In the business of disclosing security vulnerabilities etc, the finder USUALLY contacts the involved companies w/o raising the flag in public. Finder may receive a finders fee. The behavior Kochava exposes with the public disclosure, breaches the unwritten rules in this field. So called 'Zero day' disclosures are rare and using the yellow press even more so :) Who knows how they get compensated for it. They surely got their dime here IMHO. Simply unethical in this business.
CMCM made three PR regarding the orchestrated and algo lead short attack
And guess who has outed themselves? Prescience Point showed up on 2018-11-28
1)
We predicted last year that $CMCM would face questions over what we believe are its fake "revenues" and significant ad fraud practices. Our report here: https://t.co/ZvWjTLNZf9
"This is theft — no other way to say it" @kochavamobile tells @BuzzfeedNews about $CMCM. We agree - @CheetahMobile has many questions to answer for what we find to be suspect financial reporting and ad fraud practices https://t.co/ugFifI0WZ6
On 11/27 the SP wasn't even able to get above the 5min 8ema on around 10M traded shares, about 143M OS (reduced since 3Q18). On 11/28 they seemingly enabled their algo around 10am after the gap-up.
The company lost more than 1/3 of their MCAP on 11/27 and only little has been recovered. On 11/28 C was $6.64, a 17% loss compared to $8 previous support. But I assume they started way earlier around $10, so factual loss on 11/28 is still 33.6% and on 11/27 was even around 50%!
Please note from CMCM's 2017-10-27 short refutation
Allegations Regarding OrionStar Investment: The allegations claim that the OrionStar investment is a vehicle for the misappropriation of shareholder capital. Because the transaction is considered a related-party transaction, the Company has followed strict procedures to ensure the fairness of the investment. Each of the Company and Kingsoft Corporation, the parent company of Cheetah Mobile, engaged an independent appraiser to evaluate the transaction and the audit committee of the Company has approved the transaction as well. Several external investors also invested in OrionStar at the same valuation.
CMCM started to plan their adware mobile-phone helper-all exit strategy in early 2017, knowing that this revenue source will no t match their growth trajectory and is declining.
CMCM entered the AI driven application market w/ and w/o hardware involved.
1Q18 CC:
Cheetah GreetBot, which is a full-sized reception robot developed by Beijing OrionStar. Cheetah GreetBot can recognize visitors when they arrive, communicate with them, help them find their contacts and accompanying them to meeting rooms With Beijing OrionStar's end-to-end knowledge of robot production, they can tailor maker -- tailor make Cheetah GreetBot for customers such as companies, banks and hospitals at a compelling price. Beijing OrionStar had made significant progress on Cheetah GreetBot production testing since its launch. If they execute according to plans, we expect to start delivering Cheetah GreetBot to customer in Q4 2018.
Q&A My first question about the margin trend for Q2 and 2018 due to our investment in the robotics business. And my second question is about our competitive strengths and our differentiations in the robotics business versus our peers.
A: First of all, for the OrionStar, Beijing OrionStar, this is a -- we are not controlling the company right now. We only have a warrant to acquire controlling position. So at this moment, it was (inaudible) possible right now (inaudible) alternative measurements, so we have not recognized the cost and expenses of Beijing OrionStar yet. So just on our book is our costs. The expense and costs will not impact the bottom line of Cheetah Mobile. In term of the margin, we expect that the gross margin will probably be slightly lower because the top line was reduced.
Timeline as planned was to start selling new products in 4Q18, but company is now ahead of their plan:
hope they buy the remaining portion of OrionStar, for which they do have an option.
Bottom line, company is moving away from the adware biz as planned long time ago anyways and their AI driven apps + tools are well received and already selling.
Such a transition is never easy, but seemingly CMCM managed it best so far - not being damaged by quarterly negatives. The shift and R&D being paid by the exiting adware revenues.
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