MocoNews Contributor Jeremy Laws was formerly SVP of Universal Pictures Digital Platforms, where he headed up the film studio’s mobile initiatives. These days he is more likely found blogging at Cabana Mobile.
I’m keeping a close eye on major Chinese mobile content service provider KongZhong in anticipation of their second-quarter earnings conference call scheduled for Aug 10.
The company is ostensibly on fire, having experienced five consecutive quarters of solid revenue growth with plenty of cash in the bank and its stock trading up 136 percent for the quarter (including a new 52-week high last week). Investors clearly believe that KongZhong is one of the best-positioned companies to take advantage of the amazing growth potential of the Chinese mobile content market as carriers roll out 3G. However, the ability to realize that potential has everything to do with its capacity to stay in the good graces of notoriously skittish operators and regulatory authorities.
For that reason, I was very interested to read a rumor posted on the website of Chinese telco consulting firm Marbridge (attributed to internet portal Netease) claiming that KongZhong has been aggressively buying stored value from TD-SCDMA (Chinese 3G standard) test accounts in the interest of “self hitting.” That basically means buying its own products with credits subsidized by China Mobile to arbitrage the spread with its generous 85 percent revenue share, or in the interest of manipulating the ranking of its content on the carrier deck.
That speculation, coupled with the company’s sudden announcement last week that President, CTO and Co-Founder Nick Yang had resigned and Morningstar’s abrupt announcement yesterday that it was going to drop coverage of KongZhong have got me super interested in the Aug. 10 earnings call.
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