Chinese Tech Stock Weekly Summary

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

Internet

• MPdaogou.com, a shopping and loyalty marketing service provider, announced that it has secured a partnership agreement with Shanghai Unionpay. With the alliance, all MP discount shopping card members will be given access to all Unionpay POS terminals, which will be able to identify members and allow them to collect bonus points for their purchases. According to MPdaogou.com, it has entered into cooperative deals with about 800 shops in the Shanghai area, with the operation expected to cover at least 3000 shops more by the end of year through the partnership with the Unionpay group.

• There are rumors indicating that Soufun.com, one of the largest online real estate service providers in China, is looking to working with China Netcom (CN). Industry observers are speculating that Soufun.com might be interested in what China Netcom has recently launched, a service that allows users to view houses online. China Netcom’s service is currently being tested on a trial basis and can be accessed free of charge to users. A China Netcom official was quoted in the media as saying that Soufun.com has contacted China Netcom although no details as to what deal will be entered into by the two groups was reported.

• eLong (LONG) announced the appointment of Guangfu Cui as its new CEO. With the appointment, Henrik Kjellberg will step down as interim CEO of eLong but will remain chairman of the company. Before joining eLong, Cui was the managing director for FedEx Kinko's China and also worked for Procter & Gamble China for over 12 years. eLong posted a net loss 1.8 million yuan (US$240,000) for the second quarter, compared with a net income of 10.2 million yuan (US$1.3 million) for the second quarter of 2006. As of June 30, 2007, the company reported a 2 percent decline in its cash and cash equivalents to 1.1 billion yuan (US$146.5 million) from 1.2 billion yuan (US$159.8 million) at December 31, 2006.

Media, Entertainment and Gaming

• Speculations are going around that The9 has entered into an agreement with Shanghai Alliance Investment to acquire 50 percent of MSN (MSFT) China from Alliance. The report estimated that The9 will pay some US$100 million after placing MSN China's market value at above US$200 million. The9 provides a number of online games in China, including World of Warcraft which contributed to 90 percent of its total revenue in the second quarter of this year.

• Gehua Cable TV announced that it has secured 80 million yuan (US$10.6 million) in subsidies from the Beijing Municipal Bureau of Radio and Television [BMBRT] for the overall conversion of digital television programs. The notice from BMBRT to Gehua indicated that Gehua will receive 100 yuan (US$13.3) for each set-top box given to users for the implementation of the digitalization of cable TV. Outside of free services such as video-on-demand and games, Gehua manages and owns more than 20 paid digital programs and 16 stereo digital audio frequency radio for high-end users.

• CDC Games announced the launching of the South Korea-based Shine Online in China. Shine is a 3D massive multiplayer online role-playing game [MMORPG] developed by Ons On Soft. The game has earned a niche among different age groups, with the game observed to be appealing to female players. The launch followed an open beta program, which saw some 600,000 registered users played the game during this testing phase. The commercial launch included placement at more than 20,000 Internet cafes in the country.

Mobile/Wireless

• Qualcomm Inc. (QCOM), a leading developer and innovator of advanced wireless technologies and data solutions, and BYD Company Ltd., a leading rechargeable battery manufacturer and provider of handset components, modules manufacturing and assembly services listed in Hong Kong announced that they have entered into a subscriber unit license agreement. Under the terms of the agreement, Qualcomm has granted BYD a worldwide patent license to develop, manufacture and sell CDMA2000 subscriber units.

Hardware

• Dell (DELL) announced that it has entered into a deal with Gome that will allow China’s largest consumer electronics retailers to market Dell’s products. With the partnership, Dell will begin rolling out its systems in about 50 major metropolitan Gome stores in early October, with the plan of increasing its market presence in the early part of 2008. The agreement will also see Dell employees providing help to customers with their purchases in Gome stores. This alliance with Gome is one of the latest distribution agreement entered into by Dell, following similar deals in Japan, UK, U.S. and Russia. In a separate development, Gome announced that it has signed a memorandum of understanding with Microsoft China in Beijing to jointly promote computers pre-installed with legitimate windows systems and other Microsoft products. Under the partnership, Gome will promote the sale of computers with legitimate Windows in more than 760 of its chain stores across the country.

Semiconductors

• Superconductor Technologies Inc. [STI], a provider of high performance infrastructure products for wireless voice and data applications, announced that it has signed a term sheet to form a joint venture with Hunchun BaoLi Communication Co. Ltd. by the end of 2007. The planned joint venture is expected to work on manufacturing and marketing STI's SuperLink interference elimination solution in the Chinese market. Under the deal, STI will be providing an exclusive license of the enabling technology and BAOLI the manufacturing expertise and financing. The plans for the joint venture include having it registered in Jilin Province, with its research and development branch to be set in Shanghai and its marketing division in Shenzhen. According to the term sheet, BAOLI would receive 55 percent of the equity in the joint venture and STI would hold 45 percent and receive a royalty on sales. The parties intend to work together to draft and sign a binding definitive agreement by the end of 2007. Hunchun BaoLi Communication Co. Ltd. is a wholly owned subsidiary of the BaoLi Group, which operates a wide range of business entities including real estate development, financial services, and wireless communications in both the network infrastructure and handset areas. The BaoLi Group has facilities in the Hong Kong, Shenzhen, and Jilin province. STI is headquartered in California.

Ventures/Investments

• Cisco (CSCO) and the Haier Group jointly announced their entering into varied alliances that will see the two companies tap a wide range of opportunities in the Chinese as well as in the international markets. According to the CEO of Haier, the company aims to set up a business model that will transform it into a world-leading white good manufacturer. Under the agreement, Cisco and Haier will look together into the best practices in group management and processes, financial management and controls, strategic investments and capitalization cooperation, construction of information infrastructure and home networking systems.

Information Technology

• China Southern Airlines (ZNH) announced that it has signed a new agreement with Guangdong Airport Management Corporation and TravelSky Technology Limited for a new joint venture company focused on departure service. The new company will jointly develop and operate the Baiyun International Airport departure system.

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