A Chinese website ifeng published a new article on NQ

[vermut]

Saw a link posted to this article on Stocktwits:

http://finance.ifeng.com/business/special/ruigongsi11/index.shtml

It is in Chinese and I used the google traslator. A lot of the info is a rehash from MW report but there are a couple of new very interesting allegations.

The author claims that despite all the rebuttle Yidatong is related to NQ via a person known as Zhou Xu. He is called the "Ghost founder" in the article. This person came to rescue of Net Quin in 2007 when the company nearly went bankrupt. Henry Lin himself admitted many times that they had no brand recognition , no customers and were about to shut down. And here comes Zhou Xu - a mysterious angel investor - who managed to find financing from GSR and Atlantis venture funds and also took a large stake in the company himself. He was given a title of "founder" in the company. And since 2007 the story of NQ mobile made a 90 degrees turn. Revenues soared. And around the same time Yidatong appeared which became the main source of its revenue.

The author claims that Yidatong is a creation of Zhou Xu and he is its real owner. Xu Rong only acts as a facade. Xu Rong used to work for Zhou Xu in his other enterprises which were shut down (I didn't get why they were shut down... something about the change in regulations and some mentioning of corruption). Zhou Xu also has 22.9% stake in NQ Mobile. He tries to keep low profile. Ifeng looked through many pictures from NQ Mobile's events and couldn't find his picure. He does not hold any managerial positions and is just listes as a "founder".

The article makes a claim that Zhou Xu uses the company to increase his personal wealth. And since he is the owner of both Yidatong and NQ Mobile there is a conflict of interests. According to Ifeng after NQ Mobile went public Zhou Xu's personal wealth has dramatically increased (in 2011 to 6.4 bln yuan). I am not sure whether it was related to the share price going higher or maybe he sold some shares at IPO. Probably both.

So to sum it up the article insists that NQ Mobile and Yidatong are indeed related via its major shareholder Zhou Xu though the company denies any connection. I might have missed some details as the translation was sometimes hard to comprehend. Maybe some of our Chinese speakers would read it and share some more details.

I would like to know who this Zhou Xu guy is. Is he real? In my opinion this allegation is very serious and has not yet been properly refuted. While NQ's management showed the cash there is still no proof where it came from. Was this cash earned via their business? The say it came from Yidatong. Can Yidatong prove that it received the cash from end users by billing them? As it could be put there by Zhou Xu very easily.

What are your thoughts?

[tradestar2012]

My thoughts are that the money is at HSBC under NQ's name. That means shareholders have a right to draw on it.

[Mountainbiker]

I read the article. It does not say that.

[kshen]

This seems to be an area of concern. There's definitely some funkiness going on with Zhou Xu. As to how much, that's up in the air

[admin]

What does related even mean, exactly? It's no secret that the owner of Yidatong was a former NQ employee.

Is that proof of fraud, let alone a "massive" one that faked 90% of revenues? I don't think so.

[vermut]

I read the article. It does not say that.

While I admit that my interpretation is not 100% exact I am still sure that I captured the main idea correctly. Can you please point exactly where I got it wrong.

The main thesis of the article is that Zhou Xu controls both Yidatong and NQ mobile. Do you mean to say that the article does not say anything about this?

If your message was trolling then you should be ashamed and refrain from creating such pointless unconstructive posts in the future.

[Haggerston]

Saw a link posted to this article on Stocktwits:

http://finance.ifeng.com/business/special/ruigongsi11/index.shtml

It is in Chinese and I used the google traslator. A lot of the info is a rehash from MW report but there are a couple of new very interesting allegations.

The author claims that despite all the rebuttle Yidatong is related to NQ via a person known as Zhou Xu. He is called the "Ghost founder" in the article. This person came to rescue of Net Quin in 2007 when the company nearly went bankrupt. Henry Lin himself admitted many times that they had no brand recognition , no customers and were about to shut down. And here comes Zhou Xu - a mysterious angel investor - who managed to find financing from GSR and Atlantis venture funds and also took a large stake in the company himself. He was given a title of "founder" in the company. And since 2007 the story of NQ mobile made a 90 degrees turn. Revenues soared. And around the same time Yidatong appeared which became the main source of its revenue.

The author claims that Yidatong is a creation of Zhou Xu and he is its real owner. Xu Rong only acts as a facade. Xu Rong used to work for Zhou Xu in his other enterprises which were shut down (I didn't get why they were shut down... something about the change in regulations and some mentioning of corruption). Zhou Xu also has 22.9% stake in NQ Mobile. He tries to keep low profile. Ifeng looked through many pictures from NQ Mobile's events and couldn't find his picure. He does not hold any managerial positions and is just listes as a "founder".

The article makes a claim that Zhou Xu uses the company to increase his personal wealth. And since he is the owner of both Yidatong and NQ Mobile there is a conflict of interests. According to Ifeng after NQ Mobile went public Zhou Xu's personal wealth has dramatically increased (in 2011 to 6.4 bln yuan). I am not sure whether it was related to the share price going higher or maybe he sold some shares at IPO. Probably both.

So to sum it up the article insists that NQ Mobile and Yidatong are indeed related via its major shareholder Zhou Xu though the company denies any connection. I might have missed some details as the translation was sometimes hard to comprehend. Maybe some of our Chinese speakers would read it and share some more details.

I would like to know who this Zhou Xu guy is. Is he real? In my opinion this allegation is very serious and has not yet been properly refuted. While NQ's management showed the cash there is still no proof where it came from. Was this cash earned via their business? The say it came from Yidatong. Can Yidatong prove that it received the cash from end users by billing them? As it could be put there by Zhou Xu very easily.

What are your thoughts?

Here's the same article on another chinese website.  http://money.21cbh.com/2013/11-4/xNMzA3XzkwMjkxNA.html

Think this was the reason for today's drawdown. Not sure as to the validity but yes a concerted effort to dig up dirt.

[admin]

A mysterious investor controlling NQ (as well as Yidatong)? Controlling as in what, being majority owner?
I think we need a little more than that..

[vermut]

What does related even mean, exactly? It's no secret that the owner of Yidatong was a former NQ employee. Is that proof of fraud, let alone a "massive" one that faked 90% of revenues? I don't think so.

I think you got it wrong a bit. There are two different persons. Xu Rong and Zhou Xu. According to the NQ Mobile's story Xu Rong purchased Yidatong in 2007. Before that she worked as some sort of advisor for NQ Mobile. Now she has no stake in NQ Mobile and is not a related party.

This article says that Xu Rong is only used as a showcase for the public. And the real creator and the owner of 9h (or whatever it is called - the gaming company which Yidatong shares the office with) and Yidatong is Xu Zhou. He is also the major single shareholder of NQ Mobile with 22.9% stake in the company. So if you believe this article NQ Mobile and Yidatong are indeed related parties. And they are related via its major shareholder.

So Xu Rong indeed has no stake in NQ Mobile but she is not the real owner of Yidatong. The real owner of Yidatong has 22.9% stake in NQ. It is not a fraud by itself but if it is indeed true why NQ mobile did not disclose this Zhou Xu aka "The Ghost Founder"? To me this guy sounds like some type of dark cardinal...

[admin]

Unless we actually have proof of this in filings, the whole story actually sounds like a dark cardinal. Now, my Chinese isn't what it never has been, so is there any proof in that article?

Keep in mind that we've just seen how easy (and profitable) it is to make allegations, and when these are disproven, simply to shift to other allegations..