Youku Narrows Loss for First Quarter After IPO
Chinese video-sharing site's shares trading three times higher than IPO price.
BEIJING — Leading Chinese video sharing web site Youku reported a narrower loss for the fourth quarter of 2010 on Tuesday, less three months since its initial public offering on the New York Stock Exchange was the strongest share debut in the United States in five years.
Shares of the Beijing-based company opened at $12.80 on Dec. 8 and quickly more than tripled in value. On Tuesday, shares closed at $39.96 each, down 3.92 percent on the day and in the upper half of their trading range of $25.57-$50 since the IPO.
The company, led by U.S.-educated Chinese Victor Koo, reported a fourth-quarter net loss of 37.7 million yuan ($5.7 million), or 13 cents per American depositary share, compared with the larger loss of 46 million yuan, or about 33 cents a share, a year ago.
Calling itself an online television company, Youku raised nearly $203 million in its IPO, but has yet to turn a profit as the cost of bandwidth to host its huge collection of online offerings is expensive in China where the online population is the world’s largest at 457 million yet the bandwidth is state-controlled.
In January, Youku licensed the action thriller Inception from Warner Bros. to steam advertisement-free and on-demand to paying Chinese Web surfers for five yuan (75 cents) for each viewing. The company has not revealed the number of paying subscribers to this Youku Premium service.
Due to a gray regulatory environment perpetuated by media monitors in China’s one-party government, it's unclear if Youku and its leading online video space competitor, Tudou – which plans an IPO – will ever achieve profits by gaining control of all their content.
To prevent a repeat of past lawsuits over pirated videos and to keep the authorities happy, each of the companies employs an army of in-house censors to delete anything that might draw heat from copyright holders or offend state censors by touching on politically sensitive topics such as civil unrest, government corruption, sex or religion.
Youku's revenue in its first quarter as a publicly traded company more than doubled from Oct.-Dec., reaching 152.5 million yuan on the strength of advertising sales boosted by a gain in traffic and an expansion of its video library.
The company forecast revenue from Jan.-Mar. would more than double from a year ago and said its financial results would improve in the mid- to long-term as bandwidth costs shrink.