Large company spin-off listing: unpacking and not dismantling, difficult to read


Editor’s Note: This article is from the WeChat public number “Tech Planet” (ID: tech618), author Zhang Yating, 36 is authorized to release.It is a common practice for large companies to spin off important businesses and create opportunities for independent listing.However, Zhang Chaoyang, chairman of Sohu’s board of directors, should have some feelings.After the November earnings season, the independent Sogou Q3 earned 200 million in the quarter, while the parent company Sohu lost more than 100 million yuan.Baidu Chairman Li Yanhong should be able to breathe a sigh of relief.Although the spin-off of Baidu take-out, Baidu Finance and other businesses was unsuccessful, the split Iqiyi Q3 revenue growth was obvious, and there are profit expectations, which is expected to become Baidu’s new growth pole.The most successful spin-off should be Taobao and Alipay.Alibaba’s chairman and CEO Zhang Yong once revealed at Lakeside University in 2017: Alipay’s entire share, third-party share has been on par with Taobao… “points” are better than “no matter”, the market opportunities it brings,Absolutely not seen in the original scene.In 2019, the dividends of the second half of the Internet disappeared, and many new scene businesses required Red Sea competition and long-term investment, and the spin-off business became a new trend.As the saying goes, as long as the decision is right or wrong, splitting and not dismantling has become a difficult experience for big companies.The “skinny” camel is the oldest owner of Sogou than Ma Xiao, but Sohu has to hold the dog’s thigh.I don’t know if Zhang Chaoyang, who even wanted to sell Sogou, would feel what he thought so far.On November 4th, Sohu and Sogou both released the Q3 financial report for 2019. Sohu Q3 had a total revenue of 482 million US dollars, while Sogou’s total revenue was 315 million US dollars.Sogou brought 65% of total revenue to Sohu.Compared with the annual earnings report for 2017 and 2018, Sogou’s share of Sohu’s total revenue increased from 48% to 60%.Not only does Sogou’s share of Sohu’s revenue contribution has been increasing.What is even more embarrassing is that the net profit attributable to Sogou in the third quarter of 2019 was $36.6 million, a 53% increase over the same period of the previous year. Although Sohu’s loss narrowed year-on-year, it still lost $17 million.Sogou’s spin-off listing Zhang Chaoyang may not have expected that the Sogou that he once wanted to sell is gradually growing into a “cash cow.”In 2013, Zhang Chaoyang lost confidence in Sogou and did not want to spend huge sums of money to kill between 360 and Baidu.Zhou Hongyi threw out an olive branch to Zhang Chaoyang at the right time, and the conditions given by 360 were also very attractive. He offered $1.4 billion to acquire Sogou in the form of a share swap.If you sell Sogou to 360, the original words of Zhang Chaoyang are: “Smash the Sogou, nourish 360 and thrive.”From left to right: Ma Huateng, Wang Xiaochuan, and Zhang Chaoyang, Wang Xiaochuan, who regarded Sogou as a “pro-son”, was certainly not reconciled. He immediately met Ma Huateng to meet with Sogou, and joined the third party to prevent Sogou from being sold.Afraid to destroy the peace talks with 360, Zhang Chaoyang ordered Wang Xiaochuan to return to the company within one hour.Wang Xiaochuan can only talk to Ma Huateng in the last 40 minutes, convincing Tencent to buy Sogou.Fortunately for Wang Xiaochuan, Tencent took a strategic investment of 448 million US dollars and merged Soso business and QQ input method into Sogou.Looking at today’s situation, Wang Xiaochuan may be right.On November 9, 2017, Sogou was listed on the US stock market.Since then, with the help of WeChat, knowing and other exclusive search resources, and this year’s Sogou mobile phone input method DAU 460 million, some of the AI ​​smart hardware sales in the mainstream e-commerce platform sales and other outstanding performance, Sogou revenue began to pick up quickly.According to the financial report data, as of the end of 2018, Sogou maintained a record of 20 quarters of sustained profit. In contrast, Sohu, the giant of the portal era, has lost 13 consecutive quarters. The situation of the two companies is no longer the same.ratio.As of March 15, 2019, Tencent held 38.2% of the shares and had 52.2% of voting rights. It is the largest shareholder of Sogou.In addition, Sohu CEO Zhang Chaoyang and Sohu jointly held 39.2% of the shares, with 44.7% of voting rights.Zhang Chaoyang may be embarrassed now, but some decisions can’t be changed.A similar situation was staged between Sina and Weibo.Weibo also copied the counterattack of Sohu, surpassing Sina to let the sideline become the main business.It is also one of the three gateway giants that used to be brilliant. Ten years ago, Sina launched Sina Weibo on Twitter.In 2014, Sina Weibo officially changed its name to “Weibo” and soon went public in the US.From 2014 to 2017, it can be described as the highlight of Weibo. During the period, Weibo has expanded its content and user-sinking multi-dimensional layout, and also used a live broadcast and a second shot to catch live and short video outlets.After the listing of Weibo, it occupied a strong position in Sina’s revenue, and expanded by nearly 10% year by year.According to the financial report data, Tech Planet (WeChat ID: tech618) found that Weibo revenue accounted for 54% of Sina’s total revenue in FY2015, 64% in FY2016, 73% in FY2017, and 82% in FY18.According to the same flush data, Weibo’s net profit surpassed Sina in 2018. Therefore, some netizens ridiculed: “When Weibo acquired the parent company Sina?” The microblog that was spun off also introduced important shareholders.As of March 31, 2019, Ali held 30.2% of the shares and had 15.8% of voting rights, making it the second largest shareholder of Weibo.As of March 31, 2019, Sina holds 45.2% of Weibo and is the largest shareholder.According to the latest Q2 financial report data, Sina’s 2019 Q2 net profit was 51.4 million US dollars, while Weibo was as high as 156 million US dollars.Weibo’s market value of $12.3 billion is four times that of Sina’s $3 billion.Sina Weibo CEO Cao Guowei should be pleased with the growth of Weibo, but the price is also lost nearly one-third of the shares.Whether it is Sogou or Weibo, it was hoped that the sub-business would win more development space.Sogou is Zhang Chaoyang in order to compete against Baidu in the search field, and gave Wang Xiaochuan six people a world.Weibo is the extension of Cao Guowei’s social dream, and it is not easy to defeat Tencent Weibo and other products.But then again, the spin-off and selection of professional managers is critical to the success of Sogou and Weibo today.More importantly, the introduction of external strategic resources, Tencent’s to Sogou, and Ali’s to Weibo are all critical.The potential business of “cannot afford” is in the eyes of many people, and Baidu, who lost an era, is in a critical period of “solid foundation of mobile, winning the AI ​​era”.Cutting down on various costs and splitting the money-burning business has become an important means of returning blood in a short period of time.From 2017 to 2018, Baidu launched the “big spin-off campaign”: selling the take-away business, splitting the long video business, and splitting the financial business.The most important external demolition is the independent iQiyi, which was also finally listed in March 2018.Unlike other spin-off businesses that have disappeared, Iqiyi has set off a banner for Baidu’s revenue growth.According to statistics, Iqiyi’s revenue share has been large in recent years, ranging from 20% to 30%.According to Baidu’s latest Q3 financial report for 2019, the revenue was 28.1 billion yuan and the net profit was 4.4 billion yuan. Its revenue exceeded expectations mainly due to the steady growth of iQiyi, which brought 26% of revenue to Baidu.7.4 billion yuan.The steady growth of iQiyi’s revenue was mainly due to the increase in membership service income.At the end of the third quarter, the subscription membership reached 105.8 million, the subscription membership increased by 31% year-on-year, and the membership service revenue accounted for more than half of the first time, reaching 3.7 billion yuan.Baidu’s attitude towards iQiyi is love and resentment. Love drives its revenue growth. Aiqiyi and its members’ income continue to earn income. After the love of Qiyiyi, the profit-loss line is also beneficial to the market.The revaluation; grievances require a large amount of funds to continuously invest, and now Baidu’s content costs are mainly based on copyright fees, of which Iqiyi’s content costs account for a higher proportion.Aiqiyi CEO Gong Yu should be glad that Baidu has maintained sufficient investment in iQiyi in the process of falling market value.In 2018, Baidu’s content reached 7.3 billion yuan, a year-on-year increase of 96%. The main investment direction is the purchase of iQiyi copyright content.iQiyi also returns Baidu with high revenue growth.In fact, Baidu is on the market. In fact, Baidu is optimistic about the future prospects of iQiyi, especially in combination with the information flow and the scene of AI business (smart speaker and unmanned car big screen content source).However, in the pattern of competition between “You Ai Teng”, it is difficult for Baidu to transfuse Iqiyi without cost.It is no doubt a better choice to let Aiqiyi go public and promote the development by introducing shareholders and secondary market capital.In the same situation, there is a drip automatic driving business, and it is difficult to continue the blood transfusion automatic driving business.Judging from the listing of Uber, the leading player on the track, Drip will break even if it is listed.According to Uber Q3 earnings data released on November 4, Uber’s revenue was 3.813 billion US dollars, and the net loss was 1.162 billion US dollars. The loss was 18% higher than the 986 million US dollars in the same period last year.Just the only profitable windmill business has been launched, and the loss of Didi is even less optimistic.And compared to the long video platform profit period in the past two years, the profit of autopilot may not have a timetable, and even this business will take time.According to statistics, between September 2016 and March 2018, there were 37 crashes in the Uber auto-driving mode.Didi should also see the difficulty of this business, and it is reasonable to spin off the development of independent financing.Just as video content is crucial to Baidu, autopilot is also about the future.However, the dual reasons for the huge investment and the lack of coupling in the short-term business will also cause the company to split the potential business.The opposite example is the US Mission Cloud, the US group that started the war on the eve of the listing, unable to maintain the investment of an IT infrastructure system, but did not split it to allow its independent development. Today, Meituanyun has to become a product serving the internal business.The potential business is separated and independent, generally does not accept the entry of strategic investors, and maintains a controlling stake in the spin-off independent business, in order to lead its integration with the main business in the future.Expanding the day of independent development In the 2019 Wuzhen World Internet Conference, some media asked Netease CEO Ding Lei, Netease in addition to the game business, what is the second growth track?Ding Lei replied: “Education.” He also joked to say: “Give me 5000 yuan, let your child improve 2, are you willing?” October 25, Ding Lei’s educational dream – Netease has successfully listedThe issue price is $17, corresponding to a market value of $1.9 billion.Although Netease broke the first day of listing, it closed down 26.24%.However, NetEase’s listing is still very important, after all, it bears the burden of pulling Netease transformation.Netease has a listing on the NYSE. Netease has been established in 2006. It started to do search, but it was not smooth. The search business was terminated in 2013.The attempt to have a dictionary has been successful. In 2007, a dictionary was launched, and in 2011, users broke 100 million.In addition to the game, Ding Lei’s most favorite second growth pole was e-commerce.It should be said that with Netease’s $3 billion selling to Ali, Netease’s plans to send e-commerce to drive growth have failed.Today, Ding Lei is more optimistic about online education. In order to let NetEase have more room for development, Ding Lei has packaged all the educational products of Netease into Netease, and let it stand alone to strive for greater development space.However, the online education industry has a long time to realize and needs intensive cultivation. Netease has a loss that cannot be avoided.In the first half of this year, Netease had a net loss of 168 million yuan, a net loss of 209 million in 2018, and a net loss of 164 million in 2017.The independent party knows that “the rice and oil are expensive” and the online education collective stalls in 2019, Netease has a way to prove that it still has the potential to grow and develop, but also to fight with the offline training institutions such as New Oriental.This is also the risk that must be experienced in independent growth.Separating the independent business and letting it go through the storm independently is now Tencent’s strategy to deal with several key businesses of the new Wenchuang business unit.The specific operation methods of Tencent’s spin-off are similar. They are all acquisitions of industry players on the basis of their own business. They become independent companies after listing as head enterprises, and then compete with rivals such as Ali Entertainment and Netease Cloud Music.For example, the Reading Group was the result of the acquisition of Shanda Literature by Tencent Literature and the reorganization of many literary websites.Tencent Music Entertainment Group is based on QQ music and merged with China Music Group, which has two music products, Cool Dog and Cool.Through M&A integration, Yuewen Group and Tencent Music Entertainment Group have quickly become the head enterprises of the industry, and they have also obtained capital recognition after listing.At present, the market value of reading is 314 billion Hong Kong dollars, and the market value of Tencent Music Entertainment is 22.2 billion US dollars.Tencent’s next possible spin-off business should be e-sports.In January 2019, Tengxun and Tengqi Games, together with Tengjing Sports, established in Shanghai, became the first independent electric operation company in China, and took the first step in business integration.However, it is expected that Tencent E-sports will take time to establish a wholly-owned company and go public.The data shows that the total number of e-sports users in China will exceed 350 million, and the industry scale will reach 13.8 billion yuan.Although the number of users is large, but the total value of the industry is too small, it is difficult to tell a good listing story at this time.Demolition and non-demolition, similar problems are also staged in Baidu and its unmanned business, shell finding and free, 58 city and 58 to home and other large companies and sub-businesses / companies.Ma Yun, Ma Huateng and Ding Lei have made multiple choice questions, and now they are reserved for Li Yanhong, Zuo Hui and Yao Jinbo..