Chinese Tech Stock Weekly Summary

Includes: CHL, PACT-OLD
by: IRG Ltd

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


• Media sources said that Tom Eachnet has disclosed plans to cancel the use of its PayPal (NASDAQ:EBAY) service in China. Industry observers commented that with the cancellation of PayPal, the payment service may soon leave China. According to iResearch, Paypal market share in China has gone to only 1.6 percent.

Media, Entertainment and Gaming

• PacificNet Inc. (PINK:PACT-OLD), a leading provider of gaming and mobile game technology, e-commerce, and Customer Relationship Management [CRM] in China, announced that it has filed its Form 10-Q quarterly report for First Quarter 2007 with the SEC. The company posted quarterly revenue of US$9.2 million, which was an increase of 38.9 percent as compared to US$6.6 million from the first quarter of 2006. The report indicated that about 19 percent of total revenues were generated from its new gaming technology division. Its quarterly gross profit posted an 87.8 percent growth to US$2.5 million as compared to US$1.3 million from the first quarter of 2006. The company posted a quarterly net profit of US$308,000.

• China Media Group Corporation announced the expansion of its Telecom & Mobile Computing business unit to include the provision of Fixed and Wireless Broadband Platforms / Solutions. The company said the move is part of its mission to “become one of China's leading new-age media companies through the use of new technologies and devices combined with traditional media such as TV, newspapers, magazines, billboards and the Internet” to reach today's mobile society. China Media Group Corporation is a "Next Generation" advertising / media company focusing on the very lucrative Chinese market. It has offices in Beijing, Hong Kong and Texas, in the U.S. The company said it is entering the fast growing advertising industry in China and plans to expand its offices in key cities such as Shanghai, Guangzhou and Shenzhen.


• Industry sources reported that Beijing DRC Mobile Phone Animated Cartoon Design and Creation Industry Alliance is to be formally set up soon in July 2007. The alliance is jointly initiated by the Beijing Industrial Design Center and Beijing Zhonghe Tiandi Information Technology and will have an initial fund of 10 million yuan (US$1.3 million). According to the CEO of Beijing Zhonghe Tiandi, the funds will mainly be used for animated cartoon talent training, property rights protection and industry chain integration. The alliance is aiming to improve the mobile phone animated cartoon industry.

• New Oriental Education and Technology Group announced signing an agreement with Nokia (NYSE:NOK) to launch a mobile learning program. The initiative is aimed at giving students access to select New Oriental course content via their mobile phones. According to a Nokia official, by working together with New Oriental, the leading education service provider in China, Nokia strives to enrich consumers' learning experiences anytime, anywhere in a most convenient way with their mobile phones. Under the one-year agreement, New Oriental will provide specially designed English language and test preparation course content for download on both the website and New Oriental's online learning site Mobile learning content will then be available in selected new Nokia mobile phones fitted with educational programs.


• Nokia announced that it has signed a strategic cooperation agreement with Neusoft to jointly explore the online security market. According to the agreement, Nokia and Neusoft will conduct a series of cooperations on technology, products and sales in the online security sector. Neusoft is a specialized Chinese vendor of solutions, digital products and services with expertise in software technologies. Following the agreement, Neusoft will become an OEM of Nokia's network security product line.

• Sun Microsystems (NASDAQ:SUNW), the community and Redflag announced entering into an agreement to focus jointly on integration of new features in the Chinese localization of, a key implementation of OpenDocument Format, the ISO 26300 open standard file format for office application is completely vendor neutral. The suite of software applications competes directly with Microsoft's (NASDAQ:MSFT) Office product, which combines applications like Microsoft Word, Excel, and PowerPoint. Under the agreement, Beijing Redflag Chinese 2000, which produces the popular RedOffice, will add approximately 50 engineers to the open source project.


• According to its chairman, Taiwan-based TPO Displays has sold its 2.5G TFT LCD plant at Kobe, Japan to China-based Shenzhen Laibao High-technology [SLC]. Media sources said the value of the deal was more than NT$1.2 billion (US$36.2 million). The official said the reason for the sale was the high costs of production making it more appropriate to transfer facilities to China. The plants in Japan will now just concentrate on R&D activities in the future. SLC specializes in the production of high-end ITO (indium tin oxide), a key component for TFT LCD and color filter production and transparent conductive glass. In June 2006, TPO merged with Royal Philips Electronics' Mobile Display Systems [MDS], which gave TPO displays the 2.5-generation TFT LCD plant in Japan.


• Gome, a domestic electrical appliance retailer, announced that it has signed a deal with Sichuan based color TV manufacturer Changhong for the second half of this year. The deal is estimated to be worth some 1 billion yuan (US$130.7 million). According to Changhong, the reason for their entering the deal is that they aim to boost their sales volume and at the same time promote the development of both companies.

Information Technology

• HP (NYSE:HPQ) announced its collaboration with Tsinghua University to develop multimedia technologies. The joint lab research would rely mainly on image recognition, instead of traditional text identification, for visual applications. The initial research areas include automatic classification of digital photos, improved face identification, video-based audience analysis, video digital warehouse, video search and recommendation for Internet-based video communities, and music analysis and retrieval. The partnership gets its fund from HP's Imaging and Printing Group, Personal Systems Group and HP Labs. Under the agreement, Tsinghua University researchers are expected to spend time at HP Labs China in Beijing and be with the Imaging Technology Department in HP Labs in California.


• China Mobile (NYSE:CHL) Pakistan Limited, also known as CMPak Limited, announced the signing of a US$500 million agreement with four leading telecom firms including Alcatel-Lucent (ALU) and Ericsson (NASDAQ:ERIC) Pakistan (Pvt) Limited for network expansion in Pakistan. The contract covers the expansion of the CMPak GSM network in northern Pakistan. Other two companies are Huawei Technologies Pakistan (Pvt) Limited and ZTE ZhongXing Telecom Pakistan (Pvt) Limited. The network expansion will enable CMPak, fifth largest mobile operator in Pakistan, to bring mobile service to a greater number of people in the region. The equipment for this expansion will be provided by Alcatel-Lucent’s Chinese flagship company Alcatel Shanghai Bell. Earlier last month, China Mobile Communication Corporation [CMCC], the world’s largest cellular mobile-phone operator, bought a 100 percent share of Paktel for US$477 million and renamed it as CMPak Limited. According to sources, China Mobile has invested more than US$721 million for foreign direct investment and remains the only offshore company operating in Pakistan.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.