Is It Time to Sell Qihoo 360 Technology Co Ltd (QIHU)?

Qihoo’s probable future
More likely, QIhoo will heed Beijing’s warnings and curtail its “acts of unfair competition.” What company wouldn’t when face-to-face with Beijing?

All in all, preventing the company from its reviled cross-marketing tactics will stretch Qihoo thin.

For at least a year now, Qihoo simply tricked people into using its browser. By putting so much effort into these “unfair” tactics, it’s doubtful whether or not any of its products are made with quality and real effort.

Moreover, the antivirus maker turned browser maker has moved into search and maps in just a few short months. With so many new verticals, it’s doubtful whether this $8 billion market cap company can really take on $34 billion Baidu.com, Inc. (NASDAQ:BIDU) . So far, Baidu has released several versions of its mobile operating system and several smartphones.

Tired of Qihoo’s taunts, Baidu also went on the attack. By launching “Baidu PC Faster” in January, the company signaled that it would take on Qihoo in its own game: desktop security. And by releasing the software suite in Thai and English, Baidu is putting the pressure on Qihoo to compete internationally, too.

With so many areas to invest in and its main marketing strategy gone, Qihoo really has its work cut out for it.

China’s warning should be your sign to divest
Qihoo is behind the times. Although the company’s “unfair” practices have worked in the past, the company needs to grow up. Now that the tech landscape seems to be dominated by domestic players, Qihoo can’t count on Beijing to support it no matter the situation.

This warning should be a wake-up call. Now that it’s competing more heavily against domestic players, Qihoo needs to step up its product quality and really identify what its strategy is for growth because right now it’s hard to see Qihoo become the “Google of China.” Baidu has been around for far too long and may be successful in preventing Qihoo from growing.

The article Is It Time to Sell This Chinese Tech Company? originally appeared on Fool.com and is written by Kevin Chen.

Fool contributor Kevin Chen has no position in any stocks mentioned. You can follow him at @TMFKang or on Google+. The Motley Fool recommends Baidu, Google, and Sohu.com. The Motley Fool owns shares of Baidu, Google, and Microsoft.

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