Sep. 18, 2013, 10:35 AM
- Sohu (SOHU +8.4%) has provided details about the $301M special dividend it's paying to holders of Series A preferred shares in its Sogou search unit, courtesy of the $448M investment Sogou is receiving from Tencent. Sohu sold off yesterday after Wedge Partners highlighted the dividend, and declared it to amount to insider highway robbery.
- $161.2M of the dividend payment will go to Sohu's Sohu.com unit, and thus stay within the company. $96.7M will go to minority shareholder China Web Search.
- Most notably, an investment vehicle owned by chairman/CEO Charles Zhang will only receive $43M, even though it owns 60% more Series A shares than Sohu.com. Zhang chose to receive dividend payments on only 1/6 of the Series A shares he owns through the vehicle.
Sep. 17, 2013, 5:36 PM
Sep. 17, 2013, 12:39 PM
- After opening higher thanks to Goldman's upgrade, Sohu (SOHU -1.1%) has turned negative following a Wedge Partners note that observes the company's Sogou search unit will use $301M of the $448M investment it will receive from Tencent to pay a special dividend to owners of Sogou's Series A preferred stock (as disclosed in a Sohu 8-K).
- Wedge declares the dividend payment to be an example of insider highway robbery.
- Shares still +6% from where they traded before the Tencent announcement.
Sep. 17, 2013, 8:12 AM
- SOHU gains another 2.6% premarket after Goldman Sachs puts the name on its Conviction Buy list with $98 per share price target, a modest 40% above yesterday's close. Costly investments in video, search, and mobile are about to pay off in the form of accelerating earnings, says Goldman.
- Sohu flew 7.5% yesterday following its deal with Tencent.
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
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