Citron Research No Fan Of Qihoo 360

Shares of China-based Qihoo 360 Technology (Nasdaq: QIHU), a provider of Internet and mobile security products, are holding up well despite a report from Citron Research that says the company is fraudulent. In fact, Citron says Qihoo is “committing fraud – plain and simple.”“When Citron began to write on Qihoo we had questions but we did not identify Qihoo as an outright fraud.  We understand the liability that exists in calling a publicly traded company a fraud if it is not one, especially one that trades on the New York Stock Exchange.  Until now, we have always left ourselves an out … that has now come to an end,” Citron said in its report.Qihoo denied the allegations from Citron and held a conference call yesterday to attempt to assuage nervous analysts and investors. Citron alleged Qihoo is falsely inflating revenue from paid advertising links and revenue derived from online game users that visit its site. Citron claims it charges on a per link basis, not a per customer basis. The research firm also said Qihoo has “zero unique content.”The research firm concludes “This is fraud plain and simple.   Every component of Qihoo's parabolic revenue growth story is based on company assertions that can't be verified in the public domain, do not align to comparisons with industry competitors, and defy common sense. When you find such a company in the US or China, especially one with a market capitalization over 2 billion dollars, watch out.”