Seeking Alpha

Baidu (BIDU) is acquiring top Chinese mobile app distributor 91 Wireless from Hong Kong-listed...

Baidu (BIDU) is acquiring top Chinese mobile app distributor 91 Wireless from Hong Kong-listed NetDragon and minority shareholders for $1.9B. 91 was estimated to host ~900K Android apps from ~93K developers (#1 in China) at the end of 2012; the company has also developed several popular apps. Baidu is paying steep multiples for rapid growth: NetDragon's mobile ops posted 2012 revenue of $46M, and Q1 revenue of $23.6M (+42% Q/Q and +219% Y/Y). The deal follows Baidu's purchases of video sites PPS and iQiyi, and is another step towards building a Google-like mobile ecosystem ... and perhaps also lowering its search dependence in the face of growing competition and mobile monetization issues. 91 competes with Qihoo's (QIHU) Mobile Assistant app store.
Comments (11)
  • Less cash, lower margins, keep it up Baidu......
    15 Jul 2013, 10:40 PM Reply Like
  • What good is cash if you don't put it to use? BIDU going to war to destroy competition from QIHU.


    Won't know for awhile if the transaction will add value but I think BIDU is thinking that it is better to dominate the mobile space now before their competition can establish in the space.
    15 Jul 2013, 11:01 PM Reply Like
  • What a wise decision, although with high costs. DZH News
    16 Jul 2013, 03:36 AM Reply Like
  • "BIDU going to war to destroy competition from QIHU."


    This might be a mistake. For the govt to aide in destroying is OK. But establishing a destructive monopoly, might not be so.
    16 Jul 2013, 04:01 AM Reply Like
  • Yeah. Many investors have bet on the wise decision, sending Baidu's stock price higher these days.
    16 Jul 2013, 04:29 AM Reply Like
  • Did you buy some? ;)
    16 Jul 2013, 04:55 AM Reply Like
  • They need to nail down the default search setting on Apple devices before a China Mobile deal.


    I thought they needed to do Chinese language updates for Android. However, getting in front of ~900,000 Android apps seems a better alternative. It also represents revenue streams from the apps and ads that can be imbedded in them.


    Video ads through the Chinese equivalent of Facebook and a virtual corner on the largest Android app market, should solve a lot of their puzzle of how to monetize mobile.
    15 Jul 2013, 11:44 PM Reply Like
  • "(+42% Q/Q and +219% Y/Y)" Q1 growth seems completely off from the link. It should be 7.8% Q/Q and 50.5% Y/Y.
    15 Jul 2013, 11:47 PM Reply Like
  • Nope, it's accurate. Check the column that says "Mobile Internet," not the one that says "Revenue." Baidu is only buying NetDragon's mobile unit, not the entire company.
    16 Jul 2013, 12:40 AM Reply Like
  • Eric,


    Thanks for the clarification, you are right on! Apologies for not recognizing this distinction.
    16 Jul 2013, 12:53 AM Reply Like
  • Baidu missed a chance to buy AutoNavi Holdings Limited earlier. The other Internet giant Alibaba got the chance. That's way Baidu got anxious and rushed to bag up 91 Wireless. DZH News offers sth interesting on China.
    16 Jul 2013, 03:55 AM Reply Like
DJIA (DIA) S&P 500 (SPY)