Qihoo 360 Technology (QIHU, Financial) reported strong growth last quarter that came above the analysts’ consensus. This was driven by solid performance in its online advertising and internet game sales. Moreover, the management has projected a better than expected guidance for the fourth quarter. Interestingly, the company has not only surpassed the analyst’s expectations but even exceeded its own estimates on various metrics. Although the stock is currently at its 52-week low but we have some strong numbers to back on and a promising outlook ahead.
Strong expectations for the future
Qihoo’s high expectations can be justified by its strategic moves to strengthen its business. During the quarter, it completed the integration of Media V, which will bolster its tepid advertising performance. Media V has vast experience in digital advertising platform and data analysis along with a huge advertiser base. While talking to Global times, Qihoo’s Senior Vice President Yu Guangdong said “For Qihoo 360, cooperation with Media V could improve our advertising business and build more ad connections so as to upgrade our ability to generate more revenue through advertising.”
Apart from acquisitions, Qihoo also reported strong organic growth as it continues to monetize its mobile app store through both advertising and mobile games. This is a result of its rigorous efforts of putting additional resource in mobile search related product development, brand building and channel expansion. With around 25% of its total search traffic coming from mobile, the management anticipates better prospects in the coming months.
While its peers are aggressively proceeding with the acquisition of various assets to drive growth, Qihoo has a more steady approach, which involves prioritizing its resources and allocating them optimally to get maximum output. The integration of Media V is a good example of this approach and going forward the management believes that it will further support its efforts in building a tier one PC and mobile Internet platform in China.
In addition, the company announced its plans to establish a global fund of $60 million to invest in internet of things (IoT) calling it “360 Capital—IoT Fund.” The main focus of this investment will be in three countries namely China, the U.S and Israel. In fact, the company has shown keen interest in various Israeli startups over the past years and this is yet another step in that direction . The management believes that these investments will yield strong results in the days ahead.
Conclusion
Qihoo had a strong performance during the quarter, but its stock has tanked considerably in the past one year and is currently at its 52-week low. This has provided sufficient upside room for the stock in the coming months. Although many analyst are not very optimistic about Qihoo on account of the weakness in its mobile search business, but this correction in its share price has caught everyone attention making it an attractive investment opportunity .
