Recently a client project on the busy line, has no time to understand the industry dynamics. Morning, friends asked whether the understanding of large M & A Focus SINA things, really I shouted accident. Really do not understand, slightly understand, it was found that many people think that M & A industry is a nice piece of something. Special also see Zhou Hongyi also said he was optimistic about the merger.
I think the main positive about this merger in the industry there are several important major reasons, first, SINA by merging to expand their advertising business. Second, the combination of the two common winter benefit. These “optimistic” the message has some truth, but I think it could identify still years away.
In the M & A projects, I always think that should be worried about the development of SINA.
One ad from the expansion of business scope, the surface is indeed so. But this simple surface to expand, the actual business of the 1 +1> 2 integrated development to practical support. SINA Internet advertising business and public outdoor screen business indeed to the same group as the core brand advertisers. But the essence of the form is completely different.
SINA is the core news content and other resources, to attract traffic, build brand, reputation formation, and then get the value of their ads. The Focus is a pure resource-screen expansion of production of pure media environment. In the operation and development have different ideas of what is needed are different.
Integration of the two would like to send forces to find the point to take some time.
Another disadvantage is that although the percentage of the audience have had a strong record of stock market glory. But now the situation is not optimistic about the stock market. Jiang believes that the stock market has seriously underestimated the value of the masses, but I think, in fact, stock prices tend to the masses, in a reasonable space.
LCD advertising resources have been relying on the growing point and starting to promote growth, such an approach in the long ago lost its practical effect, and subsequently, Jiang boldly through the genius of the wrist shot, to support the acquisition of high Stock. Related resources can be acquired when fewer and fewer cases
Jiang also hoped that through the company’s cash flow sufficient mass industry to continue to affect stock prices. Then the final can be said to be desperate in this attempt was. Ultimately lead to the failure of Focus lost the possibility of sustained high growth. This tends to lead to prices began to fall.
Focus all resources from the point of view, it is precisely part of the growth of advertising space for building the smallest. In the face of economic crisis, shrinking advertising budgets in the advertiser’s case,
The greatest risk. Focus with SINA earned cheap buy cheap, as it is Focus lost a big burden. The future, building a drop in advertising and even some loss is possible. Once the expansion of such resources encountered type of media environment down, cash flow shortage. Then the media environment may reduce, resulting in diminished its value. If forced to inject liquidity into the maintenance of these buildings the right to use advertising, it might lead to greater losses, it will be a dilemma of mud pie.
There is also a very strange thing is that after the merger, in fact, sub-captains to become the major shareholder of SINA. I still think that Focus is an enclosure model more business ideas, more like a marketing-led company absolutely. The SINA is the core of enterprise management. Philosophy in the event of conflict, it may bring unpredictable adverse effects.
In short, the merger did not first make SINA bring any of its major competitors operating on the edge. Second, the operation will also increase the risk of SINA. Chess is really a very dangerous move.