Right now is probably a bad time to go public -- but that hasn't stopped Chinese second-place video site Tudou from filing its IPO ambitions with the SEC.
Correction: refiling. The company originally filed a registration statement last November, only to be held up by a divorce dispute between Tudou CEO Gary Wang and his now ex-wife. Wang's unnamed former spouse seeks ownership of part of the company, pursuant to Chinese community property laws for married couples.
In the amended registration statement refiled earlier this month, Wang's ex-wife now has a prominent section devoted to her as a risk factor. If successful, the company hopes to raise $143.5 million from the offering, in part to expand its bandwidth capacity and acquire content.
Currently, Youku.com (NYSE: YOKU) lays claim to China's largest online-video market share in terms of revenue. Although Youku's revenue growth is through the roof, it still can't make any money. China's No. 3 spot goes to none other than Sohu.com (Nasdaq: SOHU), which is actually generating free cash flow -- but Sohu has other businesses beyond online video.
Tudou's net loss has actually been widening by a lot, despite its 221% revenue increase last year. Revenue jumped from 89.1 million RMB to 286.3 million RMB, measured in local currency. The company's net loss expanded from 144.8 million RMB to an astonishing 347.4 million RMB.
Who wants some?
With numbers like that, it's a little hard to imagine who might want a piece of Tudou. Enter Baidu.com (Nasdaq: BIDU)! The latest rumblings in the rumor mill suggest that the company may be in talks to acquire Tudou on favorable terms. Baidu's Qiyi online video service could benefit from a Tudou acquisition, and the company has already expressed its desire to expand and innovate.
I'm not particularly impressed with Tudou's results, and I'd never consider buying shares. But in the hands of the right owner, the company could work. After all, you may remember when Google (Nasdaq: GOOG) bought unprofitable YouTube and made that acquisition perform. If Tudou somehow goes the IPO route, don't get caught up in the Chinese-Internet company hype. This one is probably better in the hands of another Chinese-Internet company, rather than your own.
