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Tudou Gains Most in 10 Weeks as Cost Controls Boost Profit

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May 21 (Bloomberg) -- Tudou Holdings Ltd., the Chinese online video site being acquired by Youku Inc., gained the most in 10 weeks in New York as first-quarter profit and sales beat estimates.

American depositary receipts of Shanghai-based Tudou surged 12 percent to $33.44 at the close of trading in New York, the most since Youku said on March 12 that it planned to acquire its rival video site operator in a stock deal valued at about $880 million. Tudou shares have climbed 117 percent since the deal was announced. Youku jumped 11 percent, also the biggest gain since March 12, to $22.56.

Tudou is cutting costs in preparation for its merger with Youku, said Andy Yeung, a New York-based analyst for Oppenheimer & Co. Tudou in a statement reported first-quarter sales of $22.3 million, exceeding Yeung’s estimate of $21.4 million. Tudou reported a loss of 75 cents per share on a GAAP basis compared to a $1 loss forecast by Yeung.

“Tudou saw significant improvement on net income through cost controls that were much better than expected,” Yeung said in a phone interview. “This bodes very well for the acquisition process and is good news for investors.”

Yeung has an outperform rating on Tudou.

To contact the reporter on this story: Leon Lazaroff in New York llazaroff@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at Tbarak@bloomberg.net

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