Chinese Tech Stock Weekly Summary

by: IRG Ltd

The following is excerpted from IRG's weekly stock report:


• H3C, a wholly-owned subsidiary of 3Com (COMS), and Raza Microelectronics announced that H3C and RMI have entered into a wide-ranging strategic vendor relationship focusing on the use of RMI's multi-core, multi-threaded XLR Processor and XLS Processor Families across H3C's networking, security and wireless applications. H3C, formerly known as Huawei-3Com, is a China-based provider of network infrastructure products. According to IDC, H3C, which held over one-third of the Chinese LAN switch market, and the 3Com/Huawei combination now contribute to the company's success in the Ethernet switch market. Initially a joint venture between U.S.-based 3Com and China's Huawei, called Huawei-3Com Technology, the company became a wholly-owned subsidiary of 3Com when 3Com acquired Huawei's stake in March 2007.
• (NASDAQ:NTES), a Chinese Internet portal, announced the launch of the official upgraded beta of its self-developed search engine You Dao. The new beta search engine features an upgraded function of the webpage search, image search, blog search and desktop dictionary. Industry observers see the search engine as becoming one of the core businesses of and providing better search experience for Chinese Internet users. With the launch of the new beta, announced that it has also adjusted the homepage of its web site, with the search button now made more prominent on the page.
• Ninetowns (NASDAQ:NINE-OLD) revealed its plan to spend more money to increase its Internet resources. The company provides software services to import and export firms. According to its CEO, Ninetowns currently has about US$100 million in cash and is considering acquiring some medium and small B2B websites. Ninetowns has also made a series of acquisitions, beginning with its acquisition in May of, an e-commerce vertical search web site and a stake in Ninetowns has formed a large scale outsourcing platform that covers all the major processes of the B2B businesses with as the main undertaker.

Media, Entertainment and Gaming

• CDC Corporation (NASDAQ:CHINA), a global enterprise software and new media company, announced its financial results for the third quarter period ended September 30, 2007, with its total revenue posting a 27 percent rise to US$99.6 million, from US$78.2 million in the third quarter of 2006. This marks the highest revenue total for a third quarter in CDC´s history and its second best revenue quarter overall. CDC said its total revenue from CDC Software for the third quarter of 2007 went up 46 percent to US$89.5 million, from US$61.3 million posted in the same quarter in 2006. The company’s business, which includes the portal and MVAS businesses, reported a 58 percent drop in its revenue to US$3.6 million for the third quarter 2007, from the US$8.5 million reported in the same quarter of 2006. For the third quarter of 2007, CDC Corporation reported net loss of U$7.1 million compared to net income of US$3.2 million in Q3 2006. The decline in net income was attributed primarily to lower revenues of CDC Games and CDC´s MVAS business.
• Focus Media (NASDAQ:FMCN) announced its plan to acquire CGEN Digital Media Company Limited (ADTV), an operator of an in-store digital advertising network in China. Under the agreement, Focus Media will purchase 100 percent of the equity of CGEN for US$168.4 million in cash, and an additional payment of up to US$181.6 million, part in cash and part in Focus Media ordinary shares contingent upon CGEN meeting certain earnings targets during the twenty four month period from the closing of the transaction. The announcement indicated that all Focus Media shares issued in the transaction will be newly issued. The transaction is expected to close in the first quarter of 2008, subject to customary closing conditions.


• Siano Mobile Silicon, a mobile digital TV firm, announced that it has entered into an agreement with CMB Satellite, the Hong Kong-based affiliate of EchoStar Communications Corporation (NASDAQ:DISH), and Huaqi, manufacturer of the Aigo consumer multimedia products in China, to provide solutions for China's mobile TV service known as CMMB.
The CMMB technology was developed in China and has been selected by China's State Administration for Radio, Film and Television as the main platform for delivering TV services to mobile devices. The CMMB network uses both satellite and terrestrial signals to obtain effective coverage both in densely populated cities, including indoor reception, as well as in sparsely populated rural areas. CMB Satellite is the primary provider of S-band satellite capacity for China's CMMB mobile video system. Huaqi is one of the largest suppliers of MP3/MP4 handheld devices in China.
• Nokia Siemens Networks reported that it has secured the contract that will allow it to work on the implementation of the GSM-R in the newly commissioned Hefei-Wuhan Passenger-dedicated Line. This line, expected to bring about regional economic and cultural communication in the region, is forecast to be operational by early 2009. Nokia Siemens Networks is a pioneer of GSM-R technology, with Siemens researching and creating the GSM-R standard starting in the early 1990s. In China, Nokia Siemens Networks is the leader of GSM-R systems and has undertaken five of the total seven GSM-R passenger-dedicated line projects in China that are under construction or have been put into operation.


• CSOFT, a provider of multilingual localization, testing and outsourced software development for the global market, announced the opening of its Shanghai office in a bid to maximize its ability to meet the globalization requirements of multinational companies. Industry observers note that Shanghai has become a manufacturing base for many global enterprises developing products for worldwide markets. It has been noted too that companies are now increasingly sourcing multilingual localization from their China business centers. CSOFT is headquartered in Beijing and maintains international offices in Boston, San Francisco, Chicago, Japan, Australia, Canada and Germany.


• According to market sources, Iomega Corp (IOM) has agreed to acquire the entire share capital of Shenzhen ExcelStor Ltd, a manufacturer of computers and peripherals, from Great Wall Technology Co Ltd (OTC:GWTCF), in exchange for the issuance of new ordinary shares valued at 2.3 billion yuan (US$323 million), subject to shareholders and regulatory approval.
Shenzhen ExcelStor is a computers and related peripheral equipment manufacturer and wholesaler headquartered in China. Iomega is based in the U.S. and manufactures and wholesales portable storage solutions.
• Xian Seastar Modern-Tech Co. Ltd. announced its plan to acquire assets of Zhuhai Gree Group Corp, a China-based household appliance manufacturer, in a deal valued at 2.2 billion yuan (US$305.1 million). The consideration was to consist of the issuance of an estimated 240 million new Xian Seastar shares, valued at 1.7 billion yuan (US$237.2 million), and 500 million yuan (US$67.9 million) in assets, which include the entire share capital of Zhuhai Gree Real Estate Co. Ltd. and Gree Zhisheng Real Estate Co. Ltd. The transaction was approved by the board of directors and regulatory authorities. Together with the deal, Zhuhai Gee said it has also signed a Letter of Intent to acquire a 17.7 percent stake in Xian Seastar. Located in China, Xian Seastar is into the development and wholesale of computer hardware and system IC, software development, intelligent architecture and digital community. The company’s other activities include developing of real estate and property; retailing and wholesaling of commercial goods; operating supermarkets; repairing computer software; developing and producing electronic communication machinery and equipment; and providing technical services.
• Following the failure to reach an agreement, Suning Electronics revealed that it has terminated its plan to acquire Dazhong. Sources said one of the main conflicts stems from the price of 3 billion yuan (US$407 million) offered by Suning. Industry analysts believe that the present development may mean a slowdown of Suning’s expansion, but may not necessarily affect the company’s overall business in China. Suning and Dazhong are two of China’s biggest electronics retailer. GOME Electrical Appliances, China's top electronics retailer, revealed that it was discussing a possible acquisition of Dazhong following Suning’s decision to abandon its plan. Beijing-based Dazhong, which controls half of the electronics market in the city, also disclosed that it is in talks with several companies on possible mergers, including Best Buy (NYSE:
BBY), the largest electronics retailer in the U.S.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.

About this article:

Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here