Internet

China e-commerce groups fight for pseudo-supremacy

20 Aug 2014

Market share is a big driver of value, but with so many ways to carve up a $308 bln sector, everyone seems to be number one for something. On the measures most relevant for shoppers, Alibaba is the clear victor. But JD.com looks better placed for a richer, more discerning China.

Rocket Internet’s booster ups risk-reward profile

18 Aug 2014

The German dotcom duplicator says it’s worth 4.3 bln euros after fresh investment. That’s a third more than its value a fortnight ago, with new assets. Investors in a possible IPO would still need to stomach a combination of emerging-market, early-stage investing and tech risks.

Tencent mobile gaming boom is no one-hit wonder

14 Aug 2014

Handheld games brought the Chinese web giant almost $500 mln in revenue in the second quarter. The worry is that the bonanza will fade, as with Candy Crush maker King Digital. But Tencent can push games to the 438 mln users of its WeChat app. The business has many more lives.

Alibaba payments cleanup makes for neater IPO

13 Aug 2014

The e-commerce group has rejigged relations with its Alipay affiliate weeks before its planned listing. The move has little impact on earnings, but reduces the risk of regulatory interference. And if the business turns into a behemoth, Alibaba investors get part of that value.

Behold the unversion: an inversion in all but name

8 Aug 2014

U.S.-based data protection firm SafeNet may slash its tax rate as part of a cross-border deal. Instead of doing so by acquiring overseas, though, it is simply selling itself to Dutch digital security company Gemalto. It shows the limitations of a possible ban on inversions.

China’s censors dim Tencent’s overseas push

8 Aug 2014

New rules to deter online rumours knocked $5.6 bln of market value off the owner of messaging app WeChat on Aug. 7. Tencent’s core gaming revenue shouldn’t suffer. But the crackdown comes amid a fierce global land grab by chat apps. China’s paranoia could help foreign rivals.

Gannett split puts digital on wrong side of divide

5 Aug 2014

The media company is spinning off newspapers, including USA Today, to unburden its TV arm. Cars.com, which Gannett is buying at a $2.5 bln valuation, would have buffered the weaker half in a similar way to Rupert Murdoch’s News Corp carve-up. Instead, print must stand on its own.

Line’s $13 bln valuation shows chat app exuberance

31 Jul 2014

The Japanese chat app reported a 26 pct jump in revenue from the previous quarter, pushing up valuation expectations ahead of its planned IPO. Yet Line’s valuation hangs on an assumption that new overseas users will spend like those back home. That seems like wishful thinking.

India’s e-commerce prize may be spread thinly

30 Jul 2014

A $1 bln fundraising by Flipkart underscores a China-like opportunity. Yet rivalry will be fierce, because the market is more open than the Middle Kingdom. The ambitions of companies like Amazon and eBay make it unlikely India will create a home-grown answer to China’s Alibaba.

Shareholders punish Amazon with whole new multiple

25 Jul 2014

The internet retailer’s stock trades at 112 times next year’s earnings, even though it barely turns a profit. A $126 mln Q2 loss, with worse to come, has investors worried. They wiped out $16.5 bln of value after hours, more than six times Amazon’s net income since its 1997 IPO.

Baidu’s costly transition to mobile is not over

25 Jul 2014

The Chinese search engine operator’s share of revenue from mobile jumped to 30 pct. Better-than-expected margins suggest heavy investments are paying off. But smaller search rivals backed by giants Alibaba and Tencent are creeping in. Baidu’s margin squeeze may not be over yet.

Facebook’s unintentional success speaks for itself

24 Jul 2014

Founder Mark Zuckerberg says he set out on a social mission not to create a company, which may explain his understated response to impressive Q2 results. Some $190 bln of market value later, though, it’s clear the social network’s importance lies squarely in the commercial realm.

The perks and pitfalls of depending on Jack Ma

21 Jul 2014

Alibaba’s founder, chairman and spiritual sultan will continue to exert near-total control of the Chinese e-commerce giant even after its massive IPO. For prospective shareholders, the question is whether Ma can be trusted to act in their interest. The answer is a qualified yes.

Alibaba’s fortune doesn’t depend on lucky digits

18 Jul 2014

The e-commerce colossus has moved its likely listing date from August to September, so will miss the “double 8,” numbers seen as charmed in China. Given its growth, Alibaba doesn’t need the gimmickry. And as Facebook learned, reaching for magic numbers in an IPO can backfire.

China’s "De-IOE" campaign takes a bite out of tech

16 Jul 2014

Beijing has been nudging state enterprises to wean themselves off U.S. software and service firms, chiefly IBM, Oracle and EMC. The drive, which accelerated after Washington indicted Chinese army officials, has dimmed the brightest star in Big Tech’s otherwise dull constellation.

China money market craze is slower but not over

14 Jul 2014

Funds like the one linked to Alibaba attracted less cash in the second quarter, after sucking in $105 bln in the previous three months. Falling interbank rates help explain the slowdown. But as long as bank deposit rates are capped China’s savers will seek out alternatives.

Edward Hadas: Google, privacy and the common good

9 Jul 2014

There is no perfect balance between the public’s right to know and the individual’s right to privacy. Businesses might want to duck the debate, but a European court has made neutrality impossible for Google. Like it or not, companies are well placed to help draw the lines.

Supercharged IPO tax spoils need splitting

7 Jul 2014

KKR and Silver Lake are listing web hosting outfit GoDaddy. The use of what’s called an “Up-C” structure means the company will float with big tax deductions. IPO investors and existing owners will both benefit, but other IPOs with Up-Cs have seen more dubious arrangements.

Chinese internet stocks deserve their discount

4 Jul 2014

Groups like Tencent and Baidu are growing faster than their U.S. counterparts, but American dotcom shares fetch a higher multiple. Corporate governance worries and legal risks are partly to blame. So are doubts about international expansion. The valuation gap is warranted.

Rakuten’s airline adventure a worry for investors

2 Jul 2014

Taking an 18 pct stake in AirAsia’s new budget carrier may be small for Japan’s $18 bln e-commerce giant. But the justification – boosting its travel website – is a stretch at best. Rakuten’s patchy investment track record is another reason to be sceptical about the new venture.