The following is excerpted from IRG's weekly stock report:
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• Workers at Baidu Inc. (NASDAQ:BIDU) in two southern Chinese cities called off their strike, although they said they hadn't reached any immediate agreement with the Internet search company over complaints about compensation. Representatives of several hundred employees at the two southern offices of Baidu, which runs China's top search site, finished meetings with executives from the company's Beijing headquarters, including the head of human resources and an assistant to Robin Li, the company's chief executive. They plan to give the company two to three days to come up with a fair response, and will decide what to do after that. Hundreds of employees stopped working May 4 over salary cuts and new commission policies they said were designed to force people out of their jobs. Baidu, which has about triple the share of Chinese Internet search advertising of Google (NASDAQ:GOOG), set new sales targets at the start of this month and said it would withhold commission from employees who don't meet them. Base salaries were also reduced by about 30 percent, said the workers, who are demanding that the policies be cancelled and that the company's regional manager be fired.
• Yahoo's (NASDAQ:YHOO) decision to establish a global software R&D center in Beijing underwent approval by Alibaba (OTC:ALBCF). Yahoo cannot conduct Internet business in China and that the company's China brand belongs to Alibaba. The e-commerce company approved the Beijing center due to the benefits afforded by Chinese R&D and Yahoo's current global situation. Yahoo planned to announce the new global center in June. Yahoo spent US$1 billion on the purchase of about 40 percent stake in Alibaba in 2005.
• China Techfaith Wireless Communication Technology (NASDAQ:CNTF) has reported total net revenues of US$48.7 million for the first quarter ended March 31, 2009, compared to US$49.6 million for the same period in 2008. The company has posted a net income attributable to TechFaith of US$2.1 million, or net income per diluted ADS of US$0.05, for the first quarter of 2009, compared to US$2.9 million, or net income per diluted ADS of US$0.07, for the same period in 2008.
• China's export of mobile phone handsets dropped 13% on-year to 103 million sets in the first quarter of 2009, with an export value dropping 11.3% to US$7.55 billion. The average price of export edged up 2% to US$72.9 per handset but the export price has been fluctuating since 2008, says China Customs. In the second half of 2008, the export price of mobile phone handsets swayed from US$79.4 per set in September to US$68.2 each in December and in March 2009, it rose back to US$71.9 per set. Export of mobile phone handsets through processing trade dropped 8.1% to 88.11 million sets, a reverse from an 8.6% rise over the same period last year. General export of mobile phone handset dropped 33.2% to 15.07 million sets.
• China Unicom (Hong Kong) Ltd. (NYSE:CHU) launched its trial third-generation services in 55 cities and aims to expand the trial to a total 284 cities by the end of September. China Unicom will formally launch the 3G services, based on WCDMA technology, to 284 cities. China Unicom is the last of the country's three major operators to launch the trial service. The other two operators are China Mobile Ltd., with a license based on the locally developed technology, TD-SCDMA; and China Telecom Corp. Ltd, with a CDMA 2000 license.
• China Mobile Ltd. (NYSE:CHL) Chairman Wang Jianzhou is optimistic Taiwanese regulators will approve the telecom operator's plan to buy a 12 percent stake in Far EasTone Telecommunications Co. The company plans to seek regulatory approval for the NT$17.77 billion (US$536 million) cash purchase once Far EasTone's shareholders vote to ratify the deal. China Mobile has also entered into a strategic cooperation agreement with Far EasTone. China Mobile remains on the lookout for overseas acquisitions that will bring synergies to the company, but its focus will stay on the domestic market. He has seen significant improvement in China's homegrown third-generation TD-SCDMA network.
• The Chinese technology is still less mature than WCDMA. Handset development for the TDSCDMA network is crucial, and the company has invested 600 million yuan to support handset makers developing 3G phones for the Chinese standard. China Mobile may consider listing in Shanghai through an issue of China Depositary Receipts if government regulations permit, but the company hasn't made any applications for such a listing.
• Huawei Technologies is further expanding its worldwide role on the strength of sales both inside and outside its native China. The company displaced Alcatel-Lucent (ALU) to take its place behind global leader Ericsson (NASDAQ:ERIC) and Nokia Siemens Networks (SI) in quarterly revenue, according to market research company Dell'Oro Group. Alcatel-Lucent had the fourth biggest sales in the quarter, followed by ailing Nortel Networks. In the top three, Ericsson had 33 percent of the market, followed by Nokia Siemens at 20 percent and Huawei at 15 percent. A year earlier, Huawei had been ranked fourth, with just 8 percent.
• Hurray! Holding (HRAY) announced its unaudited financial results for the first quarter ended March 31, 2009. Total revenues reach US$11.8 million, representing a decrease of 18.5% quarter-over-quarter and a decrease of 11.2% year-over-year; slightly below our previous guidance of US$12-13 million. Wireless value-added services revenues amounted to US$7.9 million, representing a decrease of 31.4% quarter-over-quarter and a decrease of 28.6% year-over-year. Recorded music revenues, which are from record label businesses amounted to US$3.9 million, representing an increase of 31.4% quarter-over-quarter and an increase of 73.9% year-over-year. Net loss reached US$2.1 million, adjusted EBITDA was negative US$1.6 million, while diluted loss per ADS is US$0.09.
• According to the Semiconductor Industry Association (SIA), the global semiconductor industry's BB ratio increased each month from January to March this year, although the April atio has yet to be released. Despite the increase, the ratio remained at less than one for the three month period, indicating that supply is greater than demand. However, Yang Bin, a semiconductor analyst with CCID Consulting, questioned Zhang's claim that the release of 3G services would result in increased demand for handsets and therefore semiconductor products. According to Yang, although some expect the demand from telecom operators' purchase of mobile phones for their 3G services will help drive a recovery in China's semiconductor industry, the impact will not be significant because the demand for 3G mobile phones will be offset by decreasing demand for 2G mobile phones.
• Zhang Rujin, CEO of Semiconductor Manufacturing International Corp. (NYSE:SMI) said that the company will turn around losses and return a profit as early as the fourth quarter of this year due to increasing demand for 3G-related products in China. The company started reporting losses from the second quarter of 2007 and recorded a net loss of US$178.4 million in the first quarter of 2009, its biggest since the slide began. Zhang added that the global semiconductor market is approaching the bottom of its business cycle, and that China's semiconductor industry will be the first to recover.
• Solarfun Power Holdings Co. Ltd. (SOLF) booked a net loss of 7.0 million yuan (US$1 million) in the first three months of 2009, compared to a profit of 107.9 million yuan (US$15.8 million) a year ago, but an improvement on the loss of 418.8 million yuan (US$ 61.3 million) in the previous quarter. Net revenue was 684.2 million yuan (US$100.1 million), a decrease of 43 percent year-on-year and 39 percent quarter-on-quarter, with Germany and Portugal accounting for 76.5 percent and 9.7 percent of net revenue during the quarter, respectively. PV module shipments reached 35.7 MW, down 11.4 percent year-on-year, while average selling price declined to US$2.78 from US$3.37 in the previous quarter. In the second quarter of 2009, Solarfun expects shipments to rise from current levels but for ASP to continue to fall.
• JA Solar Holdings Co. Ltd. (NASDAQ:JASO) reported a net loss per diluted ADS of 1.2 yuan (US$0.18) for the first quarter of 2009, compared to net income and net losses of 0.99 yuan (US$0.15) and 0.68 yuan (US$0.10) per diluted ADS in the year- and quarter-ago periods, respectively. The company recorded an inventory provision of 138.4 million yuan (US$20.3 million) at the end of the first quarter, an increase of 60.4 million yuan (US$8.8 million) from the previous quarter. Revenues were 231.7 million yuan (US$33.9 million), down 79.4 percent year-on-year and 76.3 percent quarter-on-quarter. The first quarter is the most challenging quarter for JA Solar since the company was founded, due to worse than normal seasonality, the weak macro economy and lack of customer project financing. JA Solar is unlikely to meet previous 2009 revenue guidance of US$830-952 million and production output of 500-550MW. The company did not provide revised guidance, due to a lack of visibility for the coming quarters.