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The following is excerpted from IRG's weekly stock report:

Internet

China Finance Online Co. (JRJC), a provider of online financial information and public company data, announced the completion of its US$1 million acquisition of Shenzhen Genius Information Technology Co. Shenzhen Genius owns a financial information database mainly serving domestic securities and investment firms. As part of the deal, China Finance also paid US$62,370 to a shareholder of Shenzhen Genius to cancel an outstanding loan.

Seek Ltd. disclosed its plan to buy a 25 percent stake of Zhaopin.com, one of the top job recruitment web sites in China, in a deal worth about US$20 million. The Australian online recruitment company said the acquisition is the first that Seek has ever conducted out of Australia and New Zealand. Zhaopin.com, a Beijing based online recruitment company, claims that its growth has been increasing by more than 100 percent in the past three years. Analysys International's recently released report ''China's Online Recruiting Market Quarterly Tracker 2006 Q2,'' shows China's online recruiting market registering 160.9 million yuan (US$20.3 million) in the second quarter of 2006.

Pay88 announced that it has finalized a purchase agreement with the shareholders of Chongqing Qianbao Technology Ltd, an online payment services firm based in Chongqing. The company said it looks to the acquisition of QianBao Technology as adding value to Pay88 by way of additional complimentary product lines, improved technology and strengthened online marketing ability. A top company official sees the acquisition as giving the company faster and “respectable” access to the huge and ever growing Chinese market. According to the agreement, Pay88 acquired Qianbao by purchasing 100 percent of Qianbao's registered capital stock in exchange for 5 million shares of Pay88's Series A Convertible Preferred Stock.

The market share of Google Greater China (GOOG), a unit of the world's leading search engine, declined by 20.6 percent in leading cities such as Beijing, Shanghai and Guangzhou from 32.9 percent a year earlier, according to the survey by mainland market research firm China Intelli Consulting. Google China offers about 13 services involving mostly basic searches for websites, pictures, news and similar topics, plus products such as China map search, a useful tool for city visitors. Analysts say new products will be needed to make inroads into the market lead held by Baidu (BIDU) which is coming out with new products regularly. Google China is working on improving its general Chinese search capability to counter the notion that Baidu is better when it comes to China-related search. Analysts are saying that the company may also have to alter its fundamental business model. Google is also boosting its affiliate network of third-party websites that carry Google's advertisements in return for a share of revenue. Google China is reportedly talking with China Mobile for mobile search, a strategy that analysts see as forming a key alliance.

Media, Entertainment and Gaming

Industry sources said that Microsoft (MSFT) will soon set up a games development office in Chengdu. When completed, the office will be the company’s first game development institution in China. According to Microsoft, the output value of the global games industry is expected to reach US$46 billion by 2010 and China would contribute a great deal to this figure. Microsoft said it looks to the institution as an open talent-training base to help China educate its own game developers and promote development within the industry. Microsoft's new platform is aimed at developing games with Chinese characteristics for Microsoft's Xbox.

CDC Corporation (CHINA) announced its decision to split its divisions into separate businesses and continue to build shareholder value. Earlier, the company announced that it has repurchased common shares for a total of US$27.6 million as part of the company's stock repurchase programs. The company completed its initial US$20 million repurchase program on August 10, 2006 and the additional US$20 million repurchase program announced on July 26, 2006 is now underway. A company top official said that the company has been working closely with its financial advisers to speed up its efforts to set up CDC Games and CDC Software into standalone companies and to pursue financing options as part of its bid for expansion “through multiple targeted acquisitions in the online games and enterprise software sectors."

NHN’s Chinese subsidiary, Ourgame, said it was confident that revenue in the third quarter of 2006 would exceed 40 million yuan (US$5 million). A top official of the company noting the present trend said the Chinese entity would be able to reach 50 million yuan (US$6.3 million) in the fourth quarter of 2006 for a total of US$21.1 million for the full year. In 2005, Ourgame posted US$10.5 million in revenue. The company expects the revenue to double again next year to US$42.3 million. The company attributes the success in China as a result of releasing games that specifically catered to the needs of Chinese gamers as well as the diversification from web board games to MMORPGs and casual games. Ourgame recently acquired a casual game developer in China earlier this year. Ourgame plans to release at least two new MMORPGs in China next year.

WPP (WPPGY), the world's largest advertising and public relations agency, is on the hunt for acquisitions in the mainland online marketing sector, seeking to add local knowledge to its international clout. The group said it will spend US$300 million a year on mainland investments. Ogilvy already has a well-established digital marketing division, Ogilvy One, which integrates marketing for Internet and electronic media. Advertisers and marketing companies such as Focus Media, which this year bought Dotad Media Holdings, are starting to use the mobile Internet platform to capture the attention of some of China's 400 million mobile phone users. China Unicom (CHU) uses its own advertising business to sell banners or spaces on handset screens. Added value is delivered by analysis of users' data, helping Unicom, the nation's second-largest mobile operator, to offer targeted marketing plans to advertisers.

Hardware

With its US$200 million investment in building a global manufacturing facility in the Free Trade Zone in Shenzhen, Hitachi Global Storage Technologies is affirming the importance of China's hard disk drive market. The company is a unit of Hitachi, the Japanese electronics giant. The company has committed investments worth US$500 million to build the 200,000 square meter manufacturing complex, which will initially produce 3.5-inch hard disk drives. The company said it looks to produce 50 percent of the firm's annual global output. Analysts are saying that Hitachi and other leading vendors are boosting production to keep up with demand from the mainland's fastgrowing consumer electronics manufacturing sector. In another development, Seagate Technology is expected to spend US$1.3 billion in the year to June to bolster its operations and integrate former rival Maxtor, which it bought in May for about US$2 billion. Both companies have manufacturing plants in China. Hitachi has a long-term agreement with Shenzhen ExcelStor Technology, a subsidiary of Great Wall Technology, to make Hitachi Deskstar drives, and produce and market the drives under its own brand. ExcelStor is among the world's top seven makers of drives. Information Technology

RFID China Alliance revealed its move to maintain a close watch on the trial use of IP-XTM technology in four sectors in China. After the observation, the group said it conducted verification on whether this technology has reached the international standard. IPico and other IT companies initiated China’s trial use of IP-XTM. iPico, which provides the platform for IP-XTM, predicts that the technology will make a practical contribution to China's use of RFID. IP-XTM provides for FreeFlow Spotting of tags in all frequency bands, a capacity which means it can enable an RFID tag to be read or authenticate even while it is rapidly moving through sorting or continuous manufacturing processes or attached to a person, container, or vehicle.

Semiconductors

Actions Semiconductor (ACTS), the mainland's second-largest chip designer, cut the size of a secondary share sale by 33 percent to US$83 million after receiving a lukewarm response from investors. The deal was reportedly 2.5 times oversubscribed. The 1.5 million share green shoe could be exercised depending on how the stock trades over the next month. The report indicated that nearly all the demand came from U.S. investors, although there were a couple of buyers in Asia because Actions is a Chinese company, the market source said. The selling shareholders originally hoped to raise US$120 million by selling 12 million ADRs in July, according to market sources. Actions, which supplies chips to low-end MP3 music player manufacturers in China, posted a second-quarter profit of US$18.1 million, up 5 percent from the US$17.2 million it earned for the same period last year. The company registered a 6 percent rise in its revenue to US$39.3 million.

Ventures/Investments

The China Banking Regulatory Commission announced its approval of TCL Group, to set up its own financial company. The company, with a registered capital of 500 million yuan (US$63.1 million), received investment from TCL Group, The Bank of East Asia, TCL King Company and TCL Mobile Communications Company, with each of them holding 62 percent, 20 percent, 14 percent and 4 percent of the stake, respectively. The new company will be mainly engaged in providing accounting, financing, credit assessment and related consulting services as well as providing other fund and insurance related services to each of its members.

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Source: Chinese Tech Stock Weekly Update