Media, Entertainment and Gaming
Shanda Interactive Entertainment Ltd. (ticker: SNDA), a leading interactive entertainment media company, announced its signing of an agreement with NHN Games Corp. for an exclusive license to operate ArchLord, a 3D MMORPG in mainland China. The game is expected to enter closed beta testing in China during the second quarter of 2006. NHN Games Corp., a leading online game company in South Korea, commercially launched Archlord in South Korea in 2006.
China Digital Media Corp. (ticker: CDGT), a digital media company announced through its subsidiary, Guangdong HuaGuang DigiMedia Culture Development Ltd., its revision of a Memorandum of Understanding (MoU) with a leading provincial TV station in a bid to enhance their previous agreement to a form that would allow the setting up of two joint ventures. The agreement is a replacement of the one the parties signed in November 2005. Under the new agreement, the TV station will grant exclusive content provision rights to its TV channel and outsource its entire advertising time slots into two newly formed joint ventures. Guangdong HuaGuang DigiMedia Culture Development Ltd. Disclosed that it will invest up to US$2.5 million and provide business and marketing expertise for the two joint ventures. The first joint venture will be responsible for providing services to a TV channel exclusively, including program sourcing, schedule planning and production of TV programs and major events. The second will serve as a sole advertising wholesaler that will enable the TV channel to sell its advertising time slots to international and domestic brand names. In a separate report, China Digital Media Corp. announced that it has, through its affiliate Guangdong HuaGuang DigiMedia Culture Development Ltd. (HuaGuang), entered into an agreement for the acquisition of all media-related businesses, assets, business contracts and management from Guiyang Classic & Fashion Advertising Co. Ltd., a TV program production and advertising company in China. Under the agreement, China Digital Media will pay approximately US$2.2 million, in cash and common stock, subject to adjustment in the event that the acquired assets generate a profit less than approximately US$2.5 million in the next two years.
Enjoy Media, a media and advertising holding company, announced the signing of an agreement for the acquisition of a 10 percent equity interest in YYFC.com from Guangzhou XinKuai Technology Company Limited. The acquisition is valued at US$625,000 and to be settled by issuance of restricted common shares of Enjoy Media. The report said Enjoy Media has boosted its online advertising business by signing a three-year exclusive service contract with YYFC. According to iResearch, China’s online advertising market is valued at US$330 million market in 2005, and could reach US$490 million in 2006. Enjoy Media is based in Guangzhou, China. It operates a full range of media advertising businesses in the southern China region with established networks to many major Chinese cities such as Guangzhou, Shenzhen, Shanghai, Beijing and Hong Kong. Enjoy Media manages investments and businesses covering advertising and media strategies for a mass audience and a specialized target audience. YYFC is one of the largest and most visited music portals nationwide in China with over 1 million registered members, who actively swap music files recorded originally from YYFC members.
Air China, the leading international air carrier in China, and Connexion by Boeing, a business unit of The Boeing Co. (ticker: BA), announced their coming to a preliminary agreement to provide realtime connectivity to air travelers traveling to and from China. Expected to be set up in October 2006, the Connexion service will allow passengers en route in-flight access to the Internet, real-time email, instant messaging (NYSE:IM), corporate intranet access, including virtual private network capability. Under the agreement, service availability is expected on major routes between China and North America, Europe, the Middle East and throughout the Asia Pacific region. Financial terms of the deal were not disclosed.
Six Internet firms in the country are expected to tap overseas markets this year in a bid to generate between US$500 million and US$1 billion in initial public offerings, according to the Internet Society of China. Alibaba.com, mobile music service provider A8 Limited and online community service provider China Interactive Corp are seen by the group as seeking listings this year. Sources said A8, Shenzhen-based mobile music service provider, expects its shares to be valued at 10 times to 20 times the company's historical profits. A8 obtained US$20 million from venture capital firms TDF Capital, Jafco Asia, Intel Capital Corp, Mitsubishi UFJ Securities (NYSE:HK) Capital and International Data Group in December last year. Despite denials from its officials, Alibaba.com is also rumored to be another listing candidate. Another possible listing candidate is mainland online community service provider China Interactive Corp. Its main assets include portal Mop.com with more than 18 million registered users. The company aims to boost its revenue to US$50 million this year to meet NASDAQ listing requirements. The report estimated that total revenue from Internet users in China would increase 52.5 per cent year on year to 286 billion yuan (US$35.5 billion), up from 186 billion yuan (US$23.1 billion) last year. The report also predicted that a new generation of Internet applications, such as Web 2.0, would focus more on interactive functions and personalized content and that blog and mobile internet service (WAP) would spur the growth of the next industry.
CDC Corporation's (ticker: CHINA) subsidiary China.com Inc. said its online game, Yulgang, went beyond 260,000 peak concurrent users in the fourth quarter of last year, a figure that stands for a quarter-on-quarter increase of 39 percent. Yulgang is an MMORPG developed by MGame in Korea. In October 2005, China.com formed a wholly-owned subsidiary, CDC Games Limited, to hold all of its assets and strategic alliances related to online games. The company announced average concurrent users per day registered 162,000 in the last quarter, a 34 percent increase from 121,000 in the third quarter of 2005. Registered users totaled almost 15 million in the fourth quarter, a 63 percent growth rate from 9.1 million in the third quarter of 2005.
Sohu.com (ticker: SOHU) announced a 27 percent year-on-year increase in its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2005. Sohu said its net profit, following the U.S. GAAP, hit US$8.9 million, a figure that goes beyond company guidance. The company said its total quarterly revenue was US$30.5 million, a figure representing a 27 percent year-on-year and 8 percent quarter-on-quarter increase. Its advertising revenues went up by 28 percent year on year to US$20.3 million. Revenues for fourth quarter ended December 31, 2005 totaled US$30.5 million, compared to revenues of US$28.3 million for third quarter ended September 30, 2005, and US$24.1 million for fourth quarter ended December 31, 2004. The company posted net income of US$8.0 million for the previous quarter and US$6.5 million for fourth quarter of 2004. Sohu said advertising revenues, valued at US$16.9 million in brand advertising and US$3.4 million in sponsored search, made up of 67 percent of total revenues in fourth quarter of 2005. In fiscal 2005, Sohu's advertising revenues totaled US$70.9 million, up 27 percent from US$55.7 million in fiscal 2004.
Nokia (ticker: NOK) cited its robust growth in sales in the Chinese market. The company said the company’s net sales in Chinese markets posted 3.4 billion euros (US$4 billion), a result that makes China its largest single market around the world. Nokia said the number of mobile handsets sold in Chinese markets this year hit 32.5 million, a figure that represents a 72 percent growth over the previous year. Nokia’s export value from the China registered 2.8 billion euros (US$3.3 billion) in 2005, which is a 15 percent increase compared with 2004.
With software companies in China’s Henan province accumulating nearly 5 billion yuan (US$621.1 million) in sales revenues during the past five years, observers are saying the software industry in the area has become one of the fastest-growing industries in the country. Observers also say the industry exhibits the most potential. From 2000 to 2005, the software industry in the province posted an average of 50 percent growth in sales revenue every year. The province has four software parks, and serves as host to more than 400 software developers. Henan province said it aims for targeted sales revenue of 20 billion yuan (US$2.4 billion) for its software industry in 2010.
Freeborders, an offshore provider of technology solutions and outsourcing from China, said it has acquired the US-based ITK Solutions, an IT management consulting firm specializing in technology project delivery for financial services companies. Analysts said the acquisition will widen Freeborders' onshore team of experts in the financial services area, which is considered a main area for expansion by Freeborders. ITK Solutions is a U.S.-based firm. Under the deal, ITK Solutions will exist as a wholly-owned, co-branded subsidiary of Freeborders.
CDC Corporation (ticker: CHINA) announced that it has completed through its subsidiary CDC Software the purchase of substantially all the business assets of JRG Software, an on-demand supply chain planning solutions delivered as Software as a Service (SaaS). Under the deal, CDC acquires One Plan, an on-demand solution for factory planning and scheduling that combines a highly interactive graphical planning environment with integrated business intelligence to enable the real-time creation, sharing and monitoring of production plans across a manufacturing organization. A top official of CDC said the addition of the offering to its current applications is expected to enable the expansion of the company into new market segments.
Semiconductor Manufacturing International Corporation (ticker: SMI) announced the consolidated results of its operations for the three months ended December 31, 2005 show, with its sales going up to US$333.1 million, a 7.5 percent increase from US$310.0 million in the third quarter of 2005. The company also reported an increase in capacity to 152,219 8-inch equivalent wafers per month. The company said its net loss declined toUS$15.0 million in the fourth quarter of 2005 compared to a net loss of US$26.1 million in the third quarter of 2005. SMIC’s wafer shipments increased 5.8 percent to 376,227 8-inch wafers in the fourth quarter of 2005 compared to the third quarter of 2005. It generated US$174 million in cash from its operations during the fourth quarter and US$648 million in 2005. SMIC said its capital expenditure budget will be approximatelyUS$1.1 billion, which will be scalable depending on market conditions.
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