Baidu Inc (百度), owner of China’s largest search engine, agreed to buy app store 91 Wireless Websoft Ltd (91無線網絡) for US$1.9 billion in its biggest announced acquisition to gain a greater share of the mobile user market.
The company will acquire the majority stake owned by NetDragon Websoft Inc (網龍) and all other shares, Baidu said in a statement yesterday. Investors in 91 Wireless on March 27 included companies controlled by PCCW Ltd chairman Richard Li and Temasek Holdings Pte, a separate filing showed.
SHIFT
The deal gives Baidu control over China’s most popular third-party store for smartphone apps as it tries to navigate the shift from desktop computing, where it has 82 percent of the nation’s searches, to mobile devices. Baidu’s mobile app had 9 percent of China’s wireless customers as of April, according to data compiled by Bloomberg. US leader Google Inc, facing a similar challenge, backed the Android operating system and started its own store to gain share against Apple Inc.
“Baidu is not as well-established in the mobile Internet space as the desktop Internet space,” said Andy Yeung, an analyst at Oppenheimer & Co Inc in New York. “It’s a complementary strategy to enhance Baidu’s status in the mobile ecosystem.”
Baidu did not disclose earnings multiples of the business in its statement.
EARNINGS
Billy Leung, an analyst at RHB Research Institute Sdn in Hong Kong, said the purchase price implies a multiple of 63 times earnings for 91 Wireless, based on his estimate that the business would post net income of US$30 million this year.
The app store was last year valued at US$115 million, NetDragon chief financial officer Joe Wu said in August last year during a conference call.
NetDragon shares slumped by a record on the agreement, which ends plans for the Hong Kong-based company to spin off 91 Wireless. The stock dropped 21 percent to HK$19.04 at the close in Hong Kong.
“People were originally expecting a spin off,” RHB’s Leung said. “After the sell off, NetDragon won’t be holding the business any more, so technically NetDragon won’t be profiting from any growth from the company.”
SHARES
Shares of Baidu rose 4.9 percent to US$101.59 in US trading yesterday, before the announcement was made.
Baidu is led by billionaire Robin Li (李彥宏) who has a net worth of US$7.5 billion, according to the Bloomberg Billionaires Index.
Competition is intensifying in China for mobile users, with Alibaba Group Holding Ltd, the nation’s largest e-commerce company, buying a stake in Sina Corp’s Weibo service in April. Sohu.com Inc, owner of China’s third-biggest Web portal, and software company Qihoo 360 Technology Co also have apps for mobile searches.
Beijing-based Baidu will pay US$1.09 billion for NetDragon’s 57.41 percent stake in 91 Wireless and acquire the remaining stock on the same terms, according to a filing with the Hong Kong stock exchange yesterday.
BIGGEST
It is the biggest acquisition announced by Baidu, according to data compiled by Bloomberg.
The 91 Wireless business is the largest third-party distributor in China by active users, according to NetDragon, which cited iResearch data. It distributes apps for Apple iPhones and iPads, as well as devices using Google’s Android system.
Lenovo Group Ltd, the world’s biggest personal computer maker, has logged more than 1 billion downloads through its app store since it opened in 2010.
“Mobile app stores are an important entry point to the mobile Internet and are therefore of great strategic interest to Baidu,” Kaiser Kuo (郭怡廣), a spokesman for Baidu in Beijing, said in an e-mail.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”