Greenberg: Digging Deeper into Youku

I think I figured it out with these Chinese IPOs: We’ve got to stop calling them the Amazon's

or YouTube's or the whatever's of China.

Instead, we need to be asking: How’s biz, and at YouKu, one of this week’s super-hot IPOs (initial public offerings), it ain’t so hot.

Take a look at these numbers—straight from the company's SEC (Securities and Exchange Commission) filing:

For the first nine months of this year, it had revenues of a whopping—$35 million.

And Youku's losses are growing. For the first nine months of the year, they were $24.9 million, up from $20.4 million a year earlier. (You have to use a currency calculator to get the year-ago figure; they give that one in Yuan.)

All of this for a company with a $4 billion-plus market cap. (It was actually higher before I discussed this today on The Strategy Session.)

And a company that for all of last year had a negative gross margin.

And a company whose content costs are going... up. They doubled last year.

And did I mention censorship? Youku comes right out and says that “videos and other content” on its website “might be found objectionable” by Chinese authorities.

My take: None of this means it won't eventually grow into its valuation, but for goodness sakes: Buyers, please beware.

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