This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Tencent's Name Belies Its Growing Internet Empire

Stocks in this article: BIDU GOOG MSFT

TAIPEI, Taiwan ( TheStreet) -- For the past decade a friend in Beijing had asked me repeatedly to sign up for the QQ chat service, one of the biggest crazes on China's Internet. "Sorry," I would say, "I already use Microsoft's (MSFT - Get Report) MSN Chat, Google's (GOOG) Gmail chat and text messaging. Isn't that enough?"

It's not enough if you're an Internet user in China, where college students use the fast, free QQ to pick up dates in cybercafés and workers write to friends behind their bosses' backs.

So this month, after another reminder, I downloaded QQ into my smartphone. I wanted to make sure it worked before writing a column saying that QQ's provider, Tencent (TCTZF:OTC) (0700.HK) is the next craze for investors picking stocks from China.

Tencent left that impression this month when Chinese tech media said the Shenzhen-based Internet service provider would offer a list of popular games through its mobile messaging application WeChat. (Representatives of Tencent wouldn't confirm this news.)

QQ was one of Tencent's first offers after it started up in 1998, and the rack of games is just its latest. In the interim Tencent grew into China's "largest and most used" Internet service portal, according to the company's spiffy English-language Web site.

So the inaptly named company headed by its core founder, 41-year-old billionaire Pony Ma, posted a first-quarter profit of slightly more than 4 million yuan ($649.4 million), a 17.3% increase over the previous quarter and a 37.4% gain from a year before.

It's no surprise that Tencent has been described as one of its country's big three Internet firms, along with e-commerce company Alibaba and the made-for-China search engine Baidu (BIDU).

Tencent's U.S. stock was recently trading at around $42, near its all-time high following a slump in late 2011. Its Hong Kong-listed shares recently changed hands at nearly HK$330 ($42.50), just below their all-time highs.

It's easy to see why. QQ chat claims 825 million users, more than half of China's population, with as many as 194 million active at one time. Another 128 million e-mail accounts and 81 million microblogs are registered under Tencent. Its search engine Paipai also sells ads.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs