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From: zax	5/15/2012 11:28:55 AM
	of 304

2 Positive Signs for Renren By Rex Moore \| More Articles May 15, 2012 fool.com Renren (NYSE: RENN ) shares are up 9% this morning on a strong earnings report. The company also carries $87.1 million of goodwill and other intangibles on its balance sheet. Sometimes goodwill, especially when it's excessive, can foreshadow problems down the road. Could this be the case with Renren? Before we answer that, let's look at what could go wrong. AOL blows up In early 2002, AOL Time Warner was trading for $66.27 per share. It had $209 billion of assets on its balance sheet, and $128 billion of that was in the form of goodwill and other intangible assets. Goodwill is simply the difference between the price paid for a company during an acquisition and the net assets of the acquired company. The $128 billion of goodwill in this case was created when AOL and Time Warner merged in 2000. The problem with inflating your net assets with goodwill is that it can -- being intangible after all -- go away if the acquisition or merger doesn't create the amount of value that was expected. That's what happened in AOL Time Warner's case. It had to write off most of the goodwill over the next few months, and one year later that line item had shrunk to $37 billion. Investors punished the stock along the way, sending it down to $27.04 -- or nearly a 60% loss. In his fine book It's Earnings That Count, Hewitt Heiserman explains the AOL situation and how two simple metrics can help minimize your risk of owning a company that may blow up like this. Let's see how Renren holds up using his two metrics. Intangible assets ratio This ratio shows us the percentage of total assets made up by goodwill and other intangibles. Heiserman says he views anything over 20% as worrisome, "because management might be overpaying for the acquisition or acquisitions that gave rise to the goodwill." Renren has an intangible assets ratio of 7%. This is well below Heiserman's threshold, and a sign that any growth you see with the company is probably organic. But we're not through; let's also take a look at tangible book value. Tangible book value Tangible book value is simply what remains after subtracting goodwill and other intangibles from shareholders' equity. If this is not a positive value, Heiserman advises you to run away because such companies may "lack the balance sheet muscle to protect themselves in a recession or from better-financed competitors." Renren's tangible book value is $1.1 billion, so no yellow flags here. Foolish bottom line Renren appears to be in good shape in terms of the intangible assets ratio and tangible book value. You can never base an entire investment thesis on one or two metrics, but there are no yellow flags here. If any companies you're researching do fail one of these checks, make sure you understand the business model and management's objectives. I'll help you keep a close eye on these ratios over the next few quarters by updating them soon after each earnings report.

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From: zax	5/16/2012 10:09:27 AM
	of 304

Renren Inc. (RENN)-NYSE 6.10 0.26(4.45%) 10:07AM EDT - Nasdaq Real Time Price My napkin analysis: Facebook IPO valuation now estimated to be $108 billion Number of active facebook users: 908 million Market cap of Renren: $2.36 billion Number of activated Renren users: 200 million These published numbers are do not represent the same thing; Active users <> Activated users. Let's assume 1/4 of Renren's "activated" users are active (when Renren had 117M users, it said 31M were active); that gives us 50 million active Renren users. That places a value of $47.20 per Renren user Compare to facebook; $108 billion / 908 million = $119 per facebook user. This is not meant to suggest anything and is only provided as food for thought and conversation. Note that Yandex is feeling the fb love as well, and I expect this to last though Friday, at least.

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To: zax who wrote (280)	5/19/2012 1:55:59 PM
From: Glenn Petersen	of 304

This may explain why RENN was hit particularly hard yesterday: Medvedev Nukes Russia’s Stock Market Walter Russell Mead May 19, 2012 It was just a short aside in a speech; the junior member of Russia’s rotating leadership team was talking about how conflicts like the one in Syria could have broader implications for world politics and pointed out that great powers could get involved in unpredictable ways: “At some moment, such actions, which undermine sovereignty, can end with a full-fledged regional war, or even, and I don’t want to scare anybody, the use of nuclear weapons.” (From the New York Times.) It was intended as a veiled threat to the United States — more as an expression of Russia’s strong displeasure with the US approach to Syria than as an actual announcement that Russia would consider a nuclear strike if the US intervenes in Damascus. But it was enough to cause the fragile Russian stock market to fall 3.5 percent, wiping, the Times estimates, $24 billion from the values of Russia’s listed companies. The market fall was not, I think, caused by investors wondering what nuclear war would do to Gazprom’s earnings. It was due to their perception that a Russian government given to random and pointless saber-rattling was not going to move forcefully on economic reforms and transparency issues, and that the long term interests of the country are going to be sacrificed for short term demagoguery. Instead of a moderate, responsible and focused leadership aimed at reforming and restructuring an increasingly ramshackle economic structure, Putinocracy 3.0 would be, if anything, a little worse than the 2.0 model when Medvedev was the president and Putin the prime minister. More, it suggested that the prime minister is on a short leash; Medvedev has been presented as a modern minded reformer. If he is mouthing stale and unconvincing Cold War threats, it looks as if he has even less autonomy than markets feared. blogs.the-american-interest.com

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From: zax	5/21/2012 9:22:03 AM
	of 304

Renren Declines Most on Record as Facebook IPO Optimism Fades By Ye Xie and Leon Lazaroff - May 18, 2012 2:51 PM CT bloomberg.com Renren Inc. (RENN) fell the most on record as Facebook Inc. (FB)’s initial public offering failed to boost investors’ confidence in the Chinese social networking website that won’t turn profit until late 2013. Beijing-based Renren tumbled 21 percent, the most since its IPO a year ago, to $4.95 at 3:48 p.m. in New York. Before today, the shares had gained 76 percent this year on speculation the Facebook IPO may prompt investors to put a higher valuation on social media companies. Renren Declines Most on Record Scott Eells/Bloomberg The Renren Inc. website is displayed for a photograph in New York. The Renren Inc. website is displayed for a photograph in New York. Photographer: Scott Eells/Bloomberg Facebook, the world’s most popular social-networking site, was little changed from its $38 offering price, paring a gain of as much as 18 percent. Market makers in Germany earlier quoted bids for Facebook at around $70 a share. Renren, which reported a first-quarter adjusted loss of 3 cents a share this week, traded at 74 times trailing 12 months earnings, more than double the average of its industry, data compiled by Bloomberg shows. “Facebook was not trading as well as people expected,”which spills over to the Chinese Internet companies, such as Renren, said Echo He, an analyst at Maxim Group LLC in New York, in a phone interview. “From a fundamental perspective, Renren’s valuation is not sustainable.” Renren will keep losing money until the third quarter of next year, according to analysts surveyed by Bloomberg. The company said in a statement on May 14 that it expects second-quarter revenue of $41 million to $43 million, less than the $46 million forecast by analysts in a Bloomberg survey. Renren had 154 million active users in China as of March. Facebook has more than 900 million users and generated $3.7 billion in revenue in 2011. “Now that Facebook’s IPO is over, investors are refocusing on Renren’s fundamentals and the fact that online advertising in China has slowed down quite rapidly,” said Andy Yeung, a New York-based analyst for Oppenheimer & Co. “Renren benefited from the run-up to the IPO, but now there’s no more external catalyst. Investors ‘buy on the rumor and sell on the news,’ and today we had the news.” To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Leon Lazaroff in New York llazaroff@bloomberg.net To contact the editor responsible for this story: Tal Barak Harif at Tbarak@bloomberg.net

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