Q4 Could be a Miss

[dietberd]

Just did a rough calc:

Revenue: $62.5 (mid point of guidance)

Net interest income: $0.5 (lower than previous quarters due to term deposit transfer)

Taxes: $(0.5)m (average of last 3 quarters)

ADS: 66m (assume 3m increase q-o-q for employee options, maybe acquisitions, etc.)

Then to get to EPS of $0.32 per ADR (= consensus estimate), we would need operating income of $21.1m, i.e., a 33.8% operating margin. Q3 margin was 31.1%.

So, basically we need a margin expansion from 31% to 34% for NQ to get to consensus EPS. That is a long shot in my view.

Therefore, I am somewhat concerned that NQ could miss EPS consensus, unless they outperforme markedly on the revenue side (but normally, when they do so, they pre-announce, which they didn't for Q4).

Does not change the fundamental story for NQ but I would just believe that Q4 earnings target maybe too high.

Happy to hear your thoughts.

[Mountainbiker]

I have not done the math but given the SP of NQ is not reflecting its underlying value because we are still awaiting the audit. The guidance is more important than the past quarter where management has or had been distracted from doing the business fully.

[TrueValueSeeker]

NQ Expected Quarterly Earnings: 22.2% NQ Expected Quarterly Revenue: 109.2% Please refer to for detail: http://www.earningswhispers.com/stocks.asp?symbol=NQ

NQ Mobile could beat Q4 estimates, says Wedge Partners Wedge Partners believes NQ Mobile could beat Q4 Street estimates due to strong mobile gaming businesses, content distribution, enterprise, and progress in the American markets.

http://www.theflyonthewall.com/permalinks/entry.php/NQid1959965/NQ-NQ-Mobile-could-beat-Q-estimates-says-Wedge-Partners

There are legal fees related to ongoing auditing. But only part cost is realized in Q4 2013. The rest should be realized in Q1 of 2014. And there are several large deals which was done in Q4.

For example: "NQ Mobile Subsidiary NationSky to Deploy Enterprise Mobile Solution on More Than 500,000 devices for

The National Bureau of Statistics of PRC".

http://ir.nq.com/phoenix.zhtml?c=243152&p=irol-newsArticle&ID=1889470&highlight=

Plus company has annunced "NQ Mobile™ Forecasts Record Revenues for 2014

" http://ir.nq.com/phoenix.zhtml?c=243152&p=irol-newsArticle&ID=1878660&highlight=

[dietberd]

I have not done the math but given the SP of NQ is not reflecting its underlying value because we are still awaiting the audit. The guidance is more important than the past quarter where management has or had been distracted from doing the business fully.

Fully agree that (a) share price will likely be more driven by audit and (b) guidance is more important than past quarter. However, NQ does have a tendency to fall 10%+ on even slightly missing EPS estimates...let's see and hope for the best.

[Mountainbiker]

The last ER was shortly after the MW's hit job. The debate was around the share based compensation used for its acquired companies, but this is the norm, Look at FB, using $15 billion based on shares. So using shares is not big deal in the tech world.