Attendees view Letv's launch of its smartphone at a press conference in Beijing in April. Photo: CFP

Jia Yueting, CEO of Letv, displays his company's smartphone. Photo: CFP

Beijing-based Leshi Internet Information and Technology Corp, commonly known as Letv,   Saturday posted a statement on its Weibo account, requiring a Shanghai-based analyst to apologize for his "false" and "misleading" comments over Letv on a Friday TV show.

On the TV show aired by China Business News (CBN) TV channel, Yang Xiaolei, an analyst at Shanghai-based Hua An Fund Management Co, said, "Letv did not engage in significant financial statement fraud," but suggested the regulators should investigate the company's public data.

"Letv announced it achieved 10 million smartphone preorders in 10 days, while 10-day preorders for Xiaomi Note [a popular brand] is only a million units," Yang said, noting he found it difficult to believe there could be a tenfold gap.

"Letv claimed it had sold several million units of smart TV sets but information from other channels indicated that the actual shipments were only half of what the company announced," Yang said, admitting though that he could not verify the information independently. 

Letv accused Yang of "spreading totally inaccurate information" and "disturbing the capital market," demanding Yang to apologize and make corrections in his CBN TV show comments.

Several hours after the TV show was aired, Yang said on his Weibo account on Friday that what he said on the show only represented his personal opinion and he did not think Letv was engaged in financial statement fraud. 

"It is hard to tell if Letv has exaggerated its sales data since there is no authoritative third-party sales survey," Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, told the Global Times Monday.

But sales exaggeration is a widespread problem in the online retail sector, said Zhang.

In addition to questioning Letv's sales data, Yang also doubted Letv's future stock performance and advised against investing in companies like Letv which are "too good at telling stories."

Letv has experienced a continuous share slump after Jia Yueting, the company's CEO, sold about 1.9 percent of Letv's total shares from June 1 to June 3 for 2.5 billion yuan ($402.3 million).

Letv's share price dropped 3.04 percent on June 4 and closed at 76.58 yuan.

On Friday, its share price plummeted the daily limit of 10 percent to close at 55.04 yuan.

Letv announced on May 25 that Jia would sell no more than 148 million shares of the company in the next six months and the capital gained would be lent to Letv for five years without interest.

Jia's share sale may raise 10 billion yuan and the interest-free loan will spare Letv from a large amount of interest payment, according to media reports.

Liu Shuwei, a researcher at the Central University of Finance and Economics, mentioned Jia's share sale in an article released on her Weibo account on June 17 and said the sale of shares by the controlling stakeholder or the president indicates the company has operation problems.

Investors bought shares to get returns and not to give easy money to major stakeholders and "investors are not fools," Liu said, noting Jia made an easy profit. 

Liu also said on her Weibo on Thursday that she will release a research report on Wednesday on Letv's viable entity. 

However, Zhang at iiMedia said that the Jia's share sale is fair as long as it did not break any laws and securities regulations.

Internet companies cannot be judged just based on their current revenue and profits, according to Zhang.

Wang Jun, a senior analyst with Beijing-based Analysys International, echoed Zhang.

"Unlike traditional enterprise which make a one-time profit on the sale of a product, Internet companies, including Letv, can make recurring profits from a customer by providing services," Wang told the Global Times Monday.

Wang also said that Letv has a comprehensive business model, which includes providing entertainment content to customers through its smart TV and smartphones, and maybe in cars which is still undergoing research and development.

The only concern about Letv is that when its executives can make a big fortune by selling their shares, would they still be devoted to the company's development, Zhang said.