Sep. 16, 2013, 11:44 AM
- Though Tencent's (TCEHY.PK, TCTZF.PK) acquisition of a 36.5% stake in Sohu's (SOHU +6.9%) Sogou search unit stands to make Sogou a greater threat to Baidu (BIDU +2%), given Tencent's plans to promote Sogou throughout its messaging/gaming empire, Baidu investors appear relieved Qihoo, which was in talks with Sohu, didn't end up reaching a deal.
- Research firm CNZZ recently estimated Qihoo now has over 15% of the Chinese search market, and the company itself recently pegged its share at 20%. Acquiring Sogou (estimated 8.8% share) would've given Qihoo additional scale and resources as it challenges Baidu's dominant position.
- Meanwhile, Tencent rose 2.5% in Hong Kong overnight, before the Sogou deal was announced. The company's market cap has topped $100B.
- Chinese Web giants Baidu, Tencent, and Alibaba are increasingly stepping on each others' toes. While Tencent and Alibaba have been relying on partnerships/minority investments to grow their reach, Baidu has been more interested in acquisitions and controlling stakes.
Sep. 16, 2013, 9:17 AM
Sep. 16, 2013, 8:23 AM
- SOHU gains 6.4% premarket after announcing a strategic cooperation deal with Tencent (TCEHY.PK, TCTZF.PK), initiated by Tencent investing $448M and the two merging their search businesses. After the deal, Tencent will own 36.5% of Sogou's equity capital, which could further increase to 40% in the near future.
- Off 5% premarket is Qihoo (QIHU) which had been speculated as the buyer of Sohu's Sogou search unit.
- Press release.
- Conference call to discuss the transaction begins at 8:30 ET.
Aug. 30, 2013, 12:48 PM
- The China mobile internet sector has collected enough users, J.P. Morgan says, and prefers Qihoo (QIHU -0.7%) and Tencent (TCEHY.PK, TCTZF.PK) because they have already amassed large mobile platforms.
- Both companies should continue to capitalize on China’s booming mobile economy, the firm says; it expects Tencent to capture 30%-35% mobile game share by the end of 2014 through content development and distribution, while QIHU could take 10% through distribution.
- The firm cuts Youku (YOKU -2.7%) and Sohu (SOHU -2.1%) to Neutral from Overweight.
- JPM also likes online real estate services platform Soufun (SFUN +4.6%) for its market leading position; users seem sticky and barrier to entry seems high.
Aug. 30, 2013, 9:41 AM
- Deutsche upgrades ARM Holdings (ARMH +0.7%) to Buy. Analyst Kai Korschelt thinks Intel fears are overblown and will have limited impact on ARM's EPS going forward.
- Bernstein upgrades Telecom Italia (TI +8.6%) to Outperform. TI is down 27.3% in the last year as the telco has been roiled by the spectre of credit downgrades and antitrust troubles.
- JPMorgan scythes a number of Chinese tech stocks: Dangdang (DANG -4.7%) to Underweight with a PT of $6.50, Youku Tudou (YOKU -1.3%) to Neutral with a PT of $23, and Sohu.com (SOHU -0.7%) to Neutral with a PT hike to $66 ($56 previous).
- JPMorgan also initiated a number of Chinese stocks: Soufun (SFUN +1.5%) with an Overweight rating and PT of $49 and YY (YY +1.1%) with an Overweight rating and PT of $47.
- Swedbank downgrades Nokia (NOK -2.4%) to Reduce.
Aug. 28, 2013, 11:22 AM
- Qihoo's (QIHU -6.6%) 2018 convertible notes carry an interest rate of 2.5%, and a conversion price of $110.96 (51% above current levels). (PR)
- Goldman estimated (before the deal was priced) the offering would dilute EPS by 4%-6%. The firm thinks Qihoo will use the proceeds " to strengthen its presence in the key strategic areas, such as in mobile gaming and search," to counter the expansion efforts of rivals.
- Judging by today's rally in Sohu (SOHU +4.7%) shares, some investors are clearly betting Qihoo will use the funds to strengthen its search presence by acquiring Sohu's Sogou unit, for which Qihoo has already held buyout talks.
- Previous: Qihoo announces $550M convertible debt offering
Jul. 30, 2013, 9:43 AM
- Bankrate (RATE +13.6%) has been upgraded to Buy by BofA in response to its Q2 report.
- SanDisk (SNDK -2.5%) has been cut to Neutral by Goldman.
- OpenTable (OPEN -1.3%) has been cut to Neutral by Macquarie.
- Sohu (SOHU -0.7%) has been cut to Equal Weight by Morgan Stanley following yesterday's Q2 report (I, II).
- EDA software firms Mentor Graphics (MENT -0.1%) and Synopsys (SNPS +0.8%) have been started at Outperform by Pac Crest. Rival Cadence (CDNS -0.2%) has been started at Sector Perform.
Jul. 29, 2013, 12:45 PM
Jul. 29, 2013, 10:47 AM
- Sohu's (SOHU) Q2 numbers weren't bad. Brand ad revenue of $100M (+45% Y/Y, +32% in Q1), online game revenue of $168M (+24% Y/Y, +33% in Q1), and Sogou revenue of $50M (+64% Y/Y, +73% in Q1) met guidance.
- Sohu's Q3 guidance is for revenue of $358M-$370M vs. a $361.3M consensus. Sogou revenue is seen growing 45%-50% Y/Y to $54M-$56M.
- But expectations for Sohu had risen; the $340.3M Q2 rev. consensus was near the high end of a $333M-$342M guidance range.
- Sohu's gross margin was 66%, flat Q/Q and +500 bps Y/Y. Opex +21% Q/Q and +43% Y/Y (above rev. growth of +10% and +33%).
- Subsidiary Changyou (CYOU) has also seen expectations rise. And its guidance for Q3 revenue of $180M-$186M is below a $191M consensus.
- Changyou's online game revenue +1% Q/Q and +24% Y/Y. But active paying accounts -4% Q/Q and -25% Y/Y to 1.96M.
- Changyou has established a new $100M buyback program in an attempt to soften the blow.
- BofA/Merrill has cut Changyou to Neutral.
- Q2 results: Sohu, Changyou
- PRs: Sohu, Changyou
Jul. 29, 2013, 8:31 AM
- Shanda Games (GAME) -7% premarket after agreeing to acquire affiliates providing user and payment platform services from its parent company Shanda Interactive Entertainment for a combined $811.5M.
- GAME says the moves will strengthen its mobile strategy.
- Other players in Chinese gaming: SOHU, RENN, NTES, PWRD, GA.
Jul. 29, 2013, 5:39 AM| Comment!
Jul. 29, 2013, 12:05 AM
Jul. 28, 2013, 5:30 PM
Jul. 24, 2013, 10:01 PMChinese Internet stocks finished AH trading with solid gains thanks to Baidu's big Q2 beat and above-consensus Q3 guidance. Baidu mentioned in its report revenue/ad customer rose 11% Q/Q, and that mobile now accounts for over 10% of its sales. SINA +4.1%. SOHU +2.2%. RENN +4.3%. YOKU +3.6%. YY +3.1%. Rival QIHU +3.3%. | Comment!
Jul. 19, 2013, 2:25 PMSohu (SOHU +0.9%) responds to comments from a Qihoo (QIHU +1.6%) exec about M&A talks regarding Sohu's Sogou search unit by stating it "has been, and continues to be, in preliminary discussions with several potential strategic investors and partners." Sohu adds its Sogou options include both the sale of a minority stake, and "a more comprehensive strategic combination." Qihoo has issued a PR in which it says "no agreement has been reached with respect to a significant transaction," but provides little color beyond that. | Comment!
Jul. 19, 2013, 9:38 AMQihu (QIHU -1.1%) says it's in talks to buy Sohu's (SOHU +0.4%) Sogou search unit, but cautions it's "not in the pricing stage yet" and is still weighing integration issues. Analysts estimate the business is worth $1.2B-$1.4B. Sogou, rumored to be drawing interest from a few different companies, was recently estimated to have an 8.8% share of the Chinese search market in June; Qihoo was given a 15.3% share. If integration challenges can be handled well, a Qihoo/Sogou merger would yield a company with more resources, user data, and advertising scale to take on Baidu (BIDU -0.3%, 69.4% share). Sohu has forecast Sogou revenue of $48M-$50M for Q2, +41%-44% Y/Y. | 1 Comment
SOHU vs. ETF Alternatives
Sohu.com Incis a Chinese online media, search, gaming, community and mobile service group. The Company along with its subsidiaries is engaged in online advertising , search and others business, online games, mobile and others business.
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