Spreadtrum, Samsung in Latest China 3G Model 展讯与三星再度联手开发中国标准3G智能手机

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After surviving a short seller attack last year, cellphone chip maker Spreadtrum (Nasdaq: SPRD) has taken the latest step in its drive to become a specialist in smartphone chips for use with China’s homegrown 3G standard, TD-SCDMA, by co-developing a second model with global giant Samsung (Seoul: 005930). (company announcement) Samsung’s roll-out of the Galaxy Note GT-I9228, using a Spreadtrum TD-SCDMA chip, is the Korean company’s second such model since last September, and signals the companies are forming a strong partnership for phones based on the 3G standard being used by China Mobile (HKEx: 941; NYSE: CHL). Now, of course, the big question will be whether China Mobile will start to promote TD-SCDMA service more aggressively, following a disappointing 2011 that saw it lose steady share in the 3G market to rivals China Unicom (HKEx: 728; NYSE: CHU) and especially China Telecom (HKEx: 728; NYSE: CHA). Spreadtrum shares have gone on a roller coaster ride over the last year, partly due to the inherent risk of investing so much in a technology with no track record and one that could ultimately see only lukewarm sales. Its share plunged in July after a short seller attack questioning an inventory buildup as the company broadened its product line as part of its TD-SCDMA bet. It ultimately survived that attack and its shares more than doubled from their lows at that time. But since November its shares have again lost about half of their value, due at least in part to disappointment about China Mobile’s lackluster promotion of 3G. Of course, part of the problem for China Mobile has been a lack of exciting smartphone models to run on its 3G network, so the introduction of 2 Samsung TD-SCDMA models should help address that problem. China Mobile has also sent out its own recent signals indicating it will make a stronger push in 3G this year under new management, though we have yet to see much real results of that. (previous post) If you’re a Spreadtrum investor, you’re most likely going to be closely watching China Mobile’s 3G subscriber numbers closely this year, as the chip maker’s stock price is likely to move in step with how quickly the network develops.

Bottom line: Spreadtrum’s latest tie-up with Samsung affirms its commitment to TD-SCDMA 3G standard, putting it at the mercy of China Mobile’s promotion of the untested technology.

Related postings 相关文章:

◙ China Mobile 3G: Where Are the Subscribers? 中国移动3G：订户在哪里？

◙ Spreadtrum, Mediatek in Cheap Smartphone Plays

◙ Spreadtrum Takes Smart Gamble on China 3G

Google: Getting Mapped Out of China? 谷歌地图：会退出中国市场吗？

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When you’re the world’s biggest Internet company even the smallest hiccups can make headlines, which is what Google (Nasdaq: GOOG) seems to be learning amid a flurry of chatter about the future of its online mapping service in China. The current saga actually began last year, when China required all mapping service providers to get new licenses, and it wasn’t clear whether Google would apply, leading some to predict another high-profile pull-out could be coming after the company moved its China search site to Hong Kong in 2010. (previous post) Google didn’t say much throughout the saga, perhaps due to the sensitivity of the matter, but eventually word got out that it had set up a joint venture as required by Beijing and indeed applied for a license. What has the world buzzing now is that a February 1 deadline has now passed for all mapping service providers to get their licenses, but Google still has yet to receive one. Reports have sprung up in the Chinese media like weeds in the last 2 days, most simply quoting the regulator saying Google has yet to receive its license without any further explanation. (Chinese article; English article) Of course, the lack of a reason has everyone guessing what is happening, with the implication that Google and Beijing are once again at an impasse similar to the one that saw it withdraw from the China search market. The only problem with all these theories is they make no sense, as there’s clearly no censorship issues, which were the major point of contention in the search dispute, involved with the mapping business. One of the more rational reports out is saying the delay is being caused by a technical issue, namely that some people at Google’s mapping venture are still waiting to get necessary clearances for the license to be issued. Clearly Beijing and Google have very little to gain from another high-profile spat, which is probably the reason both are trying to keep a low profile until the license is finally granted, which I fully expect in the next month or 2. In the meantime, look for the noisy Chinese media to keep printing conspiracy stories about what would be an insignificant story if it was about anyone else besides Google. At the end of the day, Google is still firmly committed to China, and, as I said at one point last year, I wouldn’t be surprised if it ultimately returned its search engine business to the country over the medium- to longer-term. (previous post)

Bottom line: Google’s failure to get a China mapping license before a February 1 deadline is most likely due to administrative issues, and it is likely to get the license in the next 1-2 months.

Related postings 相关文章:

◙ Latest Google Move: Gearing Up For China Return? 谷歌最新动向：打回中国市场？

◙ Google Map Impasse Resolved With New JV 谷歌地图风波解决

◙ Google Falling Off The China Map 谷歌地图：谈判也没用

News Digest: February 2, 2012 报摘： 2012年2月2日

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The following press releases and media reports about Chinese companies were carried on February 2. To view a full article or story, click on the link next to the headline.

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◙ Sina (Nasdaq: SINA) Weibo, Qihoo 360 (NYSE: QIHU) Form Strategic Partnership (English article)

◙ DuPont, Suntech (NYSE: STP) Sign Strategic Agreement (PRNewswire)

◙ Samsung Selects Spreadtrum (Nasdaq: SPRD) Baseband for Galaxy Note GT-I9228 (PRNewswire)

◙ CNOOC (HKEx: 883) to Invest $300 Million in Isofoton Venture for Solar Energy in China (English article)

◙ Baidu (Nasdaq: BIIDU) to Report Q4 2011 Results on February 16 (PRNewswire)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

55tuan Restarts IPO Race With LaShou 窝窝团和拉手网重启IPO争先赛

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An IPO race pitting 2 of China’s top group buying sites, LaShou and 55tuan, is showing signs of restarting in the Year of the Dragon, though I’m still a bit dubious of whether either of these 2 companies will ever really make it to market. New reports in the Chinese media say 55tuan is denying rumors that it has scrapped plans for a New York IPO, saying it is moving forward with a timetable for an offering in the second quarter. (Chinese article) The denial marks the latest twist in a race that started to take form last summer, when both 55tuan and LaShou appeared to be moving ahead with plans for offerings to raise much-needed cash. Both companies had trouble finding underwriters for their offerings, with names like Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) resigning from LaShou’s plan (previous post), while Credit Suisse (NYSE: CS) and Merrill Lynch reportedly declined to bid for the 55tuan deal. (previous post) All the big banks were reportedly concerned about the accounting used by both companies for some of their many acquisitions, amid a broader series of accounting scandals that hammered US-listed Chinese stocks last year. LaShou ended up hiring several second tier-players, including domestic heavyweight CICC and Japan’s Nomura; but one of my sources tells me that even Nomura ended up dropping the deal and was replaced by Britain’s Barclays Capital. LaShou appeared to have the edge in the race when it made its first public IPO filing last fall, but then saw that plan derail after the US securities regulator grew suspicious and asked for more information. (previous post) That happened in November and we haven’t heard anything since then, leading me to believe that the plan could be delayed indefinitely while LaShou does some major reworking of its books to satisfy both regulators and its own underwriters. In the meantime, I’m also skeptical that 55tuan will really make a second-quarter IPO, as it is having its own problems in the highly competitive group buying space that saw it make mass layoffs last year. Turmoil in the space appeared to claim its latest victim earlier this week when Groupon.cn, which has no relation to US giant Groupon, reportedly put most of its employees on extended holiday after the Chinese New Year break. (previous post) At the end of the day, one or both of these companies could finally make it to market, but both would be well advised to wait until the end of the year when they can generate more excitement — if they have the financial resources to survive that long.

Bottom line: A second-quarter IPO timetable for group buying site 55tuan looks overly ambitious, and an offering closer to the end of the year looks both more prudent and realistic.

Related postings 相关文章:

◙ Groupon.cn Becomes 2012 First Group Buy Victim 团宝网员工被放假 中国团购业料将加速整合

◙ LaShou IPO Derails

◙ 55tuan: A Company in Denial 窝窝团拒不接受现实

Starbucks Raises Prices, But Who Cares? 没人会在意星巴克提价

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If someone raises the price for an already ridiculously overpriced Gucci handbag, will shoppers really care? That’s the big question for Starbucks (Nasdaq: SBUX), which is tempting the lower-end luxury lifestyle market with its first price hike in 5 years, challenging China’s growing ranks of yuppies to pay 1-3 yuan more for their favorite cup of daily coffee. (English article) From a price perspective, this looks like a relatively modest hike, amounting to a 5-10 percent increase for coffee that already cost as much or more than a full meal at many local eateries. What’s more, Chinese consumers are already accustomed to price increases in this range, as inflation in 2011 hit some of the highest levels seen in years. But the real question is: will consumers even care when they are already so obviously spending money on a product that is really an extraneous low-end luxury good one of whose main functions is simply to let consumers show off their yuppie status? All of that said, my answer to the question is a definitive “no”, and I see little or no impact to Starbucks sales from this price increase. In fact, I could even see the opposite happening, with even more consumers flocking to Starbucks for coffee in order to show the world that higher prices won’t deter them from pursuing the yuppie lifestyle that Starbucks represents. Such consumers may also appreciate the fact that Starbucks waited for inflation to cool before making its move, unlike most companies that already raised their prices last year at the height of the inflationary cycle. I also like the way that Starbucks announced the move, informing its customers first on the popular Weibo microblogging platform in an attempt to ease the mild shock that some may soon feel on learning the price of their coffee has risen. What all of this says more broadly is that people will be willing to pay a premium for luxury goods in general regardless of mild price changes, as the value they get from such goods contains many intangible elements that can’t really be measured by the cost of the good to start with. All that said, Starbucks also realizes it’s not exactly a Gucci or Louis Vuitton, and has taken a prudent approach to its increase by keeping it modest, waiting until broader inflation is showing signs of cooling and being as transparent about it to consumers as possible.

Bottom line: Starbucks’ new price hike is unlikely to deter customers from buying its pricey coffee, and could even bring it more business from China’s growing ranks of yuppies.

Related postings 相关文章:

◙ Starbucks Goes Downmarket in China Drive 星巴克在华开拓低端市场

◙ Disney Bets on China Thirst for Luxury 迪士尼押注中国名品市场

◙ Starbucks Wide Open for China Business with New JV 星巴克在云南建合资厂

Citron Keeps Up Qihoo Assault 香橼继续攻击奇虎

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The year of the Dragon is off to a noisy start for controversial Internet security software firm Qihoo 360 (NYSE: QIHU), which is coming under yet another assault from a small western research house named Citron over the credibility of some of its user figures. Chinese media are reporting that Citron founder Andrew Left has taken his attack to China, where he did an interview with Shanghai’s influential China Business News telling the paper he will continue his campaign to debunk user numbers from Qihoo that he says are vastly inflated. (Chinese article) Citron began its assault back in November last year (previous post), saying at the time that Qihoo’s stock was probably worth about $5 per share rather than the $20 where it was trading. At the time Qihoo put out a strongly worded statement denying the allegations. But now the company’s controversial and usually combative founder Zhou Hongwei is keeping uncharacteristically quiet, saying he won’t engage in war of words over the issue which has clearly become quite sensitive. Qihoo’s shares initially fell to as low as $14 after Citron’s report first came out, but have bounced back since then and now trade at around $18. I’ll be quite frank and say I’m 1,000 percent confident that Citron has probably taken a big short position in Qihoo, and is starting to worry that it could lose big money on its bet, hence its reluctance to end its assault. At the same time, Zhou, who often uses ethically questionable business tactics, is actually taking a smart approach this time by staying quiet and letting his company’s performance speak for itself. All that said, I don’t think this story is over just yet, as I really do believe that Qihoo overstates its user numbers, though the magnitude of those overstatements is still unclear. By the time this story plays out, I’d look for Qihoo shares to trade a bit lower than where they are now, perhaps as low as $10, though I doubt they will hit the $5 mark unless a major scandal emerges. On a broader basis, what this prolonged war shows is that this kind of attack on US-listed Chinese companies, which became a common theme last year, will continue into the first half of 2012, as short sellers take advantage of the deep suspicions that still remain over Chinese accounting practices.

Bottom line: The protracted battle by a short seller against Qihoo 360 shows that such attacks will continue into 2012 and last at least through the first half of the year.

Related postings 相关文章:

◙ Report Takes Wind Out of Inflated Qihoo 奇虎遭遇Citron釜底抽薪

◙ Short Sellers Target China in Year End Assault 做空抛盘年底将矛头对准在美上市中国企业

◙ Xunlei, Muddy Waters Sound Upbeat Notes 迅雷和Muddy Waters保持谨慎乐观

News Digest: February 1, 2012 报摘： 2012年2月1日

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The following press releases and media reports about Chinese companies were carried on February 1. To view a full article or story, click on the link next to the headline.

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◙ Citron Continues Qihoo 360 (NYSE: QIHU) Attack, Qihoo Says Won’t Engage Verbal War (Chinese article)

◙ New Internet Map Rules to Take Effect, Google (Nasdaq: GOOG) Still Awaiting Approval (Chinese article)

◙ Lawmakers Press Obama on China Auto Parts (English article)

◙ China Telecom (HKEx: 728) Reportedly to Establish Cloud Computing Subsidiary (English article)

◙ 55tuan Says IPO Moving Ahead on Schedule, No Plans to Change Underwriter (Chinese article)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

China Telecom 3G Drive Set For Boost With iPhone 4S 中国电信3G推出电信版iPhone 4S

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It’s not exactly news at this point, but Chinese media are reporting that China Telecom (HKEx: 728; NYSE: CHA), the most aggressive of China’s 3 mobile carriers in the 3G space, has finally reached a deal to begin selling Apple’s (Nasdaq: AAPL) iPhone 4S on its network, with sales likely to begin sometime in the first quarter, possibly as soon as February. (English article; Chinese article) Talks for this deal have been going on for months and reported frequently in the media, and the debut would be at least a month behind the official iPhone 4S launch in China by one of the nation’s other carriers, China Unicom (HKEx: 762; NYSE: CHU) earlier this month. Still, the latest news was apparently enough to spook investors, with Unicom stock shedding 5 percent in Monday in Hong Kong trade and falling even more in overnight trade in New York. Apple’s iPhones are extremely popular in China, and security concerns over long lines at one Beijing Apple store actually led it to cancel its plans to sell the phone there earlier this month, resulting in some mild skirmishes. (previous post) That fact, combined with China Telecom’s generally aggressive approach to 3G, clearly has investors excited that China’s smallest mobile carrier will be able to further boost its momentum in the 3G space to take even more market share from Unicom and China Mobile (HKEx: 941; NYSE: CHL), the nation’s largest mobile carrier. China Telecom saw its share of China’s 3G market zoom to 28 percent by the end of 2011 from just 19 percent when the year began, as it took advantage of inferior technology at China Mobile and management missteps at Unicom to steal share from both of its rivals. The gains have brought China Telecom to within spitting distance of Unicom, whose 3G market share now stands at about 30 percent. If the iPhone deal finally does happen, which looks likely, and a launch occurs in February or March, I wouldn’t be at all surprised to see  China Telecom’s 3G share pass Unicom’s by the middle of the year, making China Telecom the company to watch in 2012.

Bottom line: China Telecom’s imminent launch of the iPhone 4S on its 3G network could help to propel it past Unicom to become China’s second biggest 3G carrier by the middle of this year.

Related postings 相关文章:

◙ Google, Apple OS Rivalry Intensifies 苹果与谷歌在华智能手机战白热化

◙ China Telcos In New Drives at Home, Abroad 中国三大电信运营商海内外发力

◙ 2011: China Unicom’s Lost Year 中国联通失落的一年

Groupon.cn Becomes 2012 First Group Buy Victim 团宝网员工被放假 中国团购业料将加速整合

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While recently listed Groupon (Nasdaq: GRPN) struggles with a tough group buying market in its US home base, one of its Chinese copycats, Groupon.cn, may be facing an even grimmer future as a much-needed cleanup of the ultra-competitive China market continues. Chinese media are reporting that Groupon.cn, which has no relationship with the US Groupon, has told most or all of its staff to stay on extended vacation following the end of the weeklong Chinese Lunar New Year holiday that ended on Sunday. (Chinese article) It also says a group of Groupon.cn’s partners are preparing to sue the company, presumably because it failed to pay them for their products that it offered for sale on its group buying site. Groupon.cn has denied the reports through a Weibo microblog posting, saying all of its activities have returned to normal since the end of the Lunar New Year holiday. Of course it’s possible the Chinese media reports are exaggerated, but I’m inclined to believe there’s at least an element of truth to them considering the disarray and rampant competition in the China’s group buying space. Gaopeng, the group buying  joint venture between the real Groupon and Chinese Internet giant Tencent (HKEx: 700), struggled during most of its first year of business last year, laying off hundreds of employees in the process. (previous post) Meantime, LaShou, China’s largest group buying site, is in the midst of trying to make a New York IPO that is showing few if any signs of moving forward after the securities regulator asked for more information, reportedly over concerns about some of its accounting. (previous post) Other signs of turmoil also emerged in the second half of last year, including layoffs at another top player 55tuan, giving this latest report about problems at Groupon.cn even more credibility. I would look for more headlines on this company once the situation becomes clearer, as it won’t be able to hide massive layoffs for too long if they really are happening. Perhaps the company will even sell itself to a rival, though such deals are relatively rare in China due to the big egos of bosses who hate to give up control of their businesses. Meantime, this development looks like the latest sign of distress for an overheated industry that is set for a major clean-up in 2012.

Bottom line: Reports of woes at Groupon.cn mark the latest phase in a cleanup for China’s overheated group buying space, which will see a major acceleration this year.

Related postings 相关文章:

◙ LaShou IPO Derails

◙ Latest Group Buying Turmoil Shows Up at 24quan, Meituan

◙ Lashou Files For IPO, Launching Race With 55tuan 拉手网与窝窝团打响IPO竞争战

Sany and Yingli Take Different German Tacks 三一重工和英利的德国交易或前景迥异

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I’ll start off today with a couple of news bits from Germany, one from the industrial equipment sector where Sany Heavy Industry (Shanghai: 600031) has made a major acquisition, and the other from the solar sector where Yingli (NYSE: YGE) has made a major sale. These 2 deals don’t really have much in common beyond the fact that both are in Germany, but for me the former illustrates a dubious approach for Chinese firms that want to enter Europe’s largest market, while the latter looks much more prudent. The first deal will see Sany acquire Putzmeister Holding, a concrete pump maker, in a purchase both companies say is the largest ever for a Chinese firm in Germany. (English article) The fact that they don’t give a price leads me to believe Sany didn’t give much cash for this deal, but rather is going to assume a big debt load for a company that may be marginally profitable or is more likely losing money. That would follow a pattern by other Chinese companies in Western Europe, including TCL’s (Shenzhen: 000100) purchase of the TV assets of France’s Thomson and the purchase of Siemens’ cellphone business by Taiwan’s BenQ, both of which ended in complete disasters and nearly drove their acquirers to financial ruin. In this case Sany looks equally unprepared for such a purchase, especially dealing with Germany’s tough labor laws and unions, and I see bad things ahead for both companies. In the other deal, Yingli has signed a deal to sell up to 200 megawatts worth of solar modules to a German company, IBC Solar AG, including 180 megawatts in 2012 alone. (company announcement) This kind of deal is of course much more traditional, involving a simple sale of products that has much less risk involved than the M&A approach being used by Sany. It also comes as Germany prepares to cut back many of its government incentives for installation of new solar projects, and looks like Yingli and IBC are racing to take advantage of some of those incentives while they can. (previous post) My final comment on these deals would be: Nice job on a big sale for Yingli, and, Look for stormy weather ahead, Sany.

Bottom line: Sany’s purchase of a German firm will see numerous problems in the next 2 years, while Yingli’s latest German sale looks like a major deal before government incentives are reduced.

Related postings 相关文章:

◙ LDK’s German Buy: Two Losers Combine 赛维LDK收购Sunways将使前者境况雪上加霜

◙ More Turbulence For Alternate Energy

◙ Year End Brings Problematic New IPO Wave 中国新一波IPO潮或无法达预期效果

News Digest: January 31, 2012

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The following press releases and media reports about Chinese companies were carried on January 31. To view a full article or story, click on the link next to the headline.

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◙ China Telecom (HKEx: 728), Apple (Nasdaq: AAPL) Reach iPhone 4S Deal – Source (English article)

◙ Yingli (NYSE: YGE) To Supply IBC With Up to 200 MW of PV Modules in 2012 (PRNewswire)

◙ Groupon.cn Staff Put on Extended Leave, Vendors Prepare to Sue (Chinese article)

◙ Apple (Nasdaq: AAPL) Appeals iPad Trademark Lawsuit (English article)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)