flimsy, which I’ll describe shortly and makes me slightly dubious that such talks are happening.
But such a move also has a certain logic, since the SCMP’s current owner is reportedly looking to sell the newspaper that has a relatively modest current market value of about HK$2.8 billion ($360 million). What’s more, Alibaba has also been moving aggressively into the media and entertainment spaces, including its recent purchase of leading online video site Youku Tudou(NYSE: YOKU) and formation of a joint venture with a leading mainland financial newspaper. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 12. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Generated $14.3 Bln GMV on Global Shopping Festival (Businesswire)
Perfect World to Reaquire Online Literature Unit from Baidu (Nasdaq: BIDU) – Source (Chinese article)
Bottom line: A new alliance between Ericsson and Cisco, and inability to quickly bring its new Nexus 6P smartphones to China reflect the challenges Huawei will face to maintain its growth as it comes under new pressures both at home and abroad.
Ericsson-Cisco alliance challenges Huawei
Two new developments involving Huawei are spotlighting the kinds of challenges the Chinese telecoms giant will face as it tries to maintain growth for its older networking equipment and newer and rapidly rising smartphone business. The larger of the two items have global giants Cisco (Nasdaq: CSCO) and Ericsson (NYSE: ERIC) forming a major new alliance that could provide big new competition for Huawei. The second comes in a smaller news item that has Huawei saying it will launch its new Google (Nasdaq: GOOG) smartphone in Taiwan later this month, but quietly adding it won’t be bringing the Nexus 6P model to its home China market anytime soon.
Huawei grew at a breakneck pace in the first decade of the 21st century, as it made quick inroads into global markets where names like Ericsson and Motorola traditionally dominated. But that growth has slowed sharply in the last few years as the building of traditional telecoms networks slows worldwide. The slowdown has hit not only Huawei, but also led to major consolidation in the global networking equipment industry. At the same time, demand has been growing more strongly for individual company-based networks that are a specialty of Cisco. Read Full Post…
Bottom line: JD’s decision to shutter its Paipai C2C marketplace looks like a smart move, as China looks set to crack down on online trafficking in fake goods that is often rampant and hard to police on such sites.
JD to shutter Paipai by next April
E-commerce JD.com(Nasdaq: JD) has just announced it is formally shuttering it Paipai C2C site, citing difficulties policing the thousands of small merchants and individuals who sell products on the site. Timing of the move is slightly strange, since JD announced the downbeat decision just a day before the November 11 Singles Day, which has become the world’s biggest day for online shoppers.
On the surface at least, the move looks like a major victory for archrival Alibaba(NYSE: BABA), whose Taobao online marketplace competes directly with Paipai and controls the vast majority of China’s C2C e-commerce market. But the move also represents a major tactical decision for JD, since C2C markets are notoriously difficult to police for fakes, substandard products and fraud due to the huge number of merchants they host. Read Full Post…
Bottom line: Alibaba’s Singles Day sales this year are likely to meet its targets, growing by at least 20-30 percent, but the company should put less emphasis on such figures in the future and focus more on creating a high quality shopping event.
Alibaba shopping fest kicks off with a blast
It’s only a third of the way into the day as I write this, but e-commerce leader Alibaba(NYSE: BABA) is making sure I have more than enough data to last me the entire day as we kick off this year’s edition of its popular November 11 Singles Day online shopping extravaganza. The company began putting out figures as soon as the clock struck midnight, and has been issuing a steady stream of data ever since showing just how successful the spending fest has become.
I’ll review some of the early figures shortly, and admit they’re quite impressive in numbers-obsessed China. But that said, I’ve also heard from friends about the huge behind-the-scenes pressure that Alibaba is putting on its partners to meet their sales targets for the holiday, which in turn will help it post the impressive gains it’s seeking for its own sales. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 11. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Generates $5 Bln GMV in First 90 Minutes of Singles Day Festival (Businesswire)
