The following press releases and media reports about Chinese companies were carried on August 20. To view a full article or story, click on the link next to the headline.
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Huayi Bros (Shenzhen: 300027), Ping An Bank in 30 Bln Yuan Entertainment Tie-Up (Chinese article)
Lenovo (HKEx: 992) Joins Smartphone Compatriots for ’Make in India’ (English article)
Sina (Nasdaq: SINA) Reports Q2 Financial Results (PRNewswire)
Fund Piles Into Baofeng Tech (Shenzhen: 300431), Becomes Top Shareholder (Chinese article)
Tuniu (Nasdaq: TOUR) Takes Over JD.com’s Online Travel Business After Tie-Up (Chinese article)
Bottom line: Unigroup’s bid for Micron may be near death due to lack of interest from Micron and growing US political opposition, though Unigroup could revive its pursuit after next year’s presidential election.
Unigroup abandons Micron bid?
The blockbuster deal that had China’s Tsinghua Unigroup mulling a bid for leading US memory chip maker Micron (Nasdaq: MU) appears to be near death, with neither side commenting on the situation more than a month after news of the courtship first broke. It’s now been 4 weeks now since we’ve heard anything on the $23 billion deal from either Micron or Unigroup, the ambitious microchip maker connected to Tsinghua University, China’s leading sciences university.
But Micron’s share price hasn’t stayed quiet during that time, and has moved steadily downward to its current level of about $17.20. That represents a drop of 14 percent from a recent high of $19.90 in late July, when investors were still hoping that Unigroup would make a bid at $21 per share. While neither side has commented on the deal lately, one powerful US senator did come out last week and express his opposition. Read Full Post…
Bottom line: Qihoo could drop its privatization plan and launch a buyout offer for Coolpad, in a bid to protect its joint venture with Coolpad and stop a rival offer for the company from LeTV.
Bidding war shaping up for Coolpad?
A new media report is detailing an intriguing behind-the-scenes clash taking place between security software specialist Qihoo 360 (NYSE: QIHU) and online video company LeTV (Shenzhen: 300104), with big stakes involved for both sides. If the report is true, Qihoo is quickly finding itself in a difficult position that could end with collapses for its recent privatization bid or its joint venture partnership formed late last year with smartphone maker Coolpad (HKEx: 2369).
The clash is pitting 2 of China’s highest-profile Internet executives against each other, with Qihoo’s outspoken CEO Zhou Hongyi coming under a surprise attack from younger rival LeTV CEO Jia Yueting. In this case it appears Zhou may soon have to choose between going forward with his plans to privatize Qihoo, or abandon that plan and instead mount a counter-offensive to prevent LeTV from making a bid to take control of Coolpad. Read Full Post…
Bottom line: Lenovo should write-off its Motorola investment as a failure, and focus its smartphone efforts on building up its own brand rather than relying on more acquired foreign names.
Lenovo in need of Motorola write-off
PC giant Lenovo (HKEx: 992) repeated a frequent pattern last year when it purchased a former global leader, Motorola, with plans to resuscitate the struggling brand to boost its own smartphone business. It repeated yet another pattern last week when it said that early efforts to revive Motorola were failing, undermining its own profits and sparking one of the worst sell-offs for its shares in recent memory.
Having learned once more the difficulties of reviving broken western brands, Lenovo should now take the bold step of considering a complete write-off of its $2.9 billion Motorola purchase, or at least relegating the brand to niche status. The setback also shows more broadly why Lenovo and other globally-minded Chinese companies need to abandon the strategy of buying struggling global brands at bargain prices, and instead should focus on developing their own names. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 18. To view a full article or story, click on the link next to the headline.
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Former BofA Merrill Lynch GM Joins LeTV (Shenzhen; 3001014) as Fund Raiser (Chinese article)
Chong Hing Bank (HKEx: 1111) Plans to Raise HK$3.71 Bln in Rights Issue (English article)
Qihoo 360 (NYSE: QIHU) Privatization Plan Threatened by LeTV (Shenzhen: 300104) (Chinese article)
Bottom line: Pepsi’s launch of a new oat-based dairy drink in China using an online promotion looks like a smart and savvy marketing move to tap growing consumer demand for healthier beverages.
Pepsi rolls out China oat drink
PepsiCo (NYSE: PEP) is taking aim at increasingly health-conscious Chinese consumers with its introduction of a new oat-based dairy drink to the market. This particular new drink, which is called Quaker High Fiber Oats Dairy Drink, is also tapping Chinese fondness for online purchasing through a tie-up that will see it sold exclusively at first through a partnership with e-commerce giant JD.com (Nasdaq: JD).
This launch seems quite gimmicky, aimed as much at gaining publicity as it is at introducing a product that consumers will really want. But that said, Chinese consumers do seem to love a good gimmick, especially when it involves hip and trendy online activity. That fact has been reflected in the huge success of Single’s Day, an online shopping extravaganza created by Alibaba (NYSE: BABA), and the phenomenal success of smartphone maker Xiaomi, which for its first few years sold all of its products online only. Read Full Post…
Bottom line: Alibaba’s stock could be set for a modest rebound in the remainder of the year after a round of heavy institutional selling, while Baidu’s shares could see more downward pressure on concerns about its stagnating profits.
Alibaba shares set for rebound
Big news at the end of last week saw billionaire investor George Soros declare that he recently sold most of his shares in China’s 2 leading US-listed Internet companies, Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU), as he decided to lock in profits on concerns the stocks were overvalued. His actual holdings in both stocks weren’t that big, but his huge influence almost certainly prompted other big fund managers to follow suit. That could explain the big downward pressure both stocks felt during the second quarter.
Of course small investors like myself and anyone reading this post are usually the last to find out about this kind of trading by influential buyers, meaning it’s already already too late to trade on this news. But the more interesting prospect is whether or not shares of one or either companies have reached a bottom and could be set for a rebound. Read Full Post…
Yangpu residents protest senior housing development
The status of seniors in China has always been slightly puzzling to me, due to the many contradictions you often see between the way older people are supposed to be treated and what actually happens. Such contrasts aren’t exclusive to China, and the west has also had to deal with the issue of swelling populations of seniors created by rising living standards and longer life expectancies.
The classic image of reverence for the elderly in China has always felt like a bit of a myth to me, since it often seems like the younger generation treat this group with something more like indifference. Even so, I was still quite surprised to read recent reports about a big outcry that recently broke out over plans for a new nursing home in Yangpu District. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 15-17. To view a full article or story, click on the link next to the headline.
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Soros Cuts Stakes in Internet Giants Alibaba (NYSE: BABA), Baidu (Nasdaq: BIDU) (English article)
Bottom line: SMG’s Whaley Tech division has become the focus of its drive into the new media realm, following Li Ruigang’s departure from his post as group chairman to focus on the unit’s development.
SMG chief tries hand at smart TV
I don’t generally hold out much hope for traditional Chinese broadcasters for making the transition to new media, since most are bureaucratic, state-run outfits staffed by an older generation that doesn’t really understand the emerging industry landscape. But 2 companies that have the potential make the transition are Shanghai Media Group (SMG) and Hunan Satellite TV, which are both making big drives into digital products delivered in on-demand formats over the Internet.
Of the pair, my favorite is Hunan Satellite, since the company has a strong track record of innovation that has helped it to build a national audience despite its location in the relatively backward interior Hunan province. But SMG’s longtime chief Li Ruigang is also trying to show he can take his company into the new media era, with word that he’s formally quit as chairman of his group to focus on development of its new media businesses. Read Full Post…
Bottom line: Lenovo’s attempt to make Motorola the flagship for its smartphone business looks set to fizzle, in a major setback for the company’s drive into mobile devices.
Moto sales on downward slide
I’ve predicted gloom and doom before for PC giant Lenovo (HKEx: 992), China’s first truly global high-tech brand, and each time the company has proven me wrong. But Lenovo’s latest quarterly financial report really does look like cause for concern once more, showing results that can only be described as terrible. Anchoring the misery was a huge sales plunge for its recently acquired Motorola brand, which was meant to become a cornerstone for Lenovo’s emerging smartphone business.
In some ways this particular cycle looks like deja vu, since Lenovo followed a similar pattern when it burst onto the global stage a decade ago with its landmark purchase of IBM’s (NYSE: IBM) PC business. That acquisition also later created major headaches for Lenovo, and resulted in a massive restructuring that ultimately laid the groundwork for the company to become the world’s leading PC brand. Read Full Post…
