Bottom line: Huawei’s revenue growth for 2017 is likely to drop by more than half from 2016’s rate of 32 percent as it cuts its money-losing businesses, with the biggest slowdown likely to come in its smartphone unit.
Huawei to focus on profitability in 2017
Quality over quantity is a growing theme in China these days, as the nation puts aside its previous pursuit of high growth at any cost in exchange for more sustainable expansion in high-quality areas. After starting at the top in Beijing, that theme is trickling down the corporate food chain to telecoms giant Huawei, whose New Year’s message hints that company growth could slow sharply this year.
Or course everything is relative, since Huawei has just announced preliminary results that show its revenue for 2016 jumped an impressive 32 percent to 520 billion yuan, or a whopping $74 billion. To put things in perspective, its biggest global rival Ericsson (Stockholm: ERICb) is seeing its sales contract, and is expected to post about $65 billion in revenue this year. Read Full Post…
Bottom line: Closure of Shanghai’s Oriental Morning Post was inevitable due to the decline of traditional media, and its online effort ThePaper stands a better than 50 percent chance of longer-term survival due to relatively good execution.
Oriental Morning Post yields to ThePaper
On this next-to-last work day before the New Year, I’m taking a break from the usual high-tech buzz to zoom in on a subject that’s even closer to my heart — and wallet. That subject is the rapid transformation sweeping through the media both in China and the west, creating huge uncertainties. That wave is in the headlines today with announcement of the closure of one of Shanghai’s largest and most respected newspapers.
Here I have to admit my own bias, since as a Shanghai resident until recently I was at one point quite fond of the Oriental Morning Post, which has just announced it will cease publication on January 1. The news is hardly shocking, as it was first rumored in the middle of the year and a couple of my sources informally confirmed it for me since then. Read Full Post…
Bottom line: China Telecom’s sale of several key entertainment assets to a separately run and listed unit reflects the company’s more dynamic nature compared with its 2 peers, as it tries to create services that can compete with private-sector rivals.
China Telecom (HKEx: 728; NYSE: CHA) is showing once more why it’s a telco to watch, with word that it’s formally spinning off 4 of the main entertainment businesses on its main E Surfing platform to one of its independently run and listed units. In this case the telco is spinning off the four to its fully-owned but separately managed Besttone Holdings (Shanghai: 600640) unit, in what looks like a bid to make these services more competitive with private sector rivals. Read Full Post…
Bottom line: Tencent’s new investment in Nokia’s former mapping unit Here reflects the Chinese herd mentality to pile into new technologies, but also looks like a relatively savvy way to enter the space by pairing with experienced partners.
Tencent ties with mapping giant Here
Internet giant Tencent (HKEx: 700) doesn’t want to be left behind in the race with rivals Baidu (Nasdaq: BIDU) and Alibaba (NYSE: BABA) into self-driving new energy cars that may someday dominate the streets of both China and the world. That appears to be the message from the latest headlines, which have Tencent involved in a somewhat complicated deal that will give it a small stake in a high-powered mapping company that counts car giants BMW, Daimler and Audi as its main investors. Read Full Post…
Bottom line: The departure of 2 recently hired executives from Faraday Future hints at chaos and uncertainty that has spread from struggling backer LeEco, a situation that only looks set to worsen.
Faraday Future execs depart
Cash-challenged online video company LeEco (Shenzhen: 300104) is getting an early shock in the run-up to the world’s largest consumer electronics show, with word that two top executives have defected from its Faraday Future electric car unit. Anyone reading about these company for the first time is probably scratching his or her head, trying to figure out what exactly online video and electric cars have in common and why a relatively young Internet company like LeEco would be in this business. But that’s exactly the problem. Read Full Post…
Bottom line: iQiyi won’t make an IPO next year even though Baidu would like to get the company off its books, while Renren’s privatization marks one of the last buyouts for a US-listed Chinese firm from a wave dating back to last year.
iQiyi reportedly eyes 2017 IPO
The year 2016 is winding down as an unmemorable one for Chinese IPOs, thanks to a rocky start that cast a chill over the entire space. That said, the new year could be a bit more lively, amid signs that China’s securities regulator is opening the gates a bit wider to new offerings. That signal could bode well for offshore listings as well, with word that loss-making online video site iQiyi, controlled by online search leader Baidu (Nasdaq: BIDU), is contemplating such an offering next year. Read Full Post…
Bottom line: Alibaba’s Taobao marketplace is likely to be included on the annual US “notorious markets” for piracy list for the next 1-2 years, after its return to the list this year.
Alibaba’s Taobao gets coal for Christmas
Christmas may be just around the corner, but the folks at e-commerce giant Alibaba (NYSE: BABA) won’t be feeling much holiday cheer this year. That’s because Alibaba’s hugely popular Taobao C2C marketplace has just been included on the latest edition of Washington’s annual “notorious markets” for piracy list, in a sharp rebuke to the company. The move reverses an earlier decision by Washington 4 years ago, when it took Taobao off the list to acknowledge its efforts to fight the problem. Read Full Post…
Bottom line: ZTE’s move into smart cars and Gome’s into smartphones follow a typical Chinese pattern of herd mentality investing, and are both likely to fare poorly.
ZTE buys car maker Granton
A couple of headlines are shining a spotlight on the herd mentality you often see among Chinese companies looking for the next big growth opportunity. One of those has telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063) buying a small bus maker, parroting a trend among a growing number of firms who see the future in smart vehicles. The other has the increasingly irrelevant electronics retailer Gome (HKEx: 493) rolling into the smartphone business, an area in desperate need of consolidation due to cutthroat competition. Read Full Post…
Bottom line: The acceptance by Gree’s chairman of a surprise shareholder rejection over a controversial investment, and a muted sell-off in response to a short-seller attack on Huishan Dairy both signal growing maturity by Chinese stock investors.
China stock investors grow up
A couple of stock stories in the headlines as the new week begins are spotlighting a nascent but encouraging sophistication of shareholders in Chinese-listed companies. Such investors are traditionally famous for a sheep-like mentality that sees them blindly pile into and out of stocks based on rumors, heard-on-the-street advice or even simply a name change, with little regard for reality about the company’s business prospects.
But perhaps these latest two incidents show a growing sophistication that could bring some much-needed stability to Chinese stocks, which are famous for their volatility. Leading the headlines is word that the chairman of home appliance giant Gree (Shenzhen: 000651) has accepted a recent rejection by shareholders over a controversial investment plan in an electric car company. At the same time, shareholders of Huishan Dairy (HKEx: 6863) have largely ignored a new report by notorious short-seller Muddy Waters, in contrast to earlier times when such an attack might have sparked a sheep-like panic causing the company’s shares to plunge. Read Full Post…
Bottom line: TCL’s new licensing deal with BlackBerry will end up as a quiet failure due to TCL’s weak R&D skills and lack of consumer appeal to the BlackBerry name.
TCL, BlackBerry in licensing tie-up
When does adding two negatives yield a positive? The answer is “never”, but dying smartphone makers BlackBerry (Toronto: BB) and TCL (Shenzhen: 000100) are hoping that maybe this time will be different. Of course, it’s easy for me to predict disaster for this particular new alliance, and I’d be much bolder if I said this partnership might revive the two dying companies. But the truth is that neither BlackBerry’s nor TCL’s smartphone business have much going for them these days. Read Full Post…
Bottom line: Wanda’s cautionary words to Donald Trump are unlikely to have much impact on the incoming US president, who is likely to take a more skeptical view of Chinese M&A in Hollywood.
Wanda appeals to Trump via MPAA
Wanda Group founder and chief Wang Jianlin is used to getting what he wants, especially when it comes to overseas buying as he tries to build up a global entertainment empire. But one of China’s richest men is clearly rattled by the ambivalent or even hostile attitude towards his country by US president-elect Donald Trump.
Worried about the changing winds in Washington, Wang has turned to Hollywood’s mouthpiece, the Motion Picture Association of America (MPAA), to tell Trump that Hollywood could face huge consequences if he tries to shut down China’s recent buying binge. Wang has been Hollywood’s most enthusiastic shopper these days, purchasing cinema operator AMC Entertainment (NYSE: AMC) and studio Legendary Entertainment over the last few years. He also announced a recent deal to buy Dick Clark Productions, and recently signed a major co-production deal with Sony Pictures. Read Full Post…
