Topeka note

[admin]

Summary

As we await the filing of the 20-F and the release of 1Q14 and 2Q14 results, our estimates

and, therefore, price target must remain under review. In the interim, however, we note NQ

surpassed its 1Q guidance and raised its guidance for 2Q. We refer investors to other recent

developments worth noting.

Key Points

• Revenues Continue To Outpace Estimates: We note that NQ management, in a recent

interview, commented that $500mm in revenues in 2015 is a possibility. The TCM estimate

presently stands at $428mm. We also know 1Q14 surpassed guidance of $75-$76mm. TCM

estimate $75mm. We also know 2Q14 guidance was raised to $83-$84mm. TCM estimate

$78mm.

• Minority Interest Sale of NationSky: NQ announced the proposed sale of 3.4% to Beijing

Guorun Ventures for $18mm and a 2.3% sale to other investors for $12mm, valuing

NationSky (mobile device management) at $530mm. Investors have redemption rights if

an IPO or buyer for all/some of NS at a minimum value of $500mm is not completed within

24 months of the closing of the transaction. As of this date, the transaction has not closed.

• Minority Interest Sale of FL Mobile: NQ announced the proposed sale of 5.88% to Bison

Capital for $25mm, valuing FL Mobile (mobile gaming) at $425mm. Again, the investors

have redemption rights if an IPO is not completed within 12 months of the closing of the

transaction. As of this date, the transaction has not closed.

• Receives Non-Binding Proposal To Buy NQ for $9.80 By Bison Capital:. We note this offer

values NQ at roughly $655mm while the two aforementioned pending transactions value

only a small part of NQ at $925mm.

• Signs New Partnerships With China Unicom (0762.HK-$12.34:NR), China Telecom

(0728.HK-$4.79:NR), A Wirelsss And Brightstar.

Valuation

Our $33.00 target price assumes a multiple that is 50% of the projected 40% long-term growth

rate applied to our current 2015 estimate of $1.66. Our estimates and price target are under

review pending the filing of the 20-F and 1Q and 2Q 2014 earnings.

[BillNeuburger]

Thanks.