By Paul Goodwin, Editor of Cabot China & Emerging Market Report
From Cabot Wealth Advisory 2/6/12
As the popularity of mobile phones swelled in China back in the 2000s, so did the temptation on the part of hackers to start spamming and stealing data.
So, in accord with the law that says a big need will sooner or later spawn a solution, NetQin Mobile (NQ) sprang into existence in 2005. The company specializes in software for mobile devices that protects them from malware and data theft, and the recent results have been spectacular. The company booked its first profit in Q1 2010, and its three latest quarters have featured earnings growth of 600% (Q1 2011), 800% and 275% (Q3 2011). Revenues, meanwhile, have recorded seven quarters of triple-digit growth.
The company is adding data synchronization and cloud services to its roster, which should prove appealing to consumers.
But the real change that has attracted my attention is the company’s hiring of Omar Khan to serve as co-CEO with Chairman and CEO Dr. Henry Lin. Khan arrives from Citigroup, where he headed the company’s mobile development and delivery campaign. Before that, he was a key player at Samsung Mobile and Motorola. Khan is an MIT grad with “mover and shaker” written all over him.
Khan’s significance lies with NetQin’s global expansion program, which is targeting North and South America, Europe, Japan, Korea and India. All of these areas are heavy mobile usage zones, and the attractiveness of NetQin’s services could prove substantial. The company will be rebranding itself NQ Mobile for international purposes, just so consumers won’t have to suffer through puzzling out the Chinese name (which is pronounced Net Chin).
NQ came public in May, and quickly drooped from its IPO price of 11.50 to as low as 3 in early October. The action since then has been wild and wooly, but January brought a wave of high-volume buying that pushed the stock back to 8 before it calmed down and put in a tight two-week base at 7. The hiring news is igniting interest again.
NQ is still pretty speculative, trading at a thin 225,000 shares a day and showing some big volatility. But it’s also a big story, and one that could become attractive to many institutional investors once the stock cracks into double figures. I have it on my watch list, and I think it would pay you to give it a look-see.