Xiaofan Zhang

Tech, social networking, media, internet
Xiaofan Zhang
Tech, social networking, media, internet
Contributor since: 2009
Baidu's Search Revenue = Revenue Per Pageview X Total Pageviews. Although I expect revenue growth to moderate in the long term due to larger base, I do think Revenue Per Pageview will likely go up in 2015. This will partially offset, but not more than offset, the downward pressure on revenue growth created by bigger revenue base.
I think Revenue per Pageview will go up because based on management's comments on the earnings call, Baidu could have shown more ads to its mobile users but chose not to do so. As Baidu solidifies its mobile search market share and gains more knowledge on mobile users' ads viewing preferences, it will show more ads to users, leading to increased Revenue Per Pageview. I expect this to happen sometime in 2015, partially offset the downward pressure on revenue growth created by bigger revenue base. This is part of the reason why I forecast Baidu to achieve 47.5% Y/Y revenue growth in 2015.
I still expect revenue growth to moderate in the long term because I think there is an upper limit on how many ads a mobile user can tolerate on a single screen. Baidu cannot indefinitely raise the number of ads per mobile pageview in the future. Therefore, in the long term, I do not expect showing more mobile ads will more than offset the effect of bigger revenue base. For Baidu's revenue growth to accelerate in the long run, other significant sources of revenues have to be created or acquired.
Investors were re-allocating their money in preparation for the Alibaba IPO.
"Each ADS represents 20 Class A common shares" (Source: http://1.usa.gov/1linajh)
This risk is low.
I expect them to stay independent at least for the next several years.
This investment was made to control Dolphin Browser, a Web browser for mobile devices. Browsing webpages on mobile devices and playing video games are two very different activities, so the MoboTap investment is not directly related to Changyou's game platform. Changyou may potentially choose to use Dolphin Browser to promote its game platform, thus making this deal indirectly related to its game platform. The acquisition of MoboTap shows Changyou is diversifying its business lines. Previously it was a video game company which primarily used the Internet to serve video gamers. Now it has entered the general mobile Internet space through acquiring a popular mobile browser.
The numbers on page 14 and 16 are the same: 1002, 1837, 31242. The difference between page 16 and page F-7 (31242 vs. 4105) may be because a portion of the stock-based compensation was included in the "Cash flows from financing activities" section instead of the "Cash flows from operating activities" section.
The 20-F data implies that "91 Wireless + PPStream" was more sales-oriented than Baidu prior to these two acquisitions.
The increase in Sales and Marketing headcount is largely attributable to the acquisitions of 91 Wireless and the online video business of PPStream Inc. in 2013.
Why does Weibo try to redefine "feed", instead of using "message" or "update" to describe a single piece of content created by its users? I believe the reason is Weibo does not want investors to confuse itself with other message-based social networking services.
In its IPO prospectus, Weibo defined itself as a "social media", and defined Facebook and Tencent's Weixin as "social networks and messengers": "Social media platforms, such as Weibo, combine microblogging and social networking features and are public in nature ... On the other hand, social networks and messengers, such as Tencent Qzone and Weixin, connect users by allowing friends and families to communicate and interact within a primarily private network." (Source: Weibo IPO prospectus)
This chart in the prospectus has visualized this "Social Media vs. Social Network" theory: http://bit.ly/1dVcWvY
I believe this unique theory has laid out a clear and promising road map for Weibo. But investors need to monitor closely whether Weibo has the discipline and execution capacity to stick to this game plan and maintain its uniqueness in the future.
Although Weixin was only mentioned once in Weibo's IPO prospectus, "WeChat", Weixin's English name, was actually mentioned twice. For example:
"In addition, as a form of social media featuring social networking services and messaging services, we are subject to intense competition from providers of similar services as well as potential new types of online services, including interest-based social products. These services include mobile applications, such as WhatsApp, Line, Ozone, WeChat, QQ Mobile, Kakao Talk, Yixin, Laiwang, Douban and Momo, and websites, such as renren.com." (Source: Weibo's IPO prospectus http://1.usa.gov/1gBM7m2)
I think what hurt SINA's stock price the most was the conclusions made by mainstream media based on the CNNIC report. For example, this is the conclusion made in a WSJ.com article (http://on.wsj.com/1gpCNkj):
"Though it is unclear what the numbers mean for the number of users on the two companies' microblogs, it is a strong indication that users are continuing to shift from Weibo to social-media platforms used on smartphones. In particular, over the past two years Tencent's WeChat messaging service has grown quickly in popularity."
The CNNIC report said total number of microblog users declined 9% year-over-year in China. I think Sina should report the total number of Sina Weibo users every quarter in their earnings releases. Investors can then use Sina's official numbers to make investment decisions, instead of relying on third-party numbers that describe the whole microblog industry.
Sina's stock has fallen for various reasons.
This report by China Internet Network Information Center (CNNIC) was a big, direct factor:
Then, news report such as this one added fuel to the fire:
But ultimately Sina Weibo has met serious challenges from Weixin in new user acquisitions:
On your second question, currently Weibo and Weixin are not in a large-scale battle for advertisers. On one hand, Weibo's IPO prospectus shows it has positioned itself very differently from Weixin (Figure 1 in this article). On the other hand, Weixin currently does not view advertising as the focus of its monetization. It has been busy making money from other value-added services. When these two services compete more directly for advertisers, we will be able to see which platform is a better fit for advertisers. But now, Weixin is just not participating much in this contest.
The current competition between Weibo and Weixin mainly takes place on iOS and Android platforms. The goal for both companies is for their own apps to be on the first screen of users' smartphones (ideally on the dock).
To IamHopeful2:
My thoughts on whether Weixin and Weibo are competitors:
There are two ways for a user to conduct social networking activities: mobile and non-mobile.
On the mobile side, Weixin and Weibo are direct competitors - for example, if a user has just taken an interesting picture and wants to share it with friends, both Weixin and Weibo have this feature.
On the non-mobile side, Sina Weibo's website (http://weibo.com) has much more features than Weixin's website (https://wx.qq.com). This is their major difference and the reason why some people think these two services are apples and oranges.
Nowadays most of the social networking activities take place on the mobile side, in the form of smartphone users operating their handsets to interact with friends and families. Therefore, what really matters for Weibo and Weixin is on the mobile side, where these two services are direct competitors. What happens on the non-mobile side really does not have much impact on who wins this two-horse race in China's SNS industry.
This is similar to how experts evaluate NFL quarterbacks: what matters most is what they do "inside the pocket", not outside of it.
Good question. Sina Weibo does not have a Weixin account now. But Weixin does have a Sina Weibo account: http://bit.ly/1fS6llD.
The more, the better. 多多益善。
Investors should compare Baidu's 4Q11 revenue guidance with $647 million, which is analysts' current consensus estimate for 4Q11.
Thanks for your comment, but this article is not about Baidu's long-term performance. BIDU is a great stock to own for the long term.
I did not expect such a deep correction coming to major indexes. The negative impact of VIE on China Internet stocks has been much bigger than I expected. I still stand by my views that an evenly-distributed portfolio consisting of the "Big Six" Chinese online game companies will outperform the overall China Internet industry for the rest of 2011. I developed my own research methodologies to track the operating metrics of online game companies.
Here is a larger version of Table 1: China Internet Stocks' Performance in August 2011: goo.gl/tn08U
I will be more constructive on DANG if the company's competitive environment becomes more favorable.
I agree that my virtual profit is not something to brag about, and I did not mention it in this article. It was mentioned in the comments section because I had to respond to the first comment on this article.
I understand that you don't like articles that recap past stock performance. I believe recaps and history are useful for investors. Although we disagree on this, I respect your pursuit of information that is useful to you.
It's a short now - details are here: www.tickerspy.com/port...
If a person comments on a stock, whether he/she has a trading position in the stock should not automatically make the comment less valuable.
I think investors should be less critical of comments made by people who do not have a trading position in the relevant stocks. I understand that many investors believe comments made by people who own the stocks (for example, DANG) are more valuable. But people who have a real trading position in a stock are highly motivated to provide comments and information that are positive to their own positions. In this sense, serious investors should read comments made by both types of people and make judgments based on whether the opinions themselves make sense or not.
I think it's a good practice for investors to maintain virtual portfolios and study past stock performance.The value of maintaining virtual portfolios can be found here: en.wikipedia.org/wiki/.... Past performance and trading history is valuable information for investors. Very few, if any, investors can accurately predict the future, but studying the history is something much easier to do. And by studying the history, investors normally become more knowledgeable, which helps them predict future stock performance.
Congratulations on your performance! It's good to see that you also spend the time to have a virtual portfolio, which is a good exercise for investors. After all, investors may have many ideas and they may not have enough real money to try all of these ideas. Maintaining virtual portfolios and doing some paper trading is a good practice in addition to your normal investing activities.
My virtual investment portfolio entered the short position on DANG on December 13, 2010 at $29.15. The return is around 50% as of now. Details are here: www.tickerspy.com/port...
Sina Weibo is in a much tougher competitive environment than what Twitter is facing in the U.S. At least Tencent is still a very promising contender for China's No.1 Twitter-like service in the future. This is part of the reason why currently I only feel comfortable recommending SINA in the short term.
"Everyone Knows" does not equal "Everyone Uses". If "Everyone Uses" the strategy, then it would indeed become void. I certainly hope that "Everyone Knows AND Uses" the strategy, but in reality, there are plenty of people who disagree with me right now. (I wrote this article when SINA was trading at $86.05.)
The play is to buy SINA now for a short-term trade because of the media buzz surrounding its latest monetization efforts, and exit the position in the near future before the Big Three Chinese Internet companies make major moves to respond to SINA's latest moves.
Renren (NYSE:RENN) shares are overvalued. Investors should wait on the sidelines until the company finds a way to significantly boost revenue growth.