Shanda (Nasdaq: SNDA) head honcho Chen Tianqiao, lacking any major news to boost languishing shares prices of his 2 public companies, is resorting to playing games to lift their stocks, first through a privatization plan for one and now with a massive special dividend for the other, Shanda Games (Nasdaq: GAME). (company announcement) The only problem is, another online game operator, Giant Interactive (NYSE: GA) tried a similar plan earlier this year with mostly disappointing results. So let’s have a look at Shanda Games’ new plan, which will see it offer a one-time cash dividend of $1.02 per American Depositary Share (ADS) on December 20, translating to roughly a 25 percent payout based on its price of about $4 when the announcement came out. Shanda shares jumped just $0.43 per share, or around 11 percent, after the announcement came out, or less than half the amount of the special dividend, indicating investors think the company’s share price may already be overvalued. Chen’s ploy looks especially risky in light of Giant’s experience earlier this year, when it offered a massive special dividend that amounted to 40 percent of its share price at the time. (previous post) Giant shares jumped a little after the announcement, though nowhere near the amount of the special dividend, but then crashed after the actual payout and now trade nearly 20 percent below their levels when it first announced the dividend. There’s no reason to believe that Shanda Games’ dividend won’t see a similar outcome, with investors boosting the stock to collect the one-time payout and then quickly selling it once the dividend passes. Of course this new move from Chen comes just a week after he launched a bid to privatize his other listed company, Shanda Interactive, whose shares are also in the doldrums along with those of many other US-listed China stocks. (previous post) Instead of playing these kinds of deal-making games, Chen needs to sit down and create an exciting roadmap for his companies to convince investors they have strong long-term growth potential, which will do much more to boost their share prices.
Bottom line: Shanda Games’ new offer of a large one-time dividend is the latest bid by founder Chen Tianqiao to boost the company, but is ultimately bound to disappoint.
Related postings 相关文章:
◙ Shanda Moves Ahead With Privatization 投资者对盛大私有化仍持保留态度
◙ Giant Fires CFO, Offers Dividend to Placate Investors 巨人网络CFO辞职 高额分红以安抚投资者
◙ Grentech Follows Shanda in Privatization Ploy 国人通信赴盛大网络後尘宣布私有化
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It seems I may have been wrong when I questioned the sincerity of Chen Tianqiao after he announced a potential bid to privatize his company, Shanda Interactive (Nasdaq: SNDA), as Chen has now gone ahead and actually launched the buyout. (
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With all the buzz out there about a looming China Internet bubble, new downwardly revised guidance from Perfect World (Nasdaq: PWRD), one of China’s more innovative and outward looking online game operators, looks like a potentially worrisome warning flag. According to its newly released latest estimate, the company expects to earn around 720 million yuan in revenue for the third quarter, or about $110 million, down by a sizeable 8 percent from its previous forecast given out just 3 weeks ago for about 780 million yuan. (
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es. But in this case, Wang only holds 8.6 percent of Tudou shares, and is clearly under continued pressure to raise cash, as evidenced by his determination to go ahead with this IPO despite negative market sentiment. Many will recall that Sina has a poor record with major M&A, failing to close its purchase of Focus Media (Nasdaq: FMCN) several years ago and also fending off a hostile takeover bid by Shanda Interactive (Nasdaq: SNDA) before that. This Tudou purchase could be a more careful attempt to see how the markets react before making an outright offer for the company. Given the sudden interest in video sharing by nearly every major Internet company, including Tencent (HKEx: 700), which is reportedly in talks for a stake in industry leader Youku (NYSE: YOKU) (
