As reported on The China Stock Blog this past Monday, China Finance Online (ticker: JRJC) Chairman and CEO Jun Ning has resigned -- for "health reasons" (according to the press release). He is being replaced as Chairman by company director Hugo Shang who helped establish IDG's $50 million venture fund in China in 1993. He is being replaced as CEO by the Chairman of Abitcool, a Chinese broadband provider. But there appears to be more to the story:
Here is a comment left on The China Stock Blog today:
- The new CEO and COO will come from IDG-backed TianTian_Online. Tiantian_Online bundles access control and content delivery to Internet and mobile users, under the brand name of Tiantian_Online. The business model is built on 3 main areas, broadband connectivity, interactive voice response (IVR) and short messaging services.
- Jun Ning will join an IDG-backed B2C company which sells health products online.
Comment: Interesting to note that the company made no announcement regarding the resignation of Chairman and CEO Jun Ning at its annual meeting on June 12th.
Did Hugo Shang engineer a management shake-up subsequent to his re-election to the Board of Directors at the annual meeting? Quite possibly. Shang represents IDG which owns a huge stake in China Finance Online.
According to the company's latest 20-F filing with the SEC:
....As of March 31, 2005, IDG Technology Venture Investments, LP and IDG Technology Venture Investment, Inc. together have one board representative on our five-director board, and beneficially own, collectively, approximately 27.5% of our outstanding ordinary shares. Accordingly, these shareholders have had, and may continue to have, significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. In addition, without the consent of these shareholders, we could be prevented from entering into transactions that could be beneficial to us.The takeaway for investors? While management changes may be a good sign (or bad sign?) JRJC's core business continues to struggle as a result of a weak Chinese domestic stock market. Maybe tonight's conference call will shed some light on the company's future direction.
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