A Press Release from the Company.....
Hello,
I wanted to send you a quick update on some of the questions I have received today. As always, if you have any questions, please let us know.
Thanks,
Matt
Seeking Alpha Article Today -- Let me go through each point below.
The Main Point in the Article: The article cites, "the company is purposely releasing them (news releases) with the sole intent of trying to pump up the stock price. A lot of the information in these press releases is either claiming old news as new developments for the company or irrelevant."
This is flat out wrong. As a company, we do not put out press releases to try and do anything to our stock. The purpose of our press releases is really twofold. First, we have a regulatory obligation to announce publicly and fairly anything that is material. Second, as a business we try and do our best to keep the investment and media communities informed about our business evolution, product development and partnerships. Lets go through each of the examples from the article below and I'll add in some additional examples. The announcements and both partner and product developments are significant and anything but "irrelevant" -- in fact some of them are potentially game-changing in nature.
Music Radar --
The article goes on to say that because the application was available many months before our formal product announcement, that somehow the announcement was just an attempt to drive positive sentiment. This shows a clear lack of understanding about the basics of the application industry in general. It is very common for applications to be released in a "soft" launch or public beta form. This enables the product to be enhanced and improved with real-time and real-user feedback. In the case of Music Radar, our public beta launches in various markets was a critical component of the successful product that it is today. The actual timing of our formal product announcement in September was actually tied to the fact that Samsung selected a customized version of the Music Radar application for its new Galaxy Gear Smartwatch App Store in China. Given the Galaxy Gear Smartwatch had been formally announced the week prior to this announcement and as part of that rollout the application was starting to make other media headlines, it was time for us to formally announce the product. This selection by Samsung is an important component of the underlying audio search technology -- which is something that NQ Mobile will utilize in many different ways in the future. We are very pleased with the initial success of the application and we look forward to updating the marketing on some of its key metrics in the future. Products like Music Radar help tie our platform strategy together and the way in which we attract, engage and ultimately monetize mobile users.
Preload Deals with Huawei, ZTE and Lenovo --
The article states that our press release on September 26th highlighting the expanded preload relationship with Huawei, ZTE and Lenovo is not new news and "appears to be again old news from the company purported as something new." The new and expanded relationships that we announced are new and very significant. As a company, we are always looking to expand on our relationships and constantly working to maintain ongoing trust. While we have many preload relationships with many handset OEMs -- we always are working at earning future production design wins as well as expand into more geographies. In the case of ZTE and Lenovo, we have secured a preload relationship with a broad range of their smartphones on a global basis! This is new. In the past, these were just confined to the China market. Now, they have been expanded to their smartphones that are shipped globally. As it relates to the Huawei deal specifically, this is an expanded product relationship inside of Greater China and now the broad range of their smartphones will come preloaded with our security applications. We continue to view the handset OEM channel as important channels for customer acquisition and we will continue to work with all of them to help bring a more robust handset solution out of the box to their partners. We will never rely on past relationships to earn future wins -- we will always work hard at earnings our customers trust and support going forward. And, we will update the market on such significant new channels of customer acquisition as we successfully deepen and broaden these types of relationships.
Press Releases on Combating New Malware --
The article states that "while it is nice to let investors know its product works, those press releases seem irrelevant and are just merely fluff." The education of the consumer marketplace about new forms of viruses or malware is an important part of helping the overall eco-system combat such viruses and malware from spreading. Media plays a role in helping to educate and ultimate protect consumers. As a company that is deeply rooted in protecting consumers and securing their mobile devices, it is important to communicate such new threats and constantly remind consumers of best practices to combat and protect against such things. We don't control the timing of such viruses or malware, but we strive to be early and accurate in identifying and ultimately eliminating the threats to consumers and enterprises/customers. We will never apologize or take a defensive stance against doing our job.
CFO Change and Raised Revenue Guidance --
The article states that "the news of the raised guidance was bundled together with the sudden CFO change in order to reduce any possible negative impact on the stock price." Our company is experiencing tremendous growth, globalization and business segment expansion. As such, the CFO change was a natural part of the evolution of the business. As is very common practice, when there is a CFO change, a company also makes sure that the marketplace knows that the change has nothing to do with anything related to the business trends, the financials, accounting, etc. As part of this assurance to the market, we also are seeing a continuation of the business trends we saw in Q2 and thus stated that we now expect Q3 revenues to be higher than our original guidance range of $50-$51mm.
Past Business Practice --
The article brings up the CCTV attack on our company before we went public in March of 2011. The report was proven to be blatantly false and inaccurate back then. In fact, it was a slanderous attempt by competitors to prevent us from successfully going public and with the attempt to hopefully halt the strong momentum we were enjoying in the mobile security space. Given it was false and proven to be untrue -- it did not work and our momentum has continued while we have continued to expand our partnerships inside and outside of China. This is a shallow attempt by the author of this article to bring up something from the past that was already dismissed as baseless and false by the industry and its partners and regulators (most importantly) and by the investment community.
Conclusion:
The article does make one valid point. "The company seems to be releasing press releases regularly." That is true. As has been publicly stated many times in the past couple of quarters. Our pipeline is very full. We have tremendous momentum in the business and even though we have announced a lot recently, we remain even more excited about the pipeline of deals and news flow in the future. Let me also take the opportunity to list out many of the recent announcements that we have made that the article does not highlight -- but are equally new and important. You will see that even though there is a lot of announcements, they are all material, relevant, important, new and consistent with a company that is enjoying strong growth and expanding its business pipeline, its partnerships and trajectory.
Press Releases Since our Q2 Report on August 12th:
9/3/13 - NQ Care -- new product launch partnered with Assurant Solutions to bring the first warranty solution bundled with mobile security to users in China
9/4/13 - FL Mobile and Perfect World sign strategic partnership with the new game "The Return of Condor Heroes"
9/13/13 - Music Radar product announcement
9/17/13 - Gods & Dragons launched in North America on iOS platform (first International launch for FL Mobile game)
9/20/13 - Update to Q3 revenue outlook and appointment of KB Teo as new CFO
9/23/13 - FL Mobile expands relationship with Tencent and signs exclusive publisher agreement for Fight Three Kingdoms
9/26/13 - Preload deals and expansion with Huawei, ZTE and Lenovo
--
Matt Mathison
Vice President
NQ Mobile
4514 Travis Street Suite 200 | Dallas, TX 75205
Mobile: (303) 885-8688 | Email:
matt@nq.com