A week in tech, June 23 - 29

China

Internet
• Soufun.com disclosed that it is targeting a possible overseas listing at yearend, a move that observers say is encouraged by the phenomenal growth of China's property markets. For the last 3 years, China’s biggest online property advertising company has seen its revenue rise twofold, and hitting about HK$20 million ($2.5 million) in 2005. SouFun's investors have included IDG and Goldman Sachs, with the latter having disposed its stake already. The newest outside investor is Dutch firm Classified Media which paid $22.5 million for a 15 percent stake in August of 2005 with an option to increase that share or go later into an outright acquisition of SouFun.

• China’s search engine market posted combined revenues of Rmb303 million ($37.8 million) in the first quarter excluding channel revenue, according to Analysys International. The China-based internet research firm said that Baidu, the country’s biggest search engine, is leading with a market share of 43.9 percent, followed by Yahoo!China with 21.1 percent. Google is third with 13.2 percent. The report said that 91.4 percent of total search revenue came from search engine portals, with 8.5 percent from affiliate web sites.

Mobile/Wireless
• Warner Music Group Corp. announced the signing of a deal with China Unicom Ltd. to sell music to wireless users in China. Observers say the agreement marks the first of its kind between a leading music company and a Chinese mobile operator. Industry players look to the deal as paving the way for the market to open up to the profitable distribution of music. The Chinese market has been facing the problem of piracy and the government regulations on government restrictions in ownership.

• Huawei Technologies disclosed that it is looking to securing some $2 billion worth of contracts from potential customers in the Asia-Pacific region, which is a rise of more than 50 percent from the contracts it gained last year, in a bid to boost its expansion in the region. In 2005, the company posted total contract sales of $8.2 billion, with international sales contributing about 57 percent. In the Asia-Pacific region the company said it had already won network contracts in Thailand, Malaysia, Pakistan and Brunei, and 3G contracts in Brunei, Malaysia, Indonesia and New Zealand. Huawei said the next-generation networks for both fixed and wireless carriers will serve as the future growth drivers of its business.

• The country’s Ministry of Information Industry announced that the number of cell phone users in China, the world's largest cell phone market, exceeded 420 million by the end of May. The report noted that the number of fixed-line phone users from Oct. 2003 has grown by an average of 3 million to 4 million per month. MII also reported a rapid growth in the use of text messages (SMS), with the volume of text messages sent during the 5-month period posting a 46.3 percent year-on-year increase to 167.9 billion in the first five months. The growth is reflected in the total income of postal telecommunications for the five months with its 11.4 percent year-on-year rise to Rmb287.8 billion ($36 billion).

Media, Entertainment and Gaming
• Acorn International, operator of a home shopping TV network in China, is reportedly seeking to raise between $150 million and $200 million through a public offering on the NASDAQ. The pre-marketing for the IPO of the home shopping TV network operator is expected to begin next month. SAIF Partners, a venture capital firm, holds some $35 million investment in Acorn International, which is part of Japan-based Oaklawn Marketing. Morgan Stanley and Credit Suisse Group are the underwriters for the IPO.

Hardware
• With words of caution about higher manufacturing costs, high interest rates, and rising value of yuan, VTech Holdings, a firm that manufactures cordless telephones and toys, reported that its net profit more than doubled to hit a record $128.8 million in the year to March from $56.9 million the previous year. The company said its revenue posted a 17.8 percent growth to $1.2 billion from $1 billion, ascribing the growth to the strong sales of its educational products and goods. Vtech also explained the profit as the result of the company reversing a sharp decline in the profitability of its cordless telephone operations, which remains its biggest-selling products in the U.S, and the launching of a new toy. It sales of electronic learning devices went up by 60.7 percent to $451.7 million while its contract manufacturing revenues posted a 23.2 percent growth to $158.2 million. It registered, however, a 2.9 percent decline in its telecommunication products to $594.7 million as the company did away with unprofitable businesses and streamlined product lines. The company also revealed its plans to relocate and expand its manufacturing to its factory in Qingyuan, another city in Guangdong, which has lower costs.

Telecommunications
• Qiao Xing Universal Telephone Inc., a manufacturer of telecom terminals and equipment in China, posted a 42.4 percent increase in sales for its financial year ended Dec. 31, 2005 to $356.1 million, compared to $250.1 million the year before. The company ascribed the growth to the strong performance by its subsidiary CEC Telecom Co. Ltd. (CECT), a manufacturer of mobile handsets. The company said its net income for the company reached $30.8 million for the year, up from $2.8 million in 2004.

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