The following is excerpted from IRG's weekly stock report:
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• Google (GOOG) is offering free music downloads in China, but Baidu.com (BIDU) has launched a search engine especially designed for older Web users. The portal, straightforwardly named "Baidu Elderly Search" in Chinese features larger fonts and a menu of search selections tailored for a more mature audience, from revolutionary song downloads to online forums on Tai Chi and keeping pet birds, popular pastimes among China's retirees. The design emphasizes clicking instead of typing in order to help older users who might not find it easy to type Romanized Chinese (or pinyin) to produce characters for their searches. Statistics from the China Internet Network Information Center show that only 5 million people over the age of 50 had used search engines by the end of 2008, out of a total of nearly 300 million Internet users in China. Baidu also runs special search sites for children and the blind.
• NetEase (NTES) plans to develop its portal, including online ads and wireless services, and game businesses separately, with intentions to list the portal business independently. NetEase's portal business is making personnel adjustments as it moves to Beijing. 100 news center employees would be moved to Beijing in 2009 to expand the company's portal business. Tencent (TCEHF.PK) will not spin off its game unit for an independent listing. Sohu spun off its game unit Changyou.com in an April 2 initial public offering.
• Ctrip (CTRP) CEO Fan Min said that Ctrip will seriously consider good investment opportunities in Taiwan, but that the time is not ripe to acquire or increase investment in Taiwanese online travel service provider ezTravel. Ctrip took nearly 20 percent stake in the company after ezTravel decided to develop global and regional markets in 2006.
• Dell's (DELL) smartphone plans may be on again as the company will offer its own smartphone in China by the end of the year. Dell has not confirmed the plans but that it is working on handsets with Chi Mei Communications, an unlisted unit of Taiwan electronics giant Hon Hai. China-based software maker Red Office is supposedly designing the phones' operating system. A Red Office spokeswoman confirmed the company was building an operating system for a Dell smartphone. Dell's Asian smartphone partnerships come as rumors continue to swirl that Dell is trying to sync up with China Mobile to offer two smartphones. Those devices are expected to be based on China Mobile's Open Mobile System (OMS) operating system.
• Huawei Technologies Co. and ZTE Corp. (OTC:ZTCOF) still struggle in their home market, despite success elsewhere around the globe. Since the government supports for new wireless technology and an aggressive strategy of deeply undercutting competitors on price, the two are beating out rivals in the world's biggest cellular market by subscribers. Huawei and ZTE are ahead of Telefon AB L.M. Ericsson (ERIC), Alcatel-Lucent SA (ALU) and Nokia Siemens Networks in the scramble for an estimated US$59 billion of spending over the next three years on new third-generation wireless networks. 3G technology enables high-speed data services such as wireless video and Web surfing. China was already vital for global telecom-equipment companies, and the rollout of 3G is making it even more important at a time when sales growth in many big markets is weak. China's Ministry of Industry and Information Technology expects 170 billion yuan (US$25 billion) will be spent on 3G networks in China this year. Huawei and ZTE will likely double their combined market share to more than half of China's 3G revenue over the next several years.
Media, Entertainment and Gaming
• It is rumored that The9 (NCTY), Shanghai-based online gaming company has lost the contract to operate the multi-player online version of the game from Activision Blizzard (ATVI), the game's maker, to competitor Netease.com. Standard & Poor's equity analyst Scott Kessler said in a note to clients that it wouldn't be surprising if The9 lost its license, given its failure to launch another version of the game, The Wrath of Lich King, earlier this year in China and the decision by Activision to give another contract to Netease last year. He estimates the game represents easily three-quarters of the The9's revenue and profits, though the company doesn't break out the figure. None of the three
companies had representatives immediately available to comment.
• Wealthy Rise International, a subsidiary of ingot and wafer manufacturer Solargiga Energy Holdings, has renegotiated existing contracts to purchase polysilicon from Hoku Scientific’s (HOKU) subsidiary Hoku Materials. According to the amended contract, the total volume of polysilicon to be sold by Hoku to Wealthy Rise will be reduced such that up to approximately US$136 million may be payable to Hoku over a ten-year period. Hoku received an initial deposit of $7 million from Wealthy Rise after signing, and the amendment requires that Wealthy Rise make four additional deposits in June, August, October and December 2009, each in the amount of US $3.3 million. Wealthy Rise will make a final payment of US $200,000 upon receipt of the first shipment of product from Hoku. Under the agreement, Hoku will grant to Wealthy Rise a security interest in its polysilicon assets to secure Hoku's obligation to repay US$20.4 million to Wealthy Rise as a credit against product shipments over time.
• LDK Solar (LDK) has secured an 200 million yuan (US$29 million) loan from China Development Bank and been approved for an 1 billion yuan (US$146 million) credit line from Agricultural Development Bank of China to fund ongoing business activities. As a result, the company's unused credit facilities grew to US$785 million.
• Yingli Green Energy (YGE) announced that the company, through its subsidiaries, has drawn down US$50 million from a fund managed by Asia Debt Management Hong Kong Limited (ADM Capital). Yingli granted ADM Capital 4.125 million warrants at an initial strike price of US$5.64. The warrant holders' rights to exercise the warrants will terminate and Yingli will be obligated to purchase all unexercised warrants for US$7.00 each.