Telecom & Wireless

NQ Launches Charm Offensive, Issues 2014 Forecast

Source: Thinkstock
NQ Mobile Inc. (NYSE: NQ), the China- and U.S.-based mobile Internet provider, provided a fiscal year 2014 forecast Wednesday morning that shatters the current consensus estimate. When the company reported earnings a week ago, it raised its revenue estimate for the 2013 fiscal year, but the company’s longer-term short-seller issue weighed down the share price.

Waiting a week to tell investors that the company expects to post record revenues in fiscal 2014 is a smart move. NQ Mobile now forecasts next year’s revenue at $305 million to $310 million. The company’s full-year forecast for 2013 was $191 million to $192 million a week ago, so the annual jump is around 60% to 62%.

But wait, there’s more. In Wednesday’s announcement the company said it revealed a plan at its investor day meeting that has the company reaching a revenue run rate of $200 million in 2013. NQ Mobile also said it plans on a revenue total of $500 million in 2015.

NQ Mobile was attacked by short selling firm Muddy Waters on October 24, and the company’s share price tumbled from a 52-week high of $25.90 to less than $9.00 following the report that accused NQ Mobile of various shenanigans. The mobile carrier has fought back, but the stock price has not managed to recover more than about $5 of its lost value.

The company formed a special committee of its board to conduct an independent review of the charges made by Muddy Waters. An outside law firm and financial advisory firm have been retained to advise the special committee. Until the company can either clear its name or succumb to charges, it will remain a highly volatile stock.

Even Wednesday’s announcement is not enough to move the stock dramatically. NQ Mobile will have to wait until the issues raised by Muddy Waters are completely resolved — in NQ Mobile’s favor — before even the most charming announcement puts the stock price back where it was a month ago.

Shares were trading up about 5.5% shortly after 10:00 a.m. Wednesday morning, in a 52-week range of $5.25 to $25.90.

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