In Sohu's case, the rumor mill might also be helping out. A source tells Marbridge Consulting Sohu CEO Charles Zhang and Tencent (TCEHY +1.2%) CEO Pony Ma have talked about merging their companies' online video units. Both Sohu and Tencent trail market leaders Youku and Baidu in China's burgeoning online video market.
Dangdang (DANG +8.6%) is adding to yesterday's big post-earnings gains after Oppenheimer hiked its PT to $15. The firm likes Dangdang's improved efficiency and partnerships with e-commerce rivals (inc. Alibaba's Tmall), and the fact mobile accounted for 13% of Q4 orders.
SEC administrative law judge Cameron Elliot has barred the Chinese units of the Big-4 accounting firms - KPMG, Deloitte, PwC, and Ernst & Young - from auditing U.S.-listed companies for six months.
Elliot declares the accounting firms "willfully" chose to withhold audit work papers from U.S. regulators for Chinese companies being investigated for accounted fraud. The firms have been worried about violating Chinese privacy laws by turning over the papers, and have argued the dispute needs to be resolved politically.
Though the firms plan to appeal and say they can continue serving Chinese clients for now, shares of Chinese Web and solar names aren't handling the news well. Soft Chinese PMI data could be worsening matters.
Qihoo (QIHU -4.6%) has joined the selloff in spite of a BrightWire report stating Alibaba (ABABA) has reached a deal to acquire a stake in the company. Marbridge Consulting reported two weeks ago Qihoo and Alibaba were in talks about a possible investment.
The service will be aimed squarely at Chinese online/mobile gaming leader Tencent (TCEHY), and will give developers a hefty 70% cut. Alibaba also plans to integrate the service with its Laiwang messaging app (competes with Tencent's dominant WeChat) and the mobile app for its Taobao e-commerce platform.
In addition to Tencent, Alibaba will be taking on a slew of other mobile game distributors, including NQ Mobile's (NQ +1.7%) FL Mobile unit.
Chinese game developer Perfect World (PWRD +10.1%) has skyrocketed in morning trading. Peers Changyou (CYOU +4.1%) and NetEase (NTES +3.5%) are also up sharply.
Also: Alibaba's Alipay online payments unit has struck a deal with Sina (SINA +1.5%) to allow Weibo users to make online and offline payments via Alipay. Sina investors have been expecting the company's partnership with Alibaba (bought an 18% stake last year) to yield service launches that would improve Weibo monetization.
Making good on a November Marbridge Consulting report, Baidu (BIDU +4.1%) has reached a deal to acquire Perfect World's (PWRD +1.8%) Huanxiang Zongheng online literature business (provides Chinese e-books, digital comics, and animations) for RMB191.5M ($31.5M). (PR)
Marbridge previously noted Zongheng offers 100K+ e-book titles, receives 60M+ daily page views, and gets over 1/3 of its site traffic via mobile.
The purchase is the latest in a string of 2013 acquisitions by Baidu, as the Chinese search giant attempts to create a far-reaching empire of Web/mobile content and services. Prior acquisitions: PPS, 91 Wireless, Nuomi.
Perfect World says the deal will allow it to focus on its core online gaming business. The company has been investing heavily in both developing new games and promoting existing ones.
Perfect World (PWRD) expects Q4 revenue of RMB850M-892M ($139.6M-$146.5M), above a consensus of $137.3M.
The company attributes its Q3 beat to the strong performance of new titles, including Swordsman Online and Saint Seiya Online. Average concurrent users for Chinese games rose to 778K from 742K in Q2 and 601K in the year-ago period.
Going forward, Perfect World is counting on the launch of DOTA2, as well as a Chinese version of U.S./European title Neverwinter, to maintain its momentum.
Sales/marketing spend rose 10% Q/Q and 21% Y/Y to $34.9M. The Y/Y rate is well below the 102% clip Perfect World reported for Q2, much to the concern of investors. R&D spend rose 19% Q/Q and 20% Y/Y to $38.8M. Gross margin was76.7%, up from 75.5% in Q2 but down from 81.5% a year ago.
A source close to Baidu (BIDU) tells Marbridge Consulting the Chinese search giant is close to buying Chinese literature/comics/animation site Huanxiang Zongheng, a unit of online gaming firm Perfect World (PWRD). The source adds more info about the deal will be released on Nov. 26.
Zongheng offers 100K+ online book titles, and receives 60M+ daily page views. It also offers iOS, Android, and Windows Phone apps, and gets over 1/3 of its site traffic via mobile.
Baidu has stepped up its M&A activity this year, as it tries to evolve into a broader, Google-like provider of Internet services and apps. The company has already bought video site PPS and top Android app store 91 Wireless, and a 59% stake in daily deals site Nuomi.
Perfect World (PWRD +4.3%) is spending RMB255M ($41.9M) to acquire Chinese online gaming portal owner Wuhu Huitan, and another RMB40M ($6.6M) to buy a minority stake in fellow portal owner Beijing Huitan. Both companies were previously "controlled by an individual unrelated to Perfect World." (PR)
The companies run TGBus.com and PTBus.com, which Perfect World declares are "two of the most popular gaming portals among Chinese players." Look for Perfect World to aggressively promote its online gaming titles through the portals going forward.
Q3 results are due on Nov. 25. Shares sold off in August following Perfect World's Q2 beat, largely due to spending concerns, but are still up 69% YTD.
Chinese game makers are falling in sympathy after Changyou posted in-line Q3 results but issued dismal guidance. The mismatch between Changyou's revenue and earnings guidance (partly due to launches of games in Q4) begs the question of whether the sector-wide swoon makes sense.
Shanda Games (GAME -4.3%), Perfect World (PWRD -1.7%), and NetEase (NTES -3.8%) are among the decliners.
Changyou took game makers down with it after disappointing Q2 results as well.