Reinventing the Millennium.

Chapter 1414 Financial Report (4k)

Yike's much-anticipated financial report finally came, and once it was released, it once again supported the stock price, which did not surprise analysts.

For the entire fiscal year 2014, Yike's net revenue was US$1338 billion, an increase of 2013% over 40.2. Its operating profit was US$401.4 billion, an increase of 35.5%. Its net profit was US$299.4 billion, an increase of 38.7%, both of which were record highs.

Among them, Yike’s mobile phone products contributed 69.9% of the revenue, tablet products contributed 15.3%, notebooks contributed 8.7%, and mobile ecology and technical service revenue contributed 6.1%.

In terms of geographical distribution, the Americas market accounted for 32% of revenue, Europe accounted for 27.2%, China accounted for 31%, Japan accounted for 6.3%, and the remaining regions accounted for 3.5%.

Compared with last year, Europe has dropped from the first market to third, China has grown from third to second, and America has grown from second to first.

According to Yike's financial report, this situation was partly due to "the weakness of the euro offsetting the increased positive factors in the market."

The same factor also applies to the Japanese market. "Net revenue and unit product sales in the Japanese market both increased year-on-year, and net revenue from software and technical services also increased. The Mars 8.8 series products launched last year were widely loved by Japanese consumers, but these positive factors were partially offset by the weakness of the yen against the US dollar."

Having said that, the difference in the three major markets is not large, but the Americas market is indeed currently Yike's largest market in the world, and this status has received extra attention this year.

Many data in YiKe's financial report were interpreted in depth. In addition to various types of revenue, growth rate, proportion, etc., there was another item that was also widely reported. YiKe's R&D expenditure in 2014 increased significantly to US$90.3 billion, far exceeding the US$68 billion in the previous fiscal year.

Major media outlets have been providing endless interpretations of Yike’s financial report.

However, just the next day, Yike immediately released its 2015 Q1 quarterly report, which broke the previously released Q4 quarterly report record after setting a new high in financial report.

Yike’s previous Q4 quarterly report has been praised wildly by many media, and this time Q1 still grew on a quarter-on-quarter basis compared with Q4.

Yike's net revenue in the first quarter of this year was US$1 billion, a 524.32% increase from the previous quarter and a 13% increase from the previous year. Its operating profit was US$54.6 billion, a 184.19% increase from the previous quarter and a 22.05% increase from the previous year. Its net profit was US$69.46 billion, a 136.3% increase from the previous quarter and a 21% increase from the previous year.

The cold numbers from the Q1 quarterly report almost instantly ignited the media and investors, triggering another rise in stock prices.

Yi Ke used the word "growth", while most media used the more accurate description "skyrocketing" after quoting it.

Needless to say, compared with last year's Q1, the main sales force in this year's Q1 is the Mars 8.8 series, which won the global crown. It is undoubtedly more competitive than last year's products, but this year-on-year growth is quite impressive.

Yike's Q4 includes the traditional big promotions in the US and Europe during the natural year, such as Thanksgiving, Black Friday, and Christmas. It is always prone to growth in various areas. Therefore, generally speaking, it is the most interesting quarterly financial report, while Q1 is often the dullest quarter of the year.

But this rule has failed to apply to Yike's performance in two consecutive quarters.

In the fourth quarter of last year, Yike sold 4 million Mars and Selfy units, 8128.6 million Galaxy tablets, and 1368 million Y-Book notebooks. In the first quarter of this year, the sales of Selfy, Galaxy, and Y-Book all declined, but the Mars 728.4 series increased further to 1 million units.

The figures from the annual report and quarterly report were compared together. In 2014, mobile phones accounted for 69.9% of the total revenue. However, in the first quarter of 2015, due to the amazing performance of the Mars 1 series, the proportion of mobile phone revenue increased to 8.8%.

It can be said that, except for the performance of the Mars 8.8 series, the sales of other consumer electronic products are in line with the natural decline curve, and perhaps the performance driven by the decline is also excellent, but Mars is rising against the trend. The ultimate reason for this performance is that... competitors are unable to come up with matching products.

Taiwan News only announced the mass production of 20nm on the 16th of last month, but this process has not yet been adopted by Apple and Samsung. There is still no news about Samsung's own manufacturing process, and it is expected to be put into production in the second half of the year at the earliest.

Therefore, in the first three months of 2015, Yike's mobile phones are still the world's unique and most powerful products.

Yike's stock price has fluctuated due to various factors, with both negative and positive factors intertwined, but these have not affected the global shipments of its products at all.

At the same time, another detail was noticed by the media. Yike disclosed the revenue of Yike Cloud business for the first time in Q1 this time, and announced that it had reached 17.3 billion US dollars.

In the fourth quarter of last year, Yike usually included its cloud business in the "other income" of US$4 billion, while Wall Street analysts generally believed that the upper limit of this business was US$41.5 billion.

This time, Yike Cloud's $17.3 billion is astonishing. Even according to previous assessments, the Q1 growth rate is at least 73%. The development speed is amazing. Its business areas are Europe and Asia, and it does not involve the United States.

The Wall Street Journal conducted in-depth coverage based on Yike's annual and quarterly reports.

"In the past two days, Yi Ke has given a dazzling answer."

"A week ago, Samsung released its financial report, and its mobile phone sales hit a number of new lows. Apple's previous financial report also showed a significant decline in mobile phone sales. At that time, everyone had guessed the answer: the smartphone market would only be eaten up by Yike."

“However, Yi Ke’s performance still exceeded everyone’s expectations.”

"Many of its financial data hit record highs, such as diluted earnings per share of $3.64, a 20.5% increase from the previous month, significantly better than historical performance and exceeding the expectations of Wall Street analysts."

"We interviewed senior executives from several investment institutions, and they all praised Yike's incredible growth. For example, Nick, president of New England Investment and Retirement Group, said, 'Consumers are always willing to pay for quality products, and Mars is a recognized quality product. In fact, people have almost no other choice.'"

"Inspired by the performance of Yike phones, Apple and Samsung have already seen price drops at the beginning of this year. After all, for the same price, consumers always prefer products with significantly better performance."

"Yi Ke's products can often stimulate users' desire to change their phones. According to surveys by several well-known data agencies, the desire to change phones among Apple users is as high as 63%, and among Samsung users... it is 91%."

"We have to say that Yi Ke is destroying the Samsung camp."

"Such a strong performance once again boosted the rise of Yike's stock price, and it was no surprise that some institutions that were quietly testing the waters for short selling immediately stopped their losses."

"However, Yike's stock price has fluctuated repeatedly in the past two months, and it still needs to solve its thorny external problems as soon as possible."

"As Yike itself described in its financial report, 'the company believes that revenue will face downward pressure this year due to a variety of factors, including the slowdown in the global smartphone market, intensified competition, shortened product life cycles, and potential increases in external costs for manufacturing services.'"

"It is said that Yike is negotiating with GlobalFoundries to acquire a stake in the company, which is undoubtedly a good opportunity to solve the "potential increase in external costs." However, since Yike's negotiations with Intel broke down before, it is still unknown whether the cooperation between it and GlobalFoundries can be achieved."

“Once the negotiations between Yike and GlobalFoundries break down again, there won’t be many options left on its list of potential partners.”

“Yi Ke is aware of the problem and is working on solving it.”

"The market remains optimistic about Yike's future. Several rating agencies have re-adjusted Yike's stock to 'buy' after adjusting it to 'hold' or 'reduce' due to volatility. At the same time, the stocks of several companies that have related transactions with Yike have benefited from the increase."

“No one will give up a market as important as the United States, and no market will reject a brand like Yike.”

“I hope Yike can continue to bring better products to consumers.”

The Wall Street Journal's report on Yico was quite meaningful at the end. Unlike its previous euphemism, this time, as Yico's financial report came out, many executives made appeals.

But their appeal was to the Yike board of directors.

"YiKe's board of directors must adopt a more transparent approach to the problem and cannot allow the stock price to fluctuate or allow the volatility to cause losses to investors."

"The board of directors of Yike must use more correct methods to actively deal with the problem."

As for why Fang Zhuo was not mentioned...

Perhaps this has something to do with a sudden wave of public opinion.

Just when Yi Ke released its financial report and its stock price started to rise again, many conservative media started to question Fang Zhuo and Yi Ke. One important question was the dispute between Yi Ke and investment institutions many years ago.

The industry calls this dispute the "Yi Ke Short Squeeze Case," and it has become quite famous, forcing the SEC to issue new regulations.

The short squeeze case at that time made countless institutions change color. After the short sellers were defeated, some institutions and investors filed a lawsuit against Fang Zhuo, claiming that he "manipulated the market" and "secretly built positions" and was suspected of violating the 10b-5 anti-fraud provisions of the Securities Act.

Later, large institutions such as Goldman Sachs and Bridgewater that participated in the lawsuit withdrew their lawsuits one after another, but there were still some small institutions that were unwilling to give in.

The ones who stood up this time were the small institutions and investors who had already lost the case. They united together in the hope of re-examining Fang Zhuo’s past illegal and irregular behaviors, including the insider trading involved by the MIGA fund.

Since its founding in 1955, National Review has been one of the iconic publications of the conservative movement and a public opinion platform for conservatives. Its topics have always covered a wide range of content, including politics, economics, domestic and foreign policies, etc.

Its latest issue of the magazine published a photo of Yi Ke and Fang Zhuo on the cover for the first time. Half of the cover was the faint words of the financial report, and the other half was a dark-toned white house background, with Fang Zhuo in the center with an obscure back.

"YiKe has become a behemoth without any supervision."

"But perhaps we should explore whether there are more disturbing secrets behind it."

"According to investigations in recent years, as Yike develops in the US market, its influence is also expanding, both economically and politically."

"Recently, there have been accusers from investment institutions, such as Abate, who claimed that he was a victim of illegal operations by Yike and MIGA Fund and went bankrupt in a shocking financial showdown. In that famous short squeeze case, MIGA Fund, which played an important role, was found to have participated in the disposal of non-performing assets after the financial crisis at the end of 2009."

"According to further investigation and analysis, institutions headed by MIGA have many prominent clients, and these clients have some kind of connection with Fang Zhuo."

"We need to question where the magic source of Yike's rapid development and patent litigation comes from."

An in-depth report from National Review vaguely outlines Fang Zhuo's activities in the United States, and vaguely points the finger at certain people in power.

This report describes the development of Yike in recent years, especially the success of the Mars 8.8 series last year. However, the more prominent these achievements are, the more weight they describe.

The report even named the New York Institute for Economic and Social Development, where Summers served as chief advisor, criticizing him for accepting sponsorship from Yi Ke and Fang Zhuo, a former financial steward and former director of Okuko's Economic Conference NEC.

One stone caused a thousand waves!

The New York Economic Review responded: "We are a non-profit social research organization that accepts free sponsorship from many companies. Some of the funding does come from Yike, but it is only a small part."

But such a response is not satisfactory, and instead becomes a focus that continues to be held up.

In addition, the compliance of the MIGA fund has also been questioned, and the transparency of YiKe’s business activities and its role in the semiconductor industry have once again been given a threatening meaning.

On one hand, there is the huge success of Yike, while on the other hand, there is a heated backlash against it and its founder!
Fang Zhuo naturally knew about these circumstances and the driving force behind them, but he was still somewhat dissatisfied when he received a call from lobbying leader Zhao Zhishan.

"Why did you carry Summers out?"

Zhao Zhishan was somewhat helpless: "Mr. Fang, this was discovered by the media themselves. The establishment of the New York Economic Review Institute is not a secret."

Once conflicts arise, things do not develop as expected. At the very least, it is unexpected that National Review would dig into and report on the issue with such extreme seriousness.

She discovered that the current conflict was not just a matter of learning, but also an opportunity for the two factions to display multiple contradictions.

"Mr. Fang, the SEC has confirmed that it will launch a new round of investigations, and it is said that it will work with other agencies." Zhao Zhishan talked about the latest news again.

"Well, if there are doubts, there must be investigations. I already know this. Investigate as soon as possible, reach conclusions as soon as possible, and resolve the situation as soon as possible." Fang Zhuo's information channels are more direct than Zhao Zhishan's.

Zhao Zhishan was only a little surprised when he heard this.

But she didn't expect that the "as soon as possible" that Mr. Fang mentioned was so early. The SEC conducted the investigation at an astonishing speed, and it took only four days to come up with the conclusion of the investigation.

In just four days, the SEC joint investigation team announced the end of the investigation and concluded that no violations were found by Yike, MIGA Fund and Fang Zhuo.

Is such a short time enough to sort out the files?

Zhao Zhishan saw the backlash of public opinion, but soon the backlash disappeared. What remained in public opinion was only doubts about Yike and Semiconductor, not the relationship between government and business.

No matter how short the time is, no matter whether the doubts are supported by facts, the result is this anyway.

The enthusiasm for Yi Ke will not be extinguished by an investigation, and similarly, the clamor for threats against Yi Ke will not be extinguished, but the discussion can only be limited to Yi Ke himself.

The New York Institute of Economics is innocent and should not be shamelessly attacked just for accepting sponsorship.

Mr. Fang is innocent and should not be discredited just because of the contradictions in Yike’s development.

Summers is innocent, MIGA Fund is innocent, everyone is innocent, there is no violation, they just have different positions.

(End of this chapter)