Tech guidance roundup: 1) OmniVision (OVTI - earnings) expects FQ4 revenue of $300M-$330M and EPS of $0.14-$0.29, below a consensus of $371.4M and $0.32. 2) Youku (YOKU - earnings) expects Q1 revenue of RMB480M-RMB520M ($77.2M-$83.6M), below a consensus of RMB551.3M ($88.6M). 3) Splunk (SPLK - earnings) expects FQ1 revenue of $52M-$54M, largely above a $52M consensus. FY14 (ends Jan. '14) guidance is for revenue of $260M-$270M vs. a $263.2M consensus. OVTI -9.2% AH. YOKU -16.1%. SPLK +4.8%.
Youku Tudou (YOKU -5.8%) gives back some of the big gains it has seen since early December following a downgrade to Sell from Maxim Group, which thinks losses will grow in 2013 thanks to the integration of Tudou's ops. The sell-side is currently expecting Youku's EPS loss to decline by over 50% this year, albeit while remaining substantial.
Youku (YOKU +6%) is started a Buy with price target of $29.56 by Deutsche's Alex Yao, who expects 50% CAGR in the company's top line through 2015. He sees profit margins improving over the same period, with gross margin of 53% by 2015.
China's Internet user base rose 10% last year to 564M, according to a government-linked agency. Mobile data adoption has much to do with this growth: the number of Chinese users relying on mobile devices to go online rose 18% to 420M. All that mobile activity is both a growth opportunity and a monetization challenge for the likes of Baidu (BIDU) and Sina (SINA) - Sina recently said it would adopt a "mobile first" strategy in 2013.
Baidu (BIDU +3.5%) is rallying after JPMorgan argues an improving Chinese economy and rising mobile revenue (aided by Baidu's iOS search deal) will give the company a lift. The firm thinks mobile, clearly a major concern for the Street, could make up 10% of sales by year's end. Youku Tudou (YOKU +3.5%), which JPMorgan also sees benefiting from the aforementioned trends, is also up. Alibaba's analytics arm recently estimated Qihoo (QIHU) took more search share from Baidu in December, but at a slower pace.
The Chinese government has signed off on new Internet censorship rules: posts and pages containing "illegal" info can now be deleted, and service providers have to "instantly stop the transmission" of such content, as well as take "relevant measures." But there isn't a requirement to have all Internet users register their names to gain Web access, as had been proposed. Investors seem relieved: SINA +3.7%. SOHU +2%. RENN +1.5%. BIDU +1%. YOKU +1.1%. Update:Bloomberg claims rules requiring users to identify themselves when signing up for new Internet and phone service have also been passed.
Sina (SINA -2.1%), Baidu (BIDU -1.8%), Sohu (SOHU -2.3%), Youku (YOKU -2.4%), and Renren (RENN -1.5%) slump following news a People's Congress committee will decide this week on a law requiring Internet users to register their real names to have Web access. Sina was required earlier this year to implement real-name registration for Weibo, but has admitted it isn't yet able to verify the identities of all posters. The state-run People's Daily has been publishing editorials calling for greater Web regulation.
In addition to upgrading Ctrip, Macquarie has lifted its rating on Youku Tudou (YOKU +6.3%) by two notches to Outperform. The firm says checks point to strong demand online video ads, sees ad rates rising 20%-30% next year, and thinks content costs are unlikely to move higher. Morgan Stanley launched coverage at Overweight on Friday on expectations of strong growth and future profitability.
Youku Tudou (YOKU +5%) is rallying after Morgan Stanley's Phillip Wan starts coverage with an Overweight and $21.10 PT. Youku is "at an inflection point and will turn profitable by the end of 2013," argues Wan, who sees the Chinese online video ad market growing at a 40%-50% annual clip through 2015. He adds the Tudou merger leaves Youku with ~30% of Chinese online video ad sales, and the ability to claim ~80% of local Web video viewers as users.
Sohu's (SOHU +3%) video site has won exclusive online broadcast rights for Voice of China, a popular Chinese variety show. The company says it might pay RMB100M ($16.1M) for the rights, which would be a new record for Chinese online video deals. Market leader Youku Tudou (YOKU) has been predicting its content costs will fall as a % of revenue next year - they accounted for 36% of its sales in Q3.
Some Chinese ADRs were among the biggest tech losers today, possibly thanks to ongoing de-listing fears stemming from the SEC's lawsuits against the Chinese arms of the Big-4 accounting firms. SPRD -8.2%. YOKU -6.9%. AMAP -5.7%. On the other hand, some Chinese solar names posted huge gains, likely on hopes JinkoSolar's $1B financing deal with China Development Bank indicates government support for the cash-burning industry remains strong. TSL +9.6%. LDK +12.1%.
Some marquee Chinese Internet stocks are slumping, potentially on worries about the SEC's suits against the Chinese arms of the Big-4 U.S. accounting firms. Baidu (BIDU -5.1%), Sina (SINA -6.6%), Youku Tudou (YOKU -4.2%), Sohu (SOHU -3%), Perfect World (PWRD -1.2%), and NetEase (NTES -4%) are among the losers. Renren (RENN +2.5%) is higher following yesterday afternoon's Deutsche upgrade.
seanc123+ FollowFollowing- Unfollow|Send Message23 May
: As a Chinese, my friends told me fewer and fewer people use weibo and more and more go to WeChat from TENCENT.
May 23, 11:47 AM
seanc123+ FollowFollowing- Unfollow|Send Message8 Jun
: decided to take a loss at this stock and went to $JD instead.
Jun 8, 4:43 PM
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Youku Tudou Inc is an Internet television company in china. Its internet television platform enables consumers to search, view and share high-quality video content quickly and easily across multiple devices.