The following is excerpted from IRG's weekly stock report:
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- NXP Semiconductors and T3G Technologies announced that the 3G cellular system solution T3G7208 is now commercially available to the Chinese market. Special edition T3G7208 TD- SCDMA phones with added push-to-talk functionality have also been provided by Samsung to the Beijing Olympic Games Organizing Committee. TD-SCDMA services are now in commercial trial across eight cities in China, including Beijing, Shanghai and Guangzhou. With the T3G7208-powered Samsung SGH-L288, featuring video telephony, data communication at 384 kbps downlink and 128 kbps uplink and a 2 megapixel camera, end users will be able to employ multimedia and data transfer through the 3G networks.
- Ruey-bin Kao, president of Motorola China, announced that China is not only Motorola's manufacturing base but also an innovation, research and development base. Motorola has already invested US$3.8 billion in China, one of the largest amounts of foreign funds flowing in the country from a single investor, with Tianjin enjoying most of these funds. More specifically, since the establishment of the company's manufacturing base in China, investment in research and development has accounted for almost US$1 billion.
- ZTE Corp. announced that its share in the global optic transmission product market grew the fastest compared to all other in the industry in 2007. Annual growth rate for the company's share in the global optic transmission product market was over 100 percent in 2007, far higher than the industry average of 24 percent. The company was found to have the second largest market shares in the global market sub-sectors for LH-DWDM (Long Haul - Dense Wavelength Division Multiplexing) and ADM (Add/Drop Multiplexer) products in 2007. The company generated RMB 6.37 billion (US$917.87 million) in revenue from its optic communication and data communication system products, up 64.3 percent year-on-year due to increased sales.
- ZTE Corp. has been selected by Zapp, Romania's fourth largest mobile operator, to roll out a WCDMA/HSDPA commercial network as well as upgrade Zapp's CDMA network to CDMA2000. Zapp plans to launch 3G commercial services in early autumn this year, and the WCDMA/HSDPA network is slated for completion by 2011. The WCDMA/HSDPA equipment to be provided by ZTE is compatible with Zapp's existing network and will be used to build a network fully dedicated to data services. The network will enhance the quality and speed of services offered by Zapp by increasing its data transfer rate from 2.4 Megabits per second (Mbps) to up to 7.2 Mbps.
- China GrenTech (NASDAQ:GRRF) expects China's long-awaited telecoms industry overhaul to spur multi-billion dollar spending on networks and drive its revenue considerably higher in 2009. If the telecom revamp can be completed by the end of September as expected, revenue growth at GrenTech, a small-cap firm which makes networking components that can boost signals in sites from subways to skyscrapers, could rise a further 5-10 percentage points this year.
- China Mobile (NYSE:CHL) has begun to allow ZTE, Yulong, Samsung and LG to sell TD-SCDMA handsets directly to customers through China Mobile service centers in eight cities, signaling a step from the trial of TD-SCDMA handsets to full commercialization. Prior to the move, China Mobile's service centers only sold TD-SCDMA handsets that the operator had purchased from handset manufacturers to sell to customers taking part in the trials. An official from ZTE confirmed to Interfax that ZTE has started selling TD-SCDMA handsets through China Mobile's service centers in the eight cities of Beijing, Tianjin, Shanghai, Guangzhou, Shenzhen, Shenyang, Xiamen and Qinhuangdao, where China Mobile is conducting TD-SCDMA network trials.
- China Mobile has cut short message service [SMS] fees for Beijing subscribers using the "Easy Own" service package. Subscribers to the service package will pay 10 yuan (US$1.4) for 100 short messages or 15 yuan (US$2.16) for 180 messages per month, including messages to China Unicom users. Customers who do not take this service package now pay 0.15 yuan (US$0.02) to send a short message to China Mobile users and 0.20 yuan (US$0.03) to China Unicom users. The "Easy Own" package payment plan is widely used, accounting for more than 70 percent of China Mobile's customers nationwide. There was no indication of a possible roll-out of the fee reduction outside Beijing.
Media, Entertainment and Gaming
- NetDragon Websoft, an online game developer and operator in China, plans to switch its listing to Hong Kong's main board from the growth enterprise market [GEM]. The company received in-principle approval from the listing committee of the stock exchange for the switch. It expects the company's shares to start trading on the main board from June 24, subject to shareholders' approval at a special meeting on June 12. The company made its GEM board debut in November last year.
- NetDragon Websoft also announced that the company will be added to the Morgan Stanley Capital International [MSCI] China Index, effective as of the market close on May 30, 2008. The company believes that this inclusion will further enhance its position in the international capital market.
- Digital Music Holdings is hoping to ride on the restructuring of the country's telecommunications industry to boost its profitability. A8 Digital Music promotes music from its own platform (www.a8.com), as well as from other record labels through the internet and the wireless networks of mobile operators. Most of its revenue comes from selling songs and music in the form of ring tones, ring-back tones and interactive voice responses to mobile-telephone users on the mainland.
- Beijing Gehua CATV Network Co. Ltd. [BGCTV] announced that it will invest US$17.03 million in a joint venture with two foreign companies to provide broadband access services to residents and business customers. BGCTV will have a 51 percent stake in the joint venture, while the two foreign companies, Liberty Global Inc. (NASDAQ:LBTYA) [LGI] and PRC Venture Partners LLC, will hold the remaining 49 percent stake. The joint-venture agreement was reached based on a framework agreement signed by the three parties in October of last year. The joint venture will need a total investment of US$100 million, of which the three parties will invest US$33.4 million. The remaining funds will be raised through other methods.
- Haier (OTCPK:HRELF) is considering buying the consumer electrical appliance business of General Electric (NYSE:GE) and is in discussion with China Development Bank on acquisition financing. The GE unit mainly covers manufacturing of electrical appliances such as refrigerators, bakers, and dish-washing machine. Haier has not yet contacted GE about the acquisition. The acquisition cost of the GE unit is estimated to reach US$4 - 8 billion.
- Sybase (SY) does not expect its China business to slow with IT spending remaining steady. Sybase's major clients include China Mobile, Agriculture Bank of China, China Petroleum and Chemical Corp (NYSE:SNP), Haier and the State Grid Corp of China. China Mobile last week awarded Sybase a project, for an undisclosed amount, to extend the mobile operator's international short-messaging service to 44 additional countries and over 130 operators. Sybase had first quarter global revenue growth of 13 pct year-on-year to US$260.1 million.
- Dragon Capital Group, a holding company of emerging high-tech companies in China, reported that its unaudited consolidated revenue for the year ended December 31, 2007 was approximately US$47.8 million, an increase of 13 percent from US$42.3 million for 2006. Gross profit on an unaudited basis for 2007 increased 53 to US$4.6 million, compared with gross profit of US$3.0 million for 2006. For the fourth quarter of 2007, the company’s consolidated revenue was US$14.3 million, an increase of 14 percent from US$12.5 million for the comparable quarter in 2006 and a sequential improvement of 21 percent from US$11.8 million for the third quarter of 2007.