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Qihoo 360 Technology Co. Ltd. Message Board

  • tianyiinvest2013 tianyiinvest2013 Dec 20, 2013 10:42 AM Flag

    QIHU will be dead money for a while

    Its growth in mobile app distribution has significantly slowed down due to competition. In Q3 it's growing at 10% QoQ. But in Q2 it's QoQ growth was 40%. What a significant difference!

    It's not making good progress in gaining search market share either. It has been staying below 22% for more than a month. But the company has promised an internal year end goal of 25%.

    A very bad sign, the company is not executing well towards its own promise!

    Unless something else significant enough happened, I say QIHU is dead money for now.

    Sentiment: Sell

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    • Tiany sorry for the long delay in responding but you really had me there so I had to do some work. Wish I could share the model on here but you are correct when viewing Q3 to Q2 2013 with 10% growth in Internet Value Added. One thing I want to point out: if you model back to all the available financial data on QIHU, you will see that this Q3/Q2 comparision has been the weakest quarter on record. It must be seasonality. When you go back to Q3/12 - Q212 you will see an increase of 17.5% and the fartherst back of Q311 - Q211 is 30%. So on average for this Q3-Q2 comparision ( 3years) for the Q3 Internet Value Added services you get 19% growth. I should point out that Internet Value Added is only 31% of total revenues, so not your main driver of revenues. Also when you compair 2012 to 2011, this increased 140% and 207% from 2011 - 2010. It was 639% from 2012 - 2010. It is common for all growth/revenue drivers to experience a slow down and normalcy. Look at their total revenues: 96% from 2012-2011, 190% 2011-2010, and 467% from 2012-2010. So again, I wouldn't get too caught up in that Q3-Q2 comparison for Gaming as it appears to be seasonality. Online advertising is their major revenue driver and should be going forward: it represents 67% of their revenues and has not experienced any seasonality. It is up 636% from 2012-2010. Best of luck.

      Sentiment: Strong Buy

      • 1 Reply to italiatlt
      • I hope it's just seasonality...

        but, back in Q3 of 2012, the revenue from mobile app distribution was very small, almost can be ignored. 90% of "Internet Value Added" revenue was from Web Page gaming.

        In Q3 of 2013, the revenue from mobile distribution has grown so much that it's greater than revenue from web page gaming. I am quite sure web page gaming has stopped growing since Q2 of 2013, It might be actually shrinking as more light game players are turning to mobile gaming from web page page gaming.

        So, we are talking about completely different animal when attempting to compare 2013Q3 and 2012Q3.

        Mobile growth in Q1 and Q2 of 2013 can be claimed "explosive". That's not longer the case for q3 of 2013.

        Regarding revenue from search:

        Qihu's search share 22%, Bidu's is 60%, Sohu's is 12%. there is a public report (released by qihu itself) claims qihu's Average Cost Per Click is only 10% of Bidu's. So there seems to be a lot of room for qihu to increase its revenue in search as they could close this gap in ACPC. However, I don't think qihu can reach the same level that bidu has reached. I think qihu will be closer to Sohu instead of Bidu in long term as long as its search share stays below 30%.

        It would be a different story if QIHU can indeed win 25% by year end of 2013 and then 35% by year end of 2014.

        But they failed to meet their own target!This is the most scary part to me. it seems they are not executing well...

    • ITG already set this pace with resepct to dead money...stock is off 20% from its highs...Where are you getting the mobile app disc data from?

      Sentiment: Strong Buy

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