Chinese Tech Stock Weekly Summary

by: IRG Ltd

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


• PacificNet, Inc. (PINK:PACT-OLD), a provider of gaming technology, e-commerce, and Customer Relationship Management [CRM] in China, announced that its subsidiary, PacificNet iMobile, was selected by Motorola China to design and operate Phase III of the MOTO Store portal, the official designated e-commerce portal for Motorola mobile products in China. Under the agreement, PacificNet iMobile is responsible for the overall development, design, deployment, testing and launch of the MOTO Store, as well as Internet payment processing, CRM and call center customer support services. The deal also covers a two-year maintenance agreement. PacificNet's iMobile subsidiary provides Internet, email, customer service centers, pre and post-sale services, logistics and Cash On Delivery [COD] services to mobile consumers in China. In a separate development, PacificNet announced that it has completed the acquisition of 100 percent ownership of Octavian International Limited, a worldwide supplier of gaming technology, solutions and systems.

• According to China Internet Network Information Center [CNNIC], its Internet population has surged 53 percent to 210 million people from 137 million reported last year. With this number, media sources are placing China about 5 million behind the U.S. The reports noted, however, that in many aspects, China still lags behind the U.S. with China's online penetration rate remaining at 16 percent, the point Americans were at in the mid-1990s. According to the Pew Internet and American Life Project, 75 percent of American adults are now online, with penetration even higher when teens are included.

• Media sources indicate that Coordinate Technologies has finalized a bilateral roaming agreement with Swisscom, a move that will enable Swisscom customers to have access to over 2200 WiFi hotspots managed by China Netcom (CN-OLD) and China Mobile (NYSE:CHL). The connection will cover 43 airports, 1300 hotels, and all Starbucks (NASDAQ:SBUX) locations. Under the agreement, Chinese customers will be able to access 1000 top-tier hotspots managed by Swisscom. China Netcom operates 400 Hotspots, primarily in northern China, and is anticipated to add an additional 1,000 Hotspots before the 2008 Olympics. China Mobile operates 1,836 hotspots. Both operators are planning significant capital investments in their WLAN coverage.

Media, Entertainment and Gaming

• The National Basketball Association announced the formation of NBA China with the Li Ka Shing Foundation, ESPN and three Chinese companies. Under the agreement, five strategic partners – ESPN, a division of the Walt Disney Company (NYSE:DIS); Bank of China Group Investment; Legend Holdings Limited, the holding company for PC maker Lenovo; the Li Ka Shing Foundation; and China Merchants Investments, an affiliate of China Merchants Bank – will collectively invest US$253 million to acquire 11 percent of the reference shares in NBA China. The new company will conduct all of the league's businesses in greater China, such as merchandising and marketing of television and other media.

• VODone Limited, a leading tele-media service provider in China, announced that its subsidiary, TMD2 has entered into an agreement with DoubleClick Techsolutions (Beijing) Co. Ltd., a wholly-owned subsidiary of DoubleClick Inc., which specializes in digital marketing for Internet media and advertisers. Under the agreement, DoubleClick will provide expertise service to target and measure advertisers' exposure and hit rates on VODone web sites and VODone BUS, the Broadcasting Union System for online video advertising.

• Virtuos announced the opening of a new development center in Chengdu. The center has been dubbed Virtuos Chengdu and has started servicing international clients in the 3D Art and development areas. Virtuos said it aims to expand further to establish its brand as one of the world's top game outsourcing company in quality, size and revenue. Backed by Legend Capital, the venture capital arm of China's largest IT group, Virtuos is preparing to establish or acquire new development centers. Earlier, the firm set up Virtuos Shanghai.

• Shanda disclosed its decision to spend some 8 million yuan (US$1.1 million) to encourage its employees to think of innovative undertakings. Media sources said that the first round of investment worth 8 million yuan (US$1.1 million) would be made available between June and September 2008. The sources also said that once the idea has been approved, there would be a review later to find out if it is necessary to provide any more investment.

• According to its CEO, Netease (NASDAQ:NTES) will launch a free online game in 2008 for the first time. The game to be launched is Tian Xia Er, which did not achieve much success. The CEO explained that the game was not successful on the market mainly because thecompany ignored the difference in China's 40 million game players, and emphasized too much on its time-based charging. The official said that the change of the market has encouraged them to launch the game as a free game to players. The company also disclosed that it has no plans to focus on developing games of its own in 2008. Netease is aiming to co-develop some games with its partners.


• Vtion Wireless Technology announced that it is relaunching its initial public offering of shares in Frankfurt, with the company stating its aim to raise up to 55.2 million euros (US$80.6 million). The China-based Vtion had initially set its IPO in November last year. The company provides wireless data card solutions for mobile computing. For its IPO, the company is offering 4.6 million shares, with a price range of 8-12 euro (US$12-17) per share. For the offering, BOC International, CLSA and Sal. Oppenheim will serve as the joint bookrunners.

• Haier Mobile and NXP Semiconductors announced their move to form a strategic collaboration that will have Haier adopting NXP's solutions for its EDGE mobile phones. NXP was founded by Philips. Industry observers see the strategic collaboration between the mobile terminal manufacturer and the upstream chip supplier as consolidating the technological and market advantages from both companies. The alliance is also seen as boosting the widespread deployment of EDGE technology in the domestic Chinese market, which is expected to give Haier's mobile users faster and more convenient mobile data services including streaming media and high-speed networking, as well as richer mobile entertainment experiences such as video and gaming. NXP's Nexperia cellular system solution 6120/5210 has already been adopted by Haier in several EDGE mobile phones.

• China TechFaith (NASDAQ:CNTF) announced the formation of TechFaith Tech-Interactive Limited, a wholly owned subsidiary focusing on the development and operation of wireless application and content. The company said the new wireless content unit will first set up three studios to develop interactive online gaming content. TechFaith offers the market multimedia phones, dual mode dual card phones, smartphones and Pocket PC phones. TechFaith said it is adding its handsets with interactive online gaming and professional game terminals with phone functionality. The company said it has plans to enter into gaming operations in the Chinese market and provide original design wireless gaming application and software services to the international market. Industry observers see this strategy as transforming TechFaith from an original developed product provider to an original developed product and content provider. TechFaith said that its wireless game terminals will be Windows Mobile-based, with its small PCs to be based on Windows Vista and Windows XP.

• Linktone (NASDAQ:LTON), the Chinese wireless value-added services company, announced the resignation of Colin Sung, the company's chief financial officer, effective January 31, 2008. Sung is expected to remain with Linktone in a consulting capacity for a transition period in order to assist the company with the planned strategic investment by PT Media Nusantara Citra Tbk in Indonesia. Foo Him Tiem, the deputy chief financial officer of Linktone, has been appointed acting chief financial officer of the company. Linktone posted a net loss of US$2.7 million in the third quarter of 2007. Industry observers are trying to connect the resignation of the CFO to this financial result.


• CDC Software, a wholly owned subsidiary of CDC Corporation (NASDAQ:CHINA) and a provider of industry specific enterprise software applications and business services, announced that Ingersoll Rand (NYSE:IR) has centralized management of its human resource operations in China with Platinum HRM, CDC Software’s human capital management [HCM] solutions.
Ingersoll Rand is a global diversified industrial firm providing products, services and solutions to transport and protect food and perishables, secure homes and commercial properties, and enhance industrial productivity and efficiency. Customers of the Platinum HRM solutions include Philips Electronics (Beijing), Ingersoll Rand China, Mitsubishi Chemical (Ningbo) (OTCPK:MTLHF), and Beijing SE PUTIAN Mobile Communications Co., Ltd [BMC], a Sony Ericsson investment.

• The Symbio Group, a provider of outsource software development, testing, globalization and support services out of China, announced that it has entered into agreements with China's Hangzhou Municipal Government to establish a new software park in Hangzhou. Scheduled to open in spring of 2008, the Symbio East Software Park will be the first outsourcing center in Hangzhou. The company said that the Symbio software park will house software teams responsible for business process outsourcing, financial services software development, and research and development. Outside of the Symbio East Software Park, Symbio has software development facilities in Beijing, Shanghai, Chengdu, and Taipei.


• The China Development Bank and IDB Group (Tel-Aviv, Israel) disclosed their investment of US$50 million in the Infinity I-China Fund. The I-China Fund is set to be managed by Infinity- CSVC Partners Ltd., a general partner with a joint management team both from Infinity and Suzhou Ventures Group. The Infinity I-China Fund invests in late-stage Israeli technology companies with parallel investments in Chinese businesses that license Israeli technologies to develop and market them in China. The Infinity I-China Fund is Infinity's second fund operating under its China-Israel investment cooperation model developed with Suzhou Ventures Group.

• According to the company, Hasee Computer Company has confirmed its plans to get listed in Shenzhen by the end of 2008. Observers note that Hasee has been preparing for the IPO since the second half of 2007. The company chose a listing in Shenzhen because Hasee is based in Shenzhen and the local government also hopes it can be listed there. Hasee previously had announced plans to get listed in Hong Kong, but observers believe pressure from the local government has made it change its mind. Hasee is a Shenzhen-based PC company that designs, develops, manufactures, markets and sells computer systems and services that can be customized to customer requirements. At present, the company employs more than 3,000 employees in China and has sales offices and service centers in 40 cities across China to serve its clients. Hasee was founded in 1995.

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