Thursday Tech Briefing: Weibo, iQiyi, Zhihu
BIG TECH COMPANIES
1. Weibo Profit Surges 92% in Second Quarter
What: Weibo Corp., the Chinese equivalent of Twitter, reported Wednesday that its profit grew 92% to $140.9 million in the second quarter, while revenue increased 68% to $426.6 million. The strong performance gave a boost to Weibo’s parent company, internet giant Sina Corp., which reported at the same time that its June quarter profit rose 50% to $35.1 million, with revenue up by 50% to $537.4 million.
Why it’s important: Weibo’s growth is driven by advertising and marketing revenue, which accounted for 86.7% of its revenue, up slightly from 86.1% a year earlier. 82% of its advertising revenue was generated from mobile phones. Weibo has managed to attract long-term clients after online ad sales surged during the World Cup. (Source: Caixin, Sina; latter link in Chinese)
DEALS AND FUNDRAISING
2. Video Streamer iQiyi Sees Big Bucks in Premium Sports
What: A joint venture between online streaming platform iQiyi Inc. and broadcaster Super Sports Media has raised 500 million yuan ($73.1 million) from IDG Capital and Huiyinborun Capital. This places the valuation of the joint venture, Beijing Xin’ai Sport Media Technology Co. Ltd., at 3 billion yuan ($438 million).
Beijing Xin’ai was founded in late July, with Super Sports Media holding 51.46% of its shares, and iQiyi holding 31.88%. The company’s core business is providing sports video content to online audiences.
Why it’s important: Super Sports’ partnership with iQiyi is an attempt to find new business opportunities after it lost its exclusive right to broadcast the English Premier League in China recently. IQiyi, which boasts 60 million subscribers, is hoping to use the sports-related content to increase its audience base, as it competes with two other larger rivals — Tencent Video, backed by Tencent Holdings Ltd; and Youku Tudou, backed by Alibaba Group Holding Ltd.
Big Picture: China’s online sports video sector is heating up this summer, with rival Suning Sports completing a series-A funding round in July valuing it at 15 billion yuan, led by Alibaba and Goldman Sachs. (Source: Caixin)
3. Zhihu, China’s Quora, Finds Answers With $270 Million Funding
What: Zhihu, China’s homegrown version of the popular Quora online community where people can ask and answer each other’s questions, has raised $270 million in its latest funding round, the company’s CEO Zhou Yuan revealed.
Why it’s important: Zhihu didn’t reveal its current valuation. The company was founded in 2010 and had raised $180 million before this round. Zhihu had 180 million registered users at the end of June, and featured more than 100 million questions and answers. Its average daily user base totaled about 8.2 million. (Source: Caixin)
4. China Tower’s IPO, World’s Biggest in Two Years, Met With Little Excitement
What: China Tower Corp. Ltd., the world’s largest operator of mobile telecommunications towers, ended its first day of trading in Hong Kong on Wednesday with its stock price at HK$1.26 (16 U.S. cents), unchanged from the offering price.
Why it’s important: This is the world’s largest initial public offering (IPO) in two years. However, analysts say China Tower might face head winds in its bid to attract investors. It had planned to list last year, but delayed its IPO due to a tepid reception. Earlier reports indicated the latest offering was also met with relatively tepid demand due to the mature nature of the business and its limited growth potential.
Big Picture: China Tower has been struggling with debt since acquiring the tower assets of China’s three major telecom operators, China Mobile, China Unicom, and China Telecom. (Source: Caixin)
5. European Commission Approves Chinese Group Hisense’s Acquisition of Slovenia’s Gorenje
What: Chinese home appliances maker Hisense Electric Co. has received the green light from the European Commision for its planned acquisition of Slovenian peer Gorenje.
Why it’s important: Hisense is one of the world’s largest TV and appliance manufacturers, while Gorenje is a major player in the European market. Gorenje has been seeking investors since October. Hisense plans to turn Gorenje’s facility in Velenje, Slovenia, into a research and development hub. (Source: Slovenia Times)
6. China Strikes Back With Second Tranche of Tariffs
What: China returned trade war fire Wednesday evening Beijing time with new tariffs on $16 billion of annual American imports shortly after the Trump administration unveiled its next round of tariffs on an equivalent amount of Chinese imports. China's Customs Tariff Commission, under the State Council, published a list (link in Chinese) of 333 American imports that will face additional 25% tariffs starting Aug. 23. Products include petrochemicals, cars, medical equipment and steel products.
Why it’s important: The world’s two largest economies have been locked in a back-and-forth tariff fight. Last month, the U.S. imposed 25% tariffs on $34 billion of Chinese imports. China struck back with tariffs on similar amount of American imports.
Big Picture: China’s shipments to the U.S. continued to hum along in July, rising 11.2% from a year earlier to $41.5 billion. But the value of exports dipped slightly from June’s $42.6 billion, the first month-on-month decline since March, customs data showed. Imports from the U.S. gained 11.1% year-on-year to $13.4 billion, down from June’s $13.7 billion. (Source: Caixin)
7. Alibaba Partners With Microsoft to Develop Smart Glasses
What: Alibaba’s e-commerce platform Taobao announced a cooperation with Microsoft HoloLens to develop smart glasses, based on mixed reality technology, which combines augmented reality and virtual reality. The product will be available for consumers to experience at Taobao’s marketing event in its home city Hangzhou next month.
Why it’s important: The glasses allow consumers search for products on Taobao and view holographic versions of products, according to a company statement. Users will be able to use eye movements and gestures to interact with the platform. (Source: Xinhua)
Compiled by Wang Luyao
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