Plans for cryptocurrency Hong Kong IPO shelved amid bitcoin slump

Bitcoin experienced astonishing growth in 2017 to peak at a record $19,500 by the end of that year, but has since crashed to stand at about $3,980. (AFP)
Updated 27 March 2019
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Plans for cryptocurrency Hong Kong IPO shelved amid bitcoin slump

  • Bitmain Technologies has allowed its IPO application to lapse, six months after it was initially filed in September
  • ‘The bear market at the end of 2018 brought both challenges and opportunities that Bitmain will work hard at addressing in 2019’

HONG KONG: The world’s largest maker of cryptocurrency mining chips has shelved plans for an ambitious initial public offering in Hong Kong, becoming the latest victim of bitcoin’s price plunge.
Bitmain Technologies said Tuesday it has allowed its IPO application to lapse, six months after it was initially filed in September aiming to raise up to $3 billion, according to Bloomberg News.
Under Hong Kong’s listing rules, applications expire half a year after filing.
“We do recognize that despite the huge potential of the cryptocurrency and blockchain industry, it remains a relatively young industry which is proving its value,” the Beijing-based company said on its blog on Tuesday.
“The bear market at the end of 2018 brought both challenges and opportunities that Bitmain will work hard at addressing in 2019,” it said, adding it would restart its application “at an appropriate time in the future.”
Bitcoin experienced astonishing growth in 2017 to peak at a record $19,500 by the end of that year.
But investors feared a speculative bubble and it has since crashed to stand at about $3,980 per unit following months of volatile trading.
The virtual bubble burst — followed by what has become the worst slump in years — has made mining operations practically unprofitable.
Bitmain’s co-founders Micree Zhan and Jihan Wu became the richest cryptocurrency billionaires to appear on a list by Hurun Report last year of China’s wealthiest people.
The entrepreneurs have stepped down from their roles as CEOs and were replaced by Haichao Wang, the statement said, but it added the pair would continue to guide the company’s strategic development as directors.
In addition to a leadership reshuffle, the announcement also alluded to layoffs made at the end of last year and described them as “a difficult but necessary decision.”
It did not say how many employees were affected.
Other manufacturers have faced similar hurdles recently.
Bitmain’s rival Canaan saw its listing application expire in November.
Mining chip maker Ebang is still pursuing a Hong Kong IPO after refiling its application in December.


Microsoft tops $1 trillion as it predicts more cloud growth

Updated 31 min 2 sec ago
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Microsoft tops $1 trillion as it predicts more cloud growth

BENGALURU/SAN FRANCISCO: Microsoft Corp. on Wednesday briefly topped $1 trillion in value for the first time after executives predicted continued growth for its cloud computing business.
The Redmond, Washington-based company beat Wall Street estimates for quarterly profit and revenue, powered by an unexpected boost in Windows revenue and brisk growth in its cloud business which has reached tens of billions of dollars in sales.
Microsoft shares rose 4.4% to $130.54 in late trading after the forecast issued on a conference call with investors, pushing the company ahead of Apple Inc’s $980 billion market capitalization. The companies and Amazon.com Inc. have taken turns in recent months to rank as the world’s most valuable US-listed company.
Microsoft’s stock has gained about 23% gain so far this year, after hitting a record high of $125.85 during regular trading hours.
Under Chief Executive Satya Nadella, the company has spent the past five years shifting from reliance on its once-dominant Windows operating system to selling cloud-based services.
Azure, Microsoft’s flagship cloud product, competes with market leader Amazon Web Services (AWS) to provide computing power to businesses.
Growth in that unit slowed to 73% in the third quarter ended March 31 from 76% in the second quarter. Mike Spencer, Microsoft’s head of investor relations, said the decline was roughly in line with the company’s estimate.
Christopher Eberle, a senior equity analyst with Nomura, said that with Azure, “one should assume a slower rate of growth as we move forward, simply due to the law of large numbers.” Still, Azure will bring in $13.5 billion in sales in fiscal 2019 with an overall growth rate of 75%, he estimated. “I can’t name another company of that scale growing at these rates.”
Microsoft tops tech rivals such as Amazon in market capitalization on some days despite having less revenue, partly because most of its sales is to businesses, which tend to be steadier customers than consumers. A growing proportion of Microsoft’s software sales are billed as recurring subscription purchases, which are more reliable than one-time purchases.
Microsoft’s earnings per share of $1.14 beat expectations of $1 according to IBES data from Refinitiv.
Windows licensing revenue from computer makers grew 9% year over year, beating expectations after a 5% decline in the previous quarter. Spencer said a shortage of Intel Corp. processor chips for PCs that many analysts expected to last into this summer had been resolved earlier than expected, allowing PC makers to ship more machines.
Microsoft’s “commercial cloud” revenue — which includes business use of Azure, Office 365 and LinkedIn — was $9.6 billion this quarter, up 41% from the previous year but down slightly from the 48% growth rate the previous quarter.
Microsoft’s so-called “intelligent cloud” unit, which contains its Azure services, posted revenue of $9.65 billion, above Wall Street estimates of $9.28 billion, according to IBES data from Refinitiv. Chief Financial Officer Amy Hood said that unit could reach $11.05 billion in revenue in the fiscal fourth quarter.
The “productivity and business process” unit that includes both Office as well as social network LinkedIn had $10.2 billion revenue versus expectations of $10.05 billion.
Microsoft’s latest results contained two weak spots.
Its gaming revenue was up only 5% versus 8% the quarter before, which Spencer attributed to less revenue from third-party game developers and the fact that many gamers are delaying purchases of Microsoft’s Xbox console because a new model is expected soon.
Sales of the company’s Surface hardware grew 21% versus 39% the quarter before, also because customers waited for updated hardware they expected to be released soon.
Total revenue rose 14% to $30.57 billion, beating analysts’ average estimate of $29.84 billion according to IBES data from Refinitiv.
Net income rose to $8.81 billion, or $1.15 per share, from $7.42 billion, or 96 cents per share, a year earlier.