China Short Sellers: Exposing Fraud or Practicing Fraud?

Recently, several “China Short Sellers” have developed a scheme to make themselves rich. First, short a US-listed China stock. Then, write a negative report on that company. After the stock drops, cover the short, and pocket a huge profit. This practice itself is already questionable, but what is despicable is how these short sellers take advantage of the information asymmetry between China and the US, and write reports full of holes and lies, knowing that their American readers have no way of verifying them. This paper dissects one such example, Short Seller Citron Research’s report “Qihoo’s entry into search puts SOHU in play” (August 24). This paper will show that Citron lacks even the most basic understanding of the Chinese Internet/Search market, yet it fabricates and distorts information to deceive investors. It is not my intention to support or challenge Citron’s recommendations, but only to expose Citron’s ignorance and deception, and raise the question whether any investor should ever trust them.

Author: Kai-Fu Lee 

Recently, several “China Short Sellers” have developed a scheme to make themselves rich.   First, short a US-listed China stock.  Then, write a negative report on that company.  After the stock drops, cover the short, and pocket a huge profit.  This practice itself is already questionable, but what is despicable is how these short sellers take advantage of the information asymmetry between China and the US, and write reports full of holes and lies, knowing that their American readers have no way of verifying them.  This paper dissects one such example, Short Seller Citron Research’s report “Qihoo's entry into search puts SOHU in play” (August  24).  This paper will show that Citron lacks even the most basic understanding of the Chinese Internet/Search market, yet it fabricates and distorts information to deceive investors.  It is not my intention to support or challenge Citron’s recommendations, but only to expose Citron’s ignorance and deception, and raise the question whether any investor should ever trust them.



Citron lacks basic understanding of search



The most ludicrous part of Citron’s report is its faulty analysis of search engines and basic misunderstanding search engine Sogou’s strategy and products.



First, some background for those unfamiliar with the Chinese market:



 1.Sogou is a company majority owned by Sohu, and produces three products:

  1)Sogou.com search, comparable to Google.com search.

  2)Sogou browser, comparable to IE or Chrome browser.

  3)Sogou Pinyin IME (input method editor).  An IME is a “soft keyboard” that converts typed roman character input (like “beijing”) into Chinese characters (like “北京”).  IMEs are installed in Windows/Mac and are general purpose text-entry tools (not just for search).

 2.Sogou IME is the leading IME in China, with about 74% penetration.

 3.Sogou browser is an emerging browser that has increased its user penetration from 5% in 2010 to over 20% recently.

 4.Sogou search has had about 1% market share until Sogou Browser became successful.  As Sogou Browser increased its penetration to over 20%, Sogou search also increased its share to 3-4.5%.

 5.Browser market share can increase search market share, because many Chinese users have a habit of searching from the browser directly.  Only about half of the search queries are entered on a search engine’s webpage.

 6.Pinyin IME is a software product basically detached from search, and has no direct relationship with search engines.  (Note that a few IMEs including Sogou have experimented with a feature to encourage users to search directly from the IME, with disappointing results, as it is not natural.) Empirically, search market share and IME market share can be shown to be virtually uncorrelated.



The above points are validated by the following table, showing search market share (from iResearch), as well as Sogou Pinyin and Sogou Browser market penetration (from Sohu):



Now, let’s analyze the following text, taken verbatim from the Citron report:





The above analysis shows that Citron lacks even basic understanding of “Pinyin”, “IME”, “search engine”, and confuses the two Sogou products.  Citron appears to have mentally fabricated a merged product that would not compete with Baidu and “beat [Baidu] at their own game”, from which Citron built the primary investment thesis of this report!  Also, Citron cannot comprehend the critical role of a browser in China’s search market.  Chinese users have a habit of entering search queries to a browser, so the success of Sogou’s (and Qihoo’s) browser has been directly responsible for their search share gains.  This fact would further invalidate Citron’s conclusion that Sogou is better placed than Qihoo, because Sogou’s browser share is significantly lower than Qihoo’s.  Perhaps that is why they don’t acknowledge it.



Citron distorts data and compares apples to oranges



Citron demonstrates Sohu’s superior position by asserting that Sohu has 40% more web traffic than Qihoo, and cites the statistics below (left table below) to illustrate this point.



But this comparison is misleading in three ways:



 1.For this comparison, Citron conveniently summed Sohu and Sogou numbers (see right-most column of right chart), even though Sohu is a portal site and only Sogou is comparable to Qihoo.

 2.Citron conveniently chose to keep weekly UV (WAU) and removed daily UV (DAU column) from the chart (using DAU would put Qihoo ahead of Sohusogou).

 3.While Sogou is similar to Qihoo, Sohu is a portal site and entirely different.  What is the purpose of comparing web traffic of two companies in different categories?   This is like comparing Yahoo portal to Google search.  The value of a click or link on a portal site is dramatically lower than that on a search/navigation site.



In a second fascinating comparison between Sohu and Qihoo financials, Citron uses the following table to show why Sohu is far superior:



But as any investment novice would question: What about revenue growth and earnings growth for current year and next five years?  Growth high-tech stock prices are much more driven by these growth numbers than the numbers Citron chose to cite.  Below are the numbers that really matter:





In the two examples above, it is clear that Citron picks “convenient” numbers even if they are of minimal value, and that Citron obscures “inconvenient” numbers, even if they are of critical importance.



Citron does not understand search monetization



In this report, Citron mentions many times that search engines are difficult to monetize using ads, requiring substantial and costly infrastructure that takes years to build.  While building a full ad monetization structure is indeed not easy, Citron clearly does not understand the options available to a search engine.  The obvious option is to simply use Google’s AdWords as a partner site.  The search engine site would provide the search results, but the search term would trigger Google AdWords ads (for those advertisers that permit this), with a revenue share that greatly favors the search engine site.  Many search engines have worked with Google using this approach, including AOL, Ask.com, and Tecent’s Soso.  In some cases, Google also provided search, but in other cases just AdWords.  Yahoo is also working this way with Bing.   It takes about one quarter to connect a search engine to Google AdWords.  This is basic search industry knowledge.



Qihoo has already been Google’s partner by sending traffic from 360.cn to Google, and getting a Google ad revenue share for the traffic referral.  As Qihoo launches its own search engine, is it hard to imagine that Qihoo would find a slightly different way to work with its partner Google?  Note that these were the same phases Tencent Soso went through with Google: 1) rely on Google for adssearch, 2) launch own search but uses Google ads, 3) launch own ads.



Sogou has chosen not to use Google AdWords, and instead to develop its own ads product and sales team.  There were historical reasons for that, but it is naïve to think this is the only approach.  In fact, it is an unlikely and irresponsible approach for Qihoo, because this approach explicitly forfeits significant revenue.



Now, how much revenue might come from a Qihoo-Google AdWords partnership?  According to JP Morgan report on Tencent, Tencent Soso's monetization from Google AdWords partnership was $13.6M during its last full year working with Google (Q4 2008 to Q3 2009), and Soso's market share for those four quarters was about 2.45%.  From 2009 to 2011, the China search query volume has increased about 41%.  Let’s assume another 25% increase from 2011 to 2013, for a total of 76% for 4 years.  Then, if Qihoo has a 10% search market share in 2013 in a market that is 76% larger than 2009, and uses Google AdWords, Qihoo can deliver search revenue of $98M in 2013 ($13.6M * (10% / 2.45%) * 176%).  This is at the top of the range of current analyst estimates of $50 – 100M, and much larger than Citron’s assumption of $0.



Can Qihoo get a 10% market share?  The chart below from Hitwise shows Qihoo already at 10.2% market share as of August 22, 2012:

Citron hand-waves comparisons with misleading analysis



Citron often makes sweeping generalizations and comparisons to justify its recommendation.  In this report, Citron made a comparison that Sohu video should have comparable value to Tudou’s valuation when Tudou was merged with Youku.  However, they ignore many inconvenient but major problems:



 1.There are many second-tier video websites comparable to Sohu (LeTV, Qiyi, Sina, Tencent, Xunlei, etc.), especially if one considers metrics ignored by Citron.  In a market where one company leads many others by far, the leader will command an even higher premium valuation.

 2.The price Youku paid for Tudou includes a sizable premium for creating the single market leader.  It cannot be extrapolated to second-tier players.

 3.When a market #1 buys #2, #3’s value shrinks rather than increases.

 4.Youku and Tudou project much higher revenue growth than Sohu video.



Another broad generalization was to take Qihoo’s market capitalization gains in four days and simply adding it to Sogou.  This is ridiculous, as Qihoo has gained 10% market share in these four days, while Sogou has only maintained its share.



The undisciplined and wild copy-pasting of numbers discredits Citron’s analysis.



Conclusion



This paper has shown that Citron is an amateur in the Chinese Internet market, lacking even basic understanding of Chinese text entry (IME), Chinese language (the relationship between Pinyin and Chinese characters), search product features, search monetization, and Chinese user habits (searching in browser).



Citron’s primary investment thesis in this report is based on a combined product (Sogou.com  Sogou Pinyin IME) that could bypass Baidu and win share from it.  The only problem is that combined product does not exist, and was a figment of Citron’s imagination, based on Citron’s misunderstanding of the Chinese market.



Citron takes advantage of the fact that most readers of its reports are unfamiliar with the Chinese Internet, and do not read Chinese.  This asymmetry emboldens Citron to compare apples and oranges, emphasize irrelevant but convenient data, obscure inconvenient but important data, quote questionable “experts”, cite unreadable or irrelevant sources, and wildly copy-paste key financial figures.



Leveraging this information asymmetry and general concerns about Chinese companies, Citron has successfully deceived investors to invest based on Citron’s recommendations.  Since Citron has already made big bets on these recommendations before their reports are published, Citron doesn’t have to be qualified; Citron’s recommendation doesn’t have to be right; Citron just needs to mislead their readers to follow their recommendations!



So, will you ever trust, follow or read Citron’s reports again?  Are Citron and other similar China short sellers exposing fraud, or practicing fraud?



Qihoo's entry into search puts SOHU in play http://www.citronresearch.com/wp-content/uploads/2012/08/Sohu-vs-Qihoo-comparative-analysis-Citron.pdf

Written by Kaifu Lee | Via: http://xueqiu.com/5982000457/22165142

Tire reviews online what should you look for

Tires critiques are valuable tools to boost your understanding about radials. There are several leading manufacturer of excellent radials. Numerous radials have attempted to dominated the globe markets with technological prowess. The hassles of picking out the best type of radials for your auto is substantially decreased by evaluations.

Continetnal tire review

Continental tire evaluations are one of the most widely read radial evaluations on the planet. Continental tires have continually been in a position to capture a fair quantity of reputation inside the market place. Hence you will need to comprehend the cause behind their achievement.

Cooper tires review

Cooper tires and rubber is actually a brand name about the globe. You will discover a lot of factors for its recognition and it has managed to prove its worth. When it comes to designing and technologies, Cooper tires have exceptionally couple of competitors.

Dunlop tires review

Dunlop can be a leader inside the field of radials and it is actually a fantastic deal for all passenger automobiles. Dunlop tires evaluations have emphasized Dunlop’s zeal to create world-class radials for passenger vehicles.

Falken tires evaluation

Purchasing the proper type of radial for your auto is an overwhelming knowledge. Many people should have a very good notion concerning the radial and their private expectations. Falken tire critiques have proved their worth as globe leaders inside the field of auto radials.

Goodyear tires assessment

Goodyear Tires evaluations have generally focused on the reality that it offers superior technological assistance to its clients. Goodyear has earned a tremendous reputation within the industry by supplying secure and dependable radials to it buyers.

Hoosier tires assessment

Hoosier tire assessment is only meant for those that are accustomed to winning approaches. It can be a radial, which has proved to be a winner amongst a lot of odds. It is actually lengthy lasting and very advised by racing vehicle authorities.

Kumho tires evaluation

Kumho tires happen to be in a position to grab a substantial portion of the globe auto market place. They’ve earned a fantastic reputation of supplying fantastic good quality radials towards the automobile producers.

Nokian tires reviews

Nokian Tires Evaluations have continually been an integral component of the Auto marketplace. You will discover people that appear for decent elements of a tire.

Sumitomo tire evaluations

Sumitomo tire evaluations have constantly specified the combined effort of the engineers operating here. They’ve thrived to combine technologies using the greatest styles, which could be multi functional.

Toyo tires assessment

Toyo tires evaluation is useful for the buyers given that it enables them to create the best selections. Producing the proper option as a buyer is tricky. It saves a whole lot of income inside the method.

By looking at all of the information online and tires reviews you can make an informed decision on your tire purchase.

For more information onTire reviews

http://tire-review.net/By: sam jones

Tire reviews online what should you look for

Tires critiques are valuable tools to boost your understanding about radials. There are several leading manufacturer of excellent radials. Numerous radials have attempted to dominated the globe markets with technological prowess. The hassles of picking out the best type of radials for your auto is substantially decreased by evaluations.

Tires critiques are valuable tools to boost your understanding about radials. There are several leading manufacturer of excellent radials. Numerous radials have attempted to dominated the globe markets with technological prowess. The hassles of picking out the best type of radials for your auto is substantially decreased by evaluations.

Continetnal tire review

Continental tire evaluations are one of the most widely read radial evaluations on the planet. Continental tires have continually been in a position to capture a fair quantity of reputation inside the market place. Hence you will need to comprehend the cause behind their achievement.

Cooper tires review

Cooper tires and rubber is actually a brand name about the globe. You will discover a lot of factors for its recognition and it has managed to prove its worth. When it comes to designing and technologies, Cooper tires have exceptionally couple of competitors.

Dunlop tires review

Dunlop can be a leader inside the field of radials and it is actually a fantastic deal for all passenger automobiles. Dunlop tires evaluations have emphasized Dunlop’s zeal to create world-class radials for passenger vehicles.

Falken tires evaluation

Purchasing the proper type of radial for your auto is an overwhelming knowledge. Many people should have a very good notion concerning the radial and their private expectations. Falken tire critiques have proved their worth as globe leaders inside the field of auto radials.

Goodyear tires assessment

Goodyear Tires evaluations have generally focused on the reality that it offers superior technological assistance to its clients. Goodyear has earned a tremendous reputation within the industry by supplying secure and dependable radials to it buyers.

Hoosier tires assessment

Hoosier tire assessment is only meant for those that are accustomed to winning approaches. It can be a radial, which has proved to be a winner amongst a lot of odds. It is actually lengthy lasting and very advised by racing vehicle authorities.

Kumho tires evaluation

Kumho tires happen to be in a position to grab a substantial portion of the globe auto market place. They’ve earned a fantastic reputation of supplying fantastic good quality radials towards the automobile producers.

Nokian tires reviews

Nokian Tires Evaluations have continually been an integral component of the Auto marketplace. You will discover people that appear for decent elements of a tire.

Sumitomo tire evaluations

Sumitomo tire evaluations have constantly specified the combined effort of the engineers operating here. They’ve thrived to combine technologies using the greatest styles, which could be multi functional.

Toyo tires assessment

Toyo tires evaluation is useful for the buyers given that it enables them to create the best selections. Producing the proper option as a buyer is tricky. It saves a whole lot of income inside the method.

By looking at all of the information online and tires reviews you can make an informed decision on your tire purchase.

For more information on Tire reviews

http://tire-review.net/  By: sam jones

IT Telemarketing-a Time and Tested B2b Lead Generation Tool

Generating leads for IT security firms is probably one of the most difficult and intimidating processes telemarketers need to undergo in their job. Why is that so? For one, finding people who need security systems in their business is not that easy. Two, when working in security sales, one needs to have the skills (and probably a little luck) to know where to generate good sales leads for his/her firm. Perhaps, generating security sales leads is a daunting task for anybody in the industry, but with telemarketing as b2b lead generation tool, any IT business can reach its desired market and create a supply of potential customers.

Generating leads for IT security firms is probably one of the most difficult and intimidating processes telemarketers need to undergo in their job. Why is that so? For one, finding people who need security systems in their business is not that easy. Two, when working in security sales, one needs to have the skills (and probably a little luck) to know where to generate good sales leads for his/her firm. Perhaps, generating security sales leads is a daunting task for anybody in the industry, but with telemarketing as b2b lead generation tool, any IT business can reach its desired market and create a supply of potential customers.

So, how do you generate security sales leads using IT telemarketing?

There are two telemarketing services that IT security companies can use to generate sales leads for their business; inbound telemarketing and outbound telemarketing.

Inbound telemarketing involves a call coming from a prospect or another company to inquire about the product or service. This process of generating leads is considered one of the best methods because in the first place the prospect has already showed interest by calling in. As the potential customer expresses his/her interest, the telemarketer could have the chance of making a sale by just sounding professional and accommodating. Generally, inbound telemarketing is used to gather important information about a product and/or service or check about sales or discounts, if there are. Now, the possibility of generating a lead greatly lies on the ability of the telemarketer to say the right thing and give all the facts that the caller demands.

Outbound telemarketing, on the other hand, involves a cold call coming from the telemarketer to generate a lead, set an appointment or make a sale. As compared to the former, lead generation using outbound calls is less victorious. Why? For outbound calls are unexpected calls, they are hardly attended by anyone, most especially by people who are reluctant toward unsolicited calls. Nevertheless, when one has excellent communication skills and ability to handle any rejection coming from the customer, successful sales leads are still very possible to obtain using outbound telemarketing.

Now, it is true that inbound telemarketing and outbound telemarketing are two services that can generate sales leads for an IT security company, however, with lack of proper planning, hurried and poor training, inadequate testing and faulty measurement of results, these marketing via telephone are still bound to fail. So you know, less than 20 % of the telemarketing services today are long term (http://ezinearticles.com/?Telemarketing:-What-You-Need-to-Consider&id=5795901). On the other hand, a well thought telemarketing program can generate more leads and higher ROI. So to ensure success in your IT lead generation, you need to decide whether to do the campaign in-house or outsourced.

In house or Outsourced?

Well, if you want to have an inexpensive , yet successful telephone campaign, you need to consider the outsourced telemarketing service.
When properly implemented, an outsourced telemarketing project will almost yield better results than the internal effort of the in house project. Come to think of it, when you outsource your telemarketing needs to a dependable telemarketing company, you no longer need to set up your own telemarketing department or hire people and buy equipments. Worth considering right?

Phillip Mckenzie is a successful lead generation and appointment setting consultant specializing in IT Telemarketing. To know more about IT Telemarketing, Phillip recommends you to visit http://www.it-sales-leads.com

New Apple CEO Tim Cook Will Introduce The iPhone 5 On October 4

New CEO Tim Cook will be in charge of the event, just like former CEO Steve Jobs used to run events. This will be an interesting test for Cook since he’s never done the big product roll out before. Paczkowski says he will be aided by other Apple executives who will also make presentations on stage.

Apple is going to have one of its big product events to introduce the iPhone 5 on October 4, John Paczkowski at All Things D reports. 

New CEO Tim Cook will be in charge of the event, just like former CEO Steve Jobs used to run events. This will be an interesting test for Cook since he’s never done the big product roll out before. Paczkowski says he will be aided by other Apple executives who will also make presentations on stage.

The phone is expected to go on sale weeks after Cook’s presentation.

Read more: http://www.businessinsider.com/iphone-5-october-4-2011-9

Up Close With Google+ Search

It seemed pretty odd that a social network from the leading search company, Google, didn’t offer a way to search through all its posts. But that oddity is over. Google+ now allows you to search through its content. Here’s how it works.

It seemed pretty odd that a social network from the leading search company, Google, didn’t offer a way to search through all its posts. But that oddity is over. Google+ now allows you to search through its content. Here’s how it works.

Do You Have It Yet?

First, you might not have Google+ search enabled yet. If you do, you’ll see this at the top of the Google+ pages:

See the “Search Google+” text in the search box? That means you’ve got the new search feature. If you see this:

A box with “Find people” text in it, then you haven’t gotten Google+ search yet. Hang in there. Google says it is rolling out over the coming days.

The “Everything” Search

If you do have the new service and do a search, you’ll get content from three sources:

  • People results
  • Google+ posts
  • Sparks results

Here’s an example from a search I did on charlie sheen:

In the example, you can see how matching people are listed first (and since none have a “verified” check next to their names, none are likely real), followed by a matching Google+ post. If I scroll further down, after more Google+ posts, I get this:

That comes from the special “Sparks” search engine that was part of Google+ at launch, which was supposedly designed to find new and especially sharable things.

“Best Of” Vs “Most Recent”

If you do a search for anything but people, you’ll find to ranking options. By default, “Best Of” is selected:

What exactly is “Best Of” using to decide what’s best? It’s especially weighted to favor things shared by those who are close to you, or that you are connected with, said Frances Haugen, the product manager at Google for Google+ Search.

“Content from your friends will rank higher,” Haugen said.

Even though content from your friends is favored, you will search through all the content on Google+ that’s been tagged public. My assumption is you’ll also search through any non-public content that’s been shared with you, but I’m checking on ths.

Want to see the most commented or most +1′d post on Google+, even if those aren’t from your friends? There’s no way to do that, right now, but Haugen said it’s something that might happen in the future.

Click the “Most Recent” link, and you get the latest posts from anyone on Google+, with the newest post first:

The first arrow shows how Most Recent has been selected, while the next two arrows show how a newer post comes before an older one.

How recent is recent? If there’s an earthquake or a post about breaking news, will you be able to find it within a seconds, as is the case with Twitter?

“Our goal is to index things within moments,” Haugen said.

People Search

Next to the “Everything” option after you do a search is the ability to narrow down to just people search results. Here, you can see an example where I searched for matt cutts:

The first arrow shows how “People” was selected. The second pointing at the checkmark shows how if someone is a verified person on Google+, you’re shown this.

The last arrow shows if someone is in your circles already. If they are, they’re more likely to outrank other people. That’s why for this search, I get Matt Cutts from Google coming first. He’s in my circle.

If I were friends with the other Matt Cutts — yes, there is another, who on his profile even helpfully says “Has no connection with Matt Cutts from Google” — that Matt Cutts might outrank Google’s Matt Cutts, if I didn’t have the Google one in my circles.

Again, you will get people search results showing up occasionally in an Everything search, sometimes with really large, nice displays, like these:

You can also search for people by topic, but Haugen said the relevancy might not be as good for that. The focus right now was on helping people better find others they know by name.

Also, the Suggested Users list that Google+ rolled out earlier this month isn’t part of this.

Sparks Gets A Demotion

When Google+ launched, it had its own Sparks “discovery” search engine that was designed to help spark (hence the name) shares and discussions on the service.

I’ve generally not seen people saying that they use it much, nor have I found anyone feeling it offers anything that great in terms of a discovery tool.

Given this, it’s not surprising that Sparks has effectively disappeared. Previously, you’d have had a link to Sparks on the side of your Google+ pages, like this:

In turn, that would have lead you to an area where some key subjects were highlighted, along with a search box:

That link is gone, if you have Google+ Search. If you want to go to that custom Sparks home page, you have to know the direct address and type that in (it’s here).

It’s not that much of a loss. If you really liked doing Sparks searching, you can do that from the new Google+ Search box, then select the Sparks option:

Saving Searches & Inline Comments, +1′ing

Previously, you could save Spark searches. You still can, as well as Everything, Google+ or People searches. Just search, then select the “Save this search” button:

In this case, I did a search for lol, which turns out to be a pretty funny search. Once I saved that, it was added to a list of other saved searches I have, over on the side of my Google+ pages:

Select any of the saved searches, and you can get fresh results for them.

Another cool thing is that after you’ve done a search, you can comment on, share or +1 anything you’ve found, right from the search results.

And Google Real Time Search?

Now that we have Google+ Search, how about it providing the main content to revive Google Real Time Search, which was closed down soon after Google+ launched, when Google and Twitter failed to agree on terms for Google to keep getting Twitter’s information.

Google has said that without the volume of tweets, Google Real Time Search really made little sense to keep running. Google+ potentially could make up for that.

If so, we’re all still going to have to wait. Haugen said there’s no news to report on when Google Real Time Search might return with Google+ as a part of that.

Posted by:http://searchengineland.com/up-close-with-google-search-93508