- Legend Group Ltd. reported a 4% rise in net income for its fiscal first quarter, as growth was slowed by the region's outbreak of SARS. The company said it still is feeling the effects of SARS, because corporate and government customers continue to delay purchases. The company relied more heavily on retail consumers during the three months ended June 30, moving its typical back-to-school promotion to May from July to boost sales. But the promotion's timing contributed to a sizable jump in inventory at quarter's end, something personal-computer makers try to avoid, because PCs lose value rapidly. Legend earned HK$278.3 million (US$35.7 million) during the quarter, up from HK$267.9 million (US$34.3 million) a year earlier. Revenue grew 11% to HK$5.3 billion (US$684.6 million) from HK$4.8 billion (US$615.4 million). Corporate PC sales, which accounted for 48% of revenue, grew 3.3% in the quarter. Consumer sales, which accounted for 38% of revenue, jumped 12%.
- TriGem Computer plans to enter the personal digital assistant market in China by supplying 5,000 PDAs to a state-run organization by early 2004. TriGem said it will ship the PDAs through its local partner D-View, a systems integration company based in Beijing. Targeting state-run agencies, TriGem said it aims to ship 20,000 units by the end of the year and 100,000 units in 2004.
- Sprint’s data traffic between China and the U.S. had hit two gigabits a second this year, ranking it alongside MCI as the top Internet protocol service providers in China. Sprint - one of the few foreign carriers to have registered revenue growth in an industry that has seen prices fall by more than 80 per cent in the past 12 months - plans to expand in the region. The carrier had achieved close to 30 per cent data revenue growth in China over the past 12 months, with many of its Hong Kong clients moving their headquarters to the mainland. Their demand for bandwidth had increased as prices dropped, with the same amount of corporate budget allowing them to enjoy faster connections.
Media, Entertainment and Gaming
- Shanda Network, China's largest online game company, is due to set up a Seoul branch so it can better integrate itself into the Korea's Internet game industry. The firm announced it would soon open an office in Korea that would secure content from local game companies and then distribute it in China. Shanda said though the initial focus of the firm would be on building contacts with Korean game companies to find quality games, it may eventually begin introducing Chinese programs to Korean gamers. Shanda saw great profits by serving "Legend of Mir2," an immensely popular online game developed by Korea's Actoz Soft. The game boasts over 700,000 concurrent users. Shanda sells other Korean games, including "Fortress 2," "B&B," "Crazy Arcade" and "Tactical Commanders."
Mobile / Wireless
- China International Trust and Investment Corp (CITIC) has injected assets into 21 CN CyberNet, in which it has a 27 per cent interest. CyberNet acquired 45 per cent of Beijing HL 95 from CITIC in a 36 million yuan (US$4.3 million) deal, which also included future investment into Beijing HL. The initial up-front cost was 13.5 million yuan (US$1.6 million), but CyberNet and CITIC are obligated to future investments of 22.5 million and 27.5 million yuan (US$2.7 and US$3.3 million) in Beijing HL respectively.
- Unicom may achieve its subscriber target for CDMA services despite price war with China mobile. China Unicom acknowledged the price war was having an impact on business, but said it was not significant. China Unicom had acquired nine million subscribers in the first half of this year. Nonetheless analysts doubt whether China Unicom can achieve its goal of adding 11.4 million CDMA subscribers this year. In the first half, it signed up 3.74 million CDMA users.
- Ningbo Bird has become the first Chinese mobile phone maker to beat foreign rivals in new mobile handset sales. According to a report by the Ministry of Information Industry (MII), Ningbo Bird captured 15 per cent of the mainland's handset market in the first six months of this year, bumping Motorola with 14.2 per cent into second place. The company, which mainly targets the middle and low-end markets, attributed its market dominance to a better understanding of local preferences and lower prices. Ningbo Bird said a wider network of distribution channels was another reason for the success. In the first six months, local brands claimed 55.3 per cent of the domestic market, 16.2 percentage points higher than their share for the whole of last year. TCL, another major mainland handset maker, ranked third with 11.6 per cent of the domestic market, followed by Nokia's 9.7 per cent and Konka's 6.7 per cent.
- Kingdee International Software Group has posted a 10.7 per cent year on year rise in interim profit and analysts expect double-digit growth for its yearly earnings. The company reported a first-half net profit of 14.5 million yuan (US$1.8 million), compared with 13.1 million yuan (US$1.6 million) a year ago. Turnover grew 26.6 per cent year-on-year to 157.7 million yuan (US$19.1 million). IDC has forecast the mainland application software package market will grow at 25.5 per cent a year until 2007. Kingdee is well position to benefit from this growth.
Singapore / Malaysia / Philippines / Indonesia
- Singapore Telecommunications Ltd. said it is confident that its overseas businesses will spur group revenue growth for the rest of the year, as it reported that its fiscal first-quarter net profit tripled from a year earlier, lifted by a huge one-time gain from the sale of assets. The results from Southeast Asia's biggest telecom operator show that the company's overseas expansions in recent years are starting to pay off and are helping offset the impact of telecom liberalization and market saturation at home. Singapore Telecommunications posted a better-than-expected S$1.2 billion (US$680.5 million) net profit for the April-June period, compared with S$377 million (US$214.5 million) a year earlier. Excluding exceptional items, SingTel's first-quarter net profit rose 70% to S$495 million (US$281.7 million) from a net profit of S$291 million (US$165.6 million) in the corresponding period of last year. The jump in profit was boosted by the 69% sale of local postal operator Singapore Post Ltd. and from the sale of its Yellow Pages directories business.
- SingTel is interested in increasing its current 29.1 stake in its Philippine affiliate, Globe Telecom. Germany's Deutsche Telecom is in talks with its joint venture partners SingTel and the Philippines' Ayala to sell its entire 24.8 per cent stake in Globe. Press reports in Manila said the shares on offer would be worth between US$400 million and US$500 million. Ayala Corp. holds a 32.7 per cent stake in Globe.
- Hongkong.com announced an eightfold increase in interim profit, boosted by strong sales from a mobile messaging unit it acquired in April. The subsidiary of Chinadotcom said net profit in the first half was HK$28.0 million (US$3.6 million), up from HK$3.5 million (US$448,700) a year ago. Turnover jumped 172.3 per cent to HK$67.5 million (US$8.7 million), of which 68.5 per cent was from the mainland and less than 10 per cent from Hong Kong. In the second quarter, the company recorded a profit of HK$20 million (US$2.6 million) of which HK$17 million (US$2.2 million) came from short messaging service (SMS) provider Newpalm Information Technology. Newpalm had 4.4 million subscribers at the end of the first half, up from 2.4 million at the end of last year. Hongkong.com said it would soon announce the acquisition of another mainland SMS firm after clearance from the HK Stock Exchanges and Clearing.
- Yahoo! hopes to increase its revenue from Hong Kong with the launch of Yahoo! Enterprise Solutions (Y!ES). Y!ES is a series of value-added services and applications aimed at corporate customers. The company hopes the new services will appeal to businesses looking to take advantage of the recently signed closer economic partnership agreement (CEPA) between Hong Kong and the mainland. Yahoo is hoping that the CEPA's signing would trigger companies to expand in the Pearl River Delta and that would create more communication needs. Three main services on offer are: portal solutions, broadcast solutions and an enterprise edition of the popular Yahoo! Instant Messenger. The company also provides professional services such as usability, user adoption and taxonomy consulting.
Mobile / Wireless
- Hutchison Telecom's 3 will be the first to launch 3G service in Hong Kong. Its website gives a glimpse of the array of services the new generation of wireless phones will bring to Hong Kong. The emphasis of the 3G service is on high-speed data transmission. So features include: video conferencing, messaging in video, audio, text or images, receiving live game scores, watch sports highlights, video downloads and faster and better games. Then there is the location guide, which is capable of pinpointing where the user is and will list the names and location of stores, banks, cinemas and restaurants on a digital map. 3G phones can transfer data at a rate of 384 kilobits per second (kbps) compared with 128 kbps on general packet radio service phones.
- Hutchison Global Communications has been given a written warning for using disreputable tactics to poach PCCW customers. Door-to-door sales staff from Hutchison Global Communications misled customers to try to get them to switch networks from PCCW. An investigation by the Telecommunications Authority, carried out after a complaint from PCCW, confirmed that Hutchison sales staff duped landline phone users in public housing estates during a promotional drive last year. They tried to get customers to switch networks by telling them PCCW had transferred the telephone lines on their estates to Hutchison. Residents were then asked to sign a form agreeing to use Hutchison's services, only to discover later that the claims about the lines being transferred were untrue.
- Wharf Holdings is setting up a separate long-distance telephone arm to take on rival City Telecom. Wharf will launch wholly owned subsidiary EC Telecom and offer aggressively priced IDD calls through its IDD1507 brand. City Telecom, which derived 85 per cent of its first-half revenue from IDD services, said it did not see the new Wharf unit as a threat. This competition in the fixed-line and IDD markets could extend itself into the pay-television market as well.
- PCCW says it has signed up more than 100,000 subscribers in the week following the launch of its fixed-line data services, well on track to its target of 300,000 subscribers by next year. In response to PCCW's new service launch, its competitors responded by slashing their prices in a bid to retain customers. Residential fixed-line telephone operators such as Wharf T&T, New World Telecommunications and Hong Kong Broad Network have all lowered tariffs to lure subscribers. Among them, Wharf T&T is offering a promotional HK$1 (US$0.13) monthly tariff scheme on signing a one-year contract to attract subscribers to switch networks. Hong Kong Broad Network, controlled by City Telecom, launched a HK$57 (US$7.3) monthly tariff scheme on a two-year contract.
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