Lenovo Headed for M&A Hangover 联想激进并购或留下後患

I hate to sound too negative on PC giant Lenovo (HKEx: 992), as I really do admire this company for its noble aspirations to become China’s first truly commercial global tech giant. But that said, I have to say that I’m also increasingly concerned about Lenovo over the next 2-3 years, as its fixation with global acquisitions seems to be going on steroids these days. The company’s growing addiction to global M&A was on display once again in the headlines today with Lenovo’s announcement that it would acquire Stoneware, a US developer of cloud computing products and services. (company announcement)

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Ctrip Bonds: Outspending Private Rivals 携程债券:超出私募的竞争对手

As competition intensifies in nearly every major space on the Chinese Internet, companies are finding themselves increasingly in need of new money as their profits tumble and cash reserves dwindle. The options for new funding are particularly limited for younger private companies, whose main source of money is usually private equity and venture capital that is relatively limited. Older listed companies have more choices, since they can tap financial markets by issuing bonds or new shares to raise money. That distinction is seeing a small but growing number of older Chinese Internet firms raise money by issuing new debt to compete with their smaller but very aggressive rivals in the fight for market share. In the latest development on that front, leading online travel services provider Ctrip (Nasdaq: CTRP) has just announced plans to issue up to $140 million in convertible bonds . (company announcement)

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Alibaba Buy-Out: Slow Growth Ahead 阿里巴巴未来增速或放缓

Financial markets have given their verdict on the future growth prospects for e-commerce leader Alibaba, and frankly speaking the long-awaited assessment doesn’t look too exciting or promising. I said last week when word first emerged that Alibaba was near a deal to buy back 20 percent of its shares held by Yahoo (Nasdaq: YHOO) that the most interesting elements would be the valuation Alibaba got from the transaction, as well as the name list of investors. (previous post) For starters, the valuation that Alibaba got from the deal is a bit disappointing for a company whose value rocketed from just $2.5 billion when Yahoo first purchased its stake in 2005 to more than $30 billion last year on the explosion of China’s e-commerce market.

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News Digest: September 19, 2012 报摘: 2012年9月19日

The following press releases and media reports about Chinese companies were carried on September 19. To view a full article or story, click on the link next to the headline.
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  • Alibaba Closes $7.6 Bln Share Buy Back and Restructure of Yahoo Relationship (Businesswire)
  • Jingdong Mall Says Already Reached Agreement With Home Depot (NYSE: HD) (Chinese article)
  • Huawei to Release Windows Phone 8 Smartphone – Source (English article)
  • Ctrip (Nasdaq: CTRP) Announces Proposed Offering of $140 Mln Convertible Notes (PRNewswire)

Passive Baidu Limits Liability for Piracy  百度被判定对盗版侵权承担有限责任

A new court decision in a piracy case against search titan Baidu (Nasdaq: BIDU) is throwing a spotlight on a painful reality that has seen China’s fledgling music and publishing industries undermined by poor organization and a lack of support from Beijing. The reality is this: While big Western publishers and music labels have home governments and their own powerful industry groups lobbying on their behalf, Chinese authors, musicians and other makers of copyrighted products lack such groups or support from Beijing to promote their cause. Thus the Chinese content producers are virtually powerless to stop the piracy of their material on big-name sites like Baidu, which facilitate trade of illegally copied material through file swapping services.

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ZTE on Long Smartphone March 中兴走上智能手机“长征”路

Telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063) is hoping to avoid the fate of faded cellphone giants Nokia (Helsinki: NOK1V) and Motorola by focusing on smartphones as it hones an expansion strategy that it hopes will revive its stagnating fortunes. That seems to be the latest message from the embattled company, whose profits have plunged in recent quarters as its core telecoms equipment business weakens and it pumps major new investment its cellphone unit. Personally speaking, I do think the emphasis on smartphones is a smart one as these computer-like phones are clearly the wave of the future and will probably outsell older phones within the next 5 or 6 years.

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Melting LDK Looks for Buyer 崩溃中的江西赛维寻找买家

There are quite a few developments on the solar energy front today, led by the release of new financial results from LDK (NYSE: LDK), the weakest of China’s major solar panel makers, that show a company in the midst of a meltdown. Meantime, Beijing has officially protested a US law that allows Washington to levy punitive tariffs against overseas industries that receive unfair state support, such as China’s solar sector. Both the US and Europe believe China supports its solar sector with unfair subsidies and have taken various punitive actions; and now India is also launching its own similar investigation, dealing yet another blow to the struggling sector.

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News Digest: September 18, 2012 报摘: 2012年9月18日

The following press releases and media reports about Chinese companies were carried on September 18. To view a full article or story, click on the link next to the headline.
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  • China Launches WTO Challenge to US Anti-Subsidy Tariffs (English article)
  • Western Union (NYSE: WU) Signs ICBC (HKEx: 1398) for Account Money Transfer Services (Businesswire)
  • LDK Solar (NYSE: LDK) Reports Financial Results for Q2 of 2012 (PRNewswire)
  • China Telecom (HKEx: 728), Unicom (HKEx: 762) Lower Price of iPhone 4, iPhone 4S (English article)
  • ZTE (HKEx: 763) Adjusts 2012 Cellphone Growth Target to 30 Pct (Chinese article)

News Digest: September 15-17, 2012 报摘: 2012年9月15-17日

The following press releases and media reports about Chinese companies were carried on September 15-17. To view a full article or story, click on the link next to the headline.
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  • China’s Sany (Shanghai: 600031) Seeks Covenant Waiver on $510 Mln Debt (English article)
  • Home Depot’s (NYSE: HD) Do-It-Yourself Model Fails in China’s Do-It-For-Me Market (English article)
  • China Telecom’s (HKEx: 728) Anhui Unit Begins Accepting iPhone 5 Pre-Orders (English article)

Alibaba-Google: China’s Android Addiciton 阿里巴巴—谷歌:中国的“安卓瘾”

Despite its high profile exit from the mainland search market in 2010, Google (Nasdaq: GOOG) has quietly regained its position as a powerful force in China these last two years through the rapid rise of its Android mobile operating system (OS) that powers many of the nation’s smartphones. Its new rise was on display last week, as the US Internet giant threw a major wrench into the smartphone plans of Alibaba, China’s leading e-commerce company. With most Asian cellphone makers increasingly dependent on Android, Chinese firms that will depend on the mobile Internet for future growth need to think about creating their own new mobile platforms to rival Android. Otherwise they will risk becoming hostage to the world’s biggest Internet company, which could use its clout to ensure its own products always take precedence over its Chinese rivals’.

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AgBank: Looking Good As Rivals Struggle? 中国农行或受不良贷款危机影响最小

I’ll be the first to admit I’m far from an expert on China’s banks, but the latest signs coming from the sector lead me to wonder if perhaps Agricultural Bank of China (HKEx: 1288; Shanghai: 601288), the least respected of the country’s big 4 lenders, may be best positioned to weather the bad loan crisis sowing chaos in the industry. China’s broader banking sector is facing one of the worst crises since many of the nation’s banks started going public in the mid-2000s, as lenders are unable to collect billions of dollars in loans made for questionable infrastructure projects during the global financial crisis. The problems is being compounded by the nation’s current economic slowdown, fueled in large part by anemic exports and foreign investment as the rest of the world grapples with lingering effects of the global recession.

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