This sounds unpleasant to say the least...
Weaker Profit Outlook Sinks Renren in New York: China Overnight
By Belinda Cao - Nov 6, 2011 10:00 AM CT
bloomberg.com
Prospects that earnings will weaken as economic growth slows sent most Chinese shares lower last week in New York trading, led by a more than 20 percent drop in AsiaInfo-Linkage Inc. (ASIA) and Renren Inc.
Renren, the Beijing-based social networking website that completed an $855 million initial public offering in May, will report “lackluster” figures for the third quarter this week, Eco He, an analyst at Maxim Group LLC, wrote in a research note Nov. 4. AsiaInfo-Linkage, a Beijing-based software provider, said Oct. 31 it expected profit for the fourth quarter at between 30 cents to 33 cents a share, less than eight analysts’mean estimate of 35 cents in a Bloomberg survey.
“Slower economic growth may cause businesses to cut online advertising budgets in the next few quarters, a negative for Chinese Internet companies,” New York-based He said in a telephone interview.
The Bloomberg China-US 55 Index lost 0.5 percent to 102.19 on Nov. 4 while 47 of the companies declined for the week and eight rose. Internet stocks Youku.com Inc. (YOKU) and Qihoo 360 Technology Ltd. fell more than 10 percent ahead of earnings reports later this month. Chinese stocks retreated after official data published last week showed a slowdown in manufacturing and services. Premier Wen Jiabao said Oct. 29 the government will “fine tune” policies as needed, spurring speculation that China may end a tightening cycle to support economic growth at the risk of reviving inflation.
Inflation Pressure “As the economy appears to be slow, the central bank starts to ease policy and inflation is still a serious concern,” said Ben Simpfendorfer, managing director at Silk Road Associates, in an interview with Bloomberg Television in Hong Kong on Nov. 4. “Those will only feed in existing imbalance into the economy and add in inflation pressures.”
The ishares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., fell 0.9 percent Nov. 4 and 0.2 percent for the week. The Standard & Poor’s 500 Index dropped slid 2.5 percent last week to 1,253.23 as a disagreement on Europe’s resources to fight the debt crisis offset a drop in the American unemployment rate.
The Chinese yuan strengthened 0.3 percent to 6.3392 a dollar last week, according the China Foreign Exchange Trade System. The currency has risen 4.2 percent this year, the best performance among the 25 emerging-economy currencies tracked by Bloomberg.
Slower Growth China’s policy tightening helped slow growth in the world’s second-largest economy to 9.1 percent in the third quarter from a year earlier, the least in two years. Inflation fell to 6.1 percent last month from a three-year high of 6.5 percent in July.
The government may report on Nov. 9 that consumer prices rose 5.4 percent last month from a year ago, still above the government’s 4 percent target, according to the median estimate of 20 economists surveyed by Bloomberg.
The Purchasing Managers’ Index for October dropped to 50.4, the lowest level since February 2009, missing economists’ median forecast, according to the China Federation of Logistics and Purchasing. The measure for non-manufacturing fell to 57.7 from 59.3 a month earlier.
AsiaInfo’s third-quarter non-GAAP net income declined 9.7 percent from a year earlier to 37 cents a share.
‘Lackluster’ Earnings Renren will report a 0.7-cent a share in profit and a net loss in the fourth quarter on Nov. 10, according to the mean estimate of six analysts surveyed by Bloomberg.
Youku, an online video sharing website, may report adjusted losses of $17.9 million yuan ($2.8 million) for the third quarter, according to the mean estimate of six analysts surveyed by Bloomberg. That compares with 28.1 million yuan of losses in the previous three months.
Sohu.com Inc. (SOHU), the operator of the fifth-most visited website, slid 1.2 percent to $60.93 on Nov. 4, extending its loss for the week to 12 percent. The company said Oct. 31 its third-quarter gross margin narrowed to 71 percent from 74 percent a year ago and 73 percent in the prior quarter.
Spreadtrum Communications, Inc., a Shanghai-based chip designer, rose 7.3 percent for the week after it bought an 8.3 percent stake in Zoom Technologies Inc., a mobile phone maker, to increase sales. The company will report on Nov. 9 a 74 percent growth in third-quarter GAAP earnings to 64.5 cents a share, according to the average estimate of six analysts in a Bloomberg survey. Spreadtrum purchased 1.7 million shares of Zoom at $1.73 each, it said Oct. 26.
“By investing in Zoom for a very small cost, Spreadtrum has secured a company with strong revenues and unique competencies at an extremely low valuation,” said Kevin Pollack, a fund manager at Paragon Capital LP which invests in U.S.-listed Chinese stocks.
Mindray Medical International Ltd. (MR), China’s biggest medical-device supplier, will report third-quarter financial results today after U.S. market closes and Sina Corp., the owner of the Twitter-like Weibo service in China, plans to announce earnings on Nov. 8.
To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net |
