September 04, 2007
Chinese Tech Stock Weekly Summary

by IRG

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

Internet

*Alipay, Alibaba Group's online payment service, announced the launching of a new international service which is seen as enabling consumers in Mainland China to buy from global retailers. Alipay's new international service allows foreign currency transactions between Chinese consumers and overseas retailers. Launched in 2004, Alipay said it has registered more than47 million users in China, growing at a rate of more than 80,000 new registered users each day. Under the offering, Alipay counts among its first international retailers Sa Sa International Holdings Limited, an Asian cosmetics retailing and beauty services group; StrawberryNET, a provider of discounted designer skin care, make-up, cosmetics, perfume and men's and women's fragrances; and J Shoppers, a subsidiary of Japan's largest listed mail order company Nissen On- line, focusing on mail order sales outside Japan. The company said it looks to this number of overseas partners to reach more than 100 by the end of 2007.

Media, Entertainment and Gaming

*Shanda (SNDA) reported its unaudited financial results for the second quarter ended June 30, 2007, with its net revenues posting a 6 percent quarter-over-quarter and 39.1 percent year-over-year growth to a record 564.4 million yuan (US$74.8 million). The Chinese online gaming firm said its gross profit for the second quarter of 2007 went up 9.4 percent to 379.5 million yuan (US$50.2 million) from 347 million yuan (US$46 million) in the first quarter of 2007 and 65.6 percent from 229.2 million yuan (US$30.3 million) in the second quarter of 2006. Shanda said its operating income for the second quarter of 2007 climbed 8.8 percent to 244.3 million yuan (US$32.3 million) from 224.5 million yuan (US$29.7 million) in the first quarter of 2007 and 167.5 percent from 91.3 million yuan (US$12.1 million) in the second quarter of 2006. In the announcement, the chairman and CEO of Shanda noted that its newly launched game La Tale has shown great success, with the company looking to strong growth from its current titles. In a related development, Shanda announced that Daniel Zhang has resigned as vice president and chief financial officer of the company and will remain a member of the board of directors of the company following his resignation from management. The company said Jun Tang, currently the company's president, will be named as an acting chief financial officer.

*The9 (NCTY) announced its unaudited financial results for the second quarter ended June 30, 2007, with its net income declining by 23 percent to 50.6 million yuan (US$6.7 million) from 66.1 million yuan (US$8.7 million) in the first quarter of 2007 and by 40 percent from 84.3 million yuan (US$11.1 million) in the second quarter of 2006. The Chinese online gaming company reported a 5 percent rise in its total gross revenues to 284.6 million yuan (US$37.7 million) from 271.3 million yuan (US$36 million) in the second quarter of 2006. As at June 30, 2007, the company's total cash and cash equivalents balance was 2 billion yuan (US$265 million).

*Actions Semiconductors [ACTS] announced that it has entered into a partnership with Muzgame.com to integrate downloadable audio and video content for portable multimedia players. Muzgame.com is a website that hosts video and audio content, provided by users and through partnerships with leading music record issuers. Related to the alliance, Actions also secured an agreement with conjunction with four brand name customers Unibit, Orange, Delux and MAG Digital to joint promote a new music record with Muzgame.com, and EE Media throughout China.

Mobile/Wireless

*Bird reported for the first six months of this year a total loss of 237 million yuan (US$36.1 million). Industry observers note that in 2005 the Chinese mobile phone maker also suffered losses. Bird estimates that its net profit for the period from January to September of this year indicate also huge losses. Responding to this current crisis, the company revealed its plans to sell the stake of three of its affiliates, which include Ningbo Sagem Bird Development and Research Co., Ltd, a joint venture company between French Sagem and Bird. The company expects to generate from this sale some 25 million yuan (US$3.3 million). Media sources also reported that Bird has two other separate plans. One is the transfer of 24 percent of its stake at Chongqing Bird Technology to Chongqing Runsida Technology in exchange for 441,300 yuan (US$58,500). The other plan calls for a transfer of 73 percent of the stake of Chongqing Bird Information Technology to Zhou Guangzhi from Ningbo Bird Holding Co., Ltd. in a deal estimated to be worth 3 million yuan (US$397,600).

*Lenovo Mobile (LNVGY.PK) and Gome announced that they have entered a new strategic cooperative agreement. Under the new partnership, Lenovo Mobile will see S7, the latest mobile phone product of its star product series, exclusively sold at Gome. Part of the agreement will also have the two companies conduct a range of in-depth projects in a one-month period.

*China Electronics Corporation Group [CEC] announced that it entered into an agreement with Philips, a part of which allows the Chinese company to use the trademarks of Philips. Valid until March 2012, the authorization will enable CEC's subsidiary Shenzhen Sangfei Mobile Phone to produce and sell Philips branded mobile phones. The agreement calls for CEC to pay Philips 7 million euros (US$9.5 million) each year for the trademark authorization during the initial period. In addition, it also must pay a symbolic US$1 to Philips as an intellectual property fee.

*China Unicom (CHU) announced that it has launched some 72 types of CDMA customized mobile phones fitted with stock and financial services software. The company conducted the launching jointly with more than 20 CDMA mobile manufacturers in China and abroad. For the launch, China Unicom entered into agreements with numerous CDMA mobile phone makers including LG, Samsung, Motorola (MOT), Nokia (NOK) and TCL. The company said it has purchased more than 2 million CDMA customized stock mobile phones, with the value of transactions estimated to be more than 1.7 billion yuan (US$225.3 million).

*Nokia announced at the Game Developers Conference China that Sina.com (SINA) has launched five connected mobile games powered by Nokia's SNAP Mobile. With the offering, consumers in China can go into new games, which include 3D Pool Hall, Jellypop, Sudoku, and upgraded versions of Link Up and Stone Park via Sina's mobile portal. The service will also allow consumers to download the games and play them twice offline for free. To continue playing and access multiplayer features, however, players can buy a subscription for 1 yuan (US$0.1) for 24 hours of unlimited play, either online or offline. Software

*Qualys announced that it has entered into a partnership with AsiaPay to resell Qualys' solutions to aid customers in facing weaknesses and threats. The partnership will also see AsiaPay using QualysGuard to deliver PCI certification and PCI-related services to their clients. Based in Hong Kong, with operational presence in Thailand, the Philippines, Singapore and mainland China, AsiaPay provides a comprehensive suite of secure, scalable, function-rich, real-time multi-currency payment processing solutions and technologies on credit and debit cards for banks, corporations, small-to-medium enterprises, charities and individuals.

Hardware

*China Hualu Group announced that it has signed on to the Blu-ray optical disk format. Bluray competes with another format, HD DVD, as the dominant format in the industry. In a related development, China Hualu Group and China Film Group said it has agreed to set up an authoring center in China that will release Chinese local content on Blu-ray. Behind Blu-ray are firms that include Sony Corp, Philips, Apple Inc and Hewlett-Packard. Supporting HD DVD are companies ledby Toshiba and Microsoft. .Blu-ray and HD DVD assure high-definition movies or television compared to the present DVD format.

*PC manufacturer Acer disclosed its plans to buy Gateway (GTW) in a deal placed at US$710 million. Under the deal, Acer is paying US$1.9 per share to acquire Gateway, the No. 4 PC maker in the U.S. The deal is also seen as boosting the company annual revenue to hit US$15 billion, pushing the company the third largest computer manufacturer in the world. The transaction is expected to be completed by December 2007. Earlier, Gateway revealed its plans to enter into an alliance with Digital China to sell its computer products in China.

*Rumors are circulating that Great Wall is looking to acquire Seagate, an American computer hard disk maker. The Chinese manufacturer has been singled out for its reputation as one of the most stable and famous IT companies in China. In some reports, instead of Seagate, Western Digital is the company identified as the one being eyed by Great Wall.

Ventures/Investments

*Symbian announced that it has set up a global R&D center in Beijing expected to assume a significant role in the company's development of Symbian OS. The center is the fourth R&D center with the others located in UK and India. More than 145 million Symbian smartphones have been sold worldwide to more than 250 major network operators. Symbian says it leads the market with a global market share of 72 percent of the smartphone OS market during the second quarter of 2007. Symbian disclosed that it seven Chinese companies have already joined the Symbian Platinum Program, a partnership scheme which represents key technology innovators and service providers in the mobile industry. The partners joining the Symbian Platinum Program are: Aspire Holdings, Ltd., Intromobile Co., Ltd., Leadtone Wireless, Ltd., Beijing Netqin Tech Co., Ltd., Tencent Technology Ltd., Simlife Science & Technology Co., Ltd. and Shenzhen Temobi Science & Tech Development Co., Ltd. Symbian also announced details for a local Symbian Academy program in collaboration with several local universities. The six Chinese universities involved with Symbian Academy are: Beijing University of Posts and Telecommunications, Beihang University, Graduate University of the Chinese Academy of Sciences, Tongji University, Nanjing University and Daqing Petroleum Institute.

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

(Source: SeekingAlpha)