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NQ Mobile now -7.3% AH; accounting revision, acquisition disclosed

  • NQ Mobile discloses in its Q4 report it "identified an accounting overstatement relating to share based compensation expense" for its Q3 2013 results. The company is changing its G&A expense, net loss, and balance sheet figures to account for the revision.
  • The company also says it has bought a 58% stake in Tianjin HuaYong Wireless, developer of live wallpaper app vLife (used by the NQ Live homescreen wallpaper) for "total cash payment of RMB 15.2 million, $34.4 million, and restricted shares of the Company at the market value of $ 45.5 million."
  • Guidance is strong: NQ expects Q1 revenue of $75M-$76M (above a $65.5M consensus) and 2014 revenue of $320M-$325M (above a $293.9M consensus).
  • Contributing to NQ's Q4 EPS miss: Gross margin fell to 48.8% from 59.5% in Q3 and 67.8% a year earlier, and opex rose 8.1% Q/Q and 89.4% Y/Y to $37.8M. The GM decline is blamed on a mix shift towards mobile games/ads. NationSky's low gross margin of 20.6% (caused by hardware procurement) also didn't help.
  • Ad sales rose 532% Y/Y and made up nearly 1/4 of revenue. Mobile value-added services (security/games) rose 35% and totaled 40% of revenue, and enterprise mobility (NationSky) rose 53% Q/Q and totaled 35% of revenue.
  • Total registered user accounts rose 12% Q/Q to 587.7M. Average monthly premium accounts rose 5% to 15.6M.
  • Q4 results, PR
Comments (15)
  • Growfast
    , contributor
    Comments (273) | Send Message
     
    Some nice spots in this news on revenue growth, mix and guidance, but the drop in Gross Margin is disappointing. Appears to be no forward guidance on EPS. Would like to see this from the company.
    10 Apr, 06:12 PM Reply Like
  • TheCompleatAngler
    , contributor
    Comments (162) | Send Message
     
    That the majority of the price being paid for Tianjin HuaYong Wireless is in restricted stock is interesting. It is unlikely to say the least that stock would be used as payment for an acquisition at present if any of the allegations of fraud made against NQ had substance. The sellers of Tianjin HuaYong Wireless presumably believe that in receiving NQ's shares they are not receiving something that is worthless.
    10 Apr, 06:32 PM Reply Like
  • slammer1
    , contributor
    Comments (31) | Send Message
     
    All of this doesn't matter in the slightest. NQ is hammered in after hours trading. The price action tells the story.
    10 Apr, 08:05 PM Reply Like
  • SivBum
    , contributor
    Comments (1569) | Send Message
     
    slammer1, becareful on AH trades. I had seen many stocks up or down 5% pre or after market but reverse directions during regular sessions with volume. I counted less than 400K shares or so changed hands after EA release. It initially popped to $16.11 to $17.45 on 52.5K shares before dived down to range of $14.00 to $16,25 ten minutes later on ~120K shares. The rest are just noise.
    10 Apr, 08:53 PM Reply Like
  • Bigisbetter
    , contributor
    Comments (438) | Send Message
     
    I wouldnt disagree on a 20-22 value for this kind of guidance in short term. Daily reactions are mostly misguided. Especially this kind of misunderstanding of stetements.
    11 Apr, 04:25 AM Reply Like
  • slammer1
    , contributor
    Comments (31) | Send Message
     
    I was merely referring to the earnings announcements; that's all.
    10 Apr, 08:09 PM Reply Like
  • HARDON, James
    , contributor
    Comment (1) | Send Message
     
    the company keeps churning out victory after victory.
    10 Apr, 09:33 PM Reply Like
  • ThaiGhai
    , contributor
    Comments (9) | Send Message
     
    Thank you for your brief observation GROWFAST.

     

    The strong forward guidance might be indicative of NQ's confidence that the forthcoming "audit" reports will also boost growth.

     

    The decline in GM was explained well and obviously impacted GM as well. The after-hour impact I believe will reverse itself after the entire earnings report is digested.

     

    It is painful to endure this "hit", but for those who pyramided into a position, this decline should not have been a back-breaker.

     

    I remain long-term bullish on NQ and maintain a modest position.
    10 Apr, 10:05 PM Reply Like
  • ThaiGhai
    , contributor
    Comments (9) | Send Message
     
    The third sentence should read, "The decline in GM was explained and obviously impacted EPS as well."
    11 Apr, 02:01 AM Reply Like
  • GreenGrowthGeek
    , contributor
    Comments (632) | Send Message
     
    Looks like a good news bad news scenario--mixed so this will fuel a lot more SA articles on this controversial stock. I think that the short arguments are proving more and more to be baloney--espc. the fraudulent MW report (the report itself is proving to be the true fraud). The accounting problem in this report will be what the shorter distorter grasp onto as fuel for their fire, but if you look at it rationally it's not a big deal.
    11 Apr, 12:51 AM Reply Like
  • ThaiGhai
    , contributor
    Comments (9) | Send Message
     
    Correction to above comment: The lead sentence in paragraph two should have read, "The decline in GM was explained well and obviously impacted EPS as well."
    11 Apr, 02:29 AM Reply Like
  • Jasper85
    , contributor
    Comments (312) | Send Message
     
    Revenue is great and guidance even better, it's like they are adding an extra quarter this year compared to last year revenue.

     

    I agree on the EPS, but with every revenue explosion there is EPS that fall behind in short term.
    As long as the revenue is increasing like this, EPS will follow.
    11 Apr, 06:58 AM Reply Like
  • rcallaghan@rseelaus.com
    , contributor
    Comments (13) | Send Message
     
    FYI, Cancord and Topeka this morning reiterated their 'buy' recommendations. However, they lowered their 12 month target price by $ 2 per share to average $27 per share. NQ is getting hammered in its pre market pricing now at $13+ per share. Oh boy! Wish management would get their act together and a) release the audit results b ) start managements buy back of its stock. The 1Q '14 earnings are scheduled to be released 5/15/14! Revenue was great but, it will be interesting to see them bounce back next report.
    11 Apr, 09:26 AM Reply Like
  • qrc3288
    , contributor
    Comments (299) | Send Message
     
    i don't know anyone who takes Canaccord seriously. Their stuff across the board is hilariously promotional. The only time I listen to them is in rare instance they say sell....then it might be worth a look as a long.
    11 Apr, 10:07 AM Reply Like
  • Jasper85
    , contributor
    Comments (312) | Send Message
     
    27= still a double from here
    11 Apr, 09:36 AM Reply Like
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