QIHU's partnership with Coolpad looking precarious given LeTV's recent investment in Coolpad.
Mobile search on track to become a meaningful player, a negative to BIDU.
Privatization timeline not provided. Dual-listing not an immediate possibility.
I recently met with Qihoo's (NYSE:QIHU) management to understand the progress regarding its smartphone JV with Coolpad (OTC:CHWTY) Group. The Chinese smartphone market is becoming increasingly competitive with Apple (NASDAQ:AAPL) allowing iPhone trade-ins as a way to drive higher penetration of the iOS ecosystem, and LeTV setting new pricing (i.e., Rmb1500) for high-end devices. Both could potentially be a negative to the subscale local brands such as the Qihoo-Coolpad QiKU-branded smartphones.
Search was another focus point as management looks to take a bigger share of mobile search away from incumbent Baidu (NASDAQ:BIDU). While BIDU may have the most comprehensive search results in China, it is worth noting that QIHU's search is effective to the point where BIDU's incremental advantage is irrelevant to the average user. Over time, I see the ease of access and mobile device footprint to be a key driver for QIHU search, and this will be a negative to BIDU's growth prospects.
Finally, on privatization, management gave no clear timing of the process. However, dual-listing in both US and China/HK is out of the question given the cost involved. I reiterate my bullish view on QIHU as I see it is one of few internet companies proactively seeking hardware-software integration as a point of differentiation.
Per my discussion with management, the QIHU-Coolpad smartphone, QiKU, has an expected launch date of sometime in July. No pricing has been announced but I believe it is likely to be competitive against the Xiaomi brand in the Rmb1000-2000 range. The core app will be developed by QIHU, while the hardware will be produced by Coolpad. This type of close integration is essential to deliver a consistent user experience as Coolpad's hardware capabilities must meet the processing and power demand of the QIHU OS.
While I like the direction that QIHU is pursuing, the recent investment by LeTV in Coolpad raises the concern that Coolpad+LeTV could become a more important partnership by leveraging LeTV's content library, hardware footprint, and distribution channels. If that is the case, losing a hardware partner in Coolpad could be a negative to QIHU as mobile devices remain a key channel for ecosystem expansion.
On search, management targets 15% share in mobile traffic share by the end of this year and 30% by the end of next year. QIHU is in no rush with respect to monetization, so it can aggressively expand its footprint at a loss to compete against BIDU. Management has a singular focus of market share expansion before moving to monetization at the end of this year the earliest. Investors can expect further competitive pressure on BIDU as QIHU zeroes in on the mobile search market.
Finally, management gave no clear timing on privatization. The process will involve some back and forth between the buyer group, which is represented by a special committee and the company. Shareholder vote is expected to take place subsequently, and the process will conclude once 2/3 of the shareholder group votes in favor. Given the higher valuation that the A-share companies command, I expect shareholders to be in favor, so QIHU can re-list in the domestic A-share market.
If the deal does not go through, QIHU will fall right back to low 60's or even lower. If you bought at $80, $90 or higher, accept your losses and move on.
Someone is willing to pay $77 for my shares. That's the fact!!! I'll give them my shares for the money, as simple as that. What else don't you understand???
I experienced this type thing months ago when Merck purchased CBST. I sold my shares directly to Merck at $104 per share although they were traded lower at the open market.
Thank you for following my messages. I thought this board was dead. I care for reasons beyond your comprehension, unfortunately.
This is the most badly run company I've ever known. Your chemistry group is useless wasting a lot of money, among other personnels.
Good for you! But you don't have to make an announcement of that. Your presence in the market won't be felt by anyone because you are nobody with a tiny number of shares to play with.
Fraud, corruption, and extra-marital affairs, in the eyes of Chinese, are common practice. Possible fraud in VIPS is no surprise to me.
I don't encourage you to commit fraud, but please hire some expert accountants to make your financials look as attractive and sexy as legally possible to investors.
They are indeed very good to let ordinary people believe in them. They outsmart 99.99% of the people. But, if they make it look too perfect, sooner or later, people will find out ... They are digging their own graveyard!
This company is located in Guangzhou, China. People in Guangzhou are notoriously business liars. But, you can choose to continue to believe in them as long as you can sleep well at night.