Why Cheetah Mobile Is Investing in Big Data, Startups Despite Recent Stock Drop

Cheetah Mobile has been posting better-than-expected sales results, building up a global ad network and expanding into fast-growing new markets such as India. Its stock, though, has fallen by more than half from its 52-week high, closing Monday below $16 per share.

In an interview, CEO Sheng Fu said the drop has more to do with the fact that the company has its headquarters in China than anything specific to his company. Fu says Cheetah’s position as a Chinese company is having a twofold impact, even though the company now gets more than half its business from overseas.

“One reason is, investors, they are worried about the China economy,” Fu said. The second, he said, stems from the fact that many of Cheetah’s investors are from China and have lost value across their portfolio and have been selling Cheetah shares to raise cash.

Nonetheless, the company’s strategy isn’t changing. Fu said he is focused on growing the company’s global user base, increasing its big-data analysis capabilities and strengthening its global base of advertisers.

On that middle point, Cheetah Mobile has hired 10 people in Silicon Valley for what it hopes will eventually be a 20-30 person research center focused on big data. That’s in addition to a newly expanded team of 100 people in Beijing also tackling data analysis.

The company scooped up 40 people laid off by Yahoo earlier this year, including prominent researcher and engineer Zhuang Li.

To really deliver on the promise of mobile advertisements, Fu said, companies need to do more than just push users to install other apps.

“The user is not always wanting to download an app,” Fu said. “Sometimes they want to book a hotel. Sometimes they want to eat some delicious things.”

Too much of the app economy, he said, is focused on delivering app install ads because they can be done without knowing much about the user. Fu says more personalized and tailored ads are the future.

Being at the top of the ad game is critical to Cheetah, which focuses on free, ad-supported apps, including utility software to manage disk space and battery use.

Fu is also behind a new Chinese startup investment effort, called Purple Cow. Fu is teamed with Quanling Zhang, a popular CCTV anchor who left her post at the Chinese television network to serve as Fu’s fellow investor. The company is accepting applications globally for a fall batch of 30-50 startups, with plans for spring and fall startup classes, a la Y Combinator.

The company tested out its investment efforts earlier this year, backing a now-popular mobile karaoke app called Musical.ly.

As a public company, Fu says Cheetah is not investing to make money, but rather to build a broader network of “friends” that can eventually be part of its ad network.

“That can help us build the ecosystem of Cheetah Mobile,” he said.

Fu said Cheetah Mobile also is planning to step up its collaboration efforts with phone makers. It already works with Samsung, Xiaomi and dozens of other Chinese, Taiwanese and Indian hardware makers to build Cheetah Mobile utilities into their products. Now, he says, it is time for deeper partnerships, although he declined to offer details. He did say the company plans to partner broadly so it is less susceptible to the fast-changing fortunes of individual phone makers.

“We don’t care who will go up and who will go down,” Fu said. “All of them are our partners.”

This article originally appeared on Recode.net.