Text: Duan Nannan, the forefront of entrepreneurship
Editor|Feng Yu
American Editor | Wu Yizhong
Audit | Ode
After 8 months of decline, on December 25, the share price of 360 Security Technology Co., Ltd. (hereinafter referred to as "360") ushered in a long-lost limit, sweeping away the haze of continuous decline.
The 360 stock price limit is related to a piece of news. Recently, the results of China's first official "Large Model Standard Compliance Evaluation" were announced, and 360 was impressively listed.
However, even if the company's stock price is up and down, the market value of 360 is only more than 60 billion, which is still far from the market value of nearly 500 billion at the peak.
Compared with large Internet manufacturers such as Alibaba, 360 missed the wave of mobile Internet, causing the company's performance to fall to the bottom. Now, in the context of the coming wave of artificial intelligence, Zhou Hongyi, the founder of 360, has announced more than once that he wants to be all in artificial intelligence. Can 360 successfully turn over with large-scale model products?
1. What fire, what to chase
In 2017, 360 announced that it would go public through the backdoor listing of Jiangnan Jiajie back to A-shares. After the news was announced, Jiangnan Jiajie, which was backdoor, closed 18 daily limits in a row. After the completion of the backdoor, the market value of 360 was close to 500 billion yuan at its peak.
At the time of the backdoor listing, 360 signed performance VAM agreements with many investment institutions, stipulating that from 2017 to 2020, the company's cumulative net profit after deducting non-profits shall not be less than 13.05 billion yuan.
From 2017 to 2020, 360's cumulative net profit after deducting non-profits was 13.752 billion yuan, which was only 702 million yuan higher than the agreed VAM performance.
After the completion of the performance VAM, the performance of 360 began to decline sharply. In 2021, the company's net profit attributable to the parent company will be 902 million yuan, a year-on-year decrease of 69.02%. In 2022, 360's performance will turn from profit to loss, with a substantial loss of 2.204 billion yuan. In the first three quarters of 2023, the company lost 369 million yuan again.
As a PC Internet giant, 360 missed the wave of mobile Internet development. Therefore, 360 can only rely on the PC Internet advertising business to support the company's development.
In 2018, 360's Internet advertising and service revenue was 10.658 billion yuan, accounting for 81.18% of the company's revenue. By 2022, the company's Internet advertising and service business will achieve operating income of 4.710 billion yuan, a significant decrease of 55.81% compared with 2018.
A few years ago, 360 was named by "315" because of false advertising and other issues, and consumers even shouted that 360 would close the Internet advertising business.
In March 2022, the Cyberspace Administration of China (CAC) strengthened its supervision of Internet advertising, which further led to a decline in 360's Internet advertising revenue.
The company's largest business revenue declined, and 360 is also looking for a second growth point, so 360 set its sights on network security.
However, it backfired, due to the large number of competitors in the field of network security, network security companies such as Qianxin and Sangfor were eyeing each other.
Under the pressure of competitors, the growth rate of 360's network security business is not as expected. According to the data, the company's network security business revenue in 2022 will be 1.791 billion yuan, a year-on-year increase of nearly 30%. However, due to the small base, it failed to make up for the losses caused by the decline in advertising business.
In addition, 360 also follows the trend of investment everywhere. Two years ago, new energy vehicles caught fire, and 360 obtained 16.594% of the equity of Nezha Automobile at a price of 2.9 billion yuan, becoming its second largest shareholder. After several subsequent equity transfers, as of the end of 2022, 360 held 10.72% of the equity of Nezha Automobile. In view of the unsatisfactory performance of Nezha Automobile, 360 recorded a loss of about 900 million yuan in 2022 in terms of equity.
In addition to new energy, when the metaverse caught fire in 2022, Zhou Hongyi, the actual controller of 360, publicly stated that 360 officially set foot in the metaverse field and regarded itself as a "digital twin" of the metaverse.
According to public information, since 2007, the number of 360 foreign investments has been close to 300, covering various industries such as e-commerce, social networking, entertainment, and new energy, but there are few successful investment cases.
360 insiders told "Entrepreneurship Frontline" that after the decline in the advertising business, 360 has been trying to seek a breakthrough. Chase whatever fire, but it's all a shallow taste. As a result, the company's performance has not improved.
2、All in AI，研发费用不升反降
In February 2023, the chatbot ChatGPT (artificial intelligence product) exploded. On February 8, on the interactive Q&A platform, 360 made it clear that the company has GPT-like products, and the company also has massive data to provide a data basis for ChatGPT training.
After the news was announced, the 360 share price continued to rise, and by April 4, the company's share price once touched 20.85 yuan per share, an increase of more than 300% from the low point in December 2022.
Since then, with the launch of ChatGPT4 by OpenAI, the AI (artificial intelligence) industry has once again stood on the cusp, and governments around the world have introduced policies to support the development of AI, and AI is also regarded as the "fourth industrial revolution" by industry insiders.
Based on this, Zhou Hongyi has said in public more than once that he wants to be All in AI. On April 21, 2023, Zhou Hongyi issued an internal notice asking all employees of 360 to embrace ChatGPT.
On December 10, at the annual meeting of Chinese business leaders, Zhou Hongyi mentioned "AI faith" again, and said that the United States has been all in AI, and Chinese entrepreneurs must have all in AI if they want to establish AI faith.
More than half a year has passed, is 360 really as Zhou Hongyi said, all in AI? At present, 360's main direction is AI large model, and it has developed a large model product "360 Intelligent Brain".
According to the 360 semi-annual report, "360 Intelligent Brain" has been iterated to version 4.0. However, in the market, "360 Smart Brain" does not seem to be popular.
On HUAWEI AppGallery, as of January 3, 2024, Baidu's large-scale model product "Wenyan Yixin" has been downloaded more than 18.04 million times, Douyin's "Doubao" has also been downloaded 10.3 million times, and iFLYTEK's "Xunfei Xinghuo" has been downloaded nearly 11 million times. The number of downloads of 360's "360 Smart Brain" is only 40,000 times, which is far from the above-mentioned ones.
At present, the differences of large model products are mainly concentrated in "multi-modal information processing". The so-called multimodal information processing is capable of processing information such as voice, text, images, and videos.
In the world, there is currently no company's large-scale model products that can process video (Google's large-scale model video processing has been proven to be fake), and speech recognition technology is relatively mature at home and abroad, and the real watershed is in image recognition.
In the field of multimodal image recognition in China, Baidu's "Wenxin Yiyan" is half a position ahead of other products. For example, "Wenxin Yiyan" can accurately parse the people in the picture, while the others are much weaker.
Compared with "Wenxin Yiyan", the mobile terminal "360 Smart Brain" does not have a picture analysis function. In addition, the regular Q&A of "360 Zhi Brain" is relatively stuck, and the calculation speed is slow, which is not difficult to understand why the number of downloads of "360 Zhi Brain" on Huawei Mall is so low.
Judging from the product effect, it is difficult to say that Zhou Hongyi has been all in artificial intelligence. In terms of R&D expenditure, it also failed to reflect Zhou Hongyi's determination to be all in. According to the data, the R&D expenses of 360 in the first three quarters of 2023 will be 2.314 billion yuan, compared with 2.522 billion yuan in the same period of 2022, and the R&D investment will decline by 8.25% year-on-year.
You must know that the AI industry is changing with each passing day, and the iteration speed of related products is very fast, which requires a large number of R&D personnel as support. Algorithm engineers, in particular, are the objects of competition for large model companies.
The headquarters and R&D center of 360 are all in Beijing, and a headhunter told the "front line of entrepreneurship" that algorithm engineers who have worked for more than 5 years generally earn a monthly salary of 50,000 to 70,000 yuan in Beijing.
If it is really as Zhou Hongyi said, 360 All in artificial intelligence, research and development costs should not rise but fall. Judging from the product effect and R&D expenditure, it is difficult to say that Zhou Hongyi and 360 are all in artificial intelligence.
3. The company continued to lose money, and "Lao Zhou" did not treat himself badly
At present, the current situation of 360 is that the main business is sluggish, and it is reluctant to spend money if it wants to open up a second battlefield. However, "the skinny camel is bigger than the horse", as an Internet giant in the PC era, even if 360 is not doing well, the company is not short of money.
According to data from Oriental Wealth Choice, in 2018, when 360 backdoor Jiangnan Jiajie was listed back to A, it raised 50.235 billion yuan. In 2021, 360 raised another 4.93 billion yuan from the capital market through private placement, with a total of more than 55 billion yuan raised on the two occasions.
Due to successive years of foreign investment, 360's cash reserves have been depleted. As of September 30, 2023, 360 monetary funds were 24.33 billion yuan, a decrease from the scale of funds raised. The huge cash reserves have also brought considerable interest income to the company, with data showing that in the first three quarters of 2023, 360 alone will earn as much as 518 million yuan in interest income.
According to data from Oriental Wealth Choice, in the first three quarters of 2023, among the 5,335 A-share listed companies, only 831 have a net profit attributable to the parent company of more than 518 million yuan.
This also means that in the first three quarters of 2023, the interest income of 360 alone will exceed 84% of the net profit attributable to the parent of listed companies. Even this did not stop the company from continuing to lose money. According to the data, the net profit attributable to the parent company of 360 in the first three quarters of 2023 will be -369 million yuan.
In the face of the company's continuous losses, 360, like other Internet companies, chose to lay off employees. 360 insiders told "Entrepreneurship Frontline" that since the end of 2022, 360 has carried out several rounds of layoffs. According to the 2022 annual report, 360 has 6,481 employees, a decrease of 912 from 7,393 at the end of 2021.
Since the number of employees is only disclosed in the annual report, we have no way of knowing the number of employees in 2023 from public sources.
However, it should be noted that the management expenses of 360 in the first three quarters of 2023 will be 489 million yuan, down 3.36% from 506 million yuan in the same period of 2022. Judging from the management expenses, the layoffs in 2023 seem to continue.
However, even if the company continued to lose money, Zhou Hongyi and 360 executives did not treat themselves badly. In 2022, except for the independent directors who do not participate in daily management, the total salary of the remaining six directors of 360, including Zhou Hongyi, will exceed 35.35 million yuan.
Among them, Zhou Hongyi's personal salary is 8.7664 million yuan, and the salary of the outgoing director Ye Jian is as high as 12.0895 million yuan. The rest of the directors, except for Dong Jianming, whose salary is lower, the remaining three have an annual salary of more than 3.9 million yuan.
4. Conclusion
The main business is sluggish, and what enterprises need to do is to make every effort to find new growth points. Judging from Zhou Hongyi's daily statement, 360 seems to be in full swing in transformation.
However, the capital market needs to look at the company's operating results, and at present, 360's performance still continues to lose. All in's large-scale model products not only have poor market data, but also have a large gap between the product experience effect and those of competitors.
Under the influence of various unfavorable factors, the stock price of 360 has returned to its original point after a short-term surge. If the company wants to transform, Zhou Hongyi and many executives may want to start with themselves to cut salaries and reduce divorce and equity sharing with his wife.
In terms of action, 360 needs to aim at the direction of transformation, and then invest real money to fight, rather than "telling stories" through PPT to convey the determination of transformation to the capital market.
*Note: The title image in the article is from the interface news gallery.
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