Bottom line: Phoenix Satellite TV’s latest results show a traditional broadcaster that failed to make the transition to new media, and could auger a decline that sees the company close or get acquired in the next 5 years.
Phoenix reports sinking revenue
As second-quarter earnings season winds down, I thought I’d take a look at the newly released interim results from Phoenix Satellite TV (HKEx: 2008), a former Chinese media pioneer that’s in a clear state of decline with no sign of turnaround. I used to be a big fan of Phoenix and saw a big future for the company, after it became one of the first independent TV news providers in China in the early 2000s. But the company’s colorful founder Liu Changle hasn’t been very skillful at parlaying his early success into the new media realm, with the result that the company’s outlook is fading rapidly. Read Full Post…
The following press releases and news reports about Chinese companies were carried on March 9. To view a full article or story, click on the link next to the headline.
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ZTE (HKEx: 763) Urges Suppliers to Seek US Export Licensee: Source (English article)
Smartphone Maker Dakele Shuts Down as Backers Sever Ties (Chinese article)
ReneSola (NYSE: SOL) Announces Q4 and Full Year 2015 Results (PRNewswire)
Bottom line: Qihoo is likely to complete its $9 billion privatization in the next few months at its original bid price, while Jiayuan’s buyer may have to raise its price again to placate unhappy shareholders.
Qihoo buyout advances, Jiayuan hits resistance
The year of the buyout for US-listed Chinese firms is ending on a loud note, with announcement of a formal privatization offer for security software specialist Qihoo 360 (NYSE: QIHU), the largest of the deals among the 3 dozen announced in 2015. But while Qihoo’s plan moves ahead, another older deal to buy out online dating site Jiayuan (Nasdaq: DATE) is running into trouble due to complaints about its low valuation. In the latest development on that front, a major third-party advisory service has recommended that shareholders reject the offer because it’s too low.
Last but not least, I’ll end this buy-out round-up with some whimsical speculation that Phoenix New Media (NYSE: FENG) may be next to receive a privatization offer. My speculation isn’t based on any insider information, but rather the simple fact that the company’s stock jumped 14 percent on Friday for no apparent reason. The company also looks similar to many of the others that have already received similar offers. Read Full Post…
Bottom line: Phoenix New Media’s retrenchment could produce some short-term improvement for its profits, but won’t halt a longer term decline due to its inability to adapt in a rapidly changing new media environment.
Phoenix New Media in big job cuts
After stumbling badly in its latest quarterly report, a sputtering Phoenix New Media (NYSE: FENG) is making major job cuts and rolling out a broader retrenchment, as it tries to avoid getting sidelined in China’s rapidly evolving media market. This particular story has an interesting parallel in a mostly forgotten company called Tom Group (HKEx: 2383), which was backed by Hong Kong billionaire Li Ka-shing who hoped to build it into a regional media giant when he launched the company during the Internet boom of the late 1990s and early 2000s. But more on that shortly.
Phoenix also began its life as a traditional media company, and the lesson from all this is that such media are having a hard time adapting to the rapid pace of change in the Internet age. That said, I’m not at all optimistic that Phoenix will be able to chart an effective new course, and it could just be a matter of time before the company becomes a non-player on the Chinese Internet or disappears completely. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 2. To view a full article or story, click on the link next to the headline.
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NetEase’s (Nasdaq: NTES) Board Approves $500 Mln Share Repurchase Program (PRNewswire)
Phoenix New Media (NYSE: FENG) to Cut Staff, Retrench – Memo (Chinese article)
Alibaba (NYSE: BABA) Launches “Tmall Vineyard Direct” With Robert Mondavi Wines (Businesswire)
AsiaInfo to Acquire Trend Micro Chinese Subsidiary (Businesswire)
Bottom line: Phoenix Satellite and its new media arm will continue to sputter due to China’s slowing economy and a lackluster move into mobile advertising, and founder Liu Changle should consider selling the company.
Slow move to mobile saps Phoenix New Media
Things aren’t looking too good these days for Hong Kong-based Phoenix Satellite (HKEx: 2008), a former rising star in China’s tightly controlled media market that has stumbled badly due to its inability to adapt to a changing industry landscape. Phoenix warned of a major profit decline last month due to a soft TV ad market (previous post), and now its younger Phoenix New Media (NYSE: FENG) unit is also showing signs of distress due to a heavy reliance on portal advertising delivered over traditional desktop computers.
The new quarterly earnings report from Phoenix New Media does contain one bright spot, namely a 124 percent increase in revenue from advertising services offered over smartphones and other mobile devices. (company announcement) But that part of the business is still quite small, with the result that Phoenix New Media reported overall advertising revenue growth of just 7.2 percent, and overall revenue growth of 2.9 percent during the second quarter of this year. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 12. To view a full article or story, click on the link next to the headline.
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Xiaomi Kicks Off India Production for Strengthened Redmi 2 Edition (Chinese article)
China Jails Former Bright Food Chief For 18 years For Embezzling $30 Mln (English article)
Tencent (HKEx: 700) Reports 360 (NYSE: QIHU) Cloud Service for Pornography (Chinese article)
ChemChina, Camfin to Launch Tender Offer for Rest of Pirelli (Milan: PECI) (English article)
Phoenix New Media (NYSE: FENG) Reports Q2 Unaudited Financial Results (PRNewswire)
Bottom line: Sputtering demand for luxury goods and cars is likely to hamstring Phoenix Satellite TV’s earnings for at least the next year, as the company increasingly loses ground to new media rivals.
Sliding luxury demand undermines Phoenix
The recent slowdown in China’s luxury goods market is claiming one of its first victims in the media realm, with Phoenix Satellite TV (HKEx: 2008) warning that a sudden chill in luxury ad sales has wiped out its profits in the first half of the year. The news certainly doesn’t bode well for traditional media companies, which are a favored place for luxury goods makers to advertise. Car makers are another major source of ad revenue for these older media companies, and rapidly slowing sales in that sector also means that names like Phoenix and even some new media high-flyers like Baidu (Nasdaq: BIDU) and Sina (Nasdaq: SINA) could be looking at a difficult period ahead. Read Full Post…
Bottom line: Caixin’s new lawsuit against leading portals Sohu, Sina and Hexun could mark the start of a much-needed clean-up that will end the practice of rampant copyright violations among major Chinese news sites.
Caixin sues Sina, Sohu for illegal copying
I’m giving this week’s special award for bravery to cutting-edge financial news publisher Caixin, which is challenging the widespread illegal copying of copyrighted articles that occurs daily on Chinese news sites. Everyone knows that this kind of piracy is rampant in China, but some might be surprised to learn that companies targeted in Caixin’s new lawsuit include some of China’s top news portals, led by Sina (Nasdaq: SINA) and Sohu (Nasdaq: SOHU). I was also just slightly embarrassed to see that one of the companies being sued is financial news and information site Hexun, which is backed by my former employer Reuters (Toronto: TRI). Read Full Post…
Bottom line: China’s Internet companies are expecting a slowdown this year as the nation’s economy slows, but their shares could see some upside if the declines are less severe than many are forecasting.
Qihoo, Phoenix, LITB see slowing growth
It’s not often that we see any major macroeconomic trends when a diverse group of Internet companies all report results on the same day, since individual company and sector factors often have a big influence. But we’re seeing just such a trend emerge in the new results from the high-tech trio of software security specialist Qihoo 360 (NYSE: QIHU), e-commerce firm LightInTheBox (NYSE: LITB) and online media firm Phoenix New Media (NYSE: FENG), which all are forecasting a sharp slowdown in the first quarter of this year. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 11. To view a full article or story, click on the link next to the headline.
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Dalian Wanda To Buy Swiss Sports Firm For $1.2 Bln Amid Entertainment Push (English article)
Tesla (Nasdaq: TSLA) CEO Threatens Firings After Dismal China Sales – Sources (English article)
