Cheetah Mobile Further Invests in Beijing OrionStar

Rhea-AI Summary

Cheetah Mobile Inc. (NYSE: CMCM) has announced an additional investment in Beijing OrionStar Technology Co., Ltd. The company, through its subsidiaries, invested US$16.7 million in Beijing OrionStar and exercised its right to convert all of the principal and accrued interest of a convertible loan into equity interest. The investment, expected to close in February 2024, will result in the company holding approximately 73.95% equity interest in Beijing OrionStar.

Insights

Investment Analyst

The strategic investment by Cheetah Mobile Inc. in Beijing OrionStar represents a significant consolidation of their market position in the AI and service robot sectors. By increasing their stake, Cheetah Mobile not only bolsters their control over OrionStar's strategic direction but also potentially enhances their revenue streams through the subsidiary's advancements in AI technologies. The investment indicates a proactive approach to owning a larger share of the AI market, a sector poised for exponential growth. The direct and indirect equity interest figures suggest a calculated move to maintain substantial influence without triggering a full consolidation on their financial statements, which could have varied implications for their balance sheet and income statement.

From a financial perspective, the investment of $16.7 million, alongside the conversion of a convertible loan, is a substantial allocation of capital. Investors should monitor how this capital injection influences OrionStar's R&D capabilities and market expansion. The partnership with Jiujiang Guidance Fund and CSC Group could provide additional strategic benefits, including access to new markets or expertise in supply chain optimization. However, the actual impact on Cheetah Mobile's profitability and earnings per share will depend on how effectively OrionStar can leverage this investment to generate profitable growth.

Technology Market Analyst

The emphasis on AI large language model (LLM) technologies and the pursuit of artificial general intelligence (AGI) by Beijing OrionStar is indicative of the company's ambition to be at the forefront of AI innovation. The AI market, particularly the LLM and AGI segments, is rapidly evolving and highly competitive. Beijing OrionStar's commitment to enhancing its core technological capabilities and hardware manufacturing could result in advanced product offerings and a stronger competitive edge. This could potentially increase market share and influence within the AI space, benefiting Cheetah Mobile's long-term growth prospects.

Furthermore, the focus on embodied AI technology for service robots aligns with industry trends towards automation and smart technology integration. The development of service robots with advanced AI capabilities has a broad range of applications across industries, potentially opening up new revenue channels and partnerships. However, the success of such technological advancements will be contingent upon consumer acceptance and the regulatory environment, which could pose challenges or delays in product deployment.

Supply Chain Management Expert

The collaboration with Jiujiang Guidance Fund and CSC Group, as highlighted by Cheetah Mobile's CEO, is likely to have a strategic impact on Beijing OrionStar's supply chain management. Effective supply chain optimization can lead to cost reductions, improved efficiency and faster time-to-market for new technologies. These improvements are critical in the technology sector, where product life cycles are short and the ability to rapidly innovate can be a key differentiator.

Investments aimed at upgrading manufacturing processes can lead to more resilient supply chains, which is particularly important in a post-pandemic world where supply chain disruptions have been a major challenge for many companies. The potential benefits for Cheetah Mobile include not only enhanced control over the production process but also the possibility of higher margins due to reduced production costs. However, the actual benefits will depend on the execution of these supply chain strategies and the company's ability to adapt to changing market conditions.

BEIJING, Jan. 12, 2024 /PRNewswire/ -- Cheetah Mobile Inc. (NYSE: CMCM) ("Cheetah Mobile" or the "Company"), a leading internet company, today announced that the Company, through two of its wholly-owned subsidiaries, has made an additional investment in Beijing OrionStar Technology Co., Ltd. ("Beijing OrionStar"), in which the Company held 72.91% equity interest before the investment.

The Company, through a wholly-owned subsidiary, made an investment of US$16.7 million in Beijing OrionStar. Concurrently, Beijing Kingsoft Internet Security Software Co., Ltd. ("Beijing Security"), a wholly-owned subsidiary of the Company, exercised its right under the convertible loan with principal amount of RMB100 million that it provided to Beijing OrionStar in 2021 to convert all of the principal and the accrued interest into Beijing OrionStar's equity interest.

Additionally, Gongqingcheng Orion Industrial Investment Center (Limited Partnership) (the "Fund") made an investment of RMB150 million, or approximately US$20.9 million, into Beijing OrionStar. The Company, through one of its subsidiaries, is one of the limited partners of the Fund and currently owns approximately 49.5% interest in the Fund. Jiujiang Industrial Investment Guidance Fund Partnership (Limited Partnership) ("Jiujiang Guidance Fund") and Shenzhen China Science and Merchants Equity Investment Management Co., Ltd. ("CSC Group") serve as the other limited partner and the fund manager of the Fund, respectively.

The aforementioned investment is expected to close in February 2024. After the completion of the investment, the Company's equity interest in Beijing OrionStar is expected to be 72.10%, without taking into account the stake it holds indirectly through the Fund; the Company is expected to hold, both directly and indirectly, 73.95% equity interest in Beijing OrionStar, including the stake it holds indirectly through the Fund.

Mr. Sheng Fu, chief executive officer and director of the Company, commented, "I am pleased to announce the Company's collaboration with Jiujiang Guidance Fund and CSC Group, which includes making investment in Beijing OrionStar. This collaboration marks the beginning of a new phase in Beijing OrionStar's development, with these new shareholders playing a crucial role in helping it achieve significant advancements in expanding its range of end use cases and applications, upgrading its manufacturing processes, and optimizing its supply chain management.

With its focus on in-depth research and development, Beijing OrionStar will improve its core technological capabilities, and will continue to invest in the research and development of artificial intelligence ("AI") large language model ("LLM") technologies, as well as the enhancement of its hardware manufacturing capabilities. As we enter the era of artificial general intelligence ("AGI"), Beijing OrionStar is dedicated to realizing service robots equipped with embodied AI technology, to better cater to the needs of its global customers across various scenarios."

About Beijing OrionStar

Founded by Mr. Sheng Fu, Beijing OrionStar is an AI service solution provider headquartered in Beijing focusing on the research and development of AI. Beijing OrionStar became a subsidiary of the Company in December 2023, following the Company's acquisition of its controlling stake. Having made large-scale investments in the research and development of AI technology since 2016, Beijing OrionStar has independently developed a full range of AI technologies, including automatic speech recognition, computer vision, and indoor navigation, as well as acquiring significant capabilities in the research and development of service robot operating systems, application development, and the design and manufacturing of full-stack hardware for service robots. At the same time, Beijing OrionStar is in the process of independently researching and developing LLM and empowering its robotics business with LLM technologies, promoting the smart digitalization of real economy and use cases.

About Cheetah Mobile Inc.

Cheetah Mobile is a China-based IT company with a commitment to AI innovation. It has attracted hundreds of millions of users through an array of internet products and services on PCs and mobile devices. At the same time, it actively engages in the independent research and development of its AI technologies, including LLM technologies. Cheetah Mobile provides advertising services to advertisers worldwide, value-added services including the sale of premium membership to its users, multi-cloud management platform to companies globally, as well as service robots to international clients. Cheetah Mobile is also committed to leveraging its cutting-edge AI technologies, including LLM technologies, to empower its products and make the world smarter. It has been listed on the New York Stock Exchange since May 2014.

Safe Harbor Statement

This press release contains forward-looking statements. These statements, including management quotes and business outlook, constitute forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Such statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in the forward-looking statements, including but are not limited to the following: Cheetah Mobile's growth strategies; Cheetah Mobile's ability to retain and increase its user base and expand its product and service offerings; Cheetah Mobile's ability to monetize its platform; Cheetah Mobile's future business development, financial condition and results of operations; competition with companies in a number of industries including internet companies that provide online marketing services and internet value-added services; expected changes in Cheetah Mobile's revenues and certain cost or expense items; and general economic and business condition globally and in China. Further information regarding these and other risks is included in Cheetah Mobile's filings with the U.S. Securities and Exchange Commission. Cheetah Mobile does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Investor Relations Contact

Cheetah Mobile Inc.
Tel: +86 10 6292 7779
Email: ir@cmcm.com 

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SOURCE Cheetah Mobile

FAQ

What is the recent announcement made by Cheetah Mobile Inc. (NYSE: CMCM)?

Cheetah Mobile Inc. (NYSE: CMCM) has announced an additional investment in Beijing OrionStar Technology Co., Ltd.

How much did Cheetah Mobile Inc. (NYSE: CMCM) invest in Beijing OrionStar?

The company, through its subsidiaries, invested US$16.7 million in Beijing OrionStar.

What is the expected outcome of the investment in Beijing OrionStar?

The investment is expected to result in the company holding approximately 73.95% equity interest in Beijing OrionStar.

What are the future plans for Beijing OrionStar?

Beijing OrionStar plans to focus on in-depth research and development, improve its core technological capabilities, invest in AI large language model technologies, and enhance its hardware manufacturing capabilities.

Who is the CEO of Cheetah Mobile Inc. (NYSE: CMCM)?

Mr. Sheng Fu is the chief executive officer and director of the company.