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Tudou Refiles IPO, CEO Settles Divorce Lawsuit

SEC, 6/16/11

Chinese online video site operator Tudou Holdings Limited has filed an amended IPO with the US Securities and Exchange Commission (SEC) to list American Depositary Shares on the Nasdaq Global Market under the ticker symbol "TUDO."

Net revenues increased by 166.6% to RMB 79.4 mln (USD 12.1 mln) for the three months ended March 31, 2011 from RMB 29.8 mln for the same period in 2010.

Net loss was RMB 38.0 mln and RMB 336.0 mln (USD 51.3 mln) for the three months ended March 31, 2010 and 2011, respectively.

Net revenues from online advertising services increased to RMB 70.2 mln (USD 10.7 mln) for the three months ended March 31, 2011 from RMB 29.3 mln for the same period in 2010. In addition, Tudou began generating revenues from mobile video services in January 2010. For the year ended December 31, 2010 and the three months ended March 31, 2010 and 2011, net revenues from mobile video services amounted to RMB 19.1 mln, RMB 0.5 mln and RMB 8.9 mln (USD 1.4 mln), representing 6.7%, 1.7% and 11.2% of net revenues for the period, respectively. Also, since the third quarter of 2010, Tudou has generated revenues from sub-licensing some of the premium content that it licensed from third party vendors. For the year ended December 31, 2010 and the three months ended March 31, 2010 and 2011, net revenues from sub-licensing premium content amounted to RMB 2.0 mln, zero and RMB 0.3 mln (USD 0.1 mln), representing approximately 0.7%, zero and 0.4% of net revenues for the period, respectively.

Net revenues from Tudou's top 10 advertising customers, consisting primarily of advertising agencies, accounted for 55% of total net revenues for the three months ended March 31, 2011. Tudou provided advertising services to 174 and 230 advertisers for the three months ended March 31, 2010 and 2011, respectively.

In the three months ended March 31, 2011, Tudou obtained licenses for more than 1,440 TV episodes, 1,260 movies and 210 variety shows.

Tudou's registered users increased from approximately 35.6 mln as of December 31, 2008 to approximately 78.2 mln as of December 31, 2010 and further to approximately 83.6 mln as of March 31, 2011. Average number of new video clips uploaded daily increased from approximately 23,000 in 2008 to approximately 40,000 in 2010 and further to approximately 44,000 during the first quarter of 2011. In addition, the number of monthly unique visitors to Tudou.com increased from approximately 50 mln in December 2007 to approximately 182 mln in December 2010, and to approximately 185 mln in April 2011, according to Chinese market research firm iResearch.

Tudou began generating revenues in January 2010 from its mobile video services, which are provided primarily through a video channel with China Mobile (NYSE: CHL; 0941.HK), and had an aggregate of approximately 15.8 mln users with a total of approximately 27.7 mln clip views in 2010 and an aggregate of approximately 7.3 mln users with a total of approximately 12.2 mln clip views for the three months ended March 31, 2011. Users pay a monthly subscription fee for access to the video channel or pay on a per-clip basis, and Tudou shares the fees for such services with China Mobile. In addition, Tudou began providing mobile video services in April 2011 through two video channels on China Unicom's (NYSE: CHU; 0762.HK; 600050.SH) wireless video platform.

Yang Lei, the ex-wife of Tudou founder, chairman, and CEO Gary Wei Wang who holds 95% of the equity interests in variable interest entity (VIE) Quan Toodou Network Science and Technology Co., Ltd., recently initiated a lawsuit against Wang, seeking the division of 76% of the equity interest in Quan Toodou held by Wang. Historically almost 100% of Tudou's net revenues and approximately 60% to 70% of costs were attributable to Quan Toodou, and Tudou expects costs may continue to increase in the future. This lawsuit was concluded through settlement directed by the court in June 2011 and pursuant to a court ruling, Wang is entitled to the equity interests in any companies that are directly or indirectly held by him. In the meantime, the court also issued an order releasing the conservatory measures imposed by the Assets Conservatory Notification. However, if Wang fails to fully perform his obligations under the court ruling, Wang's personal assets, including the equity interests in the companies that are directly or indirectly held by him, may be subject to the court's enforcement measures. Tudou relies on Quan Toodou to hold and maintain the licenses necessary to operate its website as well as online advertising and value-added telecommunications services in China.

To view Tudou's complete amended IPO filing, please click here.

Editor's Note: For more information on this topic, please see "Tudou Refiles for Nasdaq IPO," MD 4/29/11 issue.

Keywords: TUDO copyright Q1 2011 broadcasting rights Internet IPO Nasdaq loss users wireless online advertising online video mobile video Tudou registered users Yang Lei profit Gary Wang revenue fiscal report

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