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News Digest: December 17-19, 2011

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The following press releases and media reports about Chinese companies were carried on December 17-19. To view a full article or story, click on the link next to the headline.

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◙ Sina (Nasdaq: SINA) Announces New Rules on Microblogging by Beijing Municipal Government (PRNewswire)

◙ Alibaba’s $4 Billion Loan Takes Shape (English article)

◙ Spreadtrum Communications (Nasdaq: SPRD) Announces Share Repurchase Program (PRNewswire)

◙ Youku (NYSE: YOKU), Tudou (Nasdaq: TUDO) Trade Copyright Infringement Allegations (English article)

◙ HNA Group Completes $1.05 Billion Purchase of GE Container-Leasing Venture　（English article)

Bristol-Myers, EMC Tap China Priorities With New Tie-Ups　　趁中国政策导向东风 百时美施贵宝与EMC联姻本土企业

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A couple of new tie-ups involving major foreign players in pharmaceuticals and computing provide an interesting glimpse at how multinationals are trying to target their China initiatives to be in sync with Beijing’s latest policy agendas. The strategy of working with a local partner isn’t all that new, but in this case what’s more interesting is the targeted approach these two new tie-ups are taking, the first aimed at taking advantage of China’s ongoing massive overhaul of its healthcare system and the second at Beijing’s push to become a leader in cloud computing. Let’s look at the pharmaceuticals deal first, which is seeing Bristol-Myers Squibb (NYSE: BMY) teaming up with local drugmaker Simcere Pharmaceutical (NYSE: SCR) to make and sell a cardiovascular compound in China. (company announcement) The compound was developed by Bristol-Meyers Squibb, but Simcere will make and sell the drug in China, drawing on its strong connections to local regulators and other health care officials. This kind of deal is smart as it gives Bristol-Myers exposure to a coming boom for quality medicines as Beijing signs a series of multimillion-dollar deals to make those drugs available under its ongoing overhaul to make basic healthcare affordable for everyone. The second deal will see faded PC firm Great Wall Computer form a cloud computing joint venture with EMC (NYSE: EMC), the world’s biggest maker of data storage devices. (Chinese article) China has repeatedly said that cloud computing will be a major focus for development in the next few years, prompting a wide range of players to get in on the action, including Huawei and Alibaba. I see no reason why a big western name like EMC should try to get a piece of the action, and indeed, Microsoft (Nasdaq: MSFT) made a similar move last month with its own China-based R&D initiative in the space. (previous post) My only cause for concern with EMC is that Great Wall is hardly a big name in China anymore, and it also has a strong legacy as a state-run company, meaning it might not be the best partner for this kind of venture that calls for a more entrepreneurial approach. But that said, at least I have to credit EMC for being foresighted enough to get into this space while it’s still in the formative stages in China.

Bottom line: New China tie-ups between Bristol Myers-Squibb and EMC with partners in their respective sectors look like smart moves to take advantage of Beijing’s latest development priorities.

Related postings 相关文章:

◙ Microsoft Looks for Place in China Cloud 微软投身中国云计算大潮

◙ Merck Finds Potent China Partner in Simcere 默克牵手先声药业

◙ Growth-Addicted Huawei Looks to the Cloud 华为渴求增长上瘾 着眼云计算

News Digest: December 14, 2011

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The following press releases and media reports about Chinese companies were carried on December 14. To view a full article or story, click on the link next to the headline.

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◙ HTC (Taipei: 2498) Sues Citi (NYSE: C) in Taiwan After Share Price Fall (English article)

◙ Sinopec, (HKEx: 386) ENN (HKEx: 2688) In $2.2 Bln Bid For China Gas (HKEx: 384) (English article)

◙ SouFun (NYSE: SFUN) Declares Cash Dividends to Shareholders (Businesswire)

◙ Alibaba Says Etao Search Engine Won’t Think About Profits For 3 Years (Chinese article)

◙ ZTE (HKEx: 763) 2011 Smartphone Sales Top 12 Mln (Chinese article)

Alibaba Scrambles to Prove High Valuation 阿里巴巴高估值或将作茧自缚

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E-commerce leader Alibaba, scrambling to find financing to buy back a 40 percent stake in itself held by Yahoo (Nasdaq: YHOO), is in a sudden scramble to tell the world why it’s worth $32 billion — a number it helped to float into the market back in September and one which, in my view, seems ridiculously high. In separate news bits from the last day or so, media are reporting the company’s Etao e-commerce search engine has launched a historical pricing search feature (English article), while its popular Taobao consumer-oriented sites have launched social networking functions. (English article) First Etao, which Alibaba hopes to build up as an e-commerce search specialist to one day take on industry titan Baidu (Nasdaq: BIDU). This historical price search function seems like a good idea, as it would make it easier for cost-conscious consumers to track previous prices for items they want to buy. The only problem is that historical prices could soon be the only thing that Etao can show, as several major online retailers, including 360Buy and Dangdang (NYSE: DANG), have blocked their items from being indexed in Etao search results. (previous post) Meantime, the social networking functions being built into Taobao seem like a direct attempt to take on existing SNS sites like Renren (NYSE: RENN) and Sina’s (Nasdaq: SINA) Weibo. While this strategy of building on its industry-leading C2C and B2C platforms to build up SNS sounds interesting, the two areas are relatively unrelated and few if any Chinese web firms have successfully executed similar strategies despite many efforts to leverage popular existing services to build up a new, unrelated ones. This flurry of initiatives seems designed, at least in part, to show the world why Alibaba thinks it may be worth $32 billion. Its only listed unit, Alibaba.com (HKEx: 1688) has a market cap of about $5 billion. That means that its other big assets, which mostly consist of a very successful Taobao Mall and more modestly successful Etao and its Alipay e-payment service, would have to be worth $27 billion collectively, which seems unlikely. Ironically, Alibaba’s high estimation of its own value could ultimately come back to hurt it, as Yahoo apparently seems to want to sell its 40 percent of Alibaba based on that overinflated value. The true amount will come out when a sale finally occurs, but I suspect the final valuation will be closer to $20 billion.

Bottom line: Alibaba is trying to convince the market it is worth $32 billion, but a sale of 40 percent of the company held by Yahoo will probably show a much lower valuation.

Related postings 相关文章:

◙ Alibaba Tests Waters for Yahoo Buyout – Again 阿里巴巴再试水竞购雅虎股权

◙ Alibaba’s Incredible Shrinking Profit Growth 阿里巴巴盈利呈加速放缓趋势

◙ Albaba Faces New Assaults From Merchants, 360Buy 阿里巴巴受到中小商户和京东商城的双重夹攻

 

News Digest: December 8, 2011

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The following press releases and media reports about Chinese companies were carried on December 8. To view a full article or story, click on the link next to the headline.

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◙ Alibaba Wants to Buy Back Yahoo (Nasdaq: YHOO) Stake For $13 Bln – Source (Chinese article)

◙ China Approves Nestle’s (Switzerland: NESN) Candy Maker Purchase (English article)

◙ Apple (Nasdaq: AAPL) Loses iPad Trademark Lawsuit in Shenzhen (English article)

◙ Buffett Makes a Big Bet on Solar (English article)

◙ China Factory Unrest Spreads Amid Economic Uncertainty (English article)

Alibaba Tests Waters for Yahoo Buyout – Again 阿里巴巴再试水竞购雅虎股权

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Alibaba chief Jack Ma is clearly not someone to take “no” for an answer, as evidenced by his company’s latest effort to assemble a group to buy out its controlling shareholder, Yahoo (Nasdaq: YHOO). There’s not enough detail in a media report (English article) to make too much sense of this latest attempt, after Ma was rebuffed during the summer when he suggested a similar buyout.  But all things considered, this new attempt could stand a much better chance of success. First the facts. The media report on the bid is coming out of New York, meaning the sources are probably private equity firms that are working with Alibaba on the deal, giving the story a bit more credibility. Given the history of Ma’s previous attempt at a buyout (previous post), I suspect that what’s happening now is that this latest group will propose buying out Yahoo and then immediately selling off its core US-based portal operations to a prearranged buyer. Ma’s Alibaba-led group would then be left with Yahoo’s two main Asian assets, namely the 40 percent it owns of Alibaba and its stake in Yahoo Japan (Tokyo: 4689), a joint venture with Japan’s Softbank (Tokyo: 9984). Not surprisingly, Softbank is also a member of the group that Alibaba is leading for this latest buyout deal, according to the report. I have to say that this deal, if this is indeed what’s happening, stands a much better chance of success than Ma’s earlier effort, as it would keep Yahoo’s core operations under US ownership and management while selling its 2 big Asian assets back to their respective local partners. In fact, Reuters reported earlier this week that another major private equity group, Thomas H. Lee Partners, was hoping to do a leveraged buyout of Yahoo’s US business (English article), meaning that bid would fit nicely with a split-up scenario that Alibaba and Softbank may be trying to engineer. According to the latest report, Alibaba would only formally launch its latest offer if Yahoo is interested in such a deal, meaning it won’t consider a hostile bid. But if a break-up is indeed part of Alibaba’s plan that would allow Yahoo’s core operation to remain in US hands, and if the price is right, this latest bid could stand a much better chance of success.

Bottom line: A new buyout attempt of Yahoo by an Alibaba-led group could stand a good chance of success if the aim is a break-up of Yahoo.

Related postings 相关文章:

◙ Alibaba Sharpens Focus in Yahoo Buy-Out, Taobao Mall 阿里巴巴回购雅虎所持股权有望

◙ Alibaba: The Little Genie That Roared?

◙ Alibaba’s Incredible Shrinking Profit Growth 阿里巴巴盈利呈加速放缓趋势

 

News Digest: December 1, 2011

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

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◙ China Cuts Bank Reserves in Policy Shift To Lift Economy (English article)

◙ Alibaba-Led Group Said to Prepare Yahoo (Nasdaq: YHOO) Bid (English article)

◙ Changyou (Nasdaq: CYOU) to Buy Game Info Portal 17173.com from Sohu (Nasdaq: SOHU) (English article)

◙ Baidu (Nasdaq: BIDU) YouA Spins Off, Receives Eight-Figure USD Funding (English article)

◙ LDK Solar (NYSE: LDK) Announces Plan to Issue RMB3,000,000,000 Notes (PRNewswire)

Microsoft Looks for Place in China Cloud 微软投身中国云计算大潮

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China is clearly excited about the prospect of cloud computing, as evidenced by the steady stream of big names like Alibaba, Huawei and Shanda (Nasdaq: SNDA) that have announced initiatives in the space this year. Now even Microsoft (Nasdaq: MSFT) is trying to get in on the act, announcing a major new cloud computing campaign for China. Whether any of these initiatives will ultimately work is another question, however, as China has yet to prove that it can lead in any major new technology like this. First let’s look at Microsoft’s latest initiative, which will see it build a cloud platform and trading center in the interior city of Chongqing. (English article) This comes just days after Chinese media also reported the NDRC, China’s state planner, had reportedly distributed about $100 million in subsidies for cloud-based initiatives. (English article) Since foreign companies are usually banned from investing in telecoms infrastructure like the kind necessary for cloud computing, Microsoft’s move looks designed to try and cash in on the trend from another angle, in this case from R&D that should enable it to work with other infrastructure developers. Huawei said earlier this year it was also holding out big hopes for the cloud (previous post), and Alibaba is placing a big bet on the technology through its Alicloud unit. With so much state support and some of the country’s biggest tech names behind this cloud push, perhaps one or two companies may eventually find a bit of success in the space, especially if they can team with big foreign names like Microsoft that have stronger technology. But as China has often shown in the past, it takes more than money and state directives to become a leader in a complex new area like the cloud, and I suspect that many of these initiatives will ultimately end up as failures, as major Western players ultimately develop the technology that takes cloud computing from the laboratory to the real world.

Bottom line: China’s aim to be a leader in cloud computing will produce lackluster to poor results due to its lack of experience in commercializing new technologies.

Related postings 相关文章:

◙ Growth-Addicted Huawei Looks to the Cloud 华为渴求增长上瘾 着眼云计算

◙ Shanda’s New Deal: Spinning Off Literature 盛大文学拟分拆上市

◙ Shanda Cloudary Returns to Market, Worth a Look

News Digest: November 26-28, 2011

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The following press releases and media reports about Chinese companies were carried on November 26-28. To view a full article or story, click on the link next to the headline.

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◙ Alibaba (HKEx: 1688) Drops Most in More Than Two Years on 2012 Outlook (English article)

◙ Now China to Probe US Renewable Energy Support (English article)

◙ Gap (NYSE: GPS) Says to Triple China Network in 2012 (English article)

◙ China Lodging Group (Nasdaq: HTHT) Updates October Hotel Operating Performance (PRNewswire)

◙ NDRC Dispenses RMB 660 Mln in Cloud Subsidies – Source (English article)

 

News Digest: November 25, 2011

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The following press releases and media reports about Chinese companies were carried on November 25. To view a full article or story, click on the link next to the headline.

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◙ Group Buying Site 24quan Closes, Thousands of Users Refused Service (Chinese article)

◙ Alibaba (HKEx: 1688) Third-Quarter Profit 410 Million Yuan; In Line With Estimates (English article)

◙ Group Buying Site Meituan Issues Options to Employees – Source (English article)

◙ China Workers Strike at Lingerie, IBM (NYSE: IBM) Parts Factories Demanding More Pay (English article)

◙ China Telecom (HKEx: 728) Gets China Rights for iPhone 4S – Source (Chinese article)

Tidbits: Alibaba, Anhui Conch, Sinopec, China Mobile

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There are quite a few too good stories out there today, so here are some quick takes on a few that didn’t make the headlines but look interesting nonetheless.

— The chief executive of Alibaba’s Etao has held a high-profile media briefing to announce his company, operator of a search engine specializing in e-commerce, will invest 1 billion yuan in its business. (English article) This event is a clear signal to the market that Alibaba intends to stand by this investment despite recent moves by a number of major e-commerce sites, including 360Buy, Dangdang (NYSE: DANG) and Suning (Shenzhen: 002024), to block their pages from inclusion in Etao’s search results.

— Sinopec (HKEx: 386; NYSE: SNP) is reportedly in talks to buy a stake in Galp’s Brazilian Unit, for what’s sure to be an overinflated price. (English article) This latest potential mega-acquisition by a Chinese oil major just shows how China’s policy of buying global assets at any cost to feed its growing economy continues to be in effect, even as oil prices show every sign of coming down for an extended period.

— The China Daily is reporting that Anhui Conch (Shanghai: 600585; HKEx: 914), one of the country’s leading cement makers, aims to go global by purchasing distressed international assets for bargain prices, as most of the world’s construction industry suffers during the global downturn. I would look for this company to carry through with this plan with a major announcement or two over the next year, but have serious doubts about its ability to manage such global assets.

— Chinese media are reporting that China Mobile‘s (HKEx: 941) long-running talks with Apple (Nasdaq: AAPL) to make a TD-SCDMA iPhone have finally broken down, confirming what I had already suspected several weeks back. (Chinese article) If true, which seems likely, this would be a relatively major setback for China Mobile, which was counting on the iPhone to breathe some life into its anemic 3G business.