Chinese Internet Companies Are "Sick" IPO Tide &Nbsp; &Nbsp; Venture Capital Or Kidnapped.

Starting from the backdoor listing of cool 6 network, this can be regarded as a collective listing action led by video websites.

Even so, they remain "dear babies" in the capital market.

Expecting returns

Seeing their distant shadows, a heavy sigh suddenly rang out.

Huguo temple, the only pure land in the noisy city of Xicheng District, Beijing.

About 1 months ago, Wang Wei rented a quadrangle near here.

Bathed in solemn and quiet Buddhism, he hoped he could keep calm and calm at any time.

China's second largest video website Tudou is listed on the NASDAQ bell will ring, the dream of many years of entrepreneurship has entered the "last mile", Wang Wei, as the founder and CEO of Tudou network, a thousand and one things work waiting for him to clarify.

However, Yang Lei, an ex-wife, filed a lawsuit against property division at the court, but he was deeply tortured like a sharp file.

Once it is not handled well, it is possible to crack down on investor confidence and delay the future of Tudou.

Therefore, Wang Wei must calm down and consider carefully and deal with it seriously.

In addition to the property split of his ex-wife, the bigger challenge for Wang Wei is that he must convince investors that the future Tudou can make money and earn enough money to satisfy investors.

Just like Wang Wei, there is also ancient Yongqiang.

His Youku and Tudou are taking the sprint race as the finishing line.

Chapter 1 the ugly duckling becomes swan.

In November 16th, Youku, known as China's YouTube, formally submitted a IPO application to the US Securities and Exchange Commission (SEC), which valued itself at $1 billion 100 million.

According to the US professional website IPOSCOOP, Youku will be officially listed on NASDAQ on December 8th, when the United States will issue 15 million 370 thousand US Depositary Receipts (ADS). The Underwriters will be Goldman Sachs, offering a price range of US $9 to US $11. We will raise about 150 million US dollars in cash.

Koo, who has a stake of up to 41.48%, will become a new billionaire and become China's richest man.

Compared with the ancient scenery, Wang Wei looked gloomy.

Tudou submitted a IPO application to SEC on 10 November, and the date of its information collection and listing is unknown.

At present, we can only know that Wang Wei invited Deutsche Bank and Credit Suisse as his main underwriter, raising the amount of about $120 million.

However, Wang Wei's shareholding ratio has only been diluted by more than 13.4% after many dilution, and the wealth effect of listing is far weaker than that of Gu Yongqiang.

Wang Wei, who is quite literary and artistic, may not care much about this. But he has to pay attention to the embarrassment of "internal and external difficulties".

On the second day after Tudou's IPO information was released, the digital publisher of the United States suddenly broke out, and announced that several major digital publishers in the United Nations had submitted to the SEC law group a report on the serious violation of intellectual property rights by Tudou network and the amount of gold pirated litigation that many domestic film companies had exceeded 50 million dollars.

On the third day, Wang Wei's ex-wife, SMG anchor Yang Lei, sued the court in Xuhui, Shanghai, demanding a freeze on Wang Wei's stake in Tudou. The reason was that Wang Wei paid only 100 thousand yuan for Yang Lei's property as a divorce property on the grounds of "assets being negative".

"IT Time" reporter learned that once the case is implemented, it will directly "freeze" 38% stake in Tudou, and the listing will be lost.

Suddenly, the ex-wife's "money rush" and the "smashing" situation of the trade partners make the road of listing on Tudou quite bumpy. Not only that, Tudou also faces the possibility that the listing may not be profitable.

This is a microcosm of the collective "sick listing" of Chinese Internet companies.

Youku is not much better.

After listing the application, the detailed earnings report of TSE and Tudou was clearly presented to the public in the first place.

It is no joy to see that the two performance sheets are appalling.

Tudou and Youku's prospectus data show that the former lost 83 million 730 thousand yuan in the first three quarters, and the latter lost 167 million yuan.

If we count the cool 6 network that was previously listed on the backdoor market, the losses of the three major video websites in the first three quarters of the country will be close to 500 million yuan.

In fact, video websites have been losing money for years.

Youku network from 2007 to 2009, the annual net loss were 89 million 680 thousand yuan, 204 million yuan and 182 million yuan respectively.

In the first 9 months of this year, net loss increased from 24 million 950 thousand yuan in the same period last year to 167 million yuan.

On the other hand, Tudou net annual net losses from 2007 to 2009 were 95 million 900 thousand yuan, 213 million yuan and 145 million yuan respectively.

Dragging heavy losses into the burden, Tudou and Youku desperately seek listing behavior, the industry is not worried about this, "can such operational performance be successful independent listing?" the answer has been initially reflected in the cool 6 network.

In November 15th, the first Chinese listed company, cool 6 network, released its third quarter earnings this year, with a revenue of $3 million 960 thousand and a net loss of $12 million 700 thousand.

Controversy in the market rush

"Income and expenditure are not healthy enough, everyone is listed on a loss." Gong Yu, Baidu's video website CEO, has his own views on Tudou and Youku's current IPO behavior. He pointed out to "IT Time" that China's video websites are listed too early.

Deng Feng, managing director of Vc firm Aurora, also believes that the video industry is not yet mature, and the industry value chain is too long to participate in the distribution of interest too many parties, resulting in video website operation risk is relatively high, "at this time, the listing is obviously some impatient performance."

Deng Feng said.

As for the phenomenon of video websites' swarms of listing, there is another reason for some investors. Behind the "false prosperity" is the pressure from the capital side.

"Under normal circumstances, most companies will be required to go public after receiving 4 to 5 rounds of investment.

And Tudou and Youku have already accepted the 5 round of investment, so listing is very urgent for them.

An industry insider said.

Statistics show that as of now, Youku has completed 6 financing, totaling 160 million US dollars, and Tudou has also completed fifth rounds of financing, with a total financing amount of US $135 million.

The latest survey shows that the video industry has slowed down the pace of development in recent years, half a year growth rate of only 10%.

In addition to the unsolved problem of profit, the phenomenon of video piracy rampant, and the homogenization of video websites is very serious.

However, there are also some positive voices in the industry.

"In the situation of serious homogenization of video websites, powerful websites strive to achieve IPO at an early date in order to develop more capital business". Some industry insiders believe that facing all kinds of pressure, listing is indeed a good thing for video websites.

At present, the video website faces many problems: the bandwidth cost is high, and the domestic bandwidth is still very tight. Several CDN (content distribution acceleration network) service providers not only have high price but also poor service; in terms of copyright, most of the websites pirated in China are still very strict. Although several big sharing websites have removed some North American and Chinese popular TV dramas, the piracy of Japanese Korean dramas, anime films and old films and videos is still very common.

Insisting on the strange art complaint of the genuine HD route, "the copyright of Qi Yi has been stolen by other people too much. When our exclusive drama was broadcast to the second episode, eighth people had already been broadcast."

Some even estimate that there are at least tens of thousands of pirated movies and TV plays on several client video sites.

"After the listing, sufficient funds can temporarily solve the problem of video website bandwidth and copyright," insiders said.

Youku has said that it is expanding its network bandwidth and upgrading its technology, and is competing with Tudou to play a leading role in China's online video market.

Tudou also said it would use IPO's revenue to expand network bandwidth and upgrade its own technology in order to compete with Youku.

In the first 9 months of this year, Youku's total revenue was 234 million 600 thousand yuan, and Tudou's total revenue reached 214 million yuan. All the revenues of both companies came from video advertising.

The industry is worried that "from a long-term perspective, if video websites rely solely on advertising to support the development of enterprises, they are very lack of security and stability".

Video enterprises are also aware of this problem, including odd art, Youku, Tudou and other major video sites have joined the exploration of new profit model team.

In the light of the development of the domestic video industry, the three main lines of video content, content, HD and user experience are king.

Gong Yu believes that this trend will become more intense in the future, and for video websites, the success of listing means that enterprises have sufficient financial resources to follow this trend.

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Na city is not demanding report card.

Cool 6 network's "sick listing" encourages "potato net" and "Youku". The latter two also dare to face Wall Street investors in the face of failing earnings.

In June 1st this year, Shanda network and Hua You century announced that Hua You century will acquire a network audio business under Shanda's network, and Shanda will get about 415 million shares in the new century.

At the same time, Shanda will acquire the recording music and wireless value-added services of Hua Yu century at a price of about 36 million 900 thousand US dollars.

Last November 27th, Hua You century and cool 6 network carried out equity merger.

After the completion of the paction, the main business of the listed company Hua You century will be the cool 6 network. It will become China's first independent video website in the US.

This result has made other domestic video websites rather dissatisfied.

Just the day before the announcement, Google's Doubleclick announced the TOP1000 list of the number of independent visitors to the global web site in April.

The list shows that the cool 6 network is ranked the fifty-second place in the world with 41 million of the average daily visits and 410 million of the average daily visitors (PV), while Youku, Tudou and the 56 nets ranked seventeenth, twenty-eighth and forty-seventh respectively.

After the successful backdoor listing of cool 6 network, the stock price of Hua You century rose second days. The opening price rose 0.3 US dollars to 3.55 US dollars, or 9.2%, closing shares rose 0.46 US dollars, closing at 3.71 US dollars, up 14.15%.

Seeing that the performance is not better than that of itself, the 6 Tier post ranked cool network has been recognized by Wall Street investors. Other private video websites that are not willing to lag behind have stepped up the pace of listing.

The ugly duckling's miracle happened not only in the cool 6 nets, but also in the mediocre Mcglaughlin who passed the appraisal of Wall Street successfully.

On the evening of October 26th, Mcglaughlin, a Chinese women's wear sales website, successfully landed on the Nasdaq, with the opening price of up to US $17.50 coming on the stage, breaking the history of the domestic B2C industry for more than 10 years.

The pessimistic public opinion that lingered around Mcglaughlin on the eve of the listing failed to hold down the enthusiasm of the NASDAQ capital market against Mcglaughlin, and its opening price rose by 59.1% over the IPO price.

"On Nasdaq, Mcglaughlin was successfully listed today, and stocks were highly sought after by investors.

I believe this is a new starting point for the company. At 4 a.m. on October 27th, Shen Napeng, chairman of Mcglaughlin, did not forget to express his excitement on micro-blog.

Mcglaughlin, as an electronic business enterprise that is the first step in the capital market, is lucky enough to envy others.

Whether it is market size or market visibility, Mcglaughlin is definitely not a "brother" in the market.

According to the data released by Qing Ke, the market share of Mcglaughlin's m18.com was 8.9% in 2009, which is quite different from the market share of 31.3% of the first ranked customer.

However, under the help of Sequoia Capital, Mcglaughlin successfully described to the Wall Street a story tailored for all about one billion people in China, walking on the road of listing, in front of the famous Dangdang, Jingdong mall and van guest.

"Maybe the fame in the whole country is no more than that of Dangdang and fan Ke pin pin, but Mcglaughlin is rich in capital, actually it has become the first camp of B2C enterprises."

An investment personage said that now Mcglaughlin has successfully listed on the concept of China's "B2C first share", and its strength is increasing. Under the background of China's great development, there will be more opportunities for money.

The second chapter is boiling the wealth building movement.

The story of the ugly duckling swallowing the Swan jointly staged by cool 6 nets and Mcglaughlin makes the domestic Internet companies flock to Wall Street.

Chinese Internet companies have once again reached consensus on the issue of listing. "Listing" has become the buzzword in many websites of this year.

Prior to Tudou and Youku, the B2C companies that started the IPO preparations include Yi Che Wan, Dangdang, Shanghai Qijia network and 5173.

In addition, a number of Internet companies including thunder, 1000 oaks, including video, social networking and other fields are planning to complete IPO by the end of this year to the first half of next year.

It has been planned for a long time, and when it comes to success, it is the fever of mind, the pursuit of fashion, and the listing and financing of sailing. It is not the first time in China's Internet circles.

As early as the end of the last century, there was a wave of listing in the overseas capital market of China's concept stocks. If it was counted as the first wave, 2004~2005, grand Tencent, Baidu listing would be regarded as the second wave. In 2007, Alibaba and giant listing became the third wave. Now, it can be regarded as the fourth round of listing boom of Chinese Internet companies in the past 10 years.

The first three wave of listing

The first love affair between China's Internet and capital markets began at the end of last century.

At that time, China's Internet companies, which were just born soon after, were also unwilling to do so. They showed great powers and made every effort to speed up their close contacts with overseas capital.

At last, CN, which combines Xinhua news agency and Hong Kong capital, won the first prize in July 1999.

Because of its indisputable "first China Internet concept stock", CN has been highly sought after by investors. Its $20 stock price has risen to $67.

The opening up of CDC has stimulated domestic peers, and has also stimulated the fighting spirit of the world's top investment banks.

Morgan Stanley and Goldman Sachs fought fiercely for Sina's listing. Finally, Morgan Stanley "blatantly and abruptly grabbed Sina from Goldman Sachs".

However, on the eve of sina's listing, the NASDAQ Internet bubble has broken down.

In April 13, 2000, Sina fell far below the expected stock price and landed on NASDAQ.

Subsequent NetEase and Sohu were even more tragic. In June 30th, the listing of NetEase fell below the issue price. After that, the stock price fell below a dollar to become a "penny stock". It was in danger of being delisted. In July 12th, after the listing of Sohu City, it suffered a "Nasdaq stock disaster". The stock index was cut across 3/4, dropping from 6000 points to 2000 points.

At the end of 2003, Ctrip opened the second wave of Chinese Internet companies listing.

This time the tide of listing seems to be even more ferocious.

In March 2004, wireless value-added services became a hot market. Air networks, smart networks and TOM have been listed overseas. But once the TOM is launched, it will usher in a heavy market blow.

On the first day of Hongkong's growth enterprise market, the stock price fell by 3%. In the Nasdaq market, TOM's share price rose by only 0.2%.

Since then, its performance has no longer improved, and its share price has been hovering below the issue price.

TOM's "Waterloo" can be seen as a pformation of the characteristics of Internet companies, that is, the IPO of the portal network has been hard to arouse investors' interest.

After four years, the Chinese online game company, which has begun to emerge in the mountains and rivers, has become a new venture in the capital market.

In May 2004, NASDAQ ushered in the most dazzling new star of China's Internet stocks, Shanda.

In August of that year, the market value of the grand market reached US $1 billion 480 million, which was the first of China's concept network stocks.

When the peak reached its peak, some investment circles had predicted that the wave of Chinese listed stocks going overseas was over.

However, the successful listing and excellent post market performance of 51job, eLong, Tencent and ninth cities of online service network companies broke this pessimistic prediction.

The gap between the first two listing waves is four years, and the third wave of Chinese Internet companies has not kept them waiting for too long.

After entering 2007, along with the active global capital market and the increasing profits of China Internet Corporation, a new round of listing boom has finally become mature.

Compared with the first two listed companies, the Chinese Internet companies in the third wave of listing also set off a wider wave of wealth creation.

Because the shares of the company are fully dispersed to the hands of many employees, the listing of companies has created a wave of group wealth making. In the last quarter of 2007, the average daily production of 70 millionaires.

At the same time, the total market value of China's Internet listed companies has been pushed up to nearly $70 billion from the first wave of $1 billion.

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Lowering the threshold of overseas listing

Unlike the previous three listing tides, the fourth wave of overseas listing website IPO presents a diversified feature featuring video sites and e-commerce.

Some analysts believe that, in terms of the status quo, whether from the perspective of raising funds' future competitiveness, or from the perspective of investors who return the past, websites with ability and ideas are already on the threshold of listing.

And the prospectus of overseas listed companies shows that many enterprises are also in line with the listing conditions of domestic A shares. Why can they go far?

Some analysts pointed out that the process of listing companies in China is cumbersome and usually takes two years from filing to listing.

For a company badly in need of growth support, it can not wait that long, especially for video websites, which are eager to get capital injection and burn money.

On the contrary, from overseas capital market, after the financial crisis, overseas exchanges frequently threw "olive branches" to Chinese enterprises. In order to attract high-quality listing resources, the world's major exchanges have adjusted the listing threshold and rules of Chinese enterprises to varying degrees, reducing the conditions to be sought, simplifying the steps of listing and improving the efficiency of work.

Since the beginning of this year, the NYSE and Nasdaq have launched the battle for Chinese enterprises and the listing threshold has been lowered.

For example, the NYSE's current listing criteria are basically two: first, the scale of IPO is not less than 60 million US dollars; two, the market value of listed companies is no less than 50 million US dollars.

Jin Jian, partner of DDT accounting firm, made clear: compared with overseas listing, the difficulty of financing is the lowest.

The threshold is low, the time is short, the equity incentive mechanism is perfect, and the use of funds abroad is relatively free.

Under such favorable factors, overseas listing of Chinese enterprises this year can be seen in full swing.

According to the US New York Stock Exchange, there will be 12~15 Chinese enterprises in NYSE IPO this year, and the NASDAQ Exchange expects that the number of Chinese companies listed in Nashi this year may exceed 33 last year.

In Germany, the performance of Chinese companies is record. 8 Chinese companies have successfully listed on Deutsche bourse this year.

Liu Hong, vice chairman and general manager of China's A share listed music network, contrasted domestic and foreign listings with personal experience: "after the listing, our financing mode is the stock market, that is, we hope to refinance or private placement to raise funds.

However, in the domestic gem refinancing and private placement has not yet come out the rules, it can not be operated.

Moreover, the refinancing time for overseas listing is very short, and the refinancing rules are relatively simple, not as complicated as in China.

"China concept" is the golden signboard.

According to foreign media reports, more than half of the top 10 best performing IPO in the United States this year have been Chinese companies, and Chinese companies are clearly popular in the US.

The analysis shows that the reason why Chinese enterprises are so popular is not complicated.

The global financial crisis has spread to most developed countries in Europe and the United States, while China is in a corner. Now it is the most stable and fastest developing country in the world economy. China's economy grew by 10.3% in the second quarter of this year, and it is expected to reach 9.5% in the whole year. Compared with that, the US economy has increased by only 1.7% in the second quarter. Therefore, the world's major exchanges are optimistic about China and attracting more investment.

At present, China has become the largest IPO resource in the world.

RenaissanceCapital analyst Matt Zeyn said: "the future of European and American enterprises is not clear, but many Chinese enterprises have a better yield of IPO, so anything in China is being paid a premium.

Investors are admired and eager to grow.

At present, the IPO of Chinese enterprises has a new growth momentum in the US market, far exceeding that of other countries.

According to data from RenaissanceCapital, a US IPO market research firm, the IPO of Chinese enterprises has increased by 30% in the US, while IPO in other countries has increased by only 4%.

At the same time, as Chinese IT enterprises can attract more attention from overseas investors than traditional industry enterprises, and with the successful cases of domestic IT enterprises such as Shanda and Baidu, overseas have become the capital market of domestic IT enterprises. More Chinese IT enterprises are attracted to "leave" overseas, making it again this year, the climax of IPO in overseas capital market.

During the National Day this year, the Internet service provider blue flood communications landed on the Nasdaq market in the US, and investors who are optimistic about the prospects of China's Internet industry have been vigorously pursued. The listing just soared nearly 1 times, setting the biggest increase in the day of the listed companies in the US since 2007.

And Dalian software outsourcing company, Hai Hui software has increased by 162% since its listing.

At present, China's IT companies such as Baidu, China Star micro, Vince, information, communication and Shanda are eye-catching in the US stock market.

Foreign private-equity analysts offer a new rating to some Chinese stocks in the US and maintain a "win over the market" rating.

In the foreseeable future, China's consumption will be a concept of continuous attraction to the capital market.

In the future, more and more Chinese companies will be listed overseas, and their common feature is that China's domestic market will be the main source of business revenue.

Therefore, the concept of the Chinese market will also become an important subject for the future overseas listing.

The third chapter "the disease bubble" blows the bomb to break

NASDAQ has a slang: any business can be listed, time will prove everything.

The implication is that overseas market demands are not high, but it is not easy to sit there.

As Xu Qing, an industry watchdog, said, it is not difficult for Chinese companies to be listed, but it is very difficult to continue to operate as SIEMENS, Coca-Cola and Google.

In November this year, cool 6 media third quarterly report shows that the third quarter net loss of 12 million 800 thousand dollars, converted, cool 6 media in the third quarter of this year, an average daily loss of 142 thousand U.S. dollars, equivalent to about 943 thousand yuan.

As of September 30, 2010, the cool 6 media has 40 million 100 thousand dollars in cash and cash equivalents.

Analysts pointed out that if it can not effectively curb the loss rate in the next year, and the big shareholder Shanda network does not continue to "blood pfusion", cool 6 network is likely to face the risk of "eating out".

In fact, taking the 6 stake of Shanda network as the 47% medium of the 6 media, 6 million 20 thousand of the $6 that the Kuo 6 lost in the third quarter will be counted on the top.

If coupled with the loss of the cool 6 network in the first, second quarter of this year, the Shanda network will lose about 10000000 dollars on the 6 net in 2010, which will have a serious impact on the performance of Shanda network.

Lei Xiaoshan, managing director of Forbes magazine and executive director of China market research group, has doubted the business model of China's video websites that remain unprofitable.

Lei Xiaoshan writes that in the process of seeking profits, Tudou and Youku have shifted their focus to creating more content, rather than relying on users to contribute content.

However, video sites are not TV stations, and the cost of creating them is very large.

Moreover, the management skills needed to create content and develop a cool website are completely different.

Lei Xiaoshan also believes that there are two reasons for the rising danger bubble in China's online video industry.

First, the digital marketing budget of large Chinese companies is only 3% to 5%, far below the US standard of 8% to 12%.

At the same time, more and more forms of digital marketing are emerging.

This means that there will be more intense competition in relatively small marketing expenses.

Secondly, because the budget of digital marketing is relatively small, most large enterprises outsource most of their purchase decisions to media buyers.

The latter usually do not find the best way for their customers to penetrate into the target market; they are looking for ways to get the most rebate.

If they withdraw the entire customer base from one medium, the risk will be very high.

Under the frenzy, there is no fear of foam.

In contrast to the enthusiasm for competing in the United States, it is the cold reception of some Chinese enterprises in the "post Wall Street" survival. What's more, it is "going to court" after listing.

Because the prospectus is suspected of false or misleading information, some companies are being appealed to the court.

In the first half of this year, the Financial Times reported that there are about 16 Chinese companies facing class action in the United States, more than any other country.

Therefore, with the overall market outlook in China, it is a question and scrutiny of individual enterprises in China.

The recent IPO companies in the US are not very beautiful in their financial statements, and their profitability and future growth have been questioned in varying degrees.

Take Tudou as an example, its prospectus shows that its net revenue from 2007 to 2009 has a compound annual growth rate of 313.6%, and the net annual loss is 95 million 900 thousand yuan, 212 million 600 thousand yuan and 144 million 800 thousand yuan respectively, and the profit situation is worrying.

However, in the first nine months of this year, net loss decreased from 100 million 400 thousand yuan in the same period last year to 83 million 700 thousand yuan, a decrease of 16.6%.

The change in this figure may be related to the fact that it has almost completed the initial bandwidth investment and the copyright bubble dissipation.

According to the analysis, there is a possibility that venture capitalists were "kidnapped".

Because of the continuous need for additional investment, the listing of video websites is particularly urgent.

In the past, bandwidth and servers have invested a lot of money in video websites, and copyright costs have been increased in the process of legal editing.

At present, the profit model of the entire video website is still not clear enough.

As a result, the industry began to disagree about the prospects of the video company after its listing.

"In the short term, investors may not see anything in return."

Insiders believe that "listing is an important life-saving straw."

There is also a good view of the industry that is constantly standardized.

In this regard, Tudou and the entire video website industry are not isolated cases. The fate of Chinese enterprises after going to the US market still needs to wait and see.

"Yes, VC/PE's activity will bring more opportunities for Chinese enterprises to go to the US market," the industry believes. "But its development space is relatively limited compared to the domestic market."

Lei Xiaoshan said that now, whenever the stock analysts of Wall Street mention the two companies of Tudou and Youku, I always hear that there are 420 million Internet users in China, most of whom are young people with large amounts of disposable capital. Nearly 800 million of those who own mobile phones want to watch videos on their phones.

But one day, sober rational analysis will prevail.