NQ boosts outlook

[tradestar2012]

The raised guidance is great, but a non issue in my book. From the pr, the driver of growth was enterprise. If thats nation sky handset sales, then very little of it will drop to the bottom line. Still nice to see, but at the end of the day, the 20f is what matters. Imho, todays pop was purely driven by the fl minority sale, which I thought was genius how it's structured.

[justingiles]

The raised guidance is great, but a non issue in my book. From the pr, the driver of growth was enterprise. If thats nation sky handset sales, then very little of it will drop to the bottom line. Still nice to see, but at the end of the day, the 20f is what matters. Imho, todays pop was purely driven by the fl minority sale, which I thought was genius how it's structured.

Couldn't have said it any better tradestar. At least we know the PR department is still alive (sarcasm) and actually threw investors a nice bone too. The best thing about the PR release is that it gives investors something to value instead of investors trying to guess how much XYZ partnership will bring to the table. Hope everybody has a lovely weekend!

[AlphaMine]

The raised guidance is great, but a non issue in my book. From the pr, the driver of growth was enterprise. If thats nation sky handset sales, then very little of it will drop to the bottom line. Still nice to see, but at the end of the day, the 20f is what matters. Imho, todays pop was purely driven by the fl minority sale, which I thought was genius how it's structured.

Couldn't have said it any better tradestar. At least we know the PR department is still alive (sarcasm) and actually threw investors a nice bone too. The best thing about the PR release is that it gives investors something to value instead of investors trying to guess how much XYZ partnership will bring to the table. Hope everybody has a lovely weekend!

i agree Tradestar with the small caveat that the raised guidance contributed to the upward movement as well with the FL news being the majority driver.  Always have to remember that many people trading the stock on "good news" aren't actually capable or in fact don't even bother trying to parse the news in order to fully understand it.  How many people (by %) do imagine readthat  news and thought to themselves; "well profit margins have been dropping precipitously so even a big boost in the top line might not move the needle  much for earnings..."

And in regard to JS... Can I ask where you derived the information in your post; regarding PwC giving NQ the ok to release the Rev Guidance PR?  The way I understand unaudited reports is that they literally have no oversight.  I believe the history supports that notion when looking at NQ's reports.  They reported quarterlies while being audited, it's the 20F which is explicitly stated is an audited document which NQ can not release.

Further, the implication there is that PwC has control over all types of information being reported by NQ which I also find to be unlikely at best.  NQ can release PR reports about future performance with impunity I Imagine, considering the audit concerns a set period of time in the past, then that period would be the only time I could see the auditors having any control over.  PwC's job has never been to vet statements about future performance but rather to confirm the accuracy and vailidity of financial reports (only the 20f for Chinese Firms) of past performance claims.

[js253]

Based on my understanding of how auditing practice works at public companies. Anyone here who has friends at Big 4 that audit public companies, plz. verify.

Companies give draft copies of soon-to-be-released PR to their auditors/lawyers. Usually it's designed to catch clerical errors, disclosure violations, SEC compliance, etc. The key phrase here is "reasonable basis", whether lawyers or auditors have a "reasonable basis" to question the authenticity of the content. The answer is usually no. Otherwise, that would mean the company must be under some type of investigation(which NQ is). The draft may go thru a few revisions in terms of wording and such, but not much else. NQ on the other hand is under a major investigation, and if PwC has found that NQ fabricated revenue in past quarters, then they would have a "reasonable basis" to question the authenticity of this guidance raise and would not allow such a PR to be made. If NQ insists on doing so under such a scenario, then one would expect PwC to resign immediately, as would NQ's legal advisors.

[Spacchiusu]

Based on my understanding of how auditing practice works at public companies. Anyone here who has friends at Big 4 that audit public companies, plz. verify. Companies give draft copies of soon-to-be-released PR to their auditors/lawyers. Usually it's designed to catch clerical errors, disclosure violations, SEC compliance, etc. The key phrase here is "reasonable basis", whether lawyers or auditors have a "reasonable basis" to question the authenticity of the content. The answer is usually no. Otherwise, that would mean the company must be under some type of investigation(which NQ is). The draft may go thru a few revisions in terms of wording and such, but not much else. NQ on the other hand is under a major investigation, and if PwC has found that NQ fabricated revenue in past quarters, then they would have a "reasonable basis" to question the authenticity of this guidance raise and would not allow such a PR to be made. If NQ insists on doing so under such a scenario, then one would expect PwC to resign immediately, as would NQ's legal advisors.

I tend to agree with you. Although I'm not versed in this to be certain. Given the circumstances, if NQ was/is a blatant fraud or even close to one, you wouldn't expect PWC to be too happy with a press release strictly to pump the stock up. That's kind of absurd that they would just say "no big deal" we don't govern this so do as you please. With respect to NQ, I think nothing could be further from the truth, because this would cause all sorts of resignations. I would think. So I agree with the above, but of course I don't know definitively either. Logic would dictate PWC was and is aware of the press releases.

[SamAdams]

The more "low margin" hardware today, the more users and the more high margin (80% GMs)  revs in the future.  Makes all the sense in the world to be building share in this market.  What if NQ next decides to moentize a bit of NationSky?

[admin]

The more "low margin" hardware today, the more users and the more high margin (80% GMs)  revs in the future.  Makes all the sense in the world to be building share in this market.  What if NQ next decides to moentize a bit of NationSky?

Yes, very perceptive.

[SamAdams]

While I honestly cringed when mgmt said they were initiating an Independant Audit, I think they bit off more than they could chew at the time,  I do think in the long run (hopefully short run soon) it will have been the right decision.  This is no longer an earnings story, eventhough they have earnings, and I think they know exactly what they are doing and need to do.  MobileIron, which is a US based comp for NationSky, has filed to go public and I believe Good Technology has or will as well.  Think of what NatdionSky is building in China right now and what that might be worth as the dust settles and NQ continues to grow that business and gain market share.

Things to be confident and positive about:

1) April 30th PR tells us all we need to know.  No fraud.  Company has cash.

2) Esecuritel/Brightstar/Softbank/Spirnt relationship is deep and significant ( wont' take credit for that as it was pointed out by another0.  More channels and partners annoucnements to come and the MW cllaims have neither slowed or damaged the companies rep with partners.

3) NQ would  not have been allowed to reporte and guide revenue figures without approval from board/auditors and perhaps the IA.  The hardest thing to manipulate is revenues unless you just make them up.  That would have been the first thing the Independant Audit would have found.  Cash and Yidatong.  Primariy issues and we know on the April 30th PR nothing fraudulent was found.

4) Monetization of a small piece of FL is interesting and perhaps significant.  This was a US based PE firm with many experienced Capital Markets and Investment banking folks and not just friends of Henry, Gavin & Omar.  Third party validation of at least FL Mobile helps support the ridiculous valuation in front of us.

5)  With potential IPOs of two MDM companies such as MobileIron and Good Technology, there should be interest in a top tier MDM firm in China.  This would provide another leg to the  valuation stool as we await the 20f.

6)  All that said, reality is we need the 20f filing to remove all doubt.  When that happens we get at least 2 or more sell side firms to resume coverage and allows US based mutual funds to begin buying the stock.

7) The audit is a double edged sword.  As we have seen, mgmt lost control to an extent over the time line and the specifics.  I am sure they will get dinged on something and likely will be cited for a material weakness in financial controls.  How many here remember the Einhorn attacks on Greeen Mountain on accounting.  What came of that?  Nothing.  What ensued?  GMCR ultimately restated EPS of about $0.01 for three years and was cited for a material weakness in financial controls.  Einhorn helped drive the stock down from $110 in 2011 to $17 in July of 2012 (though some was due to slowing EPS and a contracting multiple) but where is the stock 2 years later - $110+, Coca-Cola a major shareholder and likely to buy the whole thing in the next 2-3 years.  Not saying this is the path for NQ but as painful as it has been, I think they've done the right thing and absent CB being 100% right on no cash and round triipping revenues from YiDatong, this stock will appreicate significantly in the months if not weeks to come.  Don't invest on that short term horizon but look at it all rationally.  This would still be a great stock even if it doubles from here but is derisked with the filing.

Good luck to all and thanks for all the individual contributions.

[Mountainbiker]

Sam...do you have info on Bison Capital Limited and Bison Moblie??? thanks

[SamAdams]

Sam...do you have info on Bison Capital Limited and Bison Moblie??? thanks

I wouldn't pretend to have deep insights but they come back as a legit firm from what I've learned.  If you look through their website I'm sure you've seen the backgrounds.  I'm sure they did their dd.