Chinese Tech Stock Weekly Summary

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

Internet

• Baidu.com (BIDU) reported its unaudited financial results for the third quarter ended September 30, 2007, with its total revenues showing a 107.5 percent rise to 496.5 million yuan (US$66.3 million) from the corresponding period in 2006. The company posted a 108.8 percent surge in its online revenues to 496.1 million yuan (US$66.2 million) from the third quarter of 2006. Baidu ascribed the surge to a growth in both the number of active online marketing customers and revenue per customer. Baidu said its online marketing clients in the third quarter of 2007 went up sequentially by 11.6 percent to almost 143,000 active online marketing customers. The company registered a 120.5 percent climb in its operating profit to 168.1 million (US$22.4 million) from the corresponding period in 2006. Baidu said its net income went up 113.2 percent to 181.7 million yuan (US$24.2 million) from the corresponding period in 2006. As of September 30, 2007, Baidu said its cash, cash equivalents and short-term investments amounted to 1.4 billion yuan (US$187 million).

• Ctrip.com (CTRP), a leading online travel service provider, disclosed its plans to work with search engine giant Baidu.com on matters related to hotel search service in China. Industry observers see this alliance as putting together Ctrip.com's wealth of travel information with the advanced search engine technology of Baidu.com, and enabling clients to find the location of up to 5000 member hotels of Ctrip.com. The agreement is also seen as allowing clients to do a direct online reservation and get information on more than 3,000 scenic spots and other useful travel data via Baidu's Map Channel.

• PConline.cn, a Chinese Internet portal, announced that it is looking to raise from US$200 million to US$300 in a forthcoming Hong Kong IPO. The company runs four lifestyle-related specialist web sites, where users can exchange information on information technology, automobiles, games, fashion, and cooking and beauty tips. According to its web site, its IT web site averages daily visitor traffic of over 22.4 million and its auto web site 6 million.

Media, Entertainment and Gaming

• Shanda (SNDA) announced the joining of Donald Chan as the company’s senior vice president, a post that will see him overseeing Shanda’s entry into in-game advertising business. Before this appointment, Chan served most recently as the national managing director of China for Leo Burnett Shanghai Advertising Company. In a separate development, Shanda said it has introduced three new online games that are currently under development. The games are Gui Chui Deng Online, Creation of the Gods and World Hegemony and all are expected to commence beta testing in the first half of 2008.

• CDC Games, a subsidiary of CDC Corporation (CHINA), announced the appointment of Jeffrey Longoria as president of CDC Games International [CGI]. The company said CGI, a subsidiary of CDC Games, was created to launch new games internationally and to position CDC Games as a global publisher of online games. Before this appointment, Jeffrey Longoria was with CDC Software, a sister company in the CDC family. At CDC Software, Longoria most recently served as senior vice president of strategic alliances.

• Beijing Gehua CATV Network Company disclosed its plans to form a joint venture company with Liberty Global (LBTYA) and PRC Venture Partners LLC in a bid to jointly expand broadband data value-added services. A framework agreement has already been signed by the parties, which stipulates that the initial investment for the new company will not be less than 200 million yuan (US$26.7 million). Under the terms of the contract, Gehua will take 51 percent of the stake, with Liberty Global and PRC Venture Partners taking the remaining 49 percent. According to the companies, the newly formed entity is expected to provide high-speed broadband data service to residents as well as business clients by way of Gehua’s cable network.

Mobile/Wireless

• China Mobile (CHL) announced that for the first three quarters of 2007, the Group's operating revenue posted a 21.5 percent climb to 258.4 billion yuan (US$34.5 billion) compared to the same period of last year. The company said profit posted a 29.8 percent rise to 59.8 billion yuan (US$8 billion) compared to the same period of last year. China Mobile said subscriber growth continued to maintain a rapid growth momentum, with the average monthly net additional subscribers for the first three quarters hitting nearly 5.4 million, with the total subscribers registering a total of 349.6 million as at 30 September 2007.

• Microsoft China announced that it has recently signed with D.Phone and Digital China to open 35 Windows Mobile concept retail stores in the first-tier and second-tier cities of China in the coming year. According to the director of the company’s Mobile Communications Department in Greater China region, Microsoft plans to expand its reach among Chinese consumers, stressing at the same time the need to look at more functions using mobile phones.

Telecommunications

• China Telecom (CHA) announced that it has entered into an agreement with NavInfo and Cgogo to work on telecom yellow page data, digital map applications and mobile phone search. Industry analysts see the agreement as producing the largest dynamic yellow page database in China. The three companies said their cooperation will target the application of mobile phone new products and the service pattern under the 3G system.

• Alcatel-Lucent (ALU) announced the deployment by Shanghai Telecom of the VitalQIP DHCP and IP address management software for the carrier’s IPTV service. Dynamic Host Configuration Protocol and IP address management software tools help streamline and boost the ability and capacity of the core network to assign IP addresses. The software also converts domain names into IP addresses, thus enabling more efficient use of network resources. Under the terms of the agreement, Alcatel Shanghai Bell will provide VitalQIP software and related services, which include consulting, implementation, management and maintenance as well as a training program to Shanghai Telecom to help set up the carrier class DHCP platform.

• AsiaInfo Holdings (ASIA) announced that it has secured a contract with China Telecom to provide billing solutions for its extended TD-SCDMA trial. Under the agreement, AsiaInfo will develop an online charging system for China Telecom's next generation wireless network trial in China's Hebei province.

• Guangdong Telecom announced that it has selected Nokia Siemens Networks charge@once solution for its convergent charging needs. Nokia Siemens Networks will integrate the solution into Guangdong Telecom's network and support every stage of the solution lifecycle while improving operational efficiency, with the system targeting a pre-commercial pilot in November this year. In a separate development, Nokia Siemens Networks said it has won the contract for integrating both GSM-R and the world's leading tunnel technology along the Hefei-Nanjing railway line. The dedicated line is part of the country’s newly built high-speed passenger service network.

Software

• Bleum, an outsourcing and offshore development company, announced the opening of its new branded ODC facility in Shanghai. The center is manned by a team of 80 for RedPrairie, a consumer-driven optimization company focuses on supply chain and retail solutions. According to media sources, Bleum and RedPrairie are seen as making an investment of more than US$6 million over the next two years to extend RedPrairie's logistics software.

Hardware

• According to its senior vice president and chairman, Best Buy (BBY) China is planning to open its second store in Shanghai. The rumor is that the new store will be located in the Puxi business area of Shanghai. Best Buy remains the largest consumer electronics supplier in the country. It faces competition from Suning and Gome, Chinese electronics retailers that are also expanding in the market.

Ventures/Investments

• Gome, a Chinese electronics retailer, announced that it is entering the electrical appliance manufacturing arena. The company said it will have some of the Chinese mainland made color TV sets currently sold at its retailing venues produced by Taiwan manufacturers through original design manufacturers. This move marks the first time that Gome has joined the manufacturing of the upper range of the color TV supply chain. Gome reportedly aims to take up 25 percent of China's total color TV sales this year, with the company indicating that it will ask Taiwan manufactures like TPV Technology Group and Proview manufacture some of the color TV sets that were previously made by mainland manufacturers like Konka, Hisense, Changhong and Amoi.

• According to media sources, Apple (AAPL) plans to set up a boutique retail store in Beijing next summer, a move that is seen as part of the company’s global expansion. At present, Apple has some 187 boutique stores all over the world. The company said it looks to opening 40 more stores next year. The company reported a 42 percent rise in its income from boutique stores to US$1.2 billion in the fourth quarter over the same period last year.

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