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Why Qihoo, YY, Going-Private Chinese Tech Stocks Are Rebounding

U.S.-listed Chinese stocks Qihoo 360 ( QIHU ), YY ( YY ), E-Commerce China Dangdang ( DANG ), Momo ( MOMO ) and Vianet ( VNET ) rebounded Tuesday after tumbling for days on reports that Chinese regulators might put the brakes on their plans to delist from the American market and relist in mainland China. The China Securities Regulatory Commission is mulling limits on the number of reverse mergers from previously foreign-listed companies, sources told Bloomberg. But that eased fears of an outright ban. YY YY shares gained 5% in afternoon trade on the stock market today but have tumbled about 17% since last Wednesday alone. YY stock sliced both its 50-day and 200-day lines on Friday. Reports surfaced late last week of possible regulatory scrutiny regarding the music and entertainment social network. Qihoo 360 After losing 11.3% Monday and briefly sipping below its 200-day line, Qihoo shares rebounded more than 8%. The China-based search engine and security firm announced in December a $9.3 billion deal to go private. Qihoo is a rival to much-larger Baidu ( BIDU ). Baidu has its own problems involving sponsored posts, with the stock edging down Tuesday but tumbling 13% so far this month. Momo Momo, which said last June that it had received a going-private bid from its CEO and affiliates, rose 8% intraday but remain 21% below its close of May 4’s trading session. Momo, a Chinese mobile dating app, is currently trading below its 50-day and 200-day levels. Dangdang Dangdang shares perked up nearly 11% intraday Tuesday after tumbling for three straight trading days, including a 13.3% free fall Monday. The e-commerce firm received a going-private proposal last July. Vianet Vianet rose 15% intraday after crashing 29% over the prior three sessions to the lowest level since September 2014. The Internet data carrier got a buyout offer last June. The China Securities Regulatory Commission believes some of these companies’ valuations are too high, Bloomberg reported, citing people familiar with the matter.

Apple R&D Spending Rises But Still Trails Google, Facebook, Amazon

Spending on research and development is soaring at Apple ( AAPL ), Facebook ( FB ), Amazon.com ( AMZN ) and Alphabet ’s ( GOOGL ) Google as they race against each other in artificial intelligence, virtual reality, cloud computing, electric cars, drones, the Internet of Things and many other technologies. Apple’s R&D spending rose 30% in Q1 to $2.51 billion. In a regulatory filing, Apple said R&D, including stock compensation for engineers and other technical employees, was 5% of sales, up from 3.3% in the year-earlier period. By that yardstick, however, Apple lags Google by far, as well as Facebook. Facebook’s R&D spending has climbed to 13.4% of sales, up from 10% in 2014 and only 7% in 2010. In Q1, Facebook’s R&D spending rose 26% to $1.34 billion, with the company pushing into Internet drones, virtual reality and augmented reality. While virtual reality immerses a user in an imagined or replicated world (like video games), augmented reality overlays digital imagery onto the real world. Amazon and Google, though, are still the biggest spenders, according to a Bloomberg report . In Q1, R&D totaled 16.6% of Google revenue , Bloomberg said, up from 13.8% two years earlier. While Google aims to make gains in artificial intelligence , it’s trailing in software bots , an area where both Microsoft and Facebook made recent announcements. Google’s R&D spending will rise 16% in 2016 to $14.3 billion, BMO Capital Markets estimates. Then there’s Amazon. In Q1, Amazon’s R&D spending was up 28% to $3.53 billion, Bloomberg reported. At that growth rate, Amazon’s R&D spending will likely top Google’s this year.

Rackspace Posts Q2 Revenue Miss, ‘Lacks Catalysts’ In Cloud Sector

Rackspace Hosting ( RAX ) stock fell after the cloud computing service provider late Monday reported Q1 revenue that missed estimates and forecast current-quarter sales below views. Shares in Rackspace had fallen 2.5% in early trading on the stock market today , but by early afternoon, the stock was up 2.6% to above 23. “The lack of near-term catalysts for growth, in a cloud sector marked by growth, will likely result in continued weakness in the shares despite an aggressive buyback program,” Michael Bowen, an analyst at Pacific Crest Securities, said in a report. Rackspace repurchased $68 million of its own stock in Q1. It plans to buy back at least $65 million in the current quarter. After that, it would have about $500 million remaining in a share repurchasing program. Rackspace has struggled in competing with the much larger Amazon Web Services, the cloud computing arm of Amazon.com ( AMZN ), as well as Microsoft ‘s ( MSFT ) Azure service and Alphabet ‘s ( GOOGL ) Google in the IaaS (infrastructure-as-a-service) market. Amazon’s AWS is the biggest provider of IaaS, in which client companies rent computers and data storage via the Internet cloud. Rackspace has been shifting to providing service for public clouds aside from its own, including AWS and Microsoft’s Azure cloud. Rackspace said Q1 earnings rose 21% to 34 cents a share, with revenue up 8% to $518 million. Analysts had modeled for profit of 22 cents and revenue of $519 million. In the current quarter, Rackspace forecast revenue of $521.5 million at the midpoint of its guidance vs. consensus estimates of $523.9 million. Rackspace stock has plunged 58% from 12 months ago. Shares are down about 13% in 2016 so far. Rackspace has an IBD Composite Rating of 53 out of a possible 99.