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NQ Mobile Rejects As False Allegations In Seeking Alpha Article

Stocks in this article: NQ

BEIJING and DALLAS, Dec. 11, 2012 /PRNewswire/ -- NQ Mobile Inc. ("NQ Mobile" or the "Company") (NYSE: NQ), a leading global provider of mobile Internet services, today rejected as false allegations made in an article ("Seeking Alpha Article") published on on December 10, 2012, written by an author named " FJE Research" who has admitted to holding a short position in the Company.

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NQ Mobile strongly rejects these allegations and notes that FJE Research's commentary contains numerous inaccuracies and misleading speculations based on flawed arguments and illustrates a lack of understanding of the Company's business model.  The Company also stands firm and ready to protect its reputation and reserves legal rights against any deliberately false accusation. The following statements clarify the key misleading areas contained in the Seeking Alpha Article:

NQ Mobile market share data in China

Contrary to allegations regarding NQ Mobile's market share in the Seeking Alpha Article, the third quarter 2012 Sino MR research report indicates that NQ Mobile has 63% of registered mobile security users in China. Sino MR is wholly owned by renowned market research firm, GfK Group, and has reported NQ Mobile's market share in China as greater than 60% in every quarter since May 2011. The Company also notes that the Sino MR research report is among the very few that are publicly released each quarter.

Because the third quarter 2012 Sino MR report was issued after NQ Mobile released its third quarter earnings on November 12, 2012, data from the report did not appear in the Company's third quarter 2012 earnings release. 

The third quarter 2012 Sino MR report on mobile security market in China (in Chinese only) is publicly available at the following link:

NQ Mobile user acquisition channels in China

NQ Mobile mainly acquires users through three major channels. For the third quarter of 2012, roughly 20% of NQ Mobile's newly acquired user accounts were acquired from pre-installation with handset manufacturers, which are mostly in China; approximately 40% were acquired through various online downloading channels; and approximately 40% were accrued through viral marketing.

The third-party app stores listed in the Seeking Alpha Article are only a small part of the Company's online downloading channels, and the Company does not invest heavily in these stores because it finds that the returns on them do not justify the investment due to their low conversion rates. In the third quarter of 2012, out of the online downloading channels that the Company employs to acquire users, less than 20% of the new user accounts the Company acquired in China are acquired through app stores. The rest are from working with a number of mobile ad networks to provide users with direct download from the Company's server. The Company is prudent on spending and constantly works to minimize its user acquisition cost. The Company finds the ad network channel to be the most effective and cost-efficient method to promote its apps and generate registered users.

Pre-installation is another important user acquisition channel for NQ Mobile in China. Almost 7.6 million, or 20%, of the Company's 38 million newly added registered user accounts in the third quarter of 2012 came from this channel, with most of the accounts being in China. The Company has extensive pre-installation relationships with major mobile device manufacturers. As of the end of October 2012, NQ Mobile has pre-installed its app in more than 55 million smart devices produced by a number of major manufacturers such as Huawei, ZTE, Coolpad, Hisense, Gionee, Motorola, Samsung and Nokia.

The Seeking Alpha Article ignored both pre-installation and the viral channels for NQ Mobile's user acquisition and, for the online downloading channels, it also ignored the important ad network channel and only focused on the least meaningful user acquisition channels for NQ Mobile.

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