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Technology Stocks : Renren -- Ignore unavailable to you. Want to Upgrade?

To: Savant who wrote (175)	11/3/2011 5:49:22 PM
From: zax	Respond to of 310

Renren Leads Internet Slide on Profit Concern: China Overnight November 03, 2011, 5:15 PM EDT businessweek.com By Belinda Cao Nov. 4 (Bloomberg) -- Renren Inc., the Chinese social- networking site that completed an $855 million initial public offering in May, dropped to a four-week low, leading declines among Internet stocks in the Bloomberg China-US 55 Index. Renren’s American depositary receipts fell 7.5 percent to $5.70 after losing as much as 14 percent to the lowest intraday level since Oct. 7. Analysts surveyed by Bloomberg forecast the company may report declines in profit for the third quarter. Online video sharing company Youku.com Inc. and Qihoo 360 Technology Co., developer of China’s most-popular computer security software, also fell. The Bloomberg benchmark measure for the 55 most-traded U.S.-listed Chinese equities, which had gained 34 percent in 2010, fell as much as 14 percent this year to a low on Oct. 3, pushed by investor concerns about transparency and accounting irregularities at some smaller companies. The gauge has lost 2.7 percent this year compared with a 0.8 percent decline in the Standard & Poor’s 500 Index. The Bloomberg China index fell 0.7 percent to 101.74 at 12:44 p.m. in New York. “Investors are not optimistic about Renren’s profit growth in the next several quarters,” said Echo He, a senior China analysts at Maxim Group LLC in New York. “The company has high costs for both research and marketing, as it focuses on growth instead of profit-making at the current stage.” The Beijing-based company said it will report third-quarter financial results on Nov. 10 after trading closes in the U.S. Renren’s net earnings was 0.7 cents a share for the three months ended in September and the company will incur a net loss for the fourth quarter, according to the mean estimate of seven analysts in the survey. Youku.com fell 3.5 percent to $20.03 and Qihoo retreated as much as 7.6 percent to a three-week intraday low of $16.75. --Editors: Marie-France Han, Joshua Fellman To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

To: Savant who wrote (175)	11/4/2011 9:15:14 AM
From: zax	Respond to of 310

Renren 3Q11 Earnings Preview: Expect Solid Results, But Nuomi Could Disappoint seekingalpha.com by: Jiang Zhang November 4, 2011 \| about: RENN, includes: BIDU, BUD, LONG, SINA, TCEHY.PK Renren ( RENN) announces 3Q11 results on November 10th. The Street expects the company to break even on $35.08 million in revenue. Last quarter, Renren earned $0.001 per share on $30.4 million in revenue. The key numbers that investors should focus on are total and monthly user base, advertising revenue growth, and the results of the group buying unit Nuomi. In 2Q11, total user base reached 124 million (+28% y/y) and monthly unique users grew to 34 million (+38% y/y). Revenue growth was 53% y/y, driven by stronger advertising revenue growth (+94% y/y) due to the increasing acceptance among advertisers in using social networking sites as advertising platforms. Renren is likely to see continued revenue growth from its core SNS unit. Furthermore, social gaming presents the most upside for growth. As of last quarter, Renren has over 900 social games that attract over 11 million users per month. The company would not only generate gaming revenue from selling virtual items but also advertising revenue from partnership with companies, such as Budweiser ( BUD), that wish to embed their company logos within the games. However, Renren faces the challenge of attracting game developers because they consider the scale of user base when developing games. Renren currently lags behind Tencent ( TCEHY.PK) and Sina’s ( SINA) Weibo in this category, so investors need to pay close attention on Renren’s strategy of expanding its user base. Last quarter, Renren’s group buying unit, Nuomi, saw its sale jump 37x y/y to $1.1 million and accounted for 4% of Renren’s total revenue (up from 0.1% a year ago). The unit looks to expand its presence in China and partnered with eLong ( LONG) to offer group buying deals on hotels and tickets. However, operating loss at Nuomi widened to $4.5 million from $3.7 million a year ago due to increasing competition and decreasing commission rate from upper single digit to the current 5%. As a result, Renren’s operating margin was 2% for the quarter. Excluding Nuomi, Renren’s SNS margin is approximately 18%. Going forward, Renren expects commission rate to stabilize at 5% but this is highly uncertain given the intense competitive environment Nuomi operates in due to the estimated 5,000 group buying sites in China. Nuomi could leverage the Renren brand to attract user base but it is questionable whether the site can compete against its bigger rivals, such as Lashou, Fantong, and Kaixin. That said, it is very likely that Renren would dissolve Nuomi and focus more on its core competencies in SNS and social gaming should the unit continue to be unprofitable in the foreseeable future, just as how Baidu ( BIDU) exited the microblogging space after its failed attempt to compete against Sina's Weibo. Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.