Mobile security software maker NQ's shares up on strong sales forecast

Reuters News
Posted: May 30, 2014 11:26 AM

(Reuters) - Chinese mobile security software maker NQ Mobile Inc estimated revenue in the first three months of the year would exceed its forecast of $75-$76 million due to strength in its enterprise business.

The company's shares soared as much as 29 percent after the company also forecast second-quarter revenue of $83-$84 million that beat Wall Street's estimate of $78.9 million.

NQ provides mobile devices as well as content and application management services through its NationSky enterprise business. Its customers include the Agricultural Bank of China and the National Bureau of Statistics of China.

Enterprise sales across NQ's product and services divisions brought in 14 percent of the company's revenue of $91.8 million in 2012.

NQ also said on Friday that it would sell a stake of up to 5.88 percent in its online mobile platform, FL Mobile, for up to $25 million, valuing the unit at $425 million.

NQ was valued at about $346 million as of Thursday's close. But that is 70 percent less than its value in October, when short-seller Carson Block labeled the company a "massive fraud".

Among other allegations, Block's Muddy Waters Research Group said NQ got most of its China revenue from Yidatong, a shell company.

NQ has denied the allegations and, last month, said an independent team had not found any evidence to back the allegations.

NQ's shares were up 14 percent at $7.75 in late morning trading on the New York Stock Exchange. They hit a high of $8.75 earlier in the session.

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Savio D'Souza)