Friday, March 18, 2011

Chinese IPOs Are Coming (Back)

By Eric Jackson
RealMoney Contributor

3/17/2011 12:15 PM EDT
Click here for more stories by Eric Jackson

After the successful U.S. market debuts of E-Commerce China Dangdang (DANG -commentary - Trade Now) and - commentary - Trade Now) in December, I expected to see many more Chinese companies file for initial public offerings in early 2011. Until a few days ago, though, there were none.

There are signs, however, that several new Chinese companies plan to come to market soon in the U.S. On Monday, Qihoo 360 Technologyfiled a prospectus with the Securities and Exchange Commission to hold an IPO. Qihoo says it is China's third-largest Internet company by user numbers (339 million). It makes antivirus computer security software and is the second-most-popular Internet browser in China after Microsoft's (MSFT - commentary - Trade Now) Internet Explorer. UBS and Citi are co-managing the offering.

Qihoo's revenue has exploded over the past two years, going from $17 million in 2008 to $58 million last year. Over this time, the business has completely remade itself. Previously, two-thirds of its revenue came from selling third-party security software, but now more than 93% of its revenue comes from selling its own software and Internet services, including online advertising.

Unlike Dangdang and Youku, Qihoo is solidly profitable. Its net margins were 15% last year. The company already has $61 million in cash on its balance sheet as of the end of December. In its filing, the company said it seeks to raise up to $200 million from this offering.


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