LeTV shares soar on phone speculation

Chinese media say company's event in Silicon Valley may see smartphone launched

Beijing-based online video provider Leshi Internet Information and Technology Corp, commonly known as LeTV, saw its shares rocket on Tuesday amid ballooning speculation about its branching out into the smartphone sector.

By the close of trading on Tuesday, shares of the company, listed on the NASDAQ-style board of growth enterprises in Shenzhen, soared by its 10 percent daily limit to 99.79 yuan ($16.06), outperforming a 2.8 percent gain in the ChiNext Index which tracks the board.

The soaring share price happened while the company's high-profile advertising in the US, intended to inform local consumers of an upcoming event in Silicon Valley in April, was reported by Chinese media outlets on Tuesday, adding fuel to speculation of LeTV's expansion of its hardware business beyond smart TVs.

The Chinese company took out a full-page advertisement Monday (US time) in three major newspapers - the Wall Street Journal, Los Angeles Times, San Francisco Chronicle - announcing an unspecified event in Silicon Valley on April 13, Chinese news portal sina.com.cn reported on Tuesday, saying that LeTV would take advantage of the event to make its smartphone debut.

A PR representative with Le Holdings, LeTV's parent company, confirmed that a launch event will be held in Silicon Valley on April 13, and that it will either launch phones or the company's "overall ecosystem" when reached by the Global Times on Tuesday.

The venue for the event was not specified in the advertisement, but was reported by several outlets to be the Yerba Buena Center for the Arts in California, which has often been used by Apple Inc for its launch events of new gadgets.

The choice of the venue was not confirmed by the PR representative, but Mo Cuitian who heads LeTV's international business unit, wrote on his Weibo account on Thursday that the center is "perfectly suitable for a global product launch."

In response to a question raised by Beijing-based Economic Observer newspaper on its official Weibo account late Monday "Can there be miracles when LeTV goes so far as to challenge Apple right at the company's doorway?" LeTV CEO Jia Yueting said on his Weibo account on Tuesday that "miracles are out there to be created."

Analysts, however, are less optimistic about the Chinese tech firm's ambitious vision.

Rather than aiming for a foray into the smartphone market in the US, an often difficult market to access for Chinese phone vendors, LeTV will use the event to enhance its brand value, Jia Jinghua, a Shandong-based independent IT expert, told the Global Times Tuesday.

"With rich content portfolios, the company may bank on smartphones to attract fans of its online videos, making an appeal to a niche market," Wang Jun, an industry analyst with Beijing-based market consultancy Analysys International, told the Global Times Tuesday.

Users of LeTV's smart TVs and online video streaming platform letv.com can be potential buyers of LeTV's handsets, said Wang.

According to its annual report issued on February 28, LeTV sold more than 1.5 million smart TVs in 2014, in comparison with sales of 300,000 units in 2013.

However, the company will not likely be able to capture a big slice of the smartphone market, where the competition has been increasingly heated up amid shrinking demand for smartphones, he said.

In the fourth quarter of 2014, Samsung still led the global smartphone market by shipments, seizing a 19.9 percent share of the market, while Apple was in second place with 19.7 percent, followed by Chinese phone makers Lenovo Group, Huawei Technologies Co, and Xiaomi Inc, according to the latest available data from US market consultancy IDC.

In addition to unveiling its smartphone lineup, LeTV is poised to pitch its smart TV products to US consumers at the event, according to the sina.com.cn report, citing unidentified sources.

This has yet to be officially confirmed, but Jia, the independent analyst, remarked "it's not an easy thing for a Chinese smart TV manufacturer to tap the US market."

LeTV is moving to make a dent in the overseas market, and CEO Jia Yueting has been actively pushing forward the globalization of his firm, paying visits to the US in person to set up two subsidiaries in Los Angeles and Silicon Valley in July 2014.

Apart from smartphones, LeTV is also trying to make inroads into the car sector.

On Monday, LeTV partnered with Chinese automaker BAIC Motor Corp to ink an agreement to apply an auto user interface system developed by LeTV to the automaker's upcoming cars that will be introduced at the Shanghai auto show in April.