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The founder of a Chinese online wealth-management platform that promised investors returns of 80% and turned himself into police last month is accused of illegally raising $11 billion. It’s potentially the biggest online fraud in China’s history. Zhang Xiaolei founded Qbao.com in 2012 and at one point had 200 million investors on his platform, according to Chinese media reports. Mr Zhang drew cult-like loyalty from his investors who borrowed heavily to give him money. The firm appears to have elements of a Ponzi scheme, repaying earlier investors with proceeds from newer clients, according to Caixin. This isn’t the first huge online finance platform to implode. These scandals cast an unwelcome shadow over all online financial services in China. Did investors put money in because they were gullible or greedy? It also raises questions over how such schemes were allowed to continue for so long. –Shai
(The Wall Street Journal)
SoftBank is mulling raising $18 billion from listing part of its Japanese wireless unit. That would be a great way to unlock some of the value in Masayoshi Son’s internet conglomerate, whose shares trade at a discount to the sum of its parts, but raises concerns about where that money would go. Instead of paying off debts, Mr. Son could use that cash to invest in more startups, as this writer suggests. I offer another question. Why does someone who is about to close on the biggest private equity vehicle ever need more cash? –Shai
If there’s one story traditional media loves to write about, it’s the soap opera of the Redstone family and the dysfunctional nature of its controlling interest in Viacom and CBS. The latest installment revolves around the wishes of Shari Redstone, vice chairwoman of the companies, to merge the two television companies. A report on Friday suggesting talks about a deal were under way sent Viacom stock up 10%, although a Bloomberg report later said nothing was actually going on.
Ms. Redstone tried to engineer a merger back in 2016 but was stymied by CBS CEO Les Moonves. How a hired hand manages to short circuit the wishes of the controlling shareholder is a mystery—particularly when the shareholder’s idea is the most logical, obvious move in today’s consolidating media landscape. But that’s the Redstones. If it were televised, it would probably draw higher ratings than anything else on CBS. –Martin
Amazon and Google made a big push to promote Alexa and Google Assistant this week at the Consumer Electronics Show, with a flurry of announcements about embedding their digital assistants into various products. Microsoft, on the other hand, didn’t talk much about its digital assistant, Cortana. But this is an established pattern for Microsoft, whose developer recruitment and marketing of Cortana has been strangely subdued compared to Amazon and Google. Microsoft did build Cortana into Windows 10 and often notes that its digital assistant is running on more than 140 million PCs. But with Amazon announcing deals at CES to get Alexa onto PCs from HP, Lenovo, and other manufacturers, even that stronghold appears to be under threat. –Kevin
Facebook shares fell 4.5% on Friday, following Thursday’s announcement that the company will change its News Feed algorithm to prioritize interactions with friends over more passively consumed media content. Analysts said the moves could hurt short-term revenue. Stifel downgraded the stock from buy to hold following the announcement. Barclays maintained an overweight rating, but said in a note Friday that the announcement “clearly sounds negative for 2018 revenue growth,” estimating that it would shave “low single digits” from Facebook’s revenue growth percentage this year. Shares of Twitter, meanwhile, were up 5% Friday, continuing a recent tear that means it has now outperformed Facebook stock over the last year. –Alfred
There is growing demand for employees who know about blockchain technology. One firm that places freelancers said blockchain is its fastest growing requested skill area, up more than 2000% over last year. That includes people to install, develop and even just explain cryptocurrency or other blockchain-based technology. It’s a sign that companies are starting to take the technology seriously for the long term, or at least want to understand what all the hype is about. –Sarah
(The Wall Street Journal)
Tencent has just issued $5 billion in bonds, a move that gives the Chinese company extra fire power to continue pursuing major acquisitions and investments. Last year, Tencent, which operates WeChat, invested in Tesla and also increased its stake in Snap, while buying stakes in numerous startups in China and abroad. Tencent’s latest fundraising follows a similar move by Alibaba, which sold $7 billion in bonds in November. The Chinese tech giants are taking advantage of low financing cost in the corporate debt market where investor appetite is strong. Expect more deals from Tencent and Alibaba this year. –Juro