Qihoo 360 expects big things from small acquisitions
Online search firm says it has no plans to try to compete with larger mainland rivals' approach
Qihoo 360 Technology is the mainland's fastest-growing online search service and undisputed No1 internet security provider, but its acquisition strategy remains small, conservative and focused on the world's biggest internet market.
Chairman and chief executive Zhou Hongyi said that approach will not change in the foreseeable future amid high-profile mergers and acquisitions by the mainland's three-largest internet companies - Tencent Holdings, Alibaba Group and Baidu.
"The big three are in a pretty aggressive mood in [terms of] marketing and branding. Given the limited resources we have, there is no way we can follow their strategy," Zhou said in a conference call with analysts on Wednesday evening.
"We are focused on … the small deals."
Beijing-based Qihoo's latest deal early this month was the purchase for an undisclosed amount of MediaV, a company that runs a precision advertising delivery platform that links specific advertisers to their targeted online desktop and mobile users.
Guotai Junan International analyst Ricky Lai said: "We expect Qihoo to improve its advertising revenue this year and next as its MediaV stake will allow it to explore greater marketing opportunities in mobile and desktop platforms."
In the first quarter, Qihoo had a record 479 million monthly active users of its desktop services and 538 million smartphone users of its mobile security product. The mainland had 618 million total internet users at the end of last year, with 500 million accessing the web on smartphones.
Alex Xu Zuoli, a co-chief financial officer at Qihoo, said its investments were focused on getting the right technology and teams of people to help "drive organic growth", not on receiving an instant boost in revenue.
He said the New York-listed firm's recent corporate acquisitions contributed as much as US$18 million to its first-quarter revenue of US$265.1 million. Net profit was US$49.1 million.
Qihoo's modest acquisition strategy belies its ability to get funds. It generated US$550 million last year in what was the largest convertible bond issue by a United States-traded Chinese company. In 2011, it raised US$175 million in what was then the biggest initial public offering by a Chinese firm in the US.
