Tuesday, November 29, 2011

QIHU and Numeric Domains

Citron Research has recently attacked Qihoo 360 Technology Co. Ltd., saying that the company is exaggerating its financial strengths, and then Citron has been attacked itself for its report.  While QIHU has taken a beating in terms of its share price, we here at NNNNN Domains found something else interesting in the reports.  Namely, that numeric domain names are at issue in the dispute.

Here is from Citron's report:
Qihu's homepage, shown below, resembles dozens or hundreds of other web directory / navigation sites which are very popular in China.   Here are just a few:
http://www.2345.com/
http://www.265.com/
http://www.1616.net/?www2
http://www.tao123.com/  (taobao)
http://www.wu123.com/
http://www.0460.com/
http://www.91913.cn/
http://www.44244.com/default.html
http://www.9991.com/
http://www.537.com/
http://www.5566.net/
http://www.zgwdq.com/
http://www.46.com/
http://www.176176.com/
http://www.155.com/
http://www.haokan123.com/
http://www.129139.com/
http://www.wndhw.com/
You can see they're all very similar, (English speakers can get a pretty good sense of these using Google translate)    In fact there's a fierce battle for domain-brand identity.  In Qihoo's case, their portal is hao.360.cn.  It is not hao360.com or hao360.cn, which appear to belong to others. 
These sites typically focus on link traffic, not brand (display) advertising.  Companies that pay for links on these are paying out of their advertising budgets … their online advertising budgets.  Qihoo classifies this as "advertising revenue".   Citron gets that … do you?
 I see three digit domains (NNN), four digit domains (NNNN), five digit domains (NNNNN), and even six domains (NNNNN).  Which just goes to show how significant numeric domain names are to Chinese companies and internet users.

From QIHU's prospectus, they note that they have $329,000 in carrying value for domain names in 2009 and $740,000 in 2010.