Worth 45 billion millet why still need money

Recently, the Wall Street Journal declassified the latest classified documents, showing that Millet's net profit last year amounted to 3.46 billion yuan (about 566 million U.S. dollars), a 84% increase from the 1.88 billion yuan in 2012. The same period of revenue has doubled more than 27 billion yuan. Another chart predicts that the company's net profit this year will grow by 75%. Such performance has a direct impact on the millet "head" Lei Wealth-published this year, "Hurun Rich List", Lei ranked tenth by 45 billion.

Millet in the profit of the meager smartphone market is full, but has been in the "poor" state. Recently, Millet has borrowed 1 billion of billions of three-year loans from 29 banks, all over the continent, including global investment banks. Why is Lei, 45 billion, so anxious to borrow money? Why is millet still short of money? What does Millet want to do?

Select loan Millet high valuations have pressure

For a long time, the rapid development of millet funds flow mainly from the financing. The last round of funding was in 2013, when millet valued more than billions of dollars. Perhaps tens of billions of dollars to a company founded only three years, is an astronomical figure. But for millet, there is obviously more ambition than that. Especially in this year, millet shipments have reached more than twice times last year, and involved in the field more extensive, not only the hardware product layout broader, soft eco-circle construction began to speed up, and even invited the former editor-in-chief of Sina Chen to control the content level. In this situation, the value of millet is far more than the industry expected.

It is alleged that a round of financing at the beginning of the year, the value of millet has been to 30 billion U.S. dollars, but did not receive positive confirmation. Now, it is rumored that Millet is launching a new round of financing talks, with valuations likely to reach 40 billion to 50 billion dollars. But the deal is still at an early stage and no substantive agreement has been reached. If valuations do reach this high, that's far more than Lenovo's $15.6 billion worth. Nier Shaha, Counterpoint Research director of market research, predicts that the company will double its revenue this year to more than $12 billion trillion. According to the 50 billion dollar valuation, the market sales rate of millet is 4.2 times times.

Obviously, millet is overrated. You know, Lenovo's revenue for the first quarter reached $10.395 billion trillion, and last year's revenue was 38.7 billion dollars. Even if the millet revenue reaches 12 billion dollars, it is only Lenovo a quarter of marketing. According to the data compiled by Bloomberg, Lenovo's sales rate is 0.38 times times. Even Samsung has a 0.70 times-fold market rate. Millet reached 4.2 times times the market sales rate can only say that the outside expectations are too high, investors on the future of millet too optimistic.

But in such a high valuation, millet seems to be a little overwhelmed. Because it did not come up with a match of strength. The sheer success of smartphones alone is not enough to support such high valuations, and it is too misshapen to know that up to 94% of Millet's revenue last year came from mobile sales. Unless Millet can replicate the success of smartphones to other hardware products and soft ecosystems, high valuations are just a bubble.

Millet "Learn good", no longer blindly pursue high valuations, but in the form of loans to deal with the current rapid development situation. Financing is very good, to money fast, short-term will not encounter cash flow pressure, but in the long run cost is too high, and even weaken lei in the inner voice of millet. If coupled with the usual "on the gambling agreement", once millet in the next development is not satisfactory, then the previous efforts to other people made a wedding dress. And too much financing, will face the market pressure, the capital side will be eager to cash out, will bring more pressure to millet, or even disrupt its established planning. And the loan is much better, although the amount of 1 billion dollars is not too much, but at least can support the development of millet, expansion of the one or two steps, can give a more beautiful report card, for the future development benefits. Moreover, millet this time all is to overseas bank loan and quantity up to 29, dispersed the pressure.

1 billion dollars to do: Overseas market expansion one step more

Although Chen joined Millet vowed to help build media, content empire, Lei even claimed to come up with 1 billion dollar investment content. But it is clear that the 1 billion dollar ambition for the loan is not here. It is understood that the loan will be used to speed up the development of overseas markets. Even people familiar with the matter believe that Millet chose to borrow from 29 banks, in part because of its relationship with local banks in its expanding market. But I don't think that's a very good idea, because the Indian market alone is not settled, so how does it relate to markets all over the world? Even for a rainy day, it's a little too fast.

For now, the 1 billion dollars that the millet loan will be the main users of the Indian market in-depth development. As the first step in the development of the overseas market, the Indian market, if not well, will be a heavy blow to the overseas strategic plan of millet. But at present, millet in the Indian market can be said to fall into the mud, unable to extricate themselves. Compared with the domestic market, millet is good at the marketing of hunger, internet marketing, electricity business channel is obviously not adapted to the Indian market. Plus Google's low-end model Android one in the Indian market exerting force, millet to do a lot more.

With 1 billion dollars, millet will be in the Indian market to embark on a drastic move. From product research and development, marketing, warehousing/logistics construction, after-sales service to improve the talent structure, and so on, all the subversive changes. Only millet in overseas markets will never smooth, its globalization strategy will still encounter many difficulties. 1 billion dollars can only be a step closer to overseas expansion, the later investment will be even greater.

Patent problem can't avoid millet will encounter rough

In contrast, other things are well settled in overseas markets, but the patent problem is rather tricky. Millet leap red speed too fast, although now looks infinite, in fact, the foundation is too shallow, it is easy to be caught by opponents, especially the patent aspects can not be circumvented. According to the State Intellectual Property Office statistics show that in the invention of the number of authorized, millet only 10. And to "China Cool Alliance" as the representative of other domestic handset manufacturers, the number of patents is millet on a hundredfold, even ZTE Huawei more than thousand times. According to the data, 2013, the number of patents for Huawei 71903, and millet total only 1141.

On the road to overseas expansion, the patent problem is a stumbling block. Qualcomm in the global acceptance of antitrust investigation has given millet sounded alarm, millet must make up their own patent short board. The 1 billion-dollar loan may be partly used for patent research, and Millet's solution is to work with MediaTek. It is revealed that Millet is in MediaTek cooperation, the two sides jointly funded the establishment of a new company, research and development of mobile phone chip core technology. This is a win for both sides, millet can rely on high shipments for MediaTek to win more profits, and MediaTek's patent can also be a barrier to the expansion of millet abroad.

Only MediaTek and millet own patent number is not comparable to the established manufacturers, both sides of the cooperation is helpless. If burned the money but did not get the expected success, that millet can be throwing.

Embark on the road of industrial chain management

Millet on the development of the fast lane relies on the smartphone based hardware products, in its smartphone shipments become the world's third, obviously rely on the previous simple hunger marketing, internet marketing and other models are no longer adapt to their rapid development needs. Therefore, millet or will adopt a new mode. At present, although the hardware products of millet are still based on smartphones, but have spread to many areas.

Smart TV, TV box, router, tablet computer, smart hand ring, Sphygmomanometer, portable wifi, mobile power and so on a variety of dozens of. In the rich degree of products, has not lost in the old hardware manufacturers. Millet is about to embark on Samsung, Huawei, ZTE and other industrial chain management model, their own control upstream to downstream of the right to speak and pricing.

And all of this requires a large amount of capital investment, the more millet stalls paved, the more money burned, in the short term even see no direct benefit. But millet but have to do so, if not quickly embark on the road of industrial chain management, it is easy because of the pattern of a single and many eyeing opponents beyond.

Create the Entertainment empire Lei Dream of "jobs second"

In addition to the hardware level, the industrial chain management model can not be neglected in the construction of the soft ecological circle. The reason why Apple can build a huge business empire lies in the perfect combination of hardware equipment and software and systems, bringing the highest enjoyment to the users. Lei dreams of becoming "Steve Jobs Second", which is now a step-by-step way to make millet a Chinese version of "Apple". And bat purely rely on the internet to start different, millet is on the basis of hardware products, the Internet to the contrary.

Chen to join and Li Vanchang away to Silicon Valley retreat, has proved that the strategy of millet adjustment-from simple hardware sales to Lei dream of "ecological chain construction and content operation." Relying on smart phones, smart TV, TV boxes and other hardware products, Millet has mastered the perfect Internet access, can build their own media, content empire, the establishment of a benign ecological circle.

For example, in video, music, games, news, MIUI, applications, and so on, millet can fully grasp, and its hardware products perfect integration. Just, is millet ready so much money? The construction of soft ecological circle even more than the development of hardware products, channel construction, marketing and other burning money!

The future money bad.

On the above content, millet seems to have a good future, money is beyond imagination. But looking at the current complex market situation, perhaps millet has been "a stall." "In terms of hardware products, Millet's smartphone is quite successful," he said. But other products are not showing a hot situation, especially routers, tablet computers are particularly criticized by users. The result is that the early burning of money but because of sales, resulting in a serious inventory backlog.

Even smart phones are challenged, the charm of 1799 Yuan MX4 let Millet 4 to eat enough, directly forced Millet 4 play do not turn to hunger marketing tricks, only to avoid the form of booking open purchase, but also jealous to provoke and the charm of the mouth of the race. Coupled with the foundation of other domestic handset manufacturers, millet in the hardware level of the challenges are more and more big, no longer the past a single big scenery. Even millet is familiar with the Internet marketing tools are more and more users scoff, a lot of rice noodles have been turned black.

In millet ecological chain construction and content operation, Millet encountered a greater resistance. To video content, for example, the current constraints on a lot of video sites of the TV version of the application has been the shelves, Millet Smart TV has not been able to bear the burden of content distribution platform, content operations can not talk about. And at present the video industry competition is intense, the copyright expense is more and more high, this for the fund shortage millet, certainly will carry on the heavy burden-even if Rei Junjin gives Chen 1 billion dollars, also not enough to burn. The current video site homemade network drama hot, but did not see the figure of millet, from scratch to do content, Millet has been behind for many years ...

Plus the patent issue, overseas expansion ... The money of millet is really worrying. Millet stall spread too much, in any field want to mix a foot, but its own revenue, profit is difficult to support, loans 1 billion of dollars is destined to be just a drop in the bucket. The hasty millet may be doomed to encounter more difficulties.