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NQ Mobile: This Mobile-Focused Company Is a Good Long-Term Pick

August 22, 2014 | About:
rusticnomad

rusticnomad

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Chinese mobile company NQ Mobile (NQ) released mixed results. The results for the fourth quarter were not so impressive; however, the company saw growth in revenue. But the overall quarter for NQ Mobile was weak. It is now focusing on a strong comeback. NQ is focused on profitability all over its segments. As a result, it has aggressive strategies in line. Let us find out how NQ Mobile is trying to stage a comeback.

A look at the performance

NQ Mobile had a soft end to the fiscal 2013. The Chinese mobile company posted disappointing fourth-quarter results. NQ Mobile reported earnings at $0.22 per share, disappointing the Street’s estimates of $0.32 per share. The company saw a handsome rise in the sales by 126% to $67.9 million, topping consensus forecasts of $62.8 million. NQ Mobile is focused on expansion and is expecting an increase in the revenue in the future.

However, NQ is seeing weakness in its business. It is focusing on various aspects to improve its profitability. It is looking forward to gaining market share, having added 10 new significant partnerships and business deals from some of the giants such as Sprint, Samsung, Ubisoft, China Mobile, Huawei, The National Bureau of Statistics in China and Telkomsel. Also, the company has introduced many new products in the market and is expecting to set off the weaknesses that it is seeing in its other segments. With these aggressive and innovative moves, NQ Mobile is confident of a better future.

Monetization moves

NQ Mobile is geared up to monetize its user base through various moves. The company has the world's leading mobile user acquisition engines. Focusing on this, NQ Mobile is introducing new products in the market. With the growing customer base, NQ Mobile is searching new opportunities for profitability as a result of changing user behavior and business environment.

NQ Mobile has great expectations from China. NQ Mobile has cracked many deals in China and is expecting long-term gains. For example, the company has deployed and is supporting more than 700,000 seats with the National Bureau of Statistics in China, and it expects this deal to grow in the future. With this deal, NQ Mobile is seeing mobility benefits in the Chinese market.

The healthcare sector in China should also prove to be a growth driver for NQ Mobile. Studies have revealed that the healthcare segment is moving on well in China, contributing 18% to the GDP. With the tremendous healthcare growth in China, the need for mobile application and deployment also exists. NQ Mobile is focusing on West China Hospital to develop for it a dedicated health platform.

Working with a West China hospital, NQ Mobile is giving stiff competition to some of the giants such as IBM and Hitachi. The company cracked a deal of 30,000 devices. In this new fiscal year, NQ Mobile is planning to go ahead with the same strategies that it started in 2013. It is continuing investments in R&D to explore more profitable opportunities. Secondly, the mobile company will be focusing on building credibility and scale in executing against its platform strategy. Moving ahead, NQ Mobile will be focusing on increasing its engagement with users to broaden the monetization opportunity.

Despite NQ Mobile’s woes, the company expects its sales to rise in the future. It is seeing growing traction in the retail sector. NQ Mobile is expecting a 20% increase in the retail sector in the future, which is quite impressive for the company.

Conclusion

Looking at the ratios, as the company is in a loss, there no trailing P/E. But the forward P/E indicates that the company will get better in the future. Also, in the long run, the company is expected to grow at a handsome rate of 40%. So, as of now, investors looking for long-term gains can consider NQ Mobile.


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