Company cutting costs. Shorts get taken out going forward!
But Qihoo should benefit from emerging opportunities in the enterprise security software market, "riding (a) recent favorable government policy shift," wrote JG Capital analyst Henry Guo in a research report Monday. "We see long-term growth opportunity for QIHU, considering the company's technology expertise and huge and fragmented market in China.
"We expect significant margin improvement in the second half of 2014 and 2015, thanks largely to top-line strength and leverage in the model."
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In May, Beijing-based Qihoo announced that it would acquire a controlling equity interest in MediaV, a China-based provider of Big Data analysis services designed to help customers deliver more targeted ads. In April, Qihoo announced a strategic partnership with Sungy Mobile (NASDAQ:GOMO) to use its international app distribution platform to introduce mobile security and mobile utility apps to users in the U.S. and other key markets.
World Cup TV ads also added to Q2 expenses, Zhou said on a conference call with analysts Monday.
The company plans to trim back its spending, Zhou said. "We are still looking at the second half as a margin improvement compared to the first half (of 2014), and I don't think the spending will expand" in 2015, Zhou said.