NQ Mobile vs. Muddy Waters: The Battle Is Just Starting

[Haggerston]

http://www.valuewalk.com/2013/11/nq-mobile-vs-muddy-waters-analysis/

[tradestar2012]

wow. The first, sorta balanced article.

[ArtM72]

wow. The first, sorta balanced article.

Balanced?  Until MW can substantiate at least 10% of its claims I'd say balance would be an article leading with the line "The mounting preponderance of evidence suggests that nearly all of Muddy Waters claims have been found unsubstantiated and likely written to solely manipulate the market for the benefit Muddy Water's short position."

JMHO

[admin]

wow. The first, sorta balanced article.

Balanced?  Until MW can substantiate at least 10% of its claims I'd say balance would be an article leading with the line "The mounting preponderance of evidence suggests that nearly all of Muddy Waters claims have been found unsubstantiated and likely written to solely manipulate the market for the benefit Muddy Water's short position."

JMHO

Haha, that's vintage Art..

[admin]

["The kerfuffle over how cash was reported at NQ Mobile has been blown way out of proportion. Level 1 or Level 2 refers to the methods used to value the accounts, not the liquidity or validity of the accounts."]

Amen to that. They just showed the liquidity by transferring..

[admin]

And:

[“The real issue at NQ is whether the cash and CDs actually exist. Many Chinese companies have fallen when it is discovered that the company was giving fake documents to the auditors to cover up missing cash, sometimes with the help of banks. Auditors have upped their game in this area and I would be surprised if PwC was duped in the NQ case.”]

Next week this issue can be put to bed for good, if it hasn't already..

[admin]

["Cadwalader Lee of Wickersham & Taft LLP in Beijing said that as long as the cash is real, the customer being a related party does not exactly constitute fraud."]

[kevinh]

The cash issue is put to bed. Carson Block hasn't brought it up in his most recent piece nor did he bring up in his Bloomberg interview. As soon as NQ started moving money from Chinese Banks to Standard Charter, this topic is decided.

Only real issue left is whether YDT is ran by NQ and whether the receivables are real. If the receivables are real, this whole thing is over, but to determine whether the receivables are real will be a long process.

[tradestar2012]

I ran a DSO analysis on another thread. http://shareholdersunite.com/mybb/showth...p?tid=5087 Basically, It looks like if there are issues with YTD, its very very small. Ie if there were any noncollectable AR, it would be a ~5 million bad debt write off, max to put DSO's back in line at around 130 days, which based on historical trends, seems to reflect very collectible AR.

[kevinh]

I ran a DSO analysis on another thread. http://shareholdersunite.com/mybb/showth...p?tid=5087 Basically, It looks like if there are issues with YTD, its very very small. Ie if there were any noncollectable AR, it would be a ~5 million bad debt write off, max to put DSO's back in line at around 130 days, which based on historical trends, seems to reflect very collectible AR.

Maybe I'm misreading things but my understanding from Block's attack is that YDT is owned by NQ, so all the collectibles and revenue flow is just money circulating amongst itself. If this is true, it calls into question of all the cash that NQ has collected from YDT. But we'll see how this plays out in the coming weeks.