After watching its stock price go sideways during its first
two years on the NYSE, China's NQ Mobile seems to have finally
caught Wall Street's attention.
The company has seen its shares spike in recent weeks, thanks
to events that have underscored its growth potential.
) provides mobile security and productivity software as well as
mobile gaming and enterprise solution products.
Its NQ Mobile Security product is designed to protect users'
mobile voice and data from malicious software, data theft and
Another product, NQ Mobile Vault, ensures users' digital
privacy through active control and on-device encryption of
content and communication.
The company also offers mobile games, Interest-based community
applications, advertising services and enterprise mobility
NQ's stock price touched a record high of 15.08 Tuesday,
continuing a run that has seen shares double in a month.
For that, NQ can thank a greater awareness among investors of
its growth potential, says Frederick Ziegel, analyst at Topeka
"NQ is really accelerating its partnerships and geographies
across all business units, and they've really broadened their
addressable market," Ziegel said. "What you've seen over the last
three to four weeks is an extremely undervalued company become
One positive recent development was NQ's July 15 announcement
that it was raising its second-quarter revenue guidance to above
$40 million from its prior forecast of $38.5 million to $38.8
million. Last year it reported Q2 revenue of $20 million.
The company has delivered eight straight quarters of
triple-digit sales growth since its shares debuted on the NYSE in
NQ is due to report Q2 results during the week of Aug. 12-16.
Analysts polled by Thomson Reuters expect earnings of 20 cents a
share, up from 14 cents the previous year.
The same day it raised its revenue guidance, NQ entered into a
share purchase agreement to buy the remaining 45% stake in its
Beijing NationSky Network Technology unit and fully consolidate
the two businesses. The deal is expected to be immediately
accretive to earnings.
NationSky provides mobile service to more than 1,000
enterprises in China, including in managed mobile, mobile device
) and mobile Software as a Service (SaaS).
NQ announced its original investment in NationSky last year as
a way to address the enterprise MDM market. Since then, NQ has
integrated mobile device applications with mobile device security
to differentiate itself from rivals, analyst Ziegel says.
In a statement, NQ Co-Chief Executive Omar Khan said NationSky
is "well positioned to leverage the explosive global growth in
enterprise mobility solutions."
He added: "Mobility trends are changing the way enterprises
work, (and) NationSky has successfully positioned itself in
targeting the enterprise mobility market. The NationSky business
has exceeded our expectations."
NQ shares got another boost on July 23, when the company's
Beijing Feiliu Jiutian Technology subsidiary signed an agreement
), owner of China's most popular search engine.
Under terms of that deal, Baidu's Duoku website will become
the exclusive publisher of a Beijing Feiliu-developed mobile
game, "The Martial Arts Champion," on the Android platform in
FL Mobile has been the exclusive publisher of the game on the
iOS platform since February. Since then, the game has ranked
among the top 30 grossing games on iOS and reached a ranking in
the top 8 at one point.
And on July 30, Beijing Feiliu announced it will be the game
content provider forChina Mobile 's (
) Game Center.
NQ is no stranger to partnerships with high-profile clients.
In March, it said it will provide its products to subscribers
ofAmerica Movil (
), the Mexican wireless giant that ranks as Latin America's
biggest telecom group in terms of equity subscribers.
Mobile With Movil
Under terms of that deal, America Movil will offer NQ Mobile's
products for security, privacy and family protection to its 262
million subscribers in Latin America.
NQ has also announced deals withU.S. Cellular (USM) and
retailers ofVerizon Communications (VZ) products, among other
One benefit of these partnerships, beyond the extra business
they bring in, is they expand NQ's geographic footprint.
Prior to 2012, most of NQ's international business came from
Southeast Asia and Eastern Europe, Ziegel says.
"But beginning in 2012 they launched a focus on developing
partnerships in North America, Central/South America and Western
Europe," he said. "The developed countries are still a reasonably
small part of the business, so they have that to look forward to
in terms of growth."
International markets accounted for 43% of NQ's sales in 2011.
The company's website did not provide a breakdown for 2012.
During this year's first quarter, international markets
accounted for 56% of total consumer mobile security revenue.
Overall revenue for the quarter more than doubled from the
prior year to $33 million, slightly above consensus analyst
views. Earnings gained 46% to 19 cents a share, in line with