Qihoo's ARPU: Playing Games With Investors [View article]
2nq 2012 CC ... QIHU alters the ARPU story, now counting quarterly instead of monthly. QIHU has moved from a stable 380 MONTHLY ARPU to a QUARTERLY 400.
He also adds "Gross" to the numbers, making the result a little more believable this time (albeit still high for these types of games).
Before: "The monthly ARPU has been fairly stable at around RMB380."
Latest CC: "Total web game playing users reach 148,000 in June. Web game gross ARPU for this quarter was approximately RMB400."
Let's forget about .... "March, we have 87 games up and running on the platform, 139,000 paid customers … uh, paid players and the ARPU for the month was about 440 RMB per month."
So either QIHU is lying or they took a serious hit to game revenue. I'll let them have the last word on that:
"Internet value-added service revenue, which are mainly derived from web games, were $21.7 million, up 167% from same period last year and 4% from the prior quarter. The strong year-over-year performance was mainly driven by solid growth in our game user base."
********** (Try to reconstruct their revenue with the given numbers.)
Let's forget about .... "March, we have 87 games up and running on the platform, 139,000 paid customers … uh, paid players and the ARPU for the month was about 440 RMB per month."
Qihoo 360 Fakes A Microsoft Security Patch [View article]
>I have no doubt that QIHU is involved with reciprocal Link Exchanges and is pumping up its revenues in that manner.
Lot’s of directions to go. If I had a research team I would have someone looking at user-agent strings and “browser spoofing” (sometimes performed by antivirus software) … I’d also have someone looking at the possibility of pre-rendering. But time and money are limited. High probability the search would turn out negative, as it goes with most hunches, but QIHU has cheated in so many ways in other areas that I'd give it a shot -- (IE, if I had a team with the expertise).
I had to trim the article down. Here’s something I decided to leave out. In the past, Qihoo has also used KB999999 in filenames (including the file eventually called KB360018). KB999999 is often used as a “hypothetical” knowledge base reference, used for giving examples and instructions to others. So if one wanted to use a knowledge base reference which was actually listed on Microsoft, one could use KB999999 and a non-English speaker could do a quick search on Microsoft and be somewhat satisfied that it was listed on the official site.
Some QIHU 360 filenames appear so much like Microsoft's that SystemExplorer actually provides a hyperlink to Microsoft's 365! (Click to Sys. Expl. then mouseover the hyperlink.) http://bit.ly/P4br2f http://bit.ly/P4bpY5
Qihoo 360 Fakes A Microsoft Security Patch [View article]
TechGuy:
>If a company gets bought out at a premium to its current stock price with mgmt participation, it strongly suggests the company is not a fraud.
>Matt Berry, Muddy Waters and all the shorts got FMCN wrong. Period.
You confuse what-people-do with how-the-assets-add-up.
Harvesting investor credulity is something that can be done. But it’s not the same exercise as adding up the assets. FMCN inflated their theater and LCD counts. (see below.)
>>Matt Berry, Muddy Waters and all the shorts got FMCN wrong. Period.
You can SAY that 2 + 2 = 5, but you can’t DEMONSTRATE that.
You can say that there are 27,000 theaters in a country that has less than 1,600 but you can demonstrate that. http://scr.bi/Po1lNL
You can say that Liquid Crystal Devices can later be found to be cardboard posters without your having inflated your assets, but you cannot demonstrate that. http://bit.ly/zno5ra
Declaring someone wrong is easy, sir. Demonstrating it is a little more difficult. Present your case.
Qihoo 360 Fakes A Microsoft Security Patch [View article]
TechGuy: The points in my FMCN articles afford deductive conclusions. That’s why I chose to write about FMCN. Additionally, the facts presented have withstood scrutiny.
Claiming a network of 27,000 theaters in a China that has less than 1,600 such theaters = a lie. Muddy Waters first broke this story and I have a slide show presentation to demonstrate it: http://scr.bi/Po1lNL
These are deductive … common sense certainties. Only the SEC would think that it needed a subpoena before it could proceed.
What investment bankers can do, what investors will believe, what FMCN needs to do to survive, what guanxi relationships exist, what the SEC is thinking, … these are all separate cases.
FMCN submitted fraudulent documents to the SEC. We can know this with common sense certainty … no subpoena required.
Qihoo 360 Fakes A Microsoft Security Patch [View article]
Nebhusker:
>>“BTW - why would a company risk doing something like this just before their earnings date…”
This article does not touch upon when they started doing this or how long they’ve been doing it ‒ I only deal with their being caught at it ‒THIS TIME. From my perspective, being caught "just before THIS earnings date" is a coincidence. They could just as easily have been caught "just before" another "earnings date."
15 minutes of DD will show you what I’m talking about. There was much more to this article than time and space would permit.
>>”Allegations were made against FMCN to try and drive the price down …”
One person’s bad math is not another person’s allegation.
1. In SEC documents, FMCN claimed a business relationship with 27,000 urban theaters
2. China Government statistics show that there were less than 1,600 such theaters in all of China.
Presenting that evidence in a way that others can verify for themselves is not an “allegation.” It's no longer a he-said she-said debate. It's an individual event. The conclusion follows naturally (unless you don’t know how to do the math): http://scr.bi/Po1lNL
>>” and someone is trying to by them out because the allegations were proven false.
With common sense certainty, FMCN submitted fraudulent documents to the SEC.
Qihoo 360 Accused Of Faking A Microsoft Patch [View instapost]
CEO of Kingsoft appears to have said pretty much the same. He was responding to what I'm calling "cloned smears" (See http://bit.ly/NcxAfh).
Note: "Jinshan" (phonetic) and "Gold Mountain" (literal) are how Google sometimes deals with the Chinese characters (金山) -- which in the English speaking world is known as "Kingsoft". The Chinese statement uses the 金山 characters consistently, while in the Google translator it appears in three different forms -- so I have inserted [Kingsoft] for more accurate and easier reading. See link for the original.
"The face of this "[Kingsoft] defender patch" incident, Fu Sheng, CEO of Kingsoft Internet microblogging statement said: "In fact, Microsoft does have an IE6 upgrade IE8 plans, including 360 invited, [Kingsoft], including the number of partners to participate. only [Kingsoft] honestly help Microsoft to upgrade to ie6 ie8, 360 but by the opportunity to trick users to install the browser 360. 360 things brought to light after the crazy dirty water splashed to [Kingsoft]. " http://bit.ly/QDevI6
Qihoo 360 Accused Of Faking A Microsoft Patch [View instapost]
CEO Zhou has big enemies ... and lots of them. These guys have been waging a war of words for years now. We'll have more clarity when MSFT comments on it (that is, IF they comment).
Qihoo's ARPU: Playing Games With Investors [View article]
Mr. Sheng, your profile states that you are a "Senior Analyst of Qihoo 360."
Is this true? Could you elaborate? Which organization are you associated with?
Other Analysts have said that QIHU's ARPU is in-line with other game operators/companies. Do you agree?
If so, can you provide examples of web game operators/companies with over 100,000 gamers and who have monthly ARPUs near 300 RMB?
>however, players on Facebook's FarmVillie are different from players on some other unknow platfrom which also operating FarmVillie, isnt it?
(Nice mention: FarmeVille's ZNGA is at this moment providing smelling salts to star-gazing investors.)
Differences in ARPU: There would be some difference of course due to differences in venue and user mix -- just as a theater ticket in a retirement community would cost less on average than a ticket in a community of just-employed 25 year-olds. But ...
1. The factors which accounted for the difference could be broken down and illustrated and examples could be produced. For Qihoo’s ARPU no factors have been illustrated; no examples have been produced ‒ even though this sort of evidence would greatly aid Qihoo’s prospects.
2. The difference would not be 300 to 400%.
>>> And, operators' ability to monetize from their players are different, either. Qihu could target their game players very precisely through their web browser (over 50% penetration by the way), by analyzing user's behavior which no other game operators can do the same. That's advantage Qihu far from its competitors.
1. Provide references so that we know you are not filling in the gaps of Qihoo's story with your own convenient rationalizations.
2. How would Qihoo be capable of Analyzing users behavior in a way that competitors could not and that was not also an intrusion of privacy and/or a use of spyware? (Two acts which Qihoo has been accused of in the past and at the present.)
Qihoo's ARPU: Playing Games With Investors [View article]
That's because ... you can't say that Facebook is the same as Linkedin. You CAN say that Shen Qu is Shen Qu. The sorts of gamers that play Shen Qu are ... the sorts of gamers that play Shen Qu.
And remember -- we are talking about a difference in ARPU somewhere between 300 and 400%.
Qihoo's ARPU: Playing Games With Investors [View article]
Logic recap: 1.Qihoo's games are not unusual. They are the same games found elsewhere. There is no exclusivity. 2. Other publically traded companies disclose ARPU, or at least data from which to calculate ARPU. EG, Qihoo's game site is very similar to Renren's. There are many identical games that both share. Both publish statistics and revenue. Their revenue per user does not compare. 3. "Alex means...." If you are not putting words in Alex's mouth, please provide your reference and elaborate.
RE: Differences between companies. Don't forget: It is not just how much the game companies pull in, but how much gamers spend on average ... not to mention how much they are ABLE to spend. A 440 ARPU is unrealistic, however which way you look at it. If it is net ARPU (IE, after revenue share with developers), then we are supposed to believe that the average Qihoo gamer paid 630 RMB in March for virtual goods. $100 USD? What's so special about Qihoo's web game platform? Same games...
Qihoo's ARPU: Playing Games With Investors [View article]
The Changyou.com ARPU used for the charts excluded 7Roads revenue.
"The Company’s operational results for the first quarter of 2012, which exclude those of 7Road’s Web-based games, were as follows: .... ARPU for the Company’s games slightly increased 2% quarter-over-quarter and 7% year-over-year to RMB225." SEC 6-K http://1.usa.gov/LJt70Y (Also reported in Earnings Call Transcript. (divided by 3 for monthly comparison) ARPU 75 RMB.
SOHU has an interest in Changyou and reports the same number: http://bit.ly/LK4xSf
That said, 7road's game revenue gives us a rare look under the hood, as I mentioned. That is why I included it in the text. Shen Qu is the second ranking game on Qihoo's site. DDTank is also in the top 16. The CFO said there were no dominant games. If QIHU shares with developers 70:30, you can see that no matter how you reconstruct game revenue Qihoo's numbers aren't realistic. Neither "net" nor "gross" numbers come close.
Qihoo Q2 Update: Absurd Valuation With No Transparency Into Revenues [View article]
Video: http://bit.ly/U88u47
Article: http://bit.ly/SMjHJC
Blog: http://bit.ly/Po8H4t
Qihoo's ARPU: Playing Games With Investors [View article]
He also adds "Gross" to the numbers, making the result a little more believable this time (albeit still high for these types of games).
Before: "The monthly ARPU has been fairly stable at around RMB380."
Latest CC: "Total web game playing users reach 148,000 in June. Web game gross ARPU for this quarter was approximately RMB400."
http://bit.ly/TUkTbP
Let's forget about .... "March, we have 87 games up and running on the platform, 139,000 paid customers … uh, paid players and the ARPU for the month was about 440 RMB per month."
So either QIHU is lying or they took a serious hit to game revenue. I'll let them have the last word on that:
"Internet value-added service revenue, which are mainly derived from web games, were $21.7 million, up 167% from same period last year and 4% from the prior quarter. The strong year-over-year performance was mainly driven by solid growth in our game user base."
**********
(Try to reconstruct their revenue with the given numbers.)
QIHOO 360 Technology's CEO Discusses Q2 2012 Results - Earnings Call Transcript [View article]
He also adds "Gross" to the numbers, making the result a little more believable this time (albeit still high for these types of games).
Before: "The monthly ARPU has been fairly stable at around RMB380."
Latest CC: "Web game gross ARPU for this quarter was approximately RMB400."
http://bit.ly/PFhMUl
Let's forget about .... "March, we have 87 games up and running on the platform, 139,000 paid customers … uh, paid players and the ARPU for the month was about 440 RMB per month."
Qihoo 360 Fakes A Microsoft Security Patch [View article]
Lot’s of directions to go. If I had a research team I would have someone looking at user-agent strings and “browser spoofing” (sometimes performed by antivirus software) … I’d also have someone looking at the possibility of pre-rendering. But time and money are limited. High probability the search would turn out negative, as it goes with most hunches, but QIHU has cheated in so many ways in other areas that I'd give it a shot -- (IE, if I had a team with the expertise).
I had to trim the article down. Here’s something I decided to leave out. In the past, Qihoo has also used KB999999 in filenames (including the file eventually called KB360018). KB999999 is often used as a “hypothetical” knowledge base reference, used for giving examples and instructions to others. So if one wanted to use a knowledge base reference which was actually listed on Microsoft, one could use KB999999 and a non-English speaker could do a quick search on Microsoft and be somewhat satisfied that it was listed on the official site.
KB999999 On Microsoft “for example”: http://bit.ly/TKTjhk
KB999999 as used by Qihoo: http://tinyurl.com/cb4...
Some QIHU 360 filenames appear so much like Microsoft's that SystemExplorer actually provides a hyperlink to Microsoft's 365! (Click to Sys. Expl. then mouseover the hyperlink.)
http://bit.ly/P4br2f
http://bit.ly/P4bpY5
Qihoo 360 Fakes A Microsoft Security Patch [View article]
>If a company gets bought out at a premium to its current stock price with mgmt participation, it strongly suggests the company is not a fraud.
>Matt Berry, Muddy Waters and all the shorts got FMCN wrong. Period.
You confuse what-people-do with how-the-assets-add-up.
Harvesting investor credulity is something that can be done. But it’s not the same exercise as adding up the assets. FMCN inflated their theater and LCD counts. (see below.)
>>Matt Berry, Muddy Waters and all the shorts got FMCN wrong. Period.
You can SAY that 2 + 2 = 5, but you can’t DEMONSTRATE that.
You can say that there are 27,000 theaters in a country that has less than 1,600 but you can demonstrate that. http://scr.bi/Po1lNL
You can say that Liquid Crystal Devices can later be found to be cardboard posters without your having inflated your assets, but you cannot demonstrate that. http://bit.ly/zno5ra
Declaring someone wrong is easy, sir. Demonstrating it is a little more difficult. Present your case.
Qihoo 360 Fakes A Microsoft Security Patch [View article]
The points in my FMCN articles afford deductive conclusions. That’s why I chose to write about FMCN. Additionally, the facts presented have withstood scrutiny.
Claiming a network of 27,000 theaters in a China that has less than 1,600 such theaters = a lie. Muddy Waters first broke this story and I have a slide show presentation to demonstrate it: http://scr.bi/Po1lNL
Cardboard posters are not Liquid Crystal Display devices: http://bit.ly/zno5ra
These are deductive … common sense certainties. Only the SEC would think that it needed a subpoena before it could proceed.
What investment bankers can do, what investors will believe, what FMCN needs to do to survive, what guanxi relationships exist, what the SEC is thinking, … these are all separate cases.
FMCN submitted fraudulent documents to the SEC. We can know this with common sense certainty … no subpoena required.
Qihoo 360 Fakes A Microsoft Security Patch [View article]
>>“BTW - why would a company risk doing something like this just before their earnings date…”
This article does not touch upon when they started doing this or how long they’ve been doing it ‒ I only deal with their being caught at it ‒THIS TIME. From my perspective, being caught "just before THIS earnings date" is a coincidence. They could just as easily have been caught "just before" another "earnings date."
15 minutes of DD will show you what I’m talking about.
There was much more to this article than time and space would permit.
>>”Allegations were made against FMCN to try and drive the price down …”
One person’s bad math is not another person’s allegation.
1. In SEC documents, FMCN claimed a business relationship with 27,000 urban theaters
2. China Government statistics show that there were less than 1,600 such theaters in all of China.
Presenting that evidence in a way that others can verify for themselves is not an “allegation.” It's no longer a he-said she-said debate. It's an individual event. The conclusion follows naturally (unless you don’t know how to do the math): http://scr.bi/Po1lNL
>>” and someone is trying to by them out because the allegations were proven false.
With common sense certainty, FMCN submitted fraudulent documents to the SEC.
Cardboard posters are not Liquid Crystal Displays:
http://bit.ly/zno5ra
Theaters are not Advertisements:
http://bit.ly/wAS4tj
(And here’s a sloppy attempt to keep the “Theater-revenue” story alive:
http://bit.ly/TF9Kvo)
The facts in these articles still stand. FMCN and their promoters are fond of declaring refutations without the bother of having to demonstrate them.
Qihoo 360 Accused Of Faking A Microsoft Patch [View instapost]
Note: "Jinshan" (phonetic) and "Gold Mountain" (literal) are how Google sometimes deals with the Chinese characters (金山) -- which in the English speaking world is known as "Kingsoft". The Chinese statement uses the 金山 characters consistently, while in the Google translator it appears in three different forms -- so I have inserted [Kingsoft] for more accurate and easier reading. See link for the original.
"The face of this "[Kingsoft] defender patch" incident, Fu Sheng, CEO of Kingsoft Internet microblogging statement said: "In fact, Microsoft does have an IE6 upgrade IE8 plans, including 360 invited, [Kingsoft], including the number of partners to participate. only [Kingsoft] honestly help Microsoft to upgrade to ie6 ie8, 360 but by the opportunity to trick users to install the browser 360. 360 things brought to light after the crazy dirty water splashed to [Kingsoft]. " http://bit.ly/QDevI6
Qihoo 360 Accused Of Faking A Microsoft Patch [View instapost]
Qihoo 360 Accused Of Faking A Microsoft Patch [View instapost]
Qihoo 360 Accused Of Faking A Microsoft Patch [View instapost]
Qihoo's ARPU: Playing Games With Investors [View article]
Is this true? Could you elaborate? Which organization are you associated with?
Other Analysts have said that QIHU's ARPU is in-line with other game operators/companies. Do you agree?
If so, can you provide examples of web game operators/companies with over 100,000 gamers and who have monthly ARPUs near 300 RMB?
>however, players on Facebook's FarmVillie are different from players on some other unknow platfrom which also operating FarmVillie, isnt it?
(Nice mention: FarmeVille's ZNGA is at this moment providing smelling salts to star-gazing investors.)
Differences in ARPU: There would be some difference of course due to differences in venue and user mix -- just as a theater ticket in a retirement community would cost less on average than a ticket in a community of just-employed 25 year-olds. But ...
1. The factors which accounted for the difference could be broken down and illustrated and examples could be produced. For Qihoo’s ARPU no factors have been illustrated; no examples have been produced ‒ even though this sort of evidence would greatly aid Qihoo’s prospects.
2. The difference would not be 300 to 400%.
>>> And, operators' ability to monetize from their players are different, either. Qihu could target their game players very precisely through their web browser (over 50% penetration by the way), by analyzing user's behavior which no other game operators can do the same. That's advantage Qihu far from its competitors.
1. Provide references so that we know you are not filling in the gaps of Qihoo's story with your own convenient rationalizations.
2. How would Qihoo be capable of Analyzing users behavior in a way that competitors could not and that was not also an intrusion of privacy and/or a use of spyware? (Two acts which Qihoo has been accused of in the past and at the present.)
Qihoo's ARPU: Playing Games With Investors [View article]
And remember -- we are talking about a difference in ARPU somewhere between 300 and 400%.
Qihoo's ARPU: Playing Games With Investors [View article]
1.Qihoo's games are not unusual. They are the same games found elsewhere. There is no exclusivity.
2. Other publically traded companies disclose ARPU, or at least data from which to calculate ARPU. EG, Qihoo's game site is very similar to Renren's. There are many identical games that both share. Both publish statistics and revenue. Their revenue per user does not compare.
3. "Alex means...." If you are not putting words in Alex's mouth, please provide your reference and elaborate.
RE: Differences between companies. Don't forget: It is not just how much the game companies pull in, but how much gamers spend on average ... not to mention how much they are ABLE to spend. A 440 ARPU is unrealistic, however which way you look at it. If it is net ARPU (IE, after revenue share with developers), then we are supposed to believe that the average Qihoo gamer paid 630 RMB in March for virtual goods. $100 USD? What's so special about Qihoo's web game platform? Same games...
Qihoo's ARPU: Playing Games With Investors [View article]
"The Company’s operational results for the first quarter of 2012, which exclude those of 7Road’s Web-based games, were as follows: ....
ARPU for the Company’s games slightly increased 2% quarter-over-quarter and 7% year-over-year to RMB225." SEC 6-K http://1.usa.gov/LJt70Y (Also reported in Earnings Call Transcript. (divided by 3 for monthly comparison) ARPU 75 RMB.
SOHU has an interest in Changyou and reports the same number: http://bit.ly/LK4xSf
That said, 7road's game revenue gives us a rare look under the hood, as I mentioned. That is why I included it in the text. Shen Qu is the second ranking game on Qihoo's site. DDTank is also in the top 16. The CFO said there were no dominant games. If QIHU shares with developers 70:30, you can see that no matter how you reconstruct game revenue Qihoo's numbers aren't realistic. Neither "net" nor "gross" numbers come close.