Chinese media got a few words from Lin

[kevinh]

Just more of a necessity to go private and restructure their image. There is no other solution to this story.

The image they need to restructure is not its antivirus image in China, that boat has already sailed. They need to get some material updates out in the US regarding PWC and the 20-F. Its image with investors is badly damaged, possibly beyond recovery. This management has shown it doesn't quite understand how capital markets work, and potentially not caring about shareholders. Even if 20-F comes out clean, which fund is going to buy in with this kind of image?

And why is Henry Lin releasing words to the Chinese media when its investor base is in America? If the CEO is going to release statements to the press, do it in the US.

[BillNeuburger]

That's just it, we all know Omar is a smart guy, and a visionary of sorts. He knows Android like the back of his hand and has a deep contact network, which is why they are expanding fast and able to ink deals. There is no way without Omar that this platform strategy would work. But he is NOT a finance guy hence at best he's a CTO and not a CEO. Not even to offend the guy, it's just his skills are not inline with that of a public company CEO. Maybe a private company where nothing matters aside from execution but as of now he is unfit as the public company CEO. I do also wonder what KB Teo is doing, as he is very much a finance guy, and I wonder why he isn't taking charge here on the capital markets end of things. Could all be a matter of Lin being the roadblock to reason due to the Godforsaken B-shares that exist in the U.S. markets.

[gaosl11]

NQ's antivirus software has a reputation in China as a 流氓软件, which roughly translates as hoodlum software. The story is their antivirus use to automatically install onto phones and automatically bills you 10RMBs. People who got swindled are generally lower on the economic ladder (people with money all used iphones) where 10RMB is actual money and tend to shout the loudest on the internet. Clearly that's not the case anymore but reputations are hard to shake.

Has there actually ever been any proof of any wrongdoing on the part of NQ in this respect, Kevin, or is it just that, an old rumor?

NQ used to be partner of Nokia and it's antivirus softwares are preloaded to Nokia Symbian phone from 2007 ~ 2011. At that time, smart phone are just started and no good way for end user to do payment(e.g. no paypal). Almost all cellphone software company at that time are collecting payment through SP (like YiDaTong) and there are lot of loophole for them to collect those money without real permission from end user. Chinese are not like paying money on the software, especially on security because they don't care lot at that time. That's main reason why so many chinese dislike NQ mobile today because Symbian used to be biggest user base of smart phone in China (before iphone) and most of NQ mobile users at that time are charged without actual permission from end user. Those loopholes are get fixed mostly since 2010 though.

Also NQ software is installed in the root of OS and no easy way for end user to delete/disable. that's why people call those software as hoodlum software.

However, those are just very common ways how startup company take market share at that time. The most notorius one is 3721, which is founded by same person who is the founder of Qihoo. How Qihoo become larget security software company today? because it develop software to kill 3721 like application.

Another big hit to NQ mobile reputation is because CCTV 315. It's one of most influential program in the China where hundreds of millions of people will watch. The TV program basically run a compaign against company with some really bad information. In 2011 CCTV 315 accused NQ mobile that it makes virus himself and get them downloaded to user phone through FL (at that time FL is still an independent company). The accusion caused first stock crash of NQ mobile after its IPO.

There are never really any proof that what CCTV 315's accustion against NQ is true. However it's CCTV, people in the China just believe in it and those 'rumors' spreads fast when hundred of million people believe in it.

Both Baidu and Apple also accused by CCTV 315 (apple is accused last year when stock crashed under 400 so you know how this program impact stock). And most ironically, the head of CCTV 4 (which owns 315 program) Guo Xi is just arrest a few month ago because of bribery. There are rumors/evidences saying he took bribe for more than 1 hundred million dollars to manipulate what program to show on the CCTV 4. I'm actually already sense of it because the program are so inconsistent and obviously in favor of those who play big ads on the CCTV.

So if you ask me if any wrongdoing of NQ in the past, they had some moralely, but not legally. I saw they working very hard to fix those now. But once you hit by CCTV 315, you basically labeled with 'guilty' by default.

[gaosl11]

Just more of a necessity to go private and restructure their image. There is no other solution to this story.

The image they need to restructure is not its antivirus image in China, that boat has already sailed. They need to get some material updates out in the US regarding PWC and the 20-F. Its image with investors is badly damaged, possibly beyond recovery. This management has shown it doesn't quite understand how capital markets work, and potentially not caring about shareholders. Even if 20-F comes out clean, which fund is going to buy in with this kind of image?

And why is Henry Lin releasing words to the Chinese media when its investor base is in America? If the CEO is going to release statements to the press, do it in the US.

it's not a statement release, it's just interview by Tencent news. I also have same question why US media not inerview Omar while they keep interviewing Carson Block regularly.

[gaosl11]

It's hard for Americans to understand how Chinese thinking, just like vice versa

It seems people here very hard to understand why Chinese will such dislike a software company just because they get charged 50 cents 4 years ago because they used their service. But it's really how people feel.

on the other hand, there are lot of online compaign company in China paid to post negative/postive comments. so what your guess is very likely to be true. and i'm sure NQ will pay those too.

Thanks Kevin. Whether that used to be the case, I can't tell. But I am sure that is not the case now. It is hard for NQ to shake off this image, though. Many Chinese seem unreasonable to me. Or they don't have better things to do on the internet. Sometimes I wonder whether they get paid to write such comments.

NQ's antivirus software has a reputation in China as a 流氓软件, which roughly translates as hoodlum software. The story is their antivirus use to automatically install onto phones and automatically bills you 10RMBs. People who got swindled are generally lower on the economic ladder (people with money all used iphones) where 10RMB is actual money and tend to shout the loudest on the internet. Clearly that's not the case anymore but reputations are hard to shake.

[ArtM72]

"on the other hand, there are lot of online compaign company in China paid to post negative/postive comments."

If anyone bothered to read the comments following the recent trashing of NQ (http://seekingalpha.com/article/2298345-...pardy?dr=1) leaves little doubt there is a lot of boileroom manipulation going on here and now. A veritable HAIL storm of Half truths, Allegations, Innuendo and Lies. Quite a spectacle.

[Fundy_]

["I doubt they have any incentive to malign NQ considering these are 20-25 year olds out of college, working for the first time. I don't doubt the veracity of this but you guys are welcome to debate about whether this actually happened"]

They might just simply repeat an urban legend, which is something that happens all the time.

NQ's security software has been through some rigorous testing and this never revealed anything of the kind.

The guys that told him this were reciting personal experience, i.e. this actually happend to them. This was how NQ used to do their business back when their software first hit the market, and clearly is not the case anymore. No way would Samsung or China Mobile preload NQ software with backend hacks even if NQ paid them $100/phone.

But once you have a poor reputation, it's hard to shake, hence why every NQ article has a ton of negative comments.

"It takes a lifetime to build a reputation and a five minutes to ruin it." -Warren Buffett

[admin]

["It seems people here very hard to understand why Chinese will such dislike a software company just because they get charged 50 cents 4 years ago because they used their service. But it's really how people feel."]

I understand that allright, even without being Chinese (nor American). What I'm trying to say is that these allegations, as far as I know, have never been proven.

[gaosl11]

["It seems people here very hard to understand why Chinese will such dislike a software company just because they get charged 50 cents 4 years ago because they used their service. But it's really how people feel."] I understand that allright, even without being Chinese (nor American). What I'm trying to say is that these allegations, as far as I know, have never been proven.

what kind of allegations? if you refer to charge people's money without permission, that's unfortunately true before

[admin]

["There are never really any proof that what CCTV 315's accustion against NQ is true. However it's CCTV, people in the China just believe in it and those 'rumors' spreads fast when hundred of million people believe in it."]

This is exactly the kind of practise I'm referring at.

["Almost all cellphone software company at that time are collecting payment through SP (like YiDaTong) and there are lot of loophole for them to collect those money without real permission from end user. Chinese are not like paying money on the software, especially on security because they don't care lot at that time. That's main reason why so many chinese dislike NQ mobile today because Symbian used to be biggest user base of smart phone in China (before iphone) and most of NQ mobile users at that time are charged without actual permission from end user. Those loopholes are get fixed mostly since 2010 though."]

From here I understand that this charging issue without consent (assuming that it happened, I still haven't seen any conclusive evidence) was common practise before 2010, not the exclusive reserve of NQ ("hoodlum" or otherwise)..