I read with amusement this morning a report stating that Baihe, one of China’s smaller social networking sites, is still letting people register under any name they choose, even though Beijing rolled out a controversial “real name registration” system months ago designed to curtail rumor mongering. The report, which looks credible, reflects the very real fact that such real name registration has been difficult if not impossible for not only Baihe but also much bigger names like Sina (Nasdaq: SINA) and Tencent (HKEx: 700) posing a very real risk for these Internet titans if and when Beijing decides to enforce the real name rule, or even worse, to punish companies that have failed to comply.
Tag Archives: Kaixin
Facebook Keeps Calling on China Facebook继续推动进军中国市场
Bottom line: The latest reports on Facebook’s China plans indicate the company is aggressively aiming to enter the market, with a potential new joint venture possible by the end of this year.
Related postings 相关文章:
◙ Facebook, NY Times Make New China Moves Facebook和纽约时报在华新动向
◙ Despite China Rebuff, Facebook Going Back for More Facebook明知山有虎，偏向虎山行
◙ Twitter Eyeing China? Twitter想进中国？
New Crackdown Spotlights Social Networking Risk 新的打压凸显社交网络风险
It’s a beautiful spring day here in Shanghai, and if you’re an avid microblogger you’re probably getting up and perusing the latest news and gossip on Sina’s (Nasdaq: SINA) popular Weibo service to read and pass on to your friends the latest news about your favorite celebrity or social issue. But a quick attempt to pass on someone else’s posts with your own insightful comments attached is suddenly impossible — blocked by Weibo itself as punishment from Beijing for spreading rumors, underscoring again the perils big companies face when setting up shop in China’s social networking realm. (English article) The news that Sina’s Weibo and another popular microblogging service from Tencent (HKEx: 700) are both being punished for spreading rumors should come as a surprise to no one, though enthusiastic investors who purchased stock of both companies on big hopes for their microblogging services might decide that Monday is a good time to sell some of their shares. The reports on what happened are actually quite detailed, saying both Sina and Tencent angered Beijing by allowing rumors to spread on their services that troops had moved into the nation’s capital as part of a coup attempt that never happened. Beijing has always been sensitive about any kind of rumor that could foment social unrest, and those sensitivities will only increase this year as the nation prepares for a major handover of power from the current leaders following the end of their official 10-year term in office. What’s interesting in this situation is the very public way in which the matter is being handled, with news of the false rumors and unspecified punishment both appearing in a report from Xinhua, the central news agency considered the voice of the Communist Party itself. No specifics of the punishment have been disclosed, and I suspect both Sina and Tencent will face limits on their microblogging operations and perhaps some small fines over the short term. But the longer term implications could be much more worrisome, with both companies facing big consequences — including even a possible shut-down — if they commit any similar transgressions in the year ahead during the sensitive power handover. That could pose a big risk to both companies, as well as other microblogging services, as all have now officially been warned that Beijing won’t tolerate any political rumors in the months ahead. That means all these services will undoubtedly delete any political postings on their services that are even remotely political for fear of offending Beijing, which could easily anger many of their millions of users who will no longer be able to post many of their thoughts online. Advertisers will also undoubtedly think twice about wanting to play in such a dangerous space, where their ads could not only suddenly become in accessible but they could also risk angering Beijing by doing business with companies accused of spreading rumors. This latest development comes only months after Beijing announced its “real name” policy for all microblogging sites, requiring them to register all their users by their real names, again as a measure to try and curb rumor mongering and other unsavory activities such as scams. (previous post) Sina, Tencent, NetEase (Nasdaq: NTES) and other microblog site operators aren’t the only ones at risk, as other social networking site operators like Renren (NYSE: RENN) and Kaixin, whose services are more similar to Facebook, could just as easily be accused of spreading rumors and also be punished. To anyone considering buying shares of any of these companies, I would just reiterate that they may have good great growth potential due to the size of China’s Internet market — which recently passed 500 million users — but they also come with huge risk. Especially in the coming year with the leadership change, these companies will have to be especially careful about what they allow on their sites, and can risk punishment or closure at any time. At the same time they face the risk of punishment by their own users, who might become frustrated with all the new restrictions and could easily end up abandoning their accounts.
Bottom line: The latest punishment for Sina and Tencent microblogging services for spreading rumors underscores the big risks China Internet companies face due to political considerations.
Related postings 相关文章:
◙ Real Name Registration: Burden or Not for Weibo? 实名制会否成为新浪微博的负担？
Renren Growth Continues, Profits Elusive 人人网营收增长 盈利仍未可期
A day after social networking site Kaixin released some limited financial information hinting it may soon restart its stalled IPO process, its chief rival, publicly listed Renren (NYSE: RENN) has released its own preliminary fourth quarter results telling investors not to expect a profit anytime soon. The news sent a chill over Renren stock, which tumbled by more than 6 percent in after-hours trading. In fact, the preliminary announcement doesn’t look all that bad in terms of top line growth, despite the gloom profit outlook. (company announcement) The company said it will meet its expectation for fourth-quarter revenue growth in the 50-55 percent range, and said it should be able to maintain that rate for this year — a positive outlook since Kaixin said its own revenue growth last year came in at a more modest 41 percent. (previous post) But on the more worrisome level, Renren said it should post an operating loss of around $16 million for the fourth quarter, continuing a trend of widening losses from a company that was briefly profitable before sinking into the loss column last year. Furthermore, Renren said it will not be profitable this year, as it focuses instead on building up its business. While I applaud Renren for its honesty and also its focus on long-term growth over short-term profits, the widening of its losses will surely come as a major disappointment for investors, who thought they were buying into a company that was already profitable when Renren first listed its shares last year. Since then Renren’s stock has moved steadily downward, and at its current level of around $5 is at less than half the IPO price of $14 per share. The company is trying to beef up its offerings by investing heavily in online video, which is a hot area now dominated by players like Youku (NYSE: YOKU) and Tudou (Nasdaq: TUDO). Again, I applaud this kind of diversification drive, though I also question Renren’s approach, as it might be better served by forming a strategic alliance with an existing player rather than building up its own online video business. Kaixin made a step in that direction when it sold a stake in itself to leading Internet firm Tencent (HKEx: 700) last fall, which looks like a smarter approach to me. At the end of the day, it really doesn’t matter how either of these companies find its route to sustained profits, as long as they do find such a route. I’m not completely convinced that either company has found such a formula yet, which could mean more turbulence ahead for Renren stock and similar volatility for Kaixin if and when it makes its IPO, which could be soon as it seeks to capitalize on hype from Facebook’s upcoming listing.
Bottom line: Renren’s latest preliminary results announcement show the company is still at least a year away from its goal of sustained profits, boding poorly for its stock this year.
Related postings 相关文章:
◙ Kaixin Looks to Cash in on Facebook Effect 开心网似乎在利用Facebook效应
◙ Kaxin Buys Time With Tencent Tie-Up 开心网与腾讯合作堪称一箭双雕
◙ Renren Finds Video Bargain in China Web Bubble 人人网低价收购56网 凸显中国互联网困境
Tudou-Sina Tie-Up: More to Come？ 土豆网联手新浪
Five months after buying a 9 percent stake in Tudou (Nasdaq: TUDO) shortly after its New York IPO, Sina (Nasdaq: SINA) has just announced its first tie-up with the online video site, China’s second largest, in what looks like the first of more to come, perhaps ending with the biggest tie-up of all, an outright acquisition. Under their first tie-up announced late on Friday, the 2 companies have launched a platform allowing sharing of Tudou videos on Sina’s popular Weibo microblogging platform. (English announcement; Chinese article) This particular tie-up looks quite interesting, as it combines Tudou’s rich online video library with Weibo’s 250 million users to create a potent platform that would be extremely attractive to advertisers — one of the main income sources both companies are relying on in their search for sustained profits. This combination could not only help Tudou steal advertising dollars from rivals like Youku (NYSE: YOKU) and Sohu (Nasdaq: SOHU) video, but could also help Weibo chase dollars now going to traditional social networking sites like Renren (NYSE: RENN) and Kaixin, as this kind of online video offering will give it a more traditional SNS feature. Sina shares didn’t do much after the news came out, actually dropping a bit despite a rise in the broader market. But more interesting was the reaction in Tudou shares, which jumped 16 percent to $16.25 — a healthy gain although still far below the $29 that Tudou sold shares for in its IPO last August. That jump is certainly fueled in part by excitement over this new deal, but another major factor is also growing expectation that Sina may make an outright offer for the company in the not-too-distant future. Such an offer would make sense for Sina, which needs a video offering to better compete with Sohu and looks like an increasingly important piece in general for a diversified web portal. From Tudou’s perspective, a merger would instantly give it access to Sina’s huge user base, both through its core portal business as well as subsidiaries like Weibo. Of course the major sticking point could be price, assuming Tudou Chairman Gary Wang wants to sell, which is far from certain. But even if he wants to sell, he may be loathe to part with his company for less than its IPO price, which would be a hefty 80 percent premium to its last closing price. Still, this kind of a merger looks almost too logical for either side to ignore, and I wouldn’t be surprised to see Sina either significantly increase its stake or buy Tudou outright by the end of this year.
Bottom line: A new tie-up between Sina’s Weibo and Tudou looks like a smart for both sides, and could pave the way for the former to acquire the latter by year-end.
Related postings 相关文章:
◙ Sina Taps On Back Door Into Tudou 新浪可能收购土豆
◙ Sohu’s Blowout Earnings: IPO In Store for Video? 搜狐发喜报视频业务或上市
Weibo Gets Confidence Vote From Digital Sky DST投资消息或提振新浪短期前景
Sina (Nasdaq: SINA), China’s leading web portal whose shares have been battered lately, has received a rare piece of good news in the form of a potential major new investment for its controversial Twitter-like Weibo service from heavy-hitter Digital Sky Technologies (DST). (English article; Chinese article) There’s so much to say on this subject that I’m not sure where to start, so perhaps the best place would be with the actual news. Media are reporting that DST, an early investor in Facebook and which has taken a recent liking to the Chinese Internet, is in talks to pump around $200 million into Weibo via a convertible bond exercisable at $65 per Sina share. That price would have been a bargain just 7 months ago, when Sina shares were trading as high as $140. But anyone who follows this company knows its stock has plummeted in recent months and now trades at around $55, following a string of big write-offs for its e-commerce and real estate services investments (previous post), and amid a broader confidence crisis towards US-listed China stocks after a recent series of accounting scandals. Further clouding the picture was Beijing’s announcement this month that all users of microblogging services would have to register using their real names, a move with strongly negative implications for Sina’s wildly popular Weibo service that boasts more than 250 million users and was one of the company’s few bright spots. (previous post) Clearly this new investment by DST will come as a vote of confidence in Weibo, in Sina’s sputtering campaign to monetize the recently spun-off service for a potential future IPO. But company watchers should also note that DST is hedging its bets by buying a convertible bond rather than making a direct investment. Furthermore, DST is hardly the best barometer for good China Internet investments, as it has made a wide range of such investments this year, often at overinflated valuations. DST’s recent string of China purchases include stakes in e-commerce firm 360Buy, also known as Jingdong Mall, and a recent purchase of a stake in Alibaba, China’s e-commerce leader. The company was also interested in previously buying a stake in Kaixin, one of China’s leading social networking services, and itself is part owned by leading Chinese Internet company Tencent (HKEx: 700) All that said, this latest investment may help to boost Sina and Weibo’s prospects in the very short term, but the longer-term picture for both still looks quite cloudy.
Bottom line: A potential $200 million investment in Sina’s Weibo microblogging service by DST should help to boost the company in the short term as it tries to shore up its battered image.
Related postings 相关文章:
◙ New Rule Hits Sina, Instant Messaging to Benefit? 微博实名重创新浪 即时信息服务有望受益
◙ Sina Results: Not So Diversified After All 新浪仍依赖广告,突围遇阻
◙ Digital Sky Looking for Piece of the China Pie 俄罗斯DST或与Facebook联手进军中国市场
Microblog Clampdown: Only Chapter 1? 实名制向网络行业吹去冷风
A new rule requiring microbloggers to register using their real names continues to send chills through the online world, with a new report saying the campaign will soon be extended to other social media. The domestic media reports cite an unnamed government official in Beijing, which announced the initial rule late last week (previous post), saying more guidelines will follow requiring all sites to implement real-name registration throughout their various social networking sites to give operators like Sina (Nasdaq: SINA), Tencent (HKEx: 700) and Renren (NYSE: REN) quick and easy access to who is doing what and pass that information to government officials upon request. (English article) If China was looking to kill or severely stifle development of its fledgling but vibrant social media, this certainly looks like a good way to do it. The initial rule appeared to target microblogging sites, which would have dealt a blow to a limited number of companies, most notably Sina’s popular Weibo service. But this new expanded rule would potentially affect any and every kind of social media service, from microblogging to social networking services (SNS) operated by Renren and Kaixin and even instant messaging services like Tencent’s popular QQ. The traditional SNS services may be best positioned to weather this storm, as most encourage their users to register using their real names, whereas the big majority of microblogging and instant messaging users use Internet names that are often difficult or impossible to trace. But regardless of any of that, this expanded requirement will send a strong signal that anything and everything a person writes in any of these sites is being monitored by the government, discouraging many from using the services at all. In some ways, this latest crackdown looks similar to one 5 or 6 years ago on the then-vibrant text messaging services industry, a mainstay of Sina, Sohu and NetEase (Nasdaq: NTES) at that time. That crackdown effectively killed the industry in the years that followed. I doubt results of this crackdown will be as severe, but I would still look for activity on these social media sites to slow and even drop off sharply in the next year.
Bottom line: Beijing’s potential expansion of its real-name policy to all social media will send a chill through the industry and severely hamper its development.
Related postings 相关文章:
◙ New Rule Hits Sina, Instant Messaging to Benefit? 微博实名重创新浪 即时信息服务有望受益
◙ Govt’s Microblog Shift Looks Good for Weibo 政府口风转变或有利於新浪微博
◙ Weibo Still Faces Crackdown Despite Govt Tie-Up 新浪微博难改“被监管”命运
News Digest: December 16, 2011
The following press releases and media reports about Chinese companies were carried on December 16. To view a full article or story, click on the link next to the headline.
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◙ New China Life (HKEx: 1336) Plunges in Debut After Stock Priced Near Bottom of Range (English article)
◙ China Scales Up Solar Power Capacity Plan By 50 Percent (English article)
◙ Acer (Taipei: 2353) To Cut Product Lines By About 2/3 Next Year – Chairman Wang (Chinese article)
◙ Sinopec (HKEx: 386) Says ‘Not the Time’ to Discuss Higher China Gas (HKEx: 384) Bid (English article)
◙ Kaixin001 to Launch Social E-Commerce Service (English article)
NetEase Makes Buzz With Buyback, Pigs 网易回购股票和养猪重大决策或在即
There’s a mini-flurry of news out about online game specialist NetEase (Nasdaq: NTES), as the normally low-key company generate some buzz, perhaps in the prelude to a bigger announcement about the future of its portal business. None of the latest news is that exciting, but it’s all interesting nonetheless. In perhaps the biggest news, the company has joined many of its US-listed peers in announcing a share buyback program worth up to $50 million, a relatively small amount but still significant enough to blip onto investor radar screens. (English article) The news helped to lift NetEase shares nearly 3 percent on Wall Street, outpacing the broader market but still a relatively modest move for this kind of company. In a more intriguing piece of news, the company’s soft-spoken founder Ding Lei has said an IPO is in store for his separate pig-raising business next year. (Chinese article) He made the comments in the city of Ningbo at an event centered on agriculture, which seems to be Ding’s relatively newfound passion as he also invests in red wine. The pig venture could actually be an interesting investment proposition, considering China’s love for pork and the country’s recent concerns about food safety. This kind of big publicly-listed pork company could easily become an industry leader, as this kind of massive producer can better guarantee food quality and safety. In one additional tidbit, NetEase is also reporting on its own news page that it has officially launched a social networking site (SNS) called Lofter. This is probably the least interesting news, as Sina (Nasdaq: SINA) launched a similar product earlier this year to complement its Weibo microblogging service (previous post), and both products will have to compete with more established sites operated by Renren (NYSE: RENN) and Kaixin. From my perspective, this recent flurry of news could be a prelude to a decision on what NetEase plans to do with its Internet portal, which was its main business many years ago but later took a back seat to games that now make up the bulk of its revenue. The company said earlier this year it is aiming to revitalize its portal and spin it off (previous post), and I expect this new flurry of news could presage an announcement soon about the portal’s future.
Bottom line: A recent flurry of news from NetEase could presage an announcement about future plans for its portal business, involving a potential sale or public listing.
Related postings 相关文章:
◙ NetEase Sharpens Up Messaging in Run-Up to Portal Spin-Off 网易剥离门户网站 再度磨砺电邮服务
News Digest: November 1, 2011
The following press releases and media reports about Chinese companies were carried on November 1. To view a full article or story, click on the link next to the headline.
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◙ Sohu.com (Nasdaq: SOHU) Reports Q3 Unaudited Financial Results (PRNewswire)
◙ China Online Sales Seen Tripling Driving Warehouse Surge: Retail (English article)
◙ Tencent (HKEx: 700) Confirms Strategic Investment in Kaixin (Chinese article)
◙ Baofeng Selects Underwriters for 2012 US IPO (English article)
◙ Sina Corp (Nasdaq: SINA) to Report Q3 2011 Results on November 8 (PRNewswire)
Kaixin Raises Profile in Renewed IPO March 开心网一改低调有意再次赴美上市
The normally low-key Kaixin, China’s second largest social networking system (SNS), has suddenly raised its profile with a stream of headline-making announcements, in what looks like a bid to drum up publicity in the run-up to a revival for its US listing plan that got shelved earlier this year. In two separate pieces of news, domestic media are citing unnamed sources saying that Kaixin has agreed to form a social gaming joint venture with Shanda (Nasdaq: GAME), one of China’s leading leading online game operators (English article); and the company itself has made a relatively ho-hum announcement of another tie-up with a US company called Message Systems to strengthen the messaging platforms on its site. (company announcement) Those two news bits come just a week after media reported, and the company partially confirmed, that leading Internet firm Tencent (HKEx: 700) had taken a stake in Kaixin, joining a group of previous investors that included Sina (Nasdaq: SINA). (previous post) The recent flurry of news also follows a rare press conference led by media-shy Kaixin founder Cheng Binghao in August, where he addressed reports that the company’s business was slowing. (previous post) The company had previously been in a race with Renren (NYSE: RENN), China’s biggest SNS operator, to make an IPO earlier this year, but lost out in that contest. Reports indicated Kaixin was ready to finally go public during the summer, but may have temporarily shelved the plan amid a broader wave of negative sentiment towards China stocks due to concerns over accounting practices. Now that the negative sentiment seems to have faded and is more neutral, this recent flurry of activity mentioning big-name players like Shanda and Tencent, looks like Kaixin is trying to drum up excitement in preparation to relaunch its IPO bid. Pending any unforeseen changes in the market, the timing actually looks quite good, and an offering in the next month would probably do well. It certainly couldn’t do worse than money-losing Renren, whose shares initially after their May debut, but are now down nearly 60 percent from their offer price, caught up in the negative China sentiment.
Bottom line: A recent flurry of activity indicates Kaixin is gearing up to relaunch its delayed IPO, which should do well as negative sentiment towards China stocks subsides.
Related postings 相关文章:
◙ Kaxin Buys Time With Tencent Tie-Up 开心网与腾讯合作堪称一箭双雕
◙ Renren Discovers Microblogging Too Late
◙ Gaopeng, Kaixin Spotlight China Internet Turmoil 高朋网、开心网凸显中国互联网混乱现状
