Media, Entertainment and Gaming

• Nintendo Co. (NTDOY.PK) might reduce its earnings forecast. Annual profit will lessen for the first time in six years due to the fall of Wii console sales and stronger yen. Net income at Nintendo might lessen 11 percent to 249.3 billion yen (US$2.7 billion) this fiscal year, the first drop since the 12 months ended March 2004. The company lowered the price of Wii’s in September. Nintendo had 300 billion yen (US$3.3 billion) net income this year. Global sales of the Wii fell for the first time. Sony Corp. (SNE) sold the fewest number of PlayStation 3 machines in two years.

Since I am using a virtual portfolio, and I am not sure how it will handle a potentially complicated transaction, I am going to temporarily sell E-House Holdings (EJ) pending the spinoff / IPO of China Real Estate Information (CRIC) [Sep 30, 2009: China Real Estate Information Seeks US IPO Worth $200M]

• Now, real-estate broker E-House Holdings (NYSE:EJ - News), is preparing to sell off part of its information and consulting business this week. But the deal is a little different because it's doing a merger at the same time.
• Last year, the firm formed a joint venture with Sina Corp. (NasdaqGS:SINA - News), one of China's leading Internet portals. In July of this year, Sina agreed to sell its real estate division to E-House, which is combining it with the spun-off data business. The IPO, then, will consummate the merger.

Doing all the stuff for the blog, I have not had time to look to see how this deal works mechanically, but it sounds similar to what Sohu.com (SOHU) and Changyou.com (CYOU) did earlier this year. So just to keep it simple, I am going to sell Wednesday and buy back hopefully Friday or next Monday after the IPO. This is actually one of our largest positions at the time ... we'll be out in the $22.10s.

By Hao Jin

China's rapid economic growth will be the global story of the foreseeable future. Like the Japanese in 1980s, the Chinese are shopping for Hummers, IBM (IBM) PC's, natural resources and real estate, etc.

China Real Estate Information (CRIC), a spin-off of E-House China's (EJ) real estate information and consulting business. is expected to go public this week. According to the Wall Street Journal, "China Real Estate is in the process of acquiring the online real-estate business of Sina Corp. After that deal is completed, the company will begin generating online-advertising revenue." The deal size could reach $225.9 million.

Business Overview (from prospectus)

China's rapid economic growth will be the global story of the foreseeable future. Like the Japanese in 1980s, the Chinese are shopping for Hummers, IBM PCs, natural resources and real estate.

In addition to growth, many investors look at emerging markets such as China as potential protection against a falling dollar. No one wants to lose money any more after the market crash of last year, but neither can anyone afford to miss out on potential huge growth ahead. Money is flying back to Chinese stocks, causing valuations to rise rapidly. Are there still windows of opportunity left?

Hardware

• Oki Data Corp. is initiating full-scale sales of printers in the Chinese market as part of an effort to make up for slumping sales elsewhere overseas. The Oki Electric Industry Co. subsidiary had two overseas sales organizations for printers, one for Europe and the U.S., and one for other foreign countries. It will create a third sales team at its headquarters to oversee sales in China. The new team, which is also slated to cover sales activities in Taiwan, will formulate sales plans and conduct market research. An executive responsible for sales in Japan will be appointed chairman of Oki Trading (Beijing) Co., Oki Data's local unit in Beijing, and management-level personnel will also be sent from Japan to branches in Shanghai and Guangzhou. Oki Trading has begun using endorsements from table tennis player Ai Fukuhara, who is popular there.

SINA Corporation (SINA) said that it has dropped plans for acquiring Focus Media Holding Limited (FMCN) due to the delay in approval from China's Ministry of Commerce regarding antitrust issues. The companies have decided not to extend the deadline of the agreement.

In order to provide more effective and integrated marketing solutions, SINA entered into a definitive agreement with Focus Media Holding Ltd. in 2008 to acquire substantially all of the assets of Focus Media's digital out-of-home advertising networks, including LCD display network, poster frame network and in-store network.

At the end of each trading week, Hillbent scans the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our ETF Trends Report to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

Baidu (BIDU) is the leading Chinese language Internet search engine. It has been in my Jim Van Meerten/BarChart New High model portfolio on Marketocracy for some time and I have written about it on my blog Financial Tides. I add stocks to my New High Fund when I see stocks trading over 100K per day that continue to hit new highs.

BIDU's main competition in the Chinese market is SINA and SOHU. BIDU has 545M in revenue while SOHU has 485M and SINA 372M. Why do I like BIDU above the others?

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up in our series is Bret Barakett's Tremblant Capital Group. Barakett, a former portfolio manager for Louis Bacon's Moore Capital, now runs his own hedge fund in New York and manages over $3 billion. Taken from their site, Tremblant Capital Group's objective is "to achieve superior risk adjust returns for our investors through our focused and disciplined investment process." Barakett's name will ring a bell for some as he is the brother of Timothy Barakett of Atticus Capital. We just got word recently that Atticus would be shutting down its main fund as Timothy steps away from the hedge fund game. Hopefully Bret doesn't get that same itch.

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.

Sentiment

The first trading day of September is a rocky one for the US equity market. The major averages came under pressure in morning trading despite a round of mostly positive economic numbers. For example, the latest ISM Index moved to 52.9 in August, which was up from 48.9 in July and better than economist estimates of 50.5. While July construction spending numbers fell short of expectations (-.3 percent vs. 0 percent consensus), July pending home sales improved (up 3.2 percent vs. 1.5 percent consensus).

Yet, in a sign that a lot of the good economic news might have been baked into the cake during months past, the major averages faltered shortly after the data hit the newswires. The financials are leading the market slide. BofA (BAC), Amex (AXP), and GE (GE) are the biggest losers in the Dow Jones Industrial Average.

• Skype to get new owner. eBay (EBAY) is expected to announce this morning that it has reached a deal to sell its Skype unit to a group of private investors. The investment group likely includes new venture capital firm Andreessen Horowitz, as well as early Skype investor Index Ventures and private-equity firm Silver Lake Partners. The price of the deal is still unknown, but eBay has said previously that it wants around $2B for Skype. Shares +2% premarket (7:00 ET).
• BoA ready to repay? Bank of America (BAC) is reportedly offering to repay part of its bailout money, and the U.S. is pressuring the bank to pay at least $500M to cancel a potential loss-share deal with the government. Sources said both sets of discussions relate to extra aid Bank of America received to complete its acquisition of Merrill Lynch. If Bank of America repays the additional $20B it was given in January, it will no longer be considered an 'exceptional' aid recipient and therefore won't be subject to the intense scrutiny of Congress and pay czar Kenneth Feinberg. Shares -2.4% premarket (7:00 ET).
• Disney's marvelous acquisition. Disney (DIS) agreed to acquire Marvel Entertainment (MVL) in a stock-cash transaction worth around $4B, a 29% premium for Marvel shareholders. Disney will begin to feature Marvel's portfolio of over 5,000 characters in Disney movies, theme park rides, TV shows and merchandise, a move which may help Disney better target the demographic of boys from their preteen years into young adulthood. S&P warned it may downgrade Disney because the relatively expensive acquisition, combined with stock buyback plans and the potential for continued recession-related declines, could lead to "debt leverage remaining above our threshold for an extended period." The deal is a setback for Paramount (VIA), which will be able to complete but not extend a recent distribution deal with Marvel, and for Electronic Arts (ERTS), which some analysts had thought might be acquired by Disney, a deal that no longer seems likely in the short term. (Read Disney's press release)
• AIG loses Starr case. A federal judge ruled against AIG (AIG) in its efforts to win $4.3B in damages from Starr International, the company run by former AIG chief Hank Greenberg. The judge affirmed a jury verdict that found no breach of trust by Starr for selling AIG stock rather than using its AIG shares to fund an executive retirement program for generations of the insurer's employees. Separately, AIG, Greenberg and former CFO Howard Smith agreed to enter binding arbitration by October 15 to settle various outstanding legal disputes. Shares -6.9% premarket (7:00 ET).
• Citi sheds credit card portfolios. As part of its effort to shed weak businesses, Citigroup (C) said it sold three credit card portfolios representing $1.3B in managed assets, but didn't disclose the terms of the deal. Though the sale is relatively small, the lack of transparency didn't sit well with critics, who noted the taxpayer-funded bank "said it had sold undisclosed assets to an undisclosed buyer for an undisclosed price, resulting in an undisclosed profit or loss." Sources said the buyer is likely U.S. Bancorp (USB). C -3.6% premarket (7:00 ET).
• PetroChina buys Canadian oil stake. PetroChina (PTR) moved forward in its quest for overseas expansion, agreeing to pay C$1.9B ($1.7B) to closely-held Athabasca Oil Sands Corp. for a stake in a Canadian oil sands project. PetroChina's deals represent around 20% of China's $17B in spending on overseas energy assets since December, and this is PetroChina's largest North American acquisition to date.
• Icahn offloads Yahoo shares. Activist investor Carl Icahn disclosed in a regulatory filing that he sold 12.7M shares of Yahoo (YHOO) at the end of August, bringing his stake down to 4.48%. Icahn said he remains 'optimistic' about Yahoo's long-term outlook and the sales were only meant to 'provide a more desired balance' in his portfolios.
• Sony goes Chrome. Sony (SNE) plans to put Google's (GOOG) Chrome browser on Vaio laptops in the U.S., the first such deal for Chrome since it was announced last year. Google declined to disclose details of the deal, which went into effect this summer, and said it's looking to reach similar arrangements with other computer makers. Without those partnerships, Google's Sony deal may be too small to matter.
• Apple may opt for more carriers, face SEC probe. Piper Jaffray analyst Gene Munster wrote in a research note that Apple (AAPL) is likely to add new U.S. carriers for its iPhone within a year. Repeated speculation points to Verizon (VZ) as a likely addition, while AT&T (T) faces questions about how much it really gained from its role as exclusive carrier. Separately, the Huffington Post reported the SEC is investigating possible insider-trading offenses in shares of Apple, including whether anyone was given enhanced insight into Steve Jobs' health condition or if some investors had advanced notice of iPod sales results. Both Apple and the SEC declined to comment. AAPL -1.3% premarket (7:00 ET).
• JetBlue, Lufthansa to share codes. JetBlue (JBLU) and Lufthansa announced a code-sharing agreement allowing the airliners to expand their networks through connecting flights. Lufthansa holds a 19% stake in JetBlue, but the relationship has raised some concerns among rivals and this latest move will likely exacerbate those concerns. The deal must be approved by the Department of Transportation.
• Big Tobacco files free speech suit. Tobacco company R.J. Reynolds (RAI) joined other tobacco makers in suing the FDA, challenging the regulator's new authority over tobacco. The companies say their First Amendment rights to free speech have been violated and the law's provisions "severely restrict the few remaining channels we have to communicate with adult tobacco consumers."
• Charities scammed by Madoff face clawbacks. Madoff liquidator Irving Picard said he may sue charities that were Madoff clients to reclaim the fake profits they withdrew. By law, Picard must file clawback suits against investors that profited from Madoff's scam, even if they did so unknowingly. Picard, who until now hadn't outlined his strategy for dealing with charities, said charitable organizations aren't exempt from such 'avoidance actions.'
• Cities are gloomy on shrinking revenues. City revenues fell in FY '09 for the first time in seven years, according to a report by the National League of Cities to be released later today. Weak growth in property taxes and sharp declines in sales taxes, income taxes and state aid contributed to a 0.4% decline in city revenues even as expenses rose 2.5%, creating the worst outlook in the 24 years since surveying began. Nor is relief in sight, as tax revenue is expected to lag any economic recovery.
• European leaders target bank pay. German Chancellor Angela Merkel and French President Nicolas Sarkozy promised to fight excessive pay in financial firms and to toughen regulation of the financial sector. The U.K.'s Gordon Brown echoed those sentiments, saying excessive pay must be reined in and compensation should be based on long-term success rather than short-term speculative gains. The comments come ahead of a G-20 meeting in Pittsburgh on Sept. 24-25.
• Commercial mortgage defaults rising. The commercial mortgage default rate more than doubled in Q2 as compared to the year before, reaching 2.88% of outstanding balances. Commercial mortgage-backed securities [CMBS] account for 22% of the $3.4T in commercial real estate debt, and researchers believe defaults on CMBS could pass 7% by the end of the year.
• Chicago business activity improves (.pdf). The Chicago Purchasing Managers Index registered at 50 in August, better than the consensus of 48 and up from 43.4 in July. This is the index's highest level since September 2008. New orders were up 4.5 to 52.5, while prices paid jumped 15 points to 50.
• European joblessness climbs (.pdf). Unemployment in the 16-nation eurozone climbed to a new ten-year high of 9.5% in July even as the economy began to signal a recovery. Across the entire 27-nation European Union, unemployment rose to 9% in July. Spain leads the bloc in joblessness, with nearly one in five workers without a job.

Earnings: Monday After Close

• Benihana (BNHN): FQ1 EPS of $0.05 misses by $0.05. Revenue of $96M (+2%) vs. $97M. Sees full-year EPS of $0.40-0.45 vs. $0.46, and full-year revenue of $305M-310M vs. $323M. (PR)
• Culp (CFI): FQ1 EPS of $0.15 beats by $0.03. Revenue of $46M (-23%) vs. $45M. Sees Q2 revenue down 5%. (PR)
• Sina (SINA): Q2 EPS of $0.29 in-line. Revenue of $90M (-1%) vs. $88M. Sees Q3 revenue of $91M-94M vs. $96M. (PR)

Today's Markets

In Asia, stocks managed to pull back into positive territory after yesterday's selloff. European markets and U.S. futures are slipping.

Q2 2009 Earnings Call

August 31, 2009 9:00 pm ET

Sina (SINA) will report second quarter earnings on Monday, August 31st after the market close. Consensus expectations are for revenues of $88 million (-3% y/y and +20% q/q) and pro forma EPS of $0.30.

Display revenues are expected to decline 12% y/y due in part to tough comparisons to the Olympics ad spend in 2Q08, however, I expect a sequential improvement from 1Q09 as several advertising categories such as autos and real-estate have rebounded in China during the quarter. Mobile revenues is likely to be up in the high teens y/y.

This commentary originally appeared in Forbes

Ignore them at your own risk.

Hardware

• Konica Minolta Holdings Inc. would start output at its new factory in Japan that makes high-tech film used in LCD panels by autumn 2010 due to a strong recovery in panel and TV demand. Konica Minolta had planned to begin production at the new plant in autumn 2009, but the company late last year decided to delay the start-up as the global downturn forced panel makers to cut output. Konica Minolta dominates the global market for triacetyl cellulose (TAC) film, which protects the polarisation plates used in LCD panels, with bigger rival Fujifilm Holdings Corp. Konica Minolta, which also competes with Canon and Ricoh in producing copiers and printers, plans to spend 18 billion yen (US$194 million) to build the new factory, which will be capable of making 50 million square metres of TAC film a year.

Telecommunications

• NTT DoCoMo (DCM) president Ryuji Yamada said the Japanese operator is on track for launching its new Long Term Evolution (LTE) mobile network in 2010, reports the Financial Times. The adoption of LTE will see DoCoMo's handsets become compatible with other operators' 3G networks for the first time since the 2001 launch of its FOMA service, which used a WCDMA standard that was slightly different to the one rolled out by the majority of the rest of the world. DoCoMo has learned a hard lesson from being the first operator in the world to launch 3G services. DoCoMo plans to launch LTE handsets in 2011 that are also compatible with its current 3G network, so customers can still access services if they're outside an LTE coverage area. DoCoMo will use its high-speed LTE network to offer mobile content services in a bid to drive new revenue in the saturated Japanese market.
• Softbank Corp. (SFTBF.PK), Japan’s third biggest mobile telecommunications provider, raised 30 billion yen (US$320 million) from the first BBB rated bonds sold to institutions in Japan by a non-utility borrower since Lehman Brothers Holdings Inc.’s collapse in September. The Tokyo-based company, priced three-year, 4.72 percent notes to yield 4 percentage points more than the yen swap rate, according to data compiled by Bloomberg. Softbank, rated the second-lowest investment grade of BBB by Japan Credit Rating Agency, becomes the first non-utility company with that rating to sell bonds to institutional investors in Japan for 10 months. Softbank will use money raised from the securities to repay debt, it said in a filing with Japan’s finance ministry today. The company sold 60 billion yen in 5.1 percent fixed-rate bonds to individual investors in May, Bloomberg data show.
• Softbank casts its eyes on the Greater China Region and inked a strategic cooperation agreement with Shanghai Media Group (SMG) on June 29, 2009. Softbank Founder Masayoshi Son and SMG President Li Ruigang signed on the agreement. The two parties will jointly to develop new media digital content business. Softbank is reported to cooperate with Far Eastone Telecommunications Co., Ltd. in August to launch mobile phone cartoon services. Far Eastone is in talks with Softbank subsidiaries in an attempt to introduce Japan's well-known cartoon works into Taiwan as soon as possible.

Semiconductor

• Japan's Ushio Inc. announced its subsidiary Ushio America Inc. has acquired a 49 percent stake in U.S. firm Necsel Intellectual Property Inc. Necsel has technology for low-cost mass production of visible-laser light sources, and Ushio plans to leverage this to boost its own competitiveness in the markets for light sources for data projectors and digital cinema display systems. Using the technology, Ushio will be able to broaden its lineup of light sources to include semiconductor lasers across the complete spectrum of visible wavelengths. The company plans to purchase the remaining 51 percent of Necsel over the next five years and turn the unit into a wholly owned subsidiary

Media, Entertainment and Gaming

• Square Enix Holdings Co. (SQNXF.PK) has shipped three million units of its "Dragon Quest IX" video game software in Japan since its release. In total, global shipments of the "Dragon Quest" series have surpassed 50 million units since the popular franchise debuted in 1986. Sales of the highly anticipated latest installment are going strong, too, with some 2.5 million units flying off the shelves in its first three days on the market -- beating the roughly 2.4 million of "Dragon Quest VIII," which was released in 2004. For the first time in the series, "Dragon Quest IX" runs on the Nintendo DS hand-held system. And through Wi-Fi wireless technology, up to four nearby gamers can play together.

Korea

Telecommunications

• SK Telecom Co. (SKM) is considering bidding for Kazakhstan's Mobile Telecom-Service, as part of its recent efforts to seek business opportunities overseas. Kazakhtelecom, Kazakhstan's incumbent telecommunications operator, said in late June that it plans to sell its 51 percent stake in Mobile Telecom-Service and that it would accept letters of intent from potential bidders by and final bids by Aug. 31. Mobile Telecom-Service, Kazakhstan's smallest GSM operator, was launched in 2007 and provides services under the brand Neo with 920,000 subscribers.

Mobile/Wireless

• Ericsson (ERIC) plans to invest US$1.5 billion in South Korea over the next five years. The company would set up a research centre in the Asian nation to develop environmentally friendly and fourth-generation wireless technologies. Ericsson also planned to increase the number of employees at its Korean unit to 1,000 from 80. The Korean government was determined to provide a level playing field for foreign businesses to compete with domestic rivals. The investment was expected to help boost Korea's competitiveness in the market for long-term evolution, or LTE, high-speed wireless technology, backed by Ericsson. AT&T and Verizon Communications are also choosing the standard. Verizon Wireless, the biggest U.S. mobile-telephone company, aims to begin offering a high-speed network in all U.S. regions by 2015 using LTE, which is scheduled to reach 30 markets by next year. LG Electronics, Asia's second-largest mobile-telephone maker, in December said it developed a faster wireless chip used in mobile telephones based on the technology.

Biotechnology

• Samsung Electronics plans to invest about 500 billion won (US$389 million) in the biotech medicine business. Korea’s economy minister Lee Youn-ho said that Samsung, the world's top maker of memory chips and flat-screen TVs, would spend the amount over the next five years on the biosimilar business. Biosimilars are versions of biopharmaceuticals whose patents have expired. Samsung declined to confirm the size of the investment but said biosimilars presented a new growth opportunity for the technology giant. Lee signed a letter of intent with several domestic firms, including Samsung Electronics and LG Life Science, on their investment in a government biosimilar industry development initiative, with Korea Development Bank and a state-led fund already committed to providing financial support.

China

Internet

• China's Ministry of Commerce (MOC) has not ruled against the proposed merger between Sina (SINA) and Focus Media (FMCN); documents for the merger have not yet been put on MOC records. Focus Media CEO Jason Jiang is "quite anxious" about the merger, and said recently that the MOC has continuously asked for more documentation. The companies first submitted an application for their merger in late December 2008.
• As of the end of 2008, China saw a netizen base of 298 million, and an Internet penetration rate of 22.6 percent, outracing the global average level of 21.9 percent.

Mobile/Wireless

• A total of 13.21 million mobile phones were sold in China in May 2009, up 9.6 percent from the previous month. The number of GSM mobile phones sold in May increased by 12.5 percent month-on-month to 11.06 million units, while only 2.15 million CDMA handsets, which included 39,800 3G CDMA 1xEVDO handsets, were sold in May, down 3.4 percent from April. The dip in CDMA mobile phone sales is the result of China Telecom's shift in focus from 2G to 3G. In addition, both China Mobile and China Unicom implemented subsidies within their 3G service plans in 2009 to attract more users. Five foreign brands, Nokia, Samsung, Motorola, Sony Ericsson and LG, accounted for a 65.6 percent share of China's mobile phone market in May. Nokia had the largest market share of 31.9 percent last month. Domestic mobile phone manufacturer ZTE was the sixth-largest brand in May with a 3.8 percent market share.
• Z-Obee Holdings, which provides design services for mobile-telephone manufacturers on the mainland, has launched its own handset brand to meet the country's growing demand for stylish wireless devices. The Singapore-listed company's new "Vim" brand for the mainland mobile-telephone market will cater to price-conscious consumers keen on using fashionable, easy-to-operate handsets. The firm's production road map includes launching a new model every 45 days, which would enable it to introduce at least eight models in Hong Kong and on the mainland each year. The initial batch of Vim handsets being introduced on the mainland includes a his and hers model designed for couples that has a text message authentication function. This allows text correspondence between the pair to be decoded with a specific password for privacy. Each Vim handset has a voice diary function, allowing users to record appointments on the phone and be automatically reminded by the device at the designated time.

Telecommunications

• China Mobile Ltd. (CHL) will invest 70 billion yuan (US$10.2 billion) in building and upgrading its telecommunications networks, and promoting the use of its 3G services in the country's vast rural areas over the next three years. The ministry will help it promote the adoption of 3G-enabled applications in rural areas.
• China's three telecoms carriers, China Mobile, China Unicom (CHU) and China Telecom (CHA), 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 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 78.79 million yuan 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. Their expenses on online advertising fell, but still stayed above 100 million yuan to 115 million.
• ZTE Corp. (ZTCOF.PK) has captured 34 percent of the latest 8.6 billion yuan (US$1.3 billion) 3G network expansion tender by China Mobile Communications Corp. Huawei Technologies won 22 percent while partner Nokia Siemens Networks claimed 7 percent. Datang Mobile Communications Equipment and domestic partner FibreHome Technologies ranked third with a 21 percent share. The rest went to China Putian, New Postcom and Ericsson, each winning five to six percent. ZTE and Huawei were helped by their offers of a free upgrade in China Mobile's existing TD-SCDMA equipment, which was installed in the previous two phases of network construction. Industry watchers said China Mobile's preference for supporting domestic vendors and homegrown technologies also enabled ZTE, Huawei and Datang to take a bigger share. As a result, foreign vendors' share was shrinking. The latest tender was the third by China Mobile for a network covering 200 cities or 70 percent of the areas on the mainland. The original contract size was about 8.6 billion yuan for the installation of 39,000 base stations.
• China Unicom aims to go up against market leader China Mobile for high-end users as early as October, thanks to its exclusive sales agreement for the popular Apple (AAPL) iPhone handset. Unicom and Apple are expected to announce a schedule for the iPhone's introduction soon. Meanwhile, industry sources have confirmed that Apple has already submitted the device to a Ministry of Industry and Information Technology laboratory for official approval. Unicom and Apple could not be reached for comment on the deal, but telecommunications sources said Unicom would launch the handset in the fourth quarter when its 3G mobile network will cover 284 cities across the country, up from 55 cities at the end of last month. The full commercial launch of its 3G network plus the exclusive deal with iPhone is expected to put pressure on China Mobile to defend its high-end users.

Hardware

• Greater China is expected to see an almost fourfold increase in demand this year for mini-notebooks, commonly known as netbooks, as computer makers aggressively market the low-cost devices amid the economic downturn. That growth spurt is likely to boost sales for the market's leading notebook personal computer suppliers - including mainland Lenovo Group (LNVGY.PK), Hewlett-Packard (HPQ), Dell (DELL), Toshiba (TOSBF.PK), Acer and AsusTek Computer (AKCPF.PK) and operators of high-speed 3G mobile networks. Netbook shipments on the mainland, Hong Kong and Taiwan are forecast to hit 3.9 million units, up nearly 260 percent from 1.1 million units last year. The market research firm said total industry shipments would reach nearly 33 million units, up from its earlier estimate of 27 million units. That would result in a global netbook penetration of about 20 percent and flat year-on-year demand for pricier, full-featured laptops. Many buyers were adjusting their discretionary spending and were buying netbooks as lower-priced alternatives to traditional laptops. Netbooks are smaller than typical laptops, carry few software applications and are mainly used for wireless internet access.
• Lenovo Group plans to expand its sales network coverage from more than 100 Indian cities to more than 300 within 2009. The company is currently restructuring to divide its global business into mature and emerging markets. Lenovo previously will open 30 retail locations in India to bring its store total to 150 and expand its service centers from 130 to 250.
• Shenzhen-based Coship Electronics Co., Ltd. has won an order worth US$21 million from EMB, an old customer in South America to supply digital TV set-top boxes. The order from EMB represents about 6.79 percent of Coship's total operating revenue in the entire 2008 and is the first overseas contract that Coship makes public this year. In November 2008, Coship got a set-top box order valued at US$12.21 million from the South American company. Coship had sold set-top boxes worth 120 million yuan (US$17.5 million) to EMB as of June 30, 2009, eight months after it secured the first order from the latter. The Shenzhen company, engaged in the production and sales of digital TV equipment and electronics, saw its digital TV set-top box software and hardware sales revenue account for 93.94 percent, 96.83 percent, and 95.94 percent of its revenue from major business in 2003, 2004, and 2005, respectively.
• TCL Corp. said that its net profit may plunge 80 percent from a year earlier to 85 million yuan (US$12.4 million) during the first half of this year. TCL Communication Technology Holdings Ltd, one of TCL's subsidiaries, saw sales of handsets and accessories slide 12.32 percent year on year to 1.02 million units last month, while its first-half sales declined 24.69 percent from a year earlier to 5.06 million units. TCL Multimedia Technology Holdings Ltd, another subsidiary of TCL Corp, sold 616,898 LCD TVs in June, up 60.3 percent from a year earlier, and 342,353 CRT TVs, down 56.1 percent year on year. TCL sold more than 2.31 million LCD TVs in the first five months of this year, representing a year-on-year increase of 103.7 percent. The sales volume of LCD TVs in the first five months accounts for nearly 60 percent of the company's sales in 2008.

Alternative Energy

• Suntech Power Holdings (STP) plans to invest 30 billion yuan (US$4.4 billion) in the four projects with a combined capacity of 1.8GW that it signed up to in recent weeks. The money represents just the initial investment. China's long term plan for the PV industry is 70 percent of projects will be on-grid and 25 percent building integrated PV.
• LDK Solar Co. (LDK) has purchased a 70 percent stake in Italian systems integrator Solar Green Technology for an undisclosed sum. The move is expected to enhance LDK Solar's presence in the Italian photovoltaic sector. In addition, the deal will help Solar Green Technology grow further through its partnership with LDK Solar for several projects in Italy and Europe.
• ReneSola Ltd. (SOL) has successfully commenced trial production on the first batch of polysilicon from Phase 1 of its two-phase, 3,000 metric ton annualized capacity polysilicon manufacturing facility located in China's Sichuan province. ReneSola's two-phase, 3,000 MT annualized capacity polysilicon manufacturing facility utilizes the Siemens process and a closed loop system to produce polysilicon. Phase 2 of the facility, representing approximately 1,500 MT annualized capacity, is scheduled to reach mechanical completion in September 2009.

This article compares the P/E ratios of 10 largest U.S.-traded Chinese internet stocks with at least $1 billion market cap (see table below), and discusses implications for investors.

Sentiment

Stocks are lower and volatility is higher on disappointing economic data and ahead of key "event risk" Wednesday and Thursday. Stocks sank in morning trading after a report on Consumer Confidence showed a decline to 49.3 in June, down from 54.9 before. The rocket scientists (aka economists) were expecting an increase to 55.3!

Stocks faltered, as news of eroding consumer confidence comes ahead of key economic data later in the week. Monthly jobs data are scheduled for Thursday, a day early due to the Fourth of July holiday (markets, banks, and government offices are closed Friday). A flood of market-moving information is due out Wednesday as well. In addition to economic data (ISM, construction spending, pending home sales), investors also get weekly oil inventory data and monthly auto/truck sales.