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How can Sky-Mobi Started At Buy By Citigroup?

Jan. 24, 2011 4:02 PM ETMOBI
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Last week, Sky-Mobi stock price went up more than 30% because Citigroup rated it Buy.

As a Chinese, I usually focus on Chinese IPO. I never heard of Sky-Mobi until it went public on Nasdaq. So I did some research about it. Sky-Mobi is a mobile app program company. I have to say, there are tons of mobile app program company in China, including Tom Online, qq.com, and etc. Sky-Mobi is only a tiny company. Chinese mobile users like free apps. From my knowledege, nobody wants to pay for apps. So my question is how can sky-mobi generate profit for investors? It's also funny that on the Mobi website, it said that Sky-mobi provides all the technologies and services by free. By free? How can you give a service for free? And it also compares itself with iphone appstore....

The truth is there are huge difference between English version mobi website and Chinese version mobi website. If you can read Chinese, you will get what mobi really is. It only has 22 mobile apps. The most famous one is QQ. However, qq.com has its official mobile apps. So few QQ users will use Mobi QQ version. And the rest of the mobi apps are so generic that I can't believe that those can compete with their competitors.

I have to say, the mobile apps market in China do has huge potential. But now, it doesn't have any solution to get profit, or even reach break even. I don't see any competitive advantages that Mobi has to outperform its competitors, for example, Tencent, Tom online and so on.

And the huge difference between Mobi's English website and Chinese website makes me believe that Mobi is a company with a beautiful clothes to attract investors. Unfortunately, it doesn't have the internal strength.

Finally, if you look at Mobi's income statement and balance sheet, you will tell that they are really mass. So I don't know why Citigroup rate Mobi to buy. Maybe because Citi was responsible for Mobi's IPO...

Disclosure: I am long C.

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