Less than two months after Sungy Mobile (NASDAQ:GOMO) chairman/CEO Yuqiang Deng and co-COO Zhi Zhu found VC backing for their $4.90/share going-private offer, Sungy Mobile (GOMO) has accepted the deal.
The acquisition price represents a 6.5% premium to Sungy's Monday close. $98M in deal financing has been arranged. The deal is expected to close in 2H15.
Sungy Mobile (GOMO -0.6%) chiarman/CEO Yuqiang Deng and co-COO Zhi Zhu have entered into a consortium agreement with various funds jointly owned by VC firms IDG Capital and Accel Partners to pursue their $4.90/share going-private offer (disclosed on April 13).
Sungy currently trades 3% below the offer price. Deng/Zhu own 42% of the Chinese mobile app developer's shares, and control 67.8% of its voting rights.
Sungy Mobile (NASDAQ:GOMO) COO Yingming Chang has resigned "due to his desire to pursue an entrepreneurial endeavor at a company that was invested by Sungy Mobile in October 2014." He's also stepping down from the board.
No word on who (if anyone) will succeed Chang. The news comes a week after Sungy announced the departure of tech chief Aihua Huang, and four days after the company announced CEO Yuqiang Deng and co-COO Zhi Zhu had made a non-binding $4.90/share buyout offer.
Only a handful of non-microcap tech companies are posting outsized gains or losses today amid a 0.4% rise for the Nasdaq.
Notable gainers include 4G modem/M2M module vendor Sierra Wireless (SWIR +5.1%), online money transfer provider Xoom (XOOM +4.6%), authentication hardware/software provider Vasco (VDSI +4.8%), and RFID/electronic document tech provider SuperCom (SPCB +7.9%).
Notable decliners include a couple of Chinese tech firms that soared yesterday: Sungy Mobile (GOMO -5.4%), and China Mobile Games (CMGE -7.4%). Cheetah Mobile (CMCM -9.8%), a Chinese name that rose moderately yesterday but soared on Tuesday, is also a casualty.
Sierra has risen to its highest levels since early March, and close to where it traded before tumbling in February due to the mixed guidance provided with a Q4 beat.
SuperCom is now up 11% since posting Q4 results on March 26; the company missed estimates, but also stated it's open to a buyback and that it has major deals in the pipeline that aren't factored into current 2015 guidance.
Following a big overnight rally in Hong Kong (followed a 3-day holiday during which Shanghai rallied), beaten-down Chinese Internet and mobile stocks have soared in U.S. trading.
The biggest gainers include many names that are far below their 2014 highs: The group includes Qihoo (QIHU +10.5%), YY (YY +14.9%), Taomee (TAOM +14.3%), Sina (SINA +8.7%), and Weibo (WB +12.1%). Mobile game publishers Sky-mobi (MOBI +12.6%), China Mobile Games (CMGE +8%), and iDreamSky (DSKY +13.4%) are also sharply higher, as are online real estate plays SouFun (SFUN +13.1%), E-House (EJ +6.1%), and Leju (LEJU +9.8%).
Giants Alibaba (BABA +3.4%) and Baidu (BIDU +4.1%) aren't being left out. Neither are Youku (YOKU +7.5%), 21Vianet (VNET +7.4%), Momo (MOMO +6.8%), Sohu (SOHU +7.7%), Changyou (CYOU +4.5%), Dangdang (DANG +7.3%), Vipshop (VIPS +4.8%), JD.com (JD +3.9%), Jumei (JMEI +6.6%), Sungy Mobile (GOMO +5.8%), China Techfaith (CNTF +7.1%), and KongZhong (KZ +5.5%).
Alibaba has proposed an asset injection into its money-losing Alibaba Pictures (+36% in Hong Kong) film arm. Sky-mobi has seen Rosenblatt (Buy) hike its target to $11, while noting many Chinese mobile game developers have been bought out; it thinks Sky-mobi's investments in developers could be worth $140M. NetEase has been upgraded by CICC Research.
Over in Hong Kong, software/cloud services provider Kingsoft (OTCPK:KSFTF) rose 24.2% to HKD$29.50. Messaging/gaming giant Tencent (OTCPK:TCEHY) rose 3.3% to HKD$154.80.
Beaten-down Sungy Mobile (GOMO +7.8%) has flown higher during the last two trading days of the week. Today's gains have come on volume of 190K shares, far above a 3-month daily average of 68K.
The Chinese app developer remains down 10% from where it traded before posting a Q4 miss and offering light Q1 guidance on March 18. Shares trade for 2.9x 2015E sales; this year's (2-analyst) revenue growth consensus is at -9.1%.
With the Nasdaq down 0.8%, only a handful of tech companies are posting big gains. Notable gainers include search toolbar/mobile ad provider Perion (PERI +4.2%) , low-end Android OEM InfoSonics (IFON +7.1%), and Chinese mobile app developer Sungy Mobile (GOMO +8.2%).
Notable decliners include local reviews leader Yelp (YELP -4.6%), cloud IT service management software vendor ServiceNow (NOW -4.5%), cloud talent management software vendor Cornerstone OnDemand (CSOD -4%), enterprise cloud storage/file-sharing platform Box (BOX -5.5%), software analytics tool provider New Relic (NEWR -5.9%), online family care marketplace marketplace Care.com (CRCM -5%), and e-commerce software provider Demandware (DWRE -4.9%).
Perion announced this morning it has added Mike Vorhaus, president of consulting firm Magid Advisors, to its board. ServiceNow has announced its Q1 report will arrive on April 16. Yelp, which has been volatile in recent weeks, is now just slightly over $3 above a 52-week low of $42.10. Care.com is less than $1 away from a post-IPO low of $6.50.
Today's notable tech gainers include OLED materials/IP provider Universal Display (OLED +5.7%), salvage auction site Liquidity Services (LQDT +6.2%), auto site TrueCar (TRUE +8.5%), touchscreen tech developer Neonode (NEON +10.4%), hard drive assembly supplier Hutchison (HTCH +7.1%), Web site owner/ISP United Online (UNTD +5.5%), software outsourcing firm Luxoft (LXFT +5.6%), optical component vendor NeoPhotonics (NPTN +8.3%), and U.S. solar installer Solar3D (SLTD +15.2%).
Many Chinese names are also rallying today. Standouts include online real estate plays SouFun (SFUN +6.9%), E-House (EJ +4%), and Leju (LEJU +8.1%), online beauty product retailer Jumei (JMEI +5.9%), online classifieds platform 58.com (WUBA +5%), and app developers/publishers Sungy Mobile (GOMO +4.7%), Cheetah Mobile (CMCM +7.6%), and China Mobile Games (CMGE +5.9%).
The list of major decliners is smaller: It includes cloud healthcare software firm Castlight (CSLT -4.8%), microcontroller maker Atmel (ATML -3.1%), supply chain software vendor Manhattan Associates (MANH -4.3%), Chinese solar cell/module maker ReneSola (SOL -5.9%), and RF filter tech developer Resonant (RESN -8.6%).
Universal Display is rallying to new 52-week highs yet again amid Galaxy S6 enthusiasm. Solar3D is now up 42% over the last 3 trading days. Heavily-shorted Cheetah Mobile is reversing Friday's post-earnings losses. Castlight is adding to the losses seen on Friday following a neutral Wells Fargo launch.
In addition to missing Q4 estimates, Sungy Mobile (GOMO -22.3%) has guided for Q1 revenue of RMB42M-RMB46M ($6.7M-$7.4M), well below a sole analyst estimate of $12.2M and down sharply from Q1 2014's $15.6M.
CEO Yuqiang Deng tries to offer a positive take on the numbers: He notes MAUs for Sungy's GO mobile apps rose to 111M in Q4 (from 97M in Q3 and 94M in Q4 2013), and insists the revenue weakness is due to a "temporarily shift in focus from monetization to marketing and product development." Sungy's Android utility and launcher apps face plenty of competition.
Mobile app product/service revenue fell to RMB36.4M ($5.9M) from RMB50.9M a year ago, mobile reading services revenue to RMB18.6M ($3M) from RMB26.3M, and mobile portal marketing service revenue to RMB13.6M ($2.2M) from RMB14.5M.
Gross margin fell to 59.3% from Q3's 61.2% and Q4 2013's 75.1% - distribution fees, content acquisition costs, and amortization costs related to the GetJar acquisition are blamed. Contributing to the EPS miss: While revenue fell 26% Y/Y, GAAP operating expenses rose 133% Y/Y to RMB123.1M ($19.8M).
Many Chinese Internet and mobile names are selling off as the yuan falls to its lowest levels against the dollar since Oct. 2012, thanks to the dollar's broader strength against foreign currencies and ongoing worries China's economy is cooling off. The exchange rate is currently at 6.27.
A weaker yuan affects the top and bottom lines of Chinese firms, as reported in dollars. It also increases financing costs (should Chinese companies seek to raise capital overseas), and is triggering fears of capital outflows that could lead the yuan to sell off further.
Notable decliners include YY (YY -5.2%), Vipshop (VIPS -4.1%), SouFun (SFUN -2.1%), Leju (LEJU -3.8%), Bitauto (BITA -3.7%), Autohome (ATHM -3.6%), Sungy Mobile (GOMO -4.2%), Momo (MOMO -6.6%), NetEase (NTES -4.9%), Ctrip (CTRP -2.3%), Qunar (QUNR -3.1%), iDreamSky (DSKY -3.7%), Jumei (JMEI -3.3%), Changyou (CYOU -3.3%), and 500.com (WBAI -4.8%). 500.com was downgraded to Hold by Deutsche today in response to recent provincial license suspensions.
A few of the aforementioned names also sold off on Wednesday. Forward P/E and P/S multiples for the group are far lower than they were 12 months ago.