Is this all Muddy Waters had ?

Is this all Muddy Waters had ? - Printable Version

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Is this all Muddy Waters had ? - roxron9 - 11-07-2013

Do you all think this is all Muddy Waters had for NQ ?

This all has been extremely weak, expecting a company to de-list based on this non-sense ?

More to come ?

Thoughts ?

RE: Is this all Muddy Waters had ? - admin - 11-07-2013

Considering that MW is increasingly shrill I don't think he has a lot more, but one never knows for sure. It isn't likely to be the most important terrain anymore though:
- Toro Investment Partners have done an excellent job in dispelling much of the MW stuff
- They are on the ground in China at the moment, doing deep DD
- Next week, we get Q3 figures from NQ and it will be interesting to see what PCW has, or hasn't any comments
- Then the blackout period ends and share buyback can resume
- We'll get the results from the independent audit committee at a certain time

RE: Is this all Muddy Waters had ? - kshen - 11-07-2013

the biggest portion of their article tries to say that YDT reports gross revenue but it doesn't make sense. I wrote something regarding their faulty argument

http://seekingalpha.com/instablog/15535342-karlshen/2383862-nq-stands-strong-against-muddy-waters-faulty-arguments

RE: Is this all Muddy Waters had ? - Bondguy8 - 11-07-2013

'kshen' pid='31088' dateline='<a href="tel:1383802 Wrote:the biggest portion of their article tries to say that YDT reports gross revenue but it doesn't make sense. I wrote something regarding their faulty argument http://seekingalpha.com/instablog/15535342-karlshen/2383862-nq-stands-strong-against-muddy-waters-faulty-arguments

Nice article...nicely done. I completely agree with you concerning the double taxation...why would a service provider be in a business where 50% of their margins is going to taxes.

I posted this in a different thread but maybe you could adress this...

is there a way to specifically prove that all the payments that were/are collected through YDT were/are passed on to NQ net what YDT takes out? Yes NQ has 103mm in a bank account plus working capital, but is there a way to prove that YDT is actually collecting cash and sending it through to NQ. We all know the DSO issue and the reasons for the high DSOs. I have no idea if MW is lying (could very well be the case) but they mentioned that they activated 22 accounts and not one was processed through YDT. MW mentioned UMPay as a SP (Toro has confirmed the relationship with NQ and UMPay) but after 22 activations odds are that if NQ does use YDT as a SP then something would be processed. I am not a SP expert so maybe I have learning to do (Does it matter where the initiation is taking place? Is it a random allocation?).

My point is that without a response from PWC I don't think anyone can answer the question if all the revenue that is flowing through YDT is 100% real. I think an overstatement of revenue can be a very real possibility as we learn more and more about YDT. It seems at least plausible that YDT could have been used to prop up NQ revenues. There are definitely motives for NQ to inflate its top line revenue (stock compensation etc).

Again I am not saying this is the case, but can anyone PROVE that I am wrong to think this way? Ultimately, the audit will show the truth and yes I know NQ has been audited before (pre IPO and various other times) but YDT/NQ revenue/DSO is something I can't get comfortable with yet.

RE: Is this all Muddy Waters had ? - kshen - 11-07-2013

Bondguy. Toro Investment is in China doing this DD, they have confirmed looking over the transaction slips detailing exact transactions between NQ and YDT. As for specific proof, it would be in the confirmation slips or 'Vouchers' as MW's report cited as well as actual bank transactions between NQ and YDT. These are definitely audited However, the problem anyone can claim that these vouchers could be forged. At this point its like a little kid playing the WHY game where he says why to everything you say.

22 accounts: we dont know the conditions under which they are registered or the phone brands. Think 9 out of 10 doctors Ads from the 90s. I wouldn't take to heart any statistics they throw out because having a background in stats tells me you can make anything favorable under the right conditions

RE: Is this all Muddy Waters had ? - roxron9 - 11-07-2013

Bondguy:

I have a feeling that the region and retailer from where they bought the activation service might have a role to play, though that is just a wild guess.

I don't really think they have much incentive to inflate the numbers, from memory as per one of the question on the cc their revenue from Yidatong is already around high single digit in Q2 vs 22% for 2012. I can't see the need of a fast growing company , having an amazing future in front of them and very well placed for that growth, trying to increase their sales this way. Henry Lin is already talking about $500 million revenue in 2015 vs $40 m in 2011......that's 12.5 times !

Their revenue in 2012 increased by 130% where as Revenue from Yidatong increased by 100%. Might not be the right comparison given Nationsky consolidation. It we take that out, both 2012 revenue and revenue from Yidatong increased by 100%.

Also Exhibit 4.13 in 2012 F-20 clearly shows a contract between Yidatong and NQ. If I was to inflate my numbers I won't be that brave to not only mention relationship with Yidatong in the annual review, but also give more evidence about it.

Just my thoughts.