You can still find bargains out there. The quality may have dropped but they are still out there.

The reason why small investors can out-gain the big boys is due to these small-to micro-cap companies. Include OTC stocks and you’ve got yourself a vast empty playing ground filled with deep value investing opportunities.

Hardware

• Sony Corp. (SNE) Chairman Howard Stringer wants to remain the company’s chief for at least three years through March 2013 to meet a turnaround plan delayed by the global recession and the yen’s surge to a 14-year high against the dollar. Sony last month pushed back key profitability targets as the maker of Bravia televisions battles to recover from its first back-to-back annual losses since its 1958 listing. Stringer will continue streamlining Sony to compete against South Korean electronics makers such as Samsung Electronics Co. (SSNLF.PK) Sony projected in October the yen would average 90 to the dollar in the six-month period beginning Oct. 1. The company’s losses reached about 1 billion yen (US$11 million) in annual operating profit for every yen gain against the dollar.

Mobile/ Wireless

• Korea and Japan have a half of the world's patent for mobile communications. In the Asia Pacific Mobile Industry Observatory released by the GSM Association, Korea accounts for 14 percent of the world's patent for mobile communications technology. With Japan which has 36 percent of the world's mobile communications patent, the both countries in the Asia Pacific region sweep the world's patent for mobile technology. The mobile communications industry also made both direct and indirect impacts on job creation. In Korea, the industry created 277,000 jobs, much higher than Australia’s 106,000, New Zealand’s 19,000, Hong Kong’s 37,000 and Singapore’s 40,000.

Q3 2009 Earnings Call

November 23, 2009 8:00 pm ET

The complete list of Chinese ADRs traded on U.S. organized exchanges is listed below:

Protectionism is alive and well and the Chinese government is tightening pressure on foreign investment. Most recently the country’s lucrative online gaming industry is seeing tougher regulations aimed at protecting local gaming companies who are finding it difficult to compete with larger players.

On Saturday, the China regulatory body, the General Administration of Press and Publication issued an announcement which bans foreign investors from participating in profits from the country’s online gaming business. These investors are not allowed to participate in wholly owned investments, joint ventures, or any other manner in which they could profit from the thriving business.

We’ve recently been using the GuruFocus Benjamin Graham Net Current Asset Value Screener (subscription required) to generate regular watchlists of net net stocks. The GuruFocus NCAV screen has some superb functionality that makes it possible to create the watchlist from the screen and then track the performance of those stocks. We created our first watchlist on July 7 of this year using the July 6 closing prices. The performance of the stocks in that first watchlist over the last quarter has been nothing short of spectacular. Here is a screen grab (with some columns removed to fit the space below):

Despite the significant rise in the markets from the March lows, not all stocks are up year-to-date (YTD). While many ADR stocks are in positive territory for the year, some are still down heavily. The Five Best and Worst Performing ADRs YTD are listed below.

The Five Best Performing ADRs:

Hardware

• NEC Corp. (NELTY.PK), Hitachi Ltd. (HIT) and Casio Computer Co. (CSIOY.PK) plan to merge their mobile handset operations. This will create the country's second-largest cellphone maker by shipments after Sharp Corp. (SHCAY.PK). The Japanese cellphone makers aim to boost profitability by consolidating operations to save money in a domestic market nearing saturation. A consolidation of the three players would help lessen their spending on development costs and ride out the tough local market. This would also trigger an expansion overseas. That prospect encouraged the investors to snap up shares in the three companies.

The9 Limited (NCTY)

Q2 2009 Earnings Call

• China.com’s (CHINA)revenue was down 31 percent year-over-year but up 27 percent quarter-over-quarters. Net profit was HK$0.6 million (US$.09 million) in the period and a net profit of HK$14.6 million (US$2.1 million) in the year-ago period. The company’s revenue was HK$42.64 million (US$6.2 million) and loss HK$5.49 million (US$803207) in the first six months.
• ChinaCast Education Corp. (CAST) entered into a definitive agreement to purchase the remaining 20 percent interest in The Foreign Trade and Business College of Chongqing Normal University for US$17.6 million. The Company will pay an additional US$2.3 million for a one-time profit distribution bringing the total purchase price to US$19.9 million. ChinaCast attained the acquisition of 80 percent of Hai Lai Education Technology Limited for US$65.8 million. ChinaCast will pay 50 percent of the consideration within 10 days of signing in return for 20 percent of the remaining interest of the holding company of FTBC. The balance of 50 percent of the consideration will be paid by ChinaCast after the registration of the transfer of ownership with the authorities.
• China saw its online shopping market transaction volume hit 56.36 billion yuan (US$8.2 billion) in the second quarter of 2009, increasing 20.7 percent quarter on quarter and surging 91.9 percent year on year. The transaction volume growth was mainly driven by the purchasing peak season and a list of the vendors' promotion strategies. Online shopping has become the hottest industry in the nation's whole Internet market. China's largest online consumer-to-consumer (C2C) marketplace Taobao.com still led the platform-model online shopping market with an 82.7 percent marker share in the quarter, and BOE Technology Group Co., Ltd. took 28.8 percent of the B2C shopping market.
• Alibaba.com Ltd. booked 260.7 million yuan (US$38.2 million) in net profit attributable to equity holders in the second quarter of 2009, down 16.9 percent year-on-year, while revenues grew 23.6 percent year-on-year and 12.6 percent quarter-on-quarter to 908.3 million yuan (US$133 million). Registered users rose 31.5 percent year-on-year and 6.3 percent quarter-on-quarter to 42.78 million by the end of June, with 33.32 million users in the China marketplace. China storefronts grew by 46.1 percent year-on-year to 4.38 million by the end of the second quarter. Paying members were up 44.4 percent annually and 10.4 percent sequentially to 531,471 by the end of June. Subscribers consisted of 70,453 Gold Supplier users, 19,219 International TrustPass users and 441,799 China TrustPass users.

• The number of people accessing the internet through a mobile phone in China stood at 151.82 million at the end of the second quarter, up by 183.44 percent year-on-year and 9.39 percent from the first quarter. China Mobile (CHL) is the largest provider of mobile internet services with 67.5 percent of user volume, followed by China Unicom (CHU) with 26.7 percent and China Telecom (CHA) with 5.8 percent.
• KongZhong Corp.’s (KONG) net profit for the second quarter of this year increased 41 percent from a quarter earlier to US$355 million, with earnings per share hitting US$0.09. The company recorded US$32.3 million in total revenues in Q2 2009, representing a quarter-on-quarter growth of 9 percent and a year-on-year growth of 37 percent, higher than the firm's previous estimates of between US$30.5 million and US$31.5 million. Total gross margin during the period was 51 percent, compared with 49 percent recorded in the first quarter. KongZhong will conduct a long-term investment to Kong.net. The company aims to build it as a 3G mobile portal combined with social networking services. The firm predicted its total revenues would be between US$34 million and US$35 million in the third quarter of this year.

• Huawei Technologies and Ericsson (ERIC) beat out other telecom equipment manufacturers to win contracts in China Telecom's 50 million yuan (US$7.3 million) project to update the 10 Gbps DWDM backbone network connecting the Yangtze River Delta cities of Shanghai, Nanjing and Hangzhou. Huawei took about 80 percent of contracts. China Telecom plans to improve network speed from 10 Gbps to 40 Gbps. Product delivery is on the third quarter. Commercial operation of the updated network is slated for late 2009.

• The actual sales of China's self-developed online games had reached 11.01 billion yuan (US$1.6 billion), increasing 60.1 percent over the previous year, and the sales accounted for 59.9 percent of China's online game publication market. Though the administration encourages foreign companies to jointly develop online games with Chinese companies, it strongly prohibits these companies from online game operations with their own companies or joint ventures. Chinese online game companies gained rapid development in overseas markets.
• The World of Warcraft has resumed services with an open testing program which partly resolved the conflict triggered by the game's operating right transferring from The9 (NCTY) to Shanghai Netease (NTES). The General Office of the Chinese Ministry of Culture requires a reapplication of the approval number for a game when there is a change in ownership of operation rights. The WOW service stopped until July 30. But as the two operators continue to sell the game cards has led to a lot of dissatisfaction and anger among the WOW players in China. China's online game industry’s sales in 2009 are forecast to be 24 billion to 27 billion yuan (US$3.51-3.95 billion), which would bring about 67 billion yuan(US$9.5 billion) in incomes for telecommunications, IT and other related industries.
• NetEase booked net profit of 468.1 million yuan (US$68.5 million) for the second quarter of 2009, improving over 438.2 million yuan (US$64.2 million) in the year-ago period and 416.7 million yuan (US$61.0 million) in the first quarter of 2009. Total revenues grew on annual and quarterly bases to 872.1 million yuan (US$127.7 million) in the second quarter of 2008 and 781.7 million yuan (US$114.4 million) in the first quarter of 2009. Online game revenues were 781.5 million yuan (US$114.4 million), up annually and sequentially from 595.0 million yuan (US$87.1 million) and 724.0 million yuan (US$106.0 million), respectively. The company increased its technical and customer service staff by about 500 to support the Battle.net platform and World of Warcraft.
• Hurray! Holding Co., Ltd. (HRAY) reported the resignation of director Mr. Robert Mao from the Board, effective July 31, 2009. Mr. Niu is the publisher and creator of 'The Founder' magazine and a professional industry commentator.

• LDK Solar (LDK) booked a net loss of US$216.9 million, or US$2.03 per diluted ADS, for the second quarter of 2009 versus net loss of US$22.5 million, or US$0.21 per diluted ADS, for the first quarter of 2009. An inventory write-down, of about US$175.8 million, and a loss on firm purchase commitments of polysilicon materials, approximately US$16.7 million, negatively impacted gross margin and results from operations. Net sales for the second quarter fell to US$228.3 million from US$283.3 million in the previous quarter and US$441.7 million in the year-ago period. LDK shipped 231.7MW of wafers, up 20.9 percent year-on-year, during the three-month reporting period. For the third quarter, LDK is forecasting revenue of US$240 million to US$270 million with 260-300MW of wafer shipments and 10-20MW of module shipments. Demand for solar wafers is beginning to turn more positive.

Taiwan

• Chunghwa Telecom Co. (CHT) said three of its undersea cables across the Luzon Strait that provide international voice calls and Internet connectivity have been damaged by undersea landslides caused by Typhoon Morakot. The company has repaired one of the cables, but damage to two others has limited international voice calls between Taiwan and Singapore, the Philippines and Hong Kong. Chunghwa Telecom is discussing alternative connection routes with China Telecom Corp. and other foreign telecommunications companies. Companies whose voice connections have been affected by the cable damage will have 50 percent of their service restored, while those whose Internet connectivity has been affected will have 60 percent of the service restored.

• Compal Electronics Inc. shipped 3 million notebook PCs and scored combined revenue of NT$53.206 billion (US$1.61 billion) in July, with the latter hitting the highest this year and sharply growing 44 percent from last July. Netbook PC still accounted for over 800,000 units, indicating that launch of CULV platform-based laptops hasn’t eroded the segment for netbook PCs. The firm has scored aggregate notebook PC shipment of 17.3 million units very close to the corresponding figure of 17.8 million units posted by its major rival Quanta Computer Inc., the leading notebook PC supplier.

• MediaTek is expected to ship up to 100 million chipsets in the third quarter alone and achieve earnings per share of NT$32 (US$0.969) for entire the year. MediaTek ranked as the No. 2 IC chip designer in the world, only trailing Qualcomm (QCOM) of the U.S. The firm is very likely to see its single-month sales revenue break the NT$10 billion (US$303 million) mark in August. With handset IC chips contributing over 70 percent to its sales revenue. Strong market demand in emerging markets, like China, India and Brazil, will help to strongly boost its sales performance in the remaining months of the third quarter.
• Taiwan Semiconductor Manufacturing Co. (TSM) and United Microelectronics Corp. (UMC) have received more orders for ARM-based processor chips since late July. Qualcomm, Texas Instruments (TXN), Nvidia (NVDA), Freescale Semiconductor and a unit of Via Technologies all placed orders for the chips, which will be used in smartbooks. The increase in orders will raise the capacity utilization rates for TSMC's 65-nanometer and 55-nanometer technology to 100 percent by November, while UMC's rates will reach that level by the end of August.
• Inotera Memories raised NT$10.2 billion (US$310 million) without much difficulty by issuing global depository receipt (GDP). Inotera raised from the GDP issuance 10 percent more capital than expectations, with each share trading at NT$16.02 (US$.487). Inotera is the first Taiwanese DRAM chipmaker to smoothly raise capital from the international market during the economic downturn. Nanya Technology Corp., FPG’s other DRAM subsidiary, received NT$12.2 billion (US$369 million) from the group through a private-equity placement. Industry executives point out that new capital will help facilitate the two companies’ 50-nanometer process development.

• TOM Group has net profit of HK$11.67 million (US$1.5 million) with revenues of HK$1.19 billion (US$153 million). Profit increase 16 percent year-on-year on revenues with 4 percent year-on-year. The company's share of losses in e-commerce platform Eachnet, a joint venture with eBay, narrowed 44 percent. Average revenue per Eachnet buyer increased to 22 percent during the period. Eachnet opened a marketplace for imported Taiwan goods in June. Other revenue segments include publishing, which brought in HK$404.0 million (US$52.1 million) in first half revenue, outdoor media, and TV and entertainment.

Internet

Activision Blizzard (Nasdaq: ATVI) recently tested China’s murky world of game regulation when it announced a switch in operators for its World of Warcraft franchise from The9 (Nasdaq: NCTY) to NetEase.com (Nasdaq: NTES). Although the original license expired on June 6, 2009, due to the nascent stage of China’s game regulatory environment and perennial uncertainties regarding the use of governmental discretion, no one could say for sure whether the authorities would allow Activision Blizzard to change from one operator to another.

What is clear is that Activision Blizzard cannot operate World of Warcraft in China by itself. Regulations issued by China’s Ministry of Culture and the Catalogue for the Guidance of Foreign Investment Industries both prohibit foreign companies from operating online games within the country. Foreign games are also subject to content review by the Ministry of Culture and publishing approval by the General Administration of Press and Publication (GAPP). But is yet another government approval required to switch local partners?

Hardware

• Toshiba (TOSBF.PK) may finally be launching its own Blu-ray player. Toshiba, which lost the HD DVD vs. Blu-ray battle in early 2008, is reportedly readying a player that will read both Blu-ray discs and DVDs and will appear in stores by year's end. Toshiba had been thinking of developing yet another technology to combat Blu-ray but gave up because of the huge growing market for Blu-ray players and discs. The company will start with play-only models but may consider a recordable Blu-ray player if market demand calls for it, according to local newspaper. Toshiba's entry into the Blu-ray arena would mark the last holdout among all the major electronics manufacturers.
• Fujitsu Ltd. said it is targeting record profit in the 12 months ending March 31, 2012, as spending on software and information-technology infrastructure recovers. Net income will probably be 130 billion yen (US$1.38 billion) for the fiscal period while operating profit may reach a record 250 billion yen (US$2.6 billion) on sales projected at 5 trillion yen (US$52.7 billion). The company, which forecasts a return to profit this fiscal year, is selling its money-losing hard-disk-drive business to Toshiba to focus on semiconductor and software operations. Fujitsu also plans to outsource some chip production to Taiwan Semiconductor Manufacturing Co. (TSMC) to cut spending and help make the unit profitable next year.
• Consolidated sales for the April-June quarter by Japan's Disco Corp. dropped 48 percent on the year to 9.2 billion yen (US$98.3 million) but the figure represents a 42 percent increase from the January-March quarter. Sales of machinery for cutting and grinding semiconductor silicon wafers have been sluggish as customers hold back on capital investment. But sales of expendable supplies grew in line with higher operating rates at chip-making facilities around the world. The company also said that its parent-only sales for the quarter tumbled 52 percent on the year to 6.8 billion yen. It reported a net loss of 900 million yen.
• Sony Corp. (SNE) will break down its earnings results in new categories to reflect changes made in April to its organizational structure. Its electronics business was consolidated into the Consumer Products & Devices Group, which also consists of LCD televisions, digital cameras and semiconductors. Its game business is now part of the Network Products & Services Group, which also includes personal computers and portable music players. Music entertainment and business-to-business operations are now independent segments. The motion pictures and financial services segments will remain the same. The reorganized business segments will be reflected in the firm's April-June results. Dividing the earnings results into new categories may help investors better understand Sony's business, but it will make comparisons with past performances difficult.

Semiconductor

• Elpida Memory Inc. (ELPDF.PK) is reacting calmly to the Taiwanese government's announcement of a change in its DRAM rescue plan, as the company recently secured a total of 140 billion yen (US$1.5 billion) in financial assistance from the Development Bank of Japan and others. Receiving rescue funds from Taiwan was seen as crucial for Elpida's survival amid a severe slump in the DRAM market. The Taiwanese government's previous rescue plan centered around a tie-up between Elpida and TMC, a public-private DRAM joint venture to be established under the lead of the Taiwanese government. Under the old plan, Elpida was to provide cutting-edge DRAM technology for use by Taiwanese companies, and the Elpida-TMC alliance was to receive publicly funded financial assistance. But the government there now plans to provide funds to up to two recipients and accept applications from domestic DRAM makers. The Elpida-TMC alliance is still in the running for these funds, but will likely have to wait longer and may get less because of the additional recipient.

Telecommunications

• NTT DoCoMo Inc's (DCM) group operating profit likely fell 16 percent to about 250 billion yen (US$2.68 billion) in the April-June quarter as the year-earlier boost from reduced sales costs wore off. Quarterly sales likely dropped 2 percent to around 1.15 trillion yen (US$12.1 billion) and handset unit sales may have dropped adding that average revenue per user also appears to have fallen. However, DoCoMo added a net 112,400 contracts in June alone just 500 fewer than Softbank Corp. For the full year ending next March, DoCoMo is expected to maintain its forecast of a 1 percent drop in sales to 4.38 trillion yen (US$46.2 billion) and a nearly flat operating profit of 830 billion yen (US$4 billion).
• The Nikkei English News reported that NTT Data Corporation is planning to acquire BNI Systems Corp., the parent of Wuxi Huaxia Computer Technology Co., Ltd. NTT is a provider of system integration, networking system services, and related services, while Wuxi Huaxia is a China-based software development company. BNI had revenues of approximately 700 million yen (US$7.5 million) for the year ended July 2008.
• KDDI Corp. (KDDIF.PK) said its net profit for the first quarter ended June rose 19 percent from a year earlier, as cost-reduction efforts offset sluggish revenue. KDDI posted a net profit of 86.4 billion yen (US$912 million) in the three months ended June 30. Revenue fell 1.9 percent in the April-June quarter. Average monthly revenue per user fell to 5,600 yen (US$59.00) in the first quarter from 5,900 yen (US$62.24) a year earlier. The operator of “au” brand mobile phone services succeeded in reducing operating costs, partly by spending less on handset sales promotions.

Korea

Semiconductors

• Samsung SDI Co. said that its net profit rose 17 percent in the second quarter of this year from a year earlier mainly due to increased income from equity investment. Net income came to 58 billion won (US$46.4 million) in the April-June period, compared with 49.6 billion won (US$39.8 million) a year ago. Sales fell 6 percent on-year to 1.2 trillion won (US$955 million) during the same period on the back of a rise in overseas orders and operating profit increase 33 percent from a year ago. Samsung SDI attributed the rise to earnings from its stake in a joint venture with Samsung Electronics Co.
• Pixelplus Co., Ltd., (PXPL) announced unaudited financial results for the first quarter of fiscal 2009 ended on March 31, 2009 with revenue of 3.5 billion won (US$2.6 million), compared to 4.5 billion won (US$3.3 million) in the fourth quarter of fiscal 2008, and 3.4 billion won (US$2.5 million) in the first quarter of fiscal 2008. The Company's lower-than-expected revenue was primarily due to the seasonality of sluggish sales in Asia typically exhibited annually in the first quarter, and weaker-than-anticipated sales to Chinese distributors and module makers. Pixelplus is a fabless semiconductor company in Korea that designs, develops, and markets CMOS image sensors for various consumer electronics applications,

Hardware

• South Korean TV makers claimed the largest market share of the global TV market during the first three months this year, widening their lead over Japanese and Chinese competitors. South Korea's Samsung Electronics Co. (SSNLF.PK) and LG Electronics Co. (LGERF.PK) together gained a market share of 33.4 percent in the first quarter of 2009. They had a large margin over the 23.3 percent held by Japanese TV makers Sony Corp., Sharp Corp. (SHCAY.PK), Panasonic Corp (PC). During the same period last year, South Korean makers held a 29.0 percent market share, while Japanese counterparts followed with 20.3 percent. Samsung Electronics and LG Electronics also beat out Chinese TV makers TCL Corp., Skyworth Digital Holdings Co. and Hisense Electric Co. East Asia-based TV makers grabbed a 69.1 percent market share in total for the quarter. The Netherlands' Philips Electronics N.V., with 4.1 percent market share, was the only company not from East Asia to make it into the world's top 10 TV makers.
• LG Electronics Inc. reported record quarterly profit, fueled by demand for flat- panels TVs, and forecast higher sales in the current period. Second-quarter net income climbed 62 percent to 1.15 trillion won (US$917 million), from 706.9 billion won (US$567 million) a year earlier. Profit was almost 50 percent higher than the 770.7 billion won (US$618.5 million) median estimate in a Bloomberg survey of 17 analysts. LG Electronics plans to overtake Sony Corp. in terms of LCD TV shipments this year by offering wireless and energy-saving models. The uncertainty in the global economy will continue in the current period.
• Samsung Electronics would invest 5.4 trillion won (US$4.3 billion) in green research and development and facilities to make the company eco-friendly by 2013. Of the total, 3.1 trillion won (US$2 billion) will be spent to develop products which cause less damage to the environment, and the remainder on energy-saving technologies and the environmental improvement of manufacturing facilities. Samsung Electronics did not detail how it would finance the initiatives but had around 5.3 trillion won (US$4.2 billion) in cash and cash equivalent at end-March. Samsung's plan includes reducing greenhouse gas emissions from manufacturing facilities by 50 percent, cutting total indirect greenhouse gas emissions from all products by 84 million tons through 2013, and ensuring all of its products are more environmentally friendly by increasing energy efficiency through measures such as cutting standby power consumption.
• Samsung Electronics is expected to invest at least 1 trillion won (US$790 million) in a semiconductor production facility in the second half of 2009. Kwon Oh-hyun, president of Samsung's semiconductor division, said at an industry event that Samsung expected its investment in the second half to rise slightly from the first half. The company has repeatedly declined to disclose the size of capital investments planned for this year or already made so far. The chip division investment in the second half would focus on introducing more advanced production technology, such as 40-nanometre circuitry for DRAM chips and 30-nanometre for NAND flash memory.
• LG Chem Ltd. will spend 430 billion won (US$341 million) to boost output of glass sheets for liquid crystal display (LCD) panels. LG Chem announced the investment plan a day after it posted a 31.2 percent jump in second-quarter net profit. LG Chem, which supplies glass sheets to LCD makers, is benefiting from a shortage of the key parts as LCD makers such as Samsung Electronics and LG Display, are increasing prices of the flat panels on the back of strong demand for LCD televisions and computer screens in China.
• The Korean presidential office announced on July 12 that Swedish telecom equipment vendor Ericsson (ERIC) is expected to invest in a joint project to develop 4G LTE (Long Term Evolution) technology, Reuters reported. The Korean presidential office added that Ericsson's five-year investment project is estimated at a ballpark figure of US$1.5 billion and is projected to increase Ericsson's staff in Korea to approximately 1,000 from 80 at present. After the announcement, Ericsson made clarifications to the Korea Communications Commission that the amount of its investment is still not fixed and that details of its investment plan are still being fleshed out and no definite scheme has been reached yet.

China

Internet

• China's Internet users numbered 338 million at the end of June this year. This translates to 40 million new regular Internet users in China in the first six months of this year. And there is still room for growth, given that Internet penetration stood at 25.5 percent at the end of June, up from 22.6 percent at the end of 2008. Mobile networks and devices play an important role in providing access to the Internet. 155 million people in China access the Internet via mobile. Although the spread of 3G networks and devices in the course of 2009 has helped drive mobile Internet take up, consumer enthusiasm is currently limited. A total of 65 percent of Internet users do not intend to use the mobile phone to access the Internet.
• China small and medium businesses are expected to spend more on Internet access than on their websites and online advertising combined in 2009 including US$3.7 billion on Internet access, US$1.8 billion on online advertising, and US$1.5 billion on website hosting, development and maintenance in 2009. The reverse trend is observed in developed APAC countries like Australia, Japan, and Korea. Currently, there are approximately 3.2 million small and medium businesses in China. Of this, 1.3 million SMBs have at least one PC, and 93 percent are using broadband to access the Internet. This means more than 59% of China SMBs are without PC and Internet access. For China Internet access providers and PC vendors, this spells tremendous opportunities in terms of customer base and future growth.
• Baidu Inc.'s (BIDU) second-quarter earnings rose 45 percent as the Chinese Internet company continued to post strong revenue growth and add advertisers. The company also offered strong third-quarter revenue guidance of US$184 million to US$189 million, topping the US$182 million expected by Wall Street. Baidu, which holds a commanding share of the Internet search market in China, warned earlier this year that its online marketing customers might scale back advertisements amid a weakening economy, but it has since kept the problem in check as the Chinese economy has rebounded.

Mobile/Wireless

• China's sales of cell phones in the second quarter of this year topped 33.07 million units, down 7.2 percent quarter on quarter, but the proportion of 3G handsets was below one percent. As sales promotion during the traditional Chinese New Year period of 2009 had satisfied consumers' demand for mobile phones in advance, China's cell phone entered slack season in April, and sales in branded handset market dropped. Statistics show that the sales of GSM handset in China declined sharply in the second quarter from January-March to 30.33 million units, representing a decrease of 7.5 percent on quarter. As China Telecom (CHA) gradually cut the subsidy on 2G terminals, sales volume of CDMA cell phones, with the certification owned by the carrier alone, decreased again in April-June to 2.497 million units after two consecutive quarters' soar, dropping 12.7 percent from the previous quarter. Sales of 3G handsets topped 242,000 units in China during the second quarter of this year, including 131,000 units of CDMA EVDO standard and 64,000 units supporting TD-SCDMA standard. Telecom operators took actions to boost the 3G terminal industrial chain, and issued more reasonable pricing policies with higher subsidies.
• KongZhong Corp. (KONG) co-founder, president and chief technology officer (CTO) Nick Yang, has tendered his resignation effective July 31, 2008. KongZhong also announced its appointment of educational service provider ChinaEdu Corporation and IPTV broadband solutions provider UTStarcom founder Charles Xue to the board of directors. Xue will replace Xiaolong Li, who resigned July 20 for personal reasons.

Telecommunications

• China Unicom (CHU) gained 862,000 new GSM cellular service subscribers, for June 2009, summing the total number to 140.38 million. The company reported a decrease of 255,000 in local access subscribers, and was met by 980,000 new broadband subscribers. The total subscriber numbers in these two services amounted to 108.45 million and 34.91 million, respectively, by the end of June.
• It is expected that ZTE Corp. (ZTCOF.PK) and Huawei Technologies Co. Ltd. will spend at least 500 million yuan (US$73.18 million) replacing base stations provided by Datang Mobile Communications Equipment Co. Ltd. during China Mobile's (CHL) first phase of TD-SCDMA network construction. ZTE would replace 3,000 Datang Mobile-made TD-SCDMA base stations for China Mobile's Guangzhou subsidiary while Huawei would replace approximately 4,000 base stations originally deployed by Datang Mobile on behalf of Shanghai Mobile. Both privately-owned companies will undertake the task at no cost to China Mobile. Datang Mobile locked in 27.46 percent of the network equipment tender for first phase construction, while ZTE was the biggest winner, accounting for 45.54 percent of the total contract value. ZTE, Huawei and Datang Mobile also attained sizeable portions of China Mobile's second and third round network equipment tender.
• China Telecom ended June with 49.05 million broadband customers after adding 810,000 new subscribers during the month. In the year to date, China Telecom attracted 4.78 million new broadband customers. On the fixed voice market, the company shed 1.39 million customers to end the month with 199.36 million local access lines in service. China Telecom further added 2.37 million mobile customers to reach a total of 39.28 million. In the year to date, the company has gained 11.37 million mobile subscribers.
• China's three carriers, China Mobile, China Unicom and China Telecom, injected more than 100 million yuan (US$14.6 million) in online advertising for two consecutive months of May and June. Their online ads expenses amounted to 198 billion yuan (US$29 billion) in May, when it welcomed the World Telecommunications Day on May 17, and China Unicom started trial operation of WCDMA. China Unicom's online ads input reached 78.8 million yuan (US$11.5 million) on that month. In the same period, the carriers paid large amount of money in TV advertising as well, shouldering into prime time of CCTV, China's leading television station. In June, their expenses on online advertising fell, but still stayed above 100 million yuan (US$14.6 million) to 115 million yuan (US$16.8 million).
• An industrial insider has revealed that China's leading telecom equipment manufacturer ZTE Corp. has taken the lead in China Mobile's third phase TD-SCDMA equipment purchasing bid and thereby acquired a 34 percent market share. Kang Zhiyi, an analyst with TX Investment Consulting, said the market had predicted that a 35 percent share would be won by ZTE, so the 34 percent share was in line with market expectation. Besides, the producer had respectively taken 46.78 percent and 28 percent shares in the bids during the first two rounds, and will now serve as China Mobile's largest TD equipment provider in terms of market share.
• Commonwealth Bank of Australia (CBA) has raised its stake in China Communications Services (CCS) to 11.02 percent from the previous 10.95 percent. Information from HKEx showed that CBA on July 13 bought around 1.52 million shares of CCS for HK$7.04 million (US$908 million) at an average share price of HK$4.62 (US$0.60) per share. Shares of China Communications Services, a subsidiary of China Telecom, edged up 0.64 percent.

Media, Entertainment and Gaming

• China's mobile game market size hits 520 million yuan (US$75.9 million) in the second quarter of this year, up 32.37 percent quarter on quarter. Revenues from China Mobile's charges on information reached 230 million yuan (US$33.6 million), increasing 21.3 percent quarter on quarter. China Mobile’s quarterly growth rates of information fees in the first half of this year were over 20 percent, vs. the –0.06 percent average quarterly growth in 2008. It's new game operating platform contributed most of the growth in its information fees, which topped 67.9 million yuan (US$9.9 million) in the second quarter, accounting for 30 percent of the total, while the growth of the old one slackened continuously. Information charges earned from the new game platform will keep on growing, with enrichment of mobile games on the platform as well as increase of payable games.
• The Chinese online gaming industry is expected to develop rapidly with sales income increasing 30-50 percent this year. The sales this year were forecast to be 24-27 billion yuan (US$3.51-3.95 billion), which would bring about 67 billion yuan (US$9.8 billion) in income for telecommunications, IT and other related industries. The official made the remarks at a forum during the seventh session of the China Digital Entertainment Expo and Conference (Chinajoy), the country's largest game convention. The online gaming industry showed great potential in independent research and development.
• Electronic Arts (ERTS) and NetDragon Websoft (NDWTF.PK) announced a licensing agreement for the development of a new MMORPG based on "Ultima Online" from Electronic Arts. As part of the agreement, NetDragon will develop the new Ultima Online(TM) in collaboration with EA's Mythic Entertainment, and have the exclusive operating license for China, Hong Kong, Macau and India.
• The9 Limited (NCTY) has entered into an agreement with USERJOY Technology Co., Ltd., an online game developer in Taiwan, for an exclusive license to operate Kingdom Heroes 2 Online, a 3D MMORPG, in mainland China. Kingdom Heroes 2 Online is a 3D Fantasy MMORPG which stresses on the core feature of Kingdom Wars that maintains a strong community in the game. Kingdom Wars allows hundreds of thousands gamers to fight in the same map. Gamers can bring soldiers and operate the huge siege engine such as catapult to conquer the city; even more, they can experience the exciting vessel battle on the sea. Kingdom Heroes 2 Online breaks through the original 2.5D side-scrolling restriction and evolves to the 3D characters and scenes. With seamless map, massive content upgrade and new battle mode, it is considered as a popular MMORPG product for our 2010 pipeline.
• CDC Corp. (CHINA) business unit CDC Games estimates that second quarter 2009 revenue will increase by roughly 50 percent over the first quarter. CDC Games recorded US$6.3 million in revenue from continuing operations in the first quarter, down 27 percent year-on-year. The company attributed the increase to a rebound in metrics for licensed MMORPG Yulgang after it launched version "Nan Lin Feng Yun" in late March 2009.

Hardware

• Hewlett-Packard Co. (HPQ) inked a memorandum of understanding with the municipal government of Suzhou, a major city in Jiangsu Province, to build a software outsourcing service center in the city. The outsourcing service center will provide HP's foreign and domestic clients in Suzhou with services such as consulting, design, development, testing, implementation and management. The two sides will first cooperate to build a data center and information management and service platform in the International Technology Park in Suzhou Industrial Park. They also plan to build a public logistics platform and a public information technology service platform for small and medium-sized enterprises in Suzhou.

Semiconductor

• Industry insiders estimate MediaTek Inc. (IMKI.OB) to deliver a record 100 million sets of chips for mobile phones throughout the third quarter due to the revitalizing demands for counterfeit mobile phones and exports of the phones in mainland China. They previously expected the No.1 supplier of mobile phone chipsets in the mainland to see shipments lose steam in light of slipping demands and exports of the phones in the Chinese mainland toward the end of the second quarter. Throughout last quarter it delivered a record 80 million sets. Beginning early this month, the mainland’s demands and exports of the phones have instead picked up, clearing a huge number of the inventory backlogs of MediaTek MT6225 chips at phone makers. With the traditional September peak season for mobile phone sales in the mainland approaching, the mainland’s handset makers are stepping up replenishments of inventories of MediaTek chipsets.

Hardware

• Panasonic Corp. (PC) said its domestic home-appliance unit may exceed its sales forecast this year, helped by government incentives to buy energy-saving products. The company expects the program to boost demand and help sales beat a projection of 640 billion yen (US$6.7 billion) in the year ending March 2010, according to Jun Ishii, the head of Panasonic Japan’s marketing division for home appliances. The home-products unit overall was the most profitable of Panasonic’s four main businesses last year, outdoing divisions making televisions and stereos, electrical components and homes. The July-to-September quarter will be critical for the Japanese unit’s results, Ishii said, after the government introduced incentives in May to boost spending on appliances as a part of Prime Minister Taro Aso’s plan to spur economic growth.
• Suning Appliance would pay 800 million yen (US$8.3 million) for 27.36 percent of Laox, making it the loss-making Japanese electronics retailer's biggest shareholder. Suning would pay 12 yen for each of 66.67 million shares and get two seats on the Laox board. Chinese firms have been looking for bargains in their efforts to expand abroad, but Suning said this was the first time a mainland firm had purchased a stake in a listed Japanese company. Suning hoped to return the flagging Laox to profit within a year or 18 months. Suning aimed to use Laox's expertise in the highly competitive Japanese consumer electronics retail market to help it improve business practices such as pricing policies, store layout and customer service.
• Sony Corp (SNE) is considering developing a cellphone-game gear hybrid in a bid to better compete with Apple Inc's (AAPL) highly popular iPod and iPhone. The Japanese electronics and entertainment conglomerate launched its first Walkman three decades ago, dominating the portable music player market, but it has been running far behind the iPod and iPhone in recent years. Sony plans to set up a project team as early as July to develop a new product that combines functions of its portable game player and Sony Ericsson's mobile phones. Sony Ericsson is a cellphone joint venture between Sony and Sweden's Ericsson (ERIC). A growing number of game-makers including Capcom and Square Enix are now offering software for the iPod and iPhone to take advantage of the Apple products' popularity, posing a threat to Sony's PlayStation Portable and Nintendo Co Ltd's DS.

Telecommunications

• NTT Docomo Inc. (DCM) will launch a new service jointly with Mizuho Bank to enable subscribers to transfer money via mobile phone handsets without opening new bank accounts. Rival KDDI Corp. (KDDIF.PK), the operator of the 'au' brand mobile phone service, has already been offering a similar banking service, but its service requires its users to open new bank accounts. Under NTT Docomo's money transfer service, subscribers input the receiver's phone number and part of their surname to make a payment of up to 20,000 yen (US$208.28), which will be charged on their monthly bills with a fee of 105 yen (US$1.09). The recipient can use the transferred money to pay their phone bills or put into their bank accounts via Mizuho Bank.

Semiconductor

• NEC Electronics Corp's (NELTY.PK) semiconductor orders would increase several percent this quarter, helped by demand for chips used in cars and liquid-crystal displays. Orders in the quarter probably jumped one and a half times from the previous three-month period, as manufacturers emerged from a period of excessive inventory cuts. NEC Electronics in May planned to cut labour and research costs by 90 billion yen (US$936 million) this financial year to break even at operating level this fiscal year. The company was increasing production to meet a recovery in demand. The factory-utilisation ratio, a measure of how close the plants are to operating at full capacity, would probably rise to 60 percent this quarter, from about 50 percent last quarter and 43 percent in the first quarter this year.
• Elpida Memory (ELPDF.PK) confirmed that it would receive 160 billion yen (US$1.6 billion) in aid and loans from the Japanese government, its Taiwanese partner and financial institutions after falling chip prices led to a record loss in the past fiscal year. The company would sell 30 billion yen in preferred shares to the state-run Development Bank of Japan by the end of next month. Taiwan Memory, a chipmaker set up by the island's government, planned to invest an additional 20billion yen by March 31, the bank said, while banks would lend the balance of funding. Elpida is Japan's last hope in personal-computer memory chips in an industry dominated by South Korea's Samsung Electronics and Hynix Semiconductor. Makers of computer memory worldwide are seeking funding to survive the chip glut that drove Qimonda to seek bankruptcy protection and resulted in a record loss at Elpida last fiscal year.
• Shareholders at Japanese specialty chip maker Rohm Co. Ltd. voted against a US$156 million share buyback proposal by U.S. investment fund Brandes Investment Partners. Brandes, which has US$42.4 billion under management, had proposed that cash-rich Rohm buy back up to 2.5 million of its own shares for a maximum 15 billion yen (US$156 million).

Korea

Media, Gaming and Entertainment

• TU Media, the country's sole operator of satellite-based digital multimedia broadcasting (DMB), said the number of its subscribers topped 2 million, four years after it launched the service. More than 20 million terrestrial DMB devices, including mobile phones, were also sold as of the end of May. The numbers suggest that about 45 percent of South Korea's 49 million population enjoy mobile TV service. South Korea first launched its DMB service in 2005, the first country in the world to do so, with the development of digital radio transmission technology. It has since become a ubiquitous feature of society thanks to a tech-savvy population and widespread cellular phones and laptop computers. Dubbed "TVs in hand," the mobile service allows people to surf TV channels via palm-sized monitors built into their cell phones while sitting in an underground subway or traveling via train. Various modes of public transportation such as buses, trains, and subways have also begun to equip vehicles with monitors broadcasting programs at all times.

Hardware

• LG Electronics (LGERF.PK) aims to overtake Sony as the second-biggest this year, driven by stronger than expected demand. The company was maintaining its LCD television shipment target of 18 million units this year, which would be achievable, said Simon Kang, the head of the firm's home-entertainment division. Global revenue from LCD televisions would drop 6 percent this year to US$76 billion, researcher DisplaySearch said last week, higher than its previous estimate of US$66 billion. Worldwide LCD television shipments will rise 21 percent to 127 million units, compared with an earlier prediction of 120 million sets, because of higher demand from China and as more consumers replace bulkier glass-tube sets. LG aimed to increase sales of flat-panel televisions by as much as 42 percent this year and boost market share with new products and technologies. Shipments of LCD television sets might rise 50 percent to 18 million sets this year, while those of plasma models would probably climb 7 percent to 3 million sets.
• Tokyo-based Idemitsu Kosan has entered into a strategic alliance with South Korea's LG Display to develop high-performance organic light-emitting diode displays. Their agreement encompasses the cross licensing of patented technologies related to OLED, and mutual collaboration on OLED technologies. The alliance is seen as mutually beneficial, with Idemitsu securing a global display leader as a customer by supplying high-performance OLED materials and device-structure proposals to the Korean display maker, and LG Display gaining the tools to accelerate its growth in the OLED business. Idemitsu turned its attention to phosphorescent materials as well as fluorescent materials. The company has been active in joint development with device manufacturers Sony and Toshiba Mobile Display, in parallel, and expects its new partnership to further strengthen its OLED-material business.
• Samsung Electronics (SSNLF.PK) has won a ruling from the U.S. International Trade Commission against Japan-based electronics company Sharp over patented technology for liquid crystal displays. The ITC found that Sharp infringed one of Samsung's patents in its LCD televisions and displays and ordered a ban on their import into the U.S. market. Samsung filed a complaint with the ITC in 2007 to investigate Sharp's products for infringing four of its patents. Sharp filed a counter-claim in March 2008. Earlier this month Sharp won a ruling from the ITC that found Samsung to have violated four Sharp patents and ordered a ban on the import of its LCD televisions, computer monitors, and professional displays in the U.S. market. In March Samsung won a LCD patent infringement suit against Sharp in the Tokyo District Court in Japan. In January the ITC ruled that Sharp infringed two Samsung LCD patents.

China

Hardware

• Lenovo Group (LNVGY.PK) raised the compensation of former chief executive William Amelio by 54 percent last financial year, after the mainland's biggest personal-computer maker posted a record annual loss. Mr. Amelio, who resigned on February 5, was paid US$17.6 million in the year to March, including US$3.25 million as compensation for loss of office as director. The document also showed Mr. Amelio's total compensation was US$11.4 million a year earlier. Yang Yuanqing, who replaced Mr. Amelio as Lenovo's chief executive, received a 42 percent increase in total pay to US$7.2 million for the financial year to March. Mr. Yang was previously the chairman, a title now held again by Lenovo founder Liu Chuanzhi. Mr. Amelio, who joined Lenovo from Dell in December 2005, had resigned in the aftermath of the firm's first deficit in almost three years - a net loss of US$97 million for the quarter to December last year, a reversal from a net profit of US$172 million the previous year.
• Samsung Electronics' Greater China sales volume reached US$44.5 billion in 2008, while its China region purchasing volume rose 27 percent year-on-year in the period to US$27.2 billion. Samsung expects China region purchasing volume to climb to US$32 billion in 2009 and currently has more than 4,500 domestic suppliers.

Telecommunications

• Ericsson has won contracts to provide fixed broadband to China's three telecom operators, China Mobile (CHL), China Telecom (CHA) and China Unicom (CHU). The initial contract will provide fiber-to-the-home (FTTH) networks for services including high-definition TV and high-speed broadband in Shanghai and eight provinces: Anhui, Guangdong, Hebei, Heilongjiang, Hubei, Liaoning, Shandong, and Sichuan.
• China Mobile Ltd. is still applying for approval from Taiwanese regulators on its plan to take a stake in Taiwan's Far EasTone Telecommunications Co. The Taiwan Affairs Office is under the State Council, China's highest executive body, and is in charge of cross-strait affairs. State-owned wireless carrier China Mobile agreed to pay about US$527 million for 12 percent of Far EasTone, which would be the first deal between telecommunications companies in China and Taiwan if it is allowed. Far EasTone shareholders have already approved the deal. Taiwan opened 100 sectors to investment by mainland Chinese companies, but didn't include the politically sensitive telecommunications sector, indicating the investment is unlikely to be approved by Taiwanese authorities.
• China Telecom's 3G brand e-Surfing opened a 3.6 million-handset tender. 70 handset manufacturers - including ZTE, LG Electronics, Samsung Electronics, Nokia, Huawei and China Wireless Technologies subsidiary Yulong Coolpad submitted bids to supply the handsets, which will retail for around 1,000 yuan (US$146.3).

Media, Entertainment and Gaming

• The9 (NCTY) President Xiaowei Chen has renewed her contract with the company for another two years, reports National Business Daily quoting an unnamed source close to Chen. The9 announced that its full year 2008 income, to be reported on Form 20-F on or before July 15, will be 55 percent to 75 percent lower than net income for the same period reported in its Form 6-K on February 24. The9 has incurred charges related to the loss of its operating license for 3D MMORPG World of Warcraft. Activision Blizzard division Blizzard Entertainment has licensed the game to NetEase for mainland operation following the expiration of The9's contract.
• Shanda Games Ltd. (SNDA), subsidiary of local online game operator Shanda, announced that it's struck a deal with Japanese peer CyberStep. Inc. to operate the latter's two MMORPGs, GetAmped and CosmicBreak, in China. GetAmped and CosmicBreak are both 3D massively multiplayer online role-playing games, with the former a combat game and the latter a shooter. CyberStep is a Japanese game developer which has been involved in the market for the past 10 years and GetAmped has been operating in over 10 countries so far.

Software

• Oracle Corp. (ORCL) is expected to commence its most important marketing campaign on the mainland this year following the global launch of its long-anticipated Fusion Middleware 11g suite of products. On the back of the mainland's economic stimulus initiatives, Oracle anticipated that enterprises in various industries are expected to be well positioned to adopt the software release, which includes key technologies brought by Oracle from its many acquisitions. The take-up will start in the telecommunications sector, where mainland network operators are building their nationwide 3G mobile infrastructure, and in the public sector, thanks to continued government spending. The central government announced in November last year a 4 trillion yuan (US$585 billion) economic stimulus package, including support to 10 strategic industries.

Semiconductor

• A8 Digital Music Holdings has teamed up with semiconductor firm MediaTek to target the potentially vast number of 3G handsets being produced for the domestic market. A8 Music has agreed to have its proprietary software, A8 Box, embedded in the Taiwanese firm's chipsets destined for 3G mobile telephones made on the mainland. Liu Xiaosong, the founder, chairman and chief executive of A8 Music, said the deal would boost the penetration rate of A8 Box in the mainland mobile market. The company, which owns more than 60,000 original works of music on the mainland, designed the A8 Box software to enable mobile users to easily access and buy content from its large online database and various digital music service providers.

Alternative Energy

• Yingli Green Energy (YGE) has been selected by State Development and Investment Corp. subsidiary SDIC Huajing Power Holding, to supply PV modules for a 10MW on-grid solar plant to be located in Dunhuang, Gansu Province. SDIC Huajing Power Holdings and Yingli made a combined bid to operate the similar-sized government project in Dunhuang.
• LDK Solar (LDK) expects second quarter shipments to come in between 220MW and 230MW, above previously issued guidance of 200MW to 220MW, while revenues are expected to be US$215 million to US$225 million. In the first quarter of 2009, LDK booked a net loss of US$22.5 million on revenues of US$283.3 million and 206MW of wafer shipments. LDK Solar has secured a one-year principal loan of 500 million yuan (US$73 million) from The Export-Import Bank of China, as well as a three-year 500 million yuan (US$73.1 million) loan from Huarong International Trust to support polysilicon plant construction. LDK Solar had more than US$250 million in cash as of June 30. The company's annualized wafer capacity reached 1.5GW by June 30. LDK saw strong demand for wafers in the second quarter and plans to resume wafer plant expansion to reach 2GW of annual capacity by the end of 2009.
• ReneSola Ltd. (SOL) announced that its operating subsidiary, Zhejiang Yuhui Solar Energy Source Co. Ltd., has qualified as a high technology enterprise and will receive a reduced income tax rate of 15 percent for three years, starting January 1, 2009. The current statutory tax rate is 25 percent. China's central government awards the high technology classification on the basis of the number of patents and propriety technologies held by the company, as well as its R&D facilities.
• Trina Solar Ltd. (TSL) has secured a new credit line of US$57 million from Standard Chartered Bank (China) Ltd., bringing Trina's total credit to roughly US$520 million. The company aims to use the credit for raw material procurement and product sales.

Table: Performance of U.S.-Traded Chinese Online Gaming Stocks During June 29-July 1

Chinese online gaming stocks are divided into three tiers: The table below shows that among the eight stocks in this industry, Shanda (SNDA) and NetEase (NTES) are in the first tier, with quarterly revenues above $100 million. Perfect World (PWRD), Changyou.com (CYOU), and Giant Interactive Group (GA) are in the second tier, with quarterly revenues between $50 million and $100 million. GigaMedia (GIGM), CDC Corp. (CHINA), and The9 (NCTY) are in the third tier. These rankings are ultimately determined by a few key games. In the table's last two columns, I have listed key games for each company and their PCU (Peak Concurrent Users) during 6/21/2009-6/27/2009 based on my estimates.

Telecommunications

Mobile/ Wireless

Semiconductor

Hardware

Internet

China

Hardware

Internet

Mobile/Wireless

Telecommunications

Media, Entertainment and Gaming

Software

Alternative Energy

Semiconductor

Information Technology

Activision Blizzard’s (ATVI) massively popular MMORPG or ‘massively multiplayer online role playing game’ World of Warcraft is moving to a new home in China. WoW which for several years had been licensed by The9 (NCTY) in China will now be licensed by NetEase (NTES) for the next 3 years. Investors should take note of this new development as NetEase continues its roll.

China’s online games market raked in an impressive $2.8 billion in 2008, up 63% according to Pearl Research’s latest estimates. Online games, which consist of massively multiplayer online games such as Blizzard’s World of Warcraft and quick and easy-to-play casual games, are one of the most popular past times for Chinese Internet users.

Online gaming continues to be the top revenue generator among the digital media companies in China, even surpassing those of search engines and portals. The top two gaming companies, Shanda (SNDA) and Netease (NTES), generated $522 million and $436 million in revenues respectively in 2008. Their online gaming revenues exceed those of search engine company Baidu (BIDU) with $469 million and media firm Sina (SINA) with $369.6 million in revenues.

• • •

Internet

• Google (GOOG) is offering free music downloads in China, but Baidu.com (BIDU) has launched a search engine especially designed for older Web users. The portal, straightforwardly named "Baidu Elderly Search" in Chinese features larger fonts and a menu of search selections tailored for a more mature audience, from revolutionary song downloads to online forums on Tai Chi and keeping pet birds, popular pastimes among China's retirees. The design emphasizes clicking instead of typing in order to help older users who might not find it easy to type Romanized Chinese (or pinyin) to produce characters for their searches. Statistics from the China Internet Network Information Center show that only 5 million people over the age of 50 had used search engines by the end of 2008, out of a total of nearly 300 million Internet users in China. Baidu also runs special search sites for children and the blind.