Kai-Fu Lee’s Ten Questions for Citron

Posted by The Citron Fraud Examiners on September 5, 2012 under Replies to Citron | 829 Comments to Read

by Kai-Fu Lee

Citron has used (provably incorrect) personal attacks on me to shift investors’ attention away from the core issue – that Citron lacks basic understanding about China, and fabricated or exaggerated false data to mislead investors. Below are ten questions for Mr. Andrew Left. Please answer them directly and don’t mince words.

Do you admit:

  1. You lack even the most basic understanding of the Chinese search market, especially in your fabrication of the pinyin search product that can bypass Baidu and win share? [C1, L1] （This is like saying the Microsoft Xbox-Office can win share from PlayStation!) [L3]
  2. You used obviously wrong China market share numbers to mislead investors? You described Sogou has having 10% market share [C3], even though whether revenue or traffic, the truthful number is about 3-5%. [L3]
  3. You have no clue how search monetization works, and projected Qihoo to be unable to build an infrastructure to monetize search for years, when they could easily get $98 million revenue in 2013? [L1] You had no ads could be “outsourced” to Google Adwords, and huge infrastructure was not necessary? [C1]
  4. You want your readers to measure high-tech companies by their revenue and age, but not revenue growth, earnings, or earnings growth? [C1, C3, L1, L3]
  5. You supplied what you believe to be fraudulent data [C1, C3] for your readers to compare the potential of two companies?
  6. You admitted that your original valuation of $679M [C1] was too high for Sohu’s video business, but explained you really meant “just an opinion that $200M is too low”? [C3] (Arbitrarily increase by more than 3x when you think something is too low?) [L3]
  7. You would give same valuation increase to two companies when one’s market share increased 10% and the other 0%? [C1, C3, L1, L3]
  8. You stated that navigation site and portal site valuation could be compared by web traffic [C3], totally ignoring the better monetization and lower cost for navigation sites? [L3]
  9. You mistakenly said Qihoo led the investment into Innovation Works? [C4, L4] (in reality, Qihoo was NOT an investor in Innovation Works, but just the smallest corporate LP holding 1.7% in a fund that Innovation Works co-manages. Also Qihoo is a big competitor for Innovation Works, and will not be investing in any of the funds we directly manage.)
  10. You mistakenly said there is bad blood between me and Sohu/Sogou? [C4, L4] (I have a good relationship with Sohu executives – ask them! Another proof is that Sogou CEO signed the letter condemning you, even though you said his company was the best investment in China .)

[C1] Left, “Qihoo’s entry into search puts SOHU in play” Aug 24, 2012
[C2] Left, “Open Letter to Kai-Fu Lee”, Aug 30, 2012
[C3] Left, “Reply Points to Kai-Fu Lee”, Aug 31, 2012
[C4] Left, “The Final Word on Citron vs. Kai-Fu Lee Debate”, Sep 4, 2012
[L1] Lee, “China Short Sellers: Exposing Fraud, or Practicing Fraud?”, Aug 27, 2012
[L2] Lee, “Kai-Fu Lee’s Second Letter to Citron”, Aug 31, 2012
[L3] Lee, “Kai-Fu Lee’s Third Letter to Citron“, Sep 3, 2012
[L4] Lee, “Kai-Fu Lee’s Fourth Letter to Citron“, Sep 4, 2012

[This letter was originally posted on Zhihu.com]

 

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