- Apr 13, 2013
- 3,148
There have been numerous threads asking how Qihoo can supply a security product for free. By now (hopefully) all know that Qihoo uses their security applications as "loss leaders". By that is meant products which do not contribute to corporate profitability directly, but indirectly in that they increase the company's popularity and will lead people to the areas in which the company does derive revenue (Search, gaming, advertising, etc).
That being said, it is obvious that one can determine the success of this model by looking at earnings. Corporate profit (and Qihoo is a publicly traded company- QIHU on the New York Stock Exchange) should be directly proportional to the popularity (and quality) of the Loss Leader. A corollary to this would be the more money put to work in improving the product should lead to greater earnings.
And now to my concern- due to more reasons that can (and should) be discussed in this forum, Qihoo has had a hard time of it lately financially. Although still massively profitable (and sitting on almost 2 billion USD in cash), the rate of earnings acceleration has slowed, and this has impacted the stock price severely as can be seen here:
On March 5th Qihoo will release Corporate earnings for the fiscal quarter. If continued earnings erosion is seen I wonder how long it will be until less funds are allocated to the continued development and improvement of their Flagship products for the desktop (Qihoo TS and IS), shifting funds instead into the Andoid-based security in which Wall Street is more concerned.
Guess we'll soon see...
That being said, it is obvious that one can determine the success of this model by looking at earnings. Corporate profit (and Qihoo is a publicly traded company- QIHU on the New York Stock Exchange) should be directly proportional to the popularity (and quality) of the Loss Leader. A corollary to this would be the more money put to work in improving the product should lead to greater earnings.
And now to my concern- due to more reasons that can (and should) be discussed in this forum, Qihoo has had a hard time of it lately financially. Although still massively profitable (and sitting on almost 2 billion USD in cash), the rate of earnings acceleration has slowed, and this has impacted the stock price severely as can be seen here:
On March 5th Qihoo will release Corporate earnings for the fiscal quarter. If continued earnings erosion is seen I wonder how long it will be until less funds are allocated to the continued development and improvement of their Flagship products for the desktop (Qihoo TS and IS), shifting funds instead into the Andoid-based security in which Wall Street is more concerned.
Guess we'll soon see...