Bottom line: The move by Yahoo’s former China R&D chief to a major local Internet firm reflects growing work opportunities at Chinese companies, and waning attraction of China as an R&D center for big multinationals.
Former Yahoo R&D exec joins JD.com
A new move by a leading R&D executive is spotlighting a pair of major trends in China’s high-tech space, led by rapidly falling expectations for the market by big multinationals. The actual move has seen the former head of Yahoo’s (Nasdaq: YHOO) China R&D center take a new job at JD.com (Nasdaq: JD), China’s second largest e-commerce company, just weeks after Yahoo closed one of its last remaining Chinese operations. That move also highlights the growing attractiveness of big domestic companies for top R&D executives, who used to eschew such homegrown firms. Read Full Post…
Product development centers aren’t extremely expensive as investments, but they carry a much higher level of prestige for developing countries due to their status as cutting-edge centers for innovation. Against that backdrop, major new R&D moves by global corporate giants Adobe Systems (Nasdaq: ADBE) and Visa (NYSE: V) certainly don’t look too good for China. In the former case, software giant Adobe has announced it will shutter its China R&D facility, resulting in the loss of hundreds of jobs. In the latter, financial services giant Visa has also snubbed China by announcing a major new global technology development strategy that includes a new center in neighboring India but not in China. Read Full Post…
Blackstone, Temasek give thumbs down to Pactera, Youku
Two Chinese tech leaders are feeling the effects of fickle western institutional investors, with word that one big name has lowered its buyout offer for IT outsourcing firm Pactera (Nasdaq: PACT) , while another has dumped its sizable stake in video sharing site Youku Tudou (NYSE: YOKU). In the former case, it’s private equity giant Blackstone that’s lowered its offer for Pactera, while in the latter its Singaporean sovereign wealth fund Temasek dumping its Youku Tudou stake. Both cases are due to company specific factors; but they also show that big-name investors may carry a certain level of prestige for companies that attract them, but they also bring a certain level of risk. Read Full Post…
The latest earnings and outlook are breathing new life into low-cost smarphone chip maker Spreadtrum (Nasdaq: SPRD), but also showing why the market remains difficult for homegrown IT services firms like Camelot Information Systems (NYSE: CIS). Spreadtrum’s newly announced upside surprise could bode well for the broader field of companies that specialize in low-cost smartphones and their components, as China prepares to launch 4G mobile services later this year. Meantime, Camelot’s weak earnings are likely to continue for the foreseeable future, though at least it won’t have to publicly discuss those embarrassing numbers if its current bid to privatize succeeds. Read Full Post…
I’ll finish this Friday by taking a look ahead to next week, which should see the creation of a Chinese IT outsourcing leader when shareholders are likely to approve the combination of HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT), the nation’s top 2 listed firms. I hesitate to use the word “giant” to describe this newly merged leader, as it will still be relatively small with a modest $670 million in annual revenue and a market capitalization of just under $700 million. By comparison, Indian IT outsourcing giant Infosys (Mumbai: INFY) expects to earn over $7 billion in revenue for its current fiscal year, meaning the new HiSoft-VanceInfo will be less than a tenth as big.
Less than 2 weeks after HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT) announced their landmark merger agreement, we’re getting word of another significant acquisition in the IT outsourcing space with a new purchase plan by China-listed Beyondsoft (Shenzhen: 002649). The rapid announcement of 2 such major deals could indicate that much-needed consolidation is finally coming to this lucrative but highly fragmented industry, which holds the potential to produce major companies that could someday rival big Indian outsourcing firms like Infosys (Mumbai: INFY).
A new mega-merger between China’s two largest software outsourcing firms could lay the foundation for a new global powerhouse in the lucrative IT services sector, marking the second major corporate marriage in China this year between two industry leaders. More of these kinds of marriages are sorely needed to clean up fragmented high-tech sectors marred by rampant competition, but to make that happen many of China’s most vibrant entrepreneurial companies need to lose their mom-and-pop shop mentality and learn to act more like the major corporations they aspire to become.
I’ll finish this Friday by taking a look ahead to next week, which should see the creation of a Chinese IT outsourcing leader when shareholders are likely to approve the combination of HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT), the nation’s top 2 listed firms. I hesitate to use the word “giant” to describe this newly merged leader, as it will still be relatively small with a modest $670 million in annual revenue and a market capitalization of just under $700 million. By comparison, Indian IT outsourcing giant Infosys (Mumbai: INFY) expects to earn over $7 billion in revenue for its current fiscal year, meaning the new HiSoft-VanceInfo will be less than a tenth as big.
Less than 2 weeks after HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT) announced their landmark merger agreement, we’re getting word of another significant acquisition in the IT outsourcing space with a new purchase plan by China-listed Beyondsoft (Shenzhen: 002649). The rapid announcement of 2 such major deals could indicate that much-needed consolidation is finally coming to this lucrative but highly fragmented industry, which holds the potential to produce major companies that could someday rival big Indian outsourcing firms like Infosys (Mumbai: INFY).
