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 Tracking 1259 U.S. listed China Stocks and Counting...
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 Nq Mobile Inc. Am (NYSE:NQ)

Friday, October 25, 2013

From The Fly on the Wall

Piper questions at least three claims in NQ Mobile report

Piper Jaffray says "at least three" claims made in the Muddy Waters report calling NQ Mobile (NQ) a fraud are inconsistent with its own research and work done by a "reputable third-party." Piper said its survey found NQ Mobile's market share in China at 11%, not the 1.5% stated in the report. The firm adds that its channel checks indicate NQ's attach rates in U.S. retail stores are in the 15%-30% range, not the 2%-3% claimed by Muddy Waters. Piper has an Overweight rating on NQ Mobile, but admits the 81-page report from Muddy Waters will take "considerable time to digest." Shares of NQ dropped 47% yesterday to $12.09 after the short-selling research firm called the company a fraud.


Saturday, September 3, 2011
On March 15, 2011, a live program broadcast by China Central Television Station, or CCTV, the national television broadcasting network owned by China’s central government, in celebration of China’s consumer rights protection day, reported various complaints of certain alleged fraudulent practices by Beijing Feiliu, a company in which we hold a 33% equity interest, and by us. Such alleged fraudulent practices generally included, among other things, uploading malware or viruses to imported mobile phones to promote our mobile security products. We have interviewed our employees and reviewed our mobile security products, and from this investigation we have found no evidence of malware or the alleged fraudulent practices. We also understand that Beijing Feiliu has also interviewed their employees and examined or tested their mobile software products and did not find any evidence of malware or alleged fraudulent practices. Following the CCTV broadcast on March 15, 2011, many news articles in China and overseas reported on CCTV’s negative publicity about Beijing Feiliu and us with additional allegations, including claims that China’s Ministry of Industry and Information Technology, or MIIT, directed the three major telecom operators in China to cease offering our mobile security applications on their respective online application stores, and as a result the three major telecom operators have terminated their business relationships with us. Based on our internal investigation and due diligence inquiries with certain major telecom operators in China, we believe that the claims about their termination of our contractual arrangements are false. 21