Tudou IPO: Is Tudou stock a buy?

Tudou’s IPO will face stiff competition in Youku.com (YOKU) and Baidu’s (BIDU) Qiyi.com, but the company’s convinced it will soon emerge as China’s largest online video site.

Despite some catty disagreements between Tudou Holdings’ CEO and his ex-wife, it appears the online video sharing site will soon IPO on U.S. stock exchanges.

The move has been delayed for several months for unspecified reasons even as rival site, Youku.com (NYSE:YOKU) enjoyed a spectacular IPO in December. YOKU shares have risen more than four times their IPO price of $12.80, and it will be interesting to see if investors greet Tudou shares with the same enthusiasm.

Traffic at the two online video sharing sites is nearly even. Alexa.com ranks Youku as the 10th-most-visited site in China, but Tudou’s not far behind in the No. 12 slot (as indicated by the red line below):

Source: Alexa.com

Still, there is no clear-cut winner in the market yet, and there probably won’t be anytime soon. The question is which company will differentiate itself first as China’s leading video site? Investors will get their chance to make their bets soon enough.

Tudou IPO: Key Facts and Figures

Profits? Not yet. Tudou lost $55 million last year, more than twice its loss in 2009. About a third of that loss was attributed to share-based compensation and “fees paid to third-party advertising agencies” (per the Wall Street Journal). Youku fared somewhat better with a 2010 net loss of $31.5 million. Throughout 2010, Tudou generated revenue of $43.3 million while Youku’s revenues were $59.6 million.

Ex-wife? That spat between Tudou CEO Gary Wang and his ex-wife could have serious implications for the company. Wang’s ex believes she’s entitled to half of his Tudou holdings. If that’s upheld in court, it could fundamentally shift the power structure for the company creating as much internal pressure as external pressure from rivals like Youku and Baidu’s (NASDAQ:BIDU) Qiyi.com. “Under PRC law and judicial practice, in principle, community property during marriage should be equally divided upon divorce, subject to any agreement reached by the divorced couple and other principles such as the impact on the continuous operation of the involved business,” Tudou writes in its recently-amended F1 filing.

The true “YouTube of China?” Youku relishes its nickname as the “YouTube of China,” but in fact both Tudou and Youku have diversified by offering pay-as-you-go, professionally produced content.

“Through building long-term partnerships with copyright holders and communicating with our media partners, Youku Premium is creating a whole new way for people to find and watch the content they want, when they want it,” Youku founder and CEO Victor Koo said in January.

Tudou has also branched out from user-generated video. Not only does the company license professionally-produced content for paying members, it also produces its own in-house premium content (including That Love Comes in November 2010 and last month’s debut of Utopia Office, which has been compared to the U.S. sci-fi show Fringe).

Still, user-generated content remains the heart and soul of the site with users uploading more than 40,000 video clips to Tudou last year. Total user registrations on the site climbed from 56.4 million in 2009 to 78.2 million by by the end of 2010.

Coming to a Chinese mobile near you. One of the brightest spots in Tudou’s business plan comes from a partnership with China Mobile – the PRC’s state-run mobile company that happens to operate the largest telecommunications network in the world. “We … began generating revenues in January 2010 from our mobile video services, which we provide primarily through a video channel with China Mobile, and we had an aggregate of approximately 15.8 million users with a total of approximately 27.7 million clip views in 2010,” Tudou writes.

China Mobile users can opt to pay a monthly subscription fee for the service. As the number of smartphones proliferates behind the Great Wall, expect mobile revenue to start contributing a lot more to Tudou’s bottom line. Still, it’s unclear how long it will take Tudou (or Youku for that matter) to start generating profits. In the meantime, a lot of investors seem to have their fingers crossed hoping for the best.

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Three reasons to buy Google stock now (NASDAQ:GOOG)

Social networking, not search, is the tech sector du jour, but there are signs that now might be the perfect time to make a big bet on Google.

While Twitter and Facebook shares skyrocket on private exchanges, stock in the world’s largest search engine Google Inc. (NASDAQ:GOOG) has flatlined. Google shares are down 2 percent since the start of the year. Over the past 12 months, the Dow Jones Industrial Average has out-performed Google by more than 10 percent. Social networking, it seems – not search – is the tech sector du jour.

Still, there are signs that now might be the perfect time to make a big bet on Google. Here are three reasons to consider adding the stock to your portfolio today:

1) Google Android eats the iPhone OS for breakfast. Android, Google’s free operating system for mobile phones, has started cannibalizing market share. The OS should be running on 49 percent of all smartphones worldwide sometime next year, according to research by Gartner Inc. (IT). Google gives away the OS to phone manufacturers, but the company gets a 30 percent cut of all paid apps that are purchased in the official Google app store – aka the Android Market. Apple’s App Store fueled the company’s record-breaking profits for several years now, and Google finally appears poised to catch up.

2) YouTube gets serious about bringing home the bacon. In a move aimed at taking market share from Netflix, Inc. (NASDAQ:NFLX), Google’s looking to turn YouTube into something like a Web-based television station. The company’s planning to invest as much as $100 million to finance professionally-produced original programming, according to MediaPost. As YouTube moves from computers to home televisions, the site’s ad revenue should start climbing – particularly if they can create and stream compelling original content.

3) Death to the iPad. Just as Google’s challenging the iPhone’s supremacy in smartphone app downloads, Android tablets could do the same to the iPad. A number of Android-powered tablets have already gone to market or will do so soon including the Motorola Xoom and the Samsung Galaxy. As more Android tablets land in consumers’ hands, app sales in the Android Market should start heating up. Google’s 30 percent rake on each app download will be like money in the bank.

Still not convinced Google’s a buy? Consider the fact that the company’s new CEO Larry Page seems to realize Google’s sagging. An internal memo that went out last week informed employees that their bonuses could rise or fall by 25 percent depending on the success of Google’s social strategy in 2011. Google realizes search isn’t the be-all end-all, and I expect that will mean good things for profits moving forward.

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JPMorgan tries to get in before Twitter IPO (JPM)

Wealthy investors will pay just about anything to invest in Facebook and Twitter. JPMorgan (JPM) and Goldman Sachs (GS) are finding ways to make it happen.

Shortly after Goldman Sachs Group, Inc. (NYSE:GS) announced it was selling $1 billion in Facebook shares to its foreign clients, news leaked that JPMorgan Chase & Co. (NYSE:JPM) was raising cash, too, for its so-called J.P. Morgan Digital Growth Fund LP. A few weeks later, the Digital Growth Fund is sitting on a treasure chest filled with $1.2 billion. And it’s looking to deploy that cash for stakes in late-stage, pre-IPO social media companies.

Twitter sits in the crosshairs. Negotiations are ongoing, but it sounds like JPM’s pushing for a minority stake in Twitter, which could value the site at $4.5 billion, according to the Financial Times.

Talk about a steep valuation. Debra Williamson of eMarketer estimates Twitter could generate just $150 million in revenue in 2011, according to the Wall Street Journal. Compare that to Facebook, which could generate as much as $4 billion.

With a valuation around 100 times the company’s revenues, JPM will probably lobby for Twitter to put itself up for sale. A partnership with a site like Google Inc. (NASDAQ:GOOG) could give Twitter the cash and time it needs to roll out a viable, long-term business model. And no one suggests such a thing will be easy.

While Twitter’s got 175 million “registered accounts,” eMarketer believes that only 16 million or so of those accounts are actually active. Still, it’s difficult to put a price-tag on a site that’s among the Top 10 most-visited Web sites in the world (per Alexa). It shares that honor with Web superpowers like Baidu.com, Youtube.com and Google.com.

Twitter’s reach makes it difficult to slap a pricetag on, even if the site’s “only” generating $150 million a year. The fact of the matter is, investors probably won’t care. The hottest companies in the tech sphere are all privately-owned. And we all want a piece of something the rest of the public can’t touch. Wealthy investors will pay just about anything for that honor, and JPMorgan and Goldman Sachs are finding ways to make it happen.

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