The following is excerpted from IRG's weekly stock report:
• IAS Energy, Inc. (IASCA) announced that it has paid the first payment of US$100,000 to Video1314.com. The company said it has also issued 10 million shares of IAS Energy, Inc. with the aim of generating a 20 percent interest in Video1314.com. IAS Energy, Inc. has an option to earn up to a 100 percent interest in Video1314.com by issuing a total of 50 million shares of IAS and paying US$650,000 in five equal payments over a one-year period. Video1314.com is a Chinese Web 2.0 platform similar to YouTube which allows users to watch and upload their videos. Video1314.com is completing a buy-and-sell site, which will allow users to make money by buying and selling merchandise at no cost. The company is also planning on developing features that will allow Video1314.com users a utility that will connect to friends and contacts similar to Facebook.
• China 3C Group (CHCG-OLD), a retailer and distributor of consumer and business products in China, announced that it has signed a letter of intent to become the exclusive supplier for 3c800.com, an online Chinese retailer of business-to-consumer electronics products. The web site is owned by Hangzhou Xituo, an e-commerce company specializing in online sales of computers, communication products and consumer electronic.
• PacificNet (PACT-OLD) reported its unaudited results for the third quarter ended Sept. 30, 2007. Quarterly revenue declined by 7 percent to US$9.8 million from the same period last year. The company posted an 115 percent surge in its quarterly gross profit to US$2.3 million compared to US$1.1 million it posted for the third quarter of 2006, with the company attributing 37 percent of the growth to gaming products. Its cash and cash equivalents went up to US$4.9 million, compared to the declared US$1.9 million as of December 31, 2006.
• There are speculations reported by the media that Yahoo (YHOO) is aiming to enter the online game market in China by way of Kingsoft. The rumor indicated that the two companies are working on the contract and will release details about the alliance soon.
• According to industry observers, Tom Online is on its way to giving up its news portal business. The company announced its plans to make some changes on the framework of its portalweb site, bringing about a change from a content-based media to one described as product- and function-based provider.
• According to its CEO, Soufun.com, the Chinese online real estate provider, plans to get listed in Hong Kong in 2007. The official said the company is set for the listing with preparations already done. Soufun has put up branches in 75 cities across China, with the aim of bringing the number to 100. Soufun.com has received venture capital investment from IDG, Goldman Sachs (GS), Trader Classified Media (TRDFF) and Telstra (TLSYY), the largest shareholder of Soufun.com.
Media, Entertainment and Gaming
• Glu Mobile (GLUU), a leading provider of games for cell phones, announced that it has agreed to pay up to US$40 million for MIG, China’s biggest mobile games developer and publisher. Industry observers see the acquisition as providing Glu an advantage over Electronic Arts (ERTS) and Gameloft (GFT) as these two companies have yet to have a mobile presence in China. MIG will provide Glu access to China’s 500 million mobile subscribers and the local knowledge needed to succeed in an Asian games market where western companies have until now failed to make inroads. Glu Mobile said it would pay some US$14.7 million in cash for MIG with additional payment of up to US$25 million in cash and stock, which are contingent on certain financial milestones being reached in 2008.
• Shanda Interactive Entertainment Limited (SNDA) announced for the third quarter ended September 30, 2007, its consolidated net revenues reaching a record high of 656.3 million yuan (US$87.4 million), which represents a rise of 16.3 percent quarter over quarter and 50.3 percent year over year. Shanda said its online game revenues, including MMORPGs and casual games, went up 16.6 percent to 633.7 million yuan (US$84.4 million). It reported a net income of 238.9 million yuan (US$31.8 million), compared to the adjusted net income of 238.4 million yuan (US$32.2 million) in the second quarter of 2007, which excludes the net gain of 177.5 million yuan (US$24 million) from the disposal of SINA shares, and net income of 143.5 million yuan (US$19.3 million) in the third quarter of 2006. In a separate development, Shanda announced that Grace Wu, the company's vice president of strategic investments, has been appointed as the company's chief financial officer.
• Xinhua Finance Media [XFMedia] (XFML) announced its acquisition of JCBN Company Limited, the largest advertising agent for Sohu.com and Focus.cn in China. Under the agreement, XFMedia takes 100 percent control of JCBN Group for an initial cash payment of US$43 million. The deal will also see JCBN with a maximum of US$70 million in earnout payments in cash and shares of XFMedia, if JCBN exceeds certain financial performance targets in 2008 and 2009. According to the diligence report from XFMedia's accounting adviser RSM Nelson Wheeler, JCBN Group posted unaudited consolidated revenue of US$17.3 million and net income of US$4.2 million for the year ending December 2006. JCBN Group is a key marketing service provider for Pernod Ricard, which manages the Chivas and Martell brands. After the acquisition, XFMedia will become a leading advertising agency in China's online property and imported spirits sectors. JCBN Group’s clients also include international financial institutions and the Hong Kong government.
• Youku.com announced its completion of a US$25 million round of private equity funding that the company said will use to help boost its online video services in China. At present, Youku delivers more than 80 million video views on a daily basis. Youku also announced that it has entered into an online video strategic cooperation with Sohu.com (SOHU), and before this, with Baidu (BIDU). Youku also provides exclusive game video support to Shanda. The company previously completed two rounds of venture financing worth US$154 million from Sutter Hill Ventures, Farallon Capital and Chengwei Ventures.
• Alcatel-Lucent (ALU) announced that it has signed an agreement with China Mobile (CHL) and China Unicom (CHU) estimated to be worth 750 million euros (US$1 billion). Under the agreement, Alcatel-Lucent will provide mobile communications solutions including GSM/GPRS/EDGE and related services for both Chinese mobile service operators. It will also provide TD-SCDMA solutions for China Mobile. Alcatel-Lucent will provide CDMA, GSM/GPRS and related services to China Unicom for its network expansion.
• Linktone (LTON), a provider of interactive media and entertainment products and services to consumers in China, announced that it has entered into a definitive agreement with Media Nusantara Citra [MNC], an Indonesia based, publicly-listed integrated media company. Under the agreement, MNC will buy no less than 51 percent of Linktone's outstanding shares using a combination of a tender offer for existing shares and subscription for newly issued shares. MNC has business operations in content production, content distribution worldwide, free-to-air television networks, 24-hour program TV channels, newspaper, tabloid, radio networks and online media. The announcement puts the closing of the transaction during the first quarter of 2008. Lunar Capital Management and CDC Corporation (CHINA) have also submitted a formal proposal for an investment in Linktone. Under the proposal, the two companies are asking to buy either common shares or convertible preferred shares convertible into a minimum of 19.9 percent of the fully-diluted equity capitalization of Linktone.
• Linktone disclosed that it posted a net loss of US$2.8 million for the third quarter ended September 30, 2007. The company posted revenues of US$13.3 million, compared with US$11.7 million in the second quarter of 2007. For its advertising service revenues, the company reported US$1.9 million, compared with US$1.6 million in the second quarter of 2007.
• According to a regulatory filing, VanceInfo Technologies Inc. (VIT), a Chinese offshore software developer, looks to raising more than US$45 million in an IPO of American Depositary Shares. The company said it plans an offering with a total of 7.6 million ADS, each representing one ordinary share. VanceInfo is offering 6.3 million ADS, while a group of shareholders including the Chinese affiliate of venture-capital firm Sequoia Capital is selling an additional 1.3 million ADS. VanceInfo said it has also granted the underwriters the option to buy up to an additional 1.1 million ADS at the offering price to cover any overallotments. VanceInfo provides clients research and development services, enterprise products, application development and maintenance, and quality assurance and testing. It serves primarily corporations headquartered in the U.S., Europe, Japan and China. It counts among its clients Citibank, Hewlett-Packard Co., International Business Machines Corp., Microsoft Corp., Motorola Inc. and Tibco Software Inc. Citi (C) and Merrill Lynch & Co. (MER) are serving as lead managers of the deal. Jefferies & Co. (JEF) and Susquehanna Financial Group (SUSQ) are also underwriting the offering.
• According to media sources, Foxconn, a subsidiary of Taiwan-based Hon Hai Precision Industry Company Ltd., has plans to making Shenzhen its global planning headquarters and a center for global manufacturing. The company also said that it plans to initiate the sales expansion of its products in China. Foxconn reported its export in Shenzhen hitting US$29.7 billion, with its annual exports expected to hit about US$34.5 billion.
• Haier Group announced that it has signed a global selling agreement with Ingram Micro (IM), one of the largest IT distributors in the world, a move that is seen as part of the company’s move to expand overseas in 2008. Haier is currently No. 4 in the Chinese-made computer market, a position it owes to the massive investment it has made in the computer business in the last few years. Earlier in November, Haier also entered into an agreement with Intel (INTC) on computer business.
• General Motors (GM), Shanghai Automotive Industry [SAIC] and OnStar announced that they have established a telematics joint venture called Shanghai Onstar Telematics Company. Industry observers note that this is OnStar's first venture outside of North America. The joint venture is expected to provide OnStar’s in-vehicle safety, security and communication services. The companies said the joint venture is going to be based in Shanghai.
Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.