Scandal: anti-virus software provider Netqin cooperates with virus maker to cheat consumers, just before its IPO plan in Nasdaq

On Mar 15, Chinese CCTV uncovered a horrified scandal concerning Chinese mobile internet startups.  Netqin is a company, which makes anti-virus software for mobile phone.  It invested in a company called, Feeliu, which claims to make mobile apps and mobile games.  But once users install Feeliu software on their phones, the phones will have many problems, including being very slow. Only if they pay Rmb 2 to download an anti-virus update from Netqin can they solve the problem. (Here is an article about it in local media: http://tech.sina.com.cn/t/2011-03-15/21215289323.shtml)

After the scandal was exposed, Nokia said it will stop pre-installing Netqin software onto its phones.  It will also remove Netqin software from its App store and other distribution channels.  Besides of Nokia, Netqin has distribution partnership with many of the leading phone makers, such as Sony Ericsson, Samsung, ZTE, Coolpad, etc. The other phone makers have yet to respond, according to local news. (http://www.cnbeta.com/articles/137382.htm)

Netqin was invested by many well-known companies, including HTC (US$2.5 million) and MediaTek (US$2.2 million).  It’s just filed for an IPO in Nasdaq, trying to raise US$100 million.  (http://www.reuters.com/article/2011/03/15/netqinmobile-idUSL3E7EF40220110315)  Its listing document shows its revenue reached US$17.7 million last year.  It broke even in Q3 of 2010, but made a loss again in Q4 due to stock option given to employees.

But with the scandal exposed, obviously, its listing plan will be delayed or canceled, as investors wonder how much of its revenue was coming from illegitimate sources.