A week in tech

A round-up of all the latest tech news from Asia.



- ADSL wholesaler Acca Networks Co. announced it would go public on the JASDAQ Securities Exchange in March. As of December 2004, there were about 1.2 million individuals and companies registered as subscribers to Acca's so-called "best effort" service, which does not guarantee a maximum data transmission speed. On record also are some 34,000 firms that made use of its service that guarantees a minimum speed. The company had been in the red because of capital spending since its inception in March 2000. In the near future, the company said it plans to increase earnings growth by helping corporate clients be part of its fiber optic-based online market-to-market trading. Acca, the fifth-largest ADSL sellers in terms of subscribers, is expecting to raise 7 billion yen ($66.4 million) from the public offering. The fund will be used mainly to repay debt and for capital expenditure.

- Himawari Network and Cisco Systems announced they have initiated trials of Wideband Protocol for DOCSISTM, which is a technology that can deliver up to 1Gbps broadband speeds to consumers and businesses over existing hybrid fiber coax (HFC) networks. The trial will show the ability of the technology to converge video, data traffic onto a single IP-based high-speed service offering. This capability will give cable operators increased service flexibility and lower deployment and operational costs. The Himawari Wideband trial is based on Cisco's Cable Modem Termination System (CMTS) platform that will enable customers to utilize existing investments and thereby improve time-to-market and drive profitability.

- Fujitsu Limited announced that it has received a multimillion dollar by the 'Sea-Me-We 3' consortium allowing Fujitsu to deploy its next-generation FLASHWAVE S650 submarine transmission equipment. The work will upgrade the current cable system infrastructure and significantly expand submarine network capacity. The upgrade is expected to allow countries to benefit from a high-capacity bandwidth network that delivers faster Internet and multimedia traffic, increased broadband services, advanced digital services, and more reliable voice services. The consortium is composed of 32 telecommunications service providers.

Information Technology

- IT firms have begun reviewing their accounting practices with a focus on how sales are booked. The action has been spurred by Media Lynks Corp. being discovered to have fabricated sales figures. In particular, the Japan Institute of Certified Public Accountants (JICPA) will be issuing new accounting guidelines in March and IT firms are expected to make a shift in their orientation from sales to profits. The move is designed to respond to the public mistrust generated by the action by Media Lynks, whose clients were discovered to have sold and resold fictitious products among themselves without the final buyers to pad sales and earn small commissions. The scam is said to be rooted in the practice an IT industry practice in which companies that have high credit standing become nominal buyers for smaller actual buyers.



- Daum Communications, an internet portal operator, has purchased a 90 percent stake in online auction marketplace operator Onket for W4.2 billion ($4.2 million). The move has been interpreted as Daum's challenge to eBay's efforts in the country. The individual now running South Korea's No. 1 online auction service Internet Auction, which in turn is now owned 99.7 percent by eBay Inc, established Onket. As a result of the acquisition, the service will be rebranded Daum Onket. The company will promote D&Shop, Daum's own online marketplace service, and Daum Onket side by side, the former for conventional shopping and the latter for online auctions. D&Shop has about 9 million users while Onket has more than 3.5 million users. Both sites follow closely behind Internet Auction, which has more than 10 million users.

- Daum Communications Corp. announced for the fourth-quarter of last year a net loss of W20.7 billion ($20.4 million). South Korea's second-largest internet portal by revenue posted a profit of W10.2 billion ($10 million) a year earlier. Daum explain the loss as caused partly by its purchase of US Internet portal Lycos Inc.

Media, Entertainment and Gaming

- NCSoft Corp. announced a 42 percent growth of its net income for the fourth quarter of last year to W13.7 billion ($13.7 million). The company, South Korea's biggest online game company, said its operating profit rose 54 percent to W21.5 billion ($21.2 million). Sales had a growth of 12 percent to W62.5 billion ($61.7 million). NCSoft sells blockbuster online games "Lineage" and its sequel "Lineage II." "Lineage II" has been reported to have received over 110,000 peak concurrent players.

- South Korea's game industry is now more than twice the combined size of the movie and music markets, according to the Korea Game Development and Promotion Institute. Record shows that the game market had a 15.8 percent growth year-on-year to W3.9 trillion ($3.8 billion) in 2003, compared with the W1.4 trillion ($1.3 billion) posted by the movie industry and the W368.3 billion ($368.3 million) by the music market. The dramatic growth of the online and mobile-based games are said to be the reason for the advance of the game industry. The situation is a stark contrast to the piracy problems and slowdown affecting the music and the movie industry. According to an official, the prevention to piracy and aggressive internet-based marketing are the factors contributing to the rise of the game industry. The game industry is predicted to rise between 11 percent and 15 percent this year. The gap between the game industry and the music and movie industries are expected to widen still.



- China's mobile production capacity is expected to go beyond the 300 million handsets last year to 500 million this year, the government said. One major reason for this increase is the 40 new producers who have begun manufacturing handsets. The preferential policies set for the industry in 1999 has pushed the fast growth and the resulting strong profits had encouraged investment from both multinational and domestic companies. From l999 to 2002, China's mobile industry has sold some 300 million phones, which brought in an earning of 350 billion yuan ($42.2 billion) in sales. By 2003, mobile phone sales had reached 180 million units. Out of this number, 95 million sets were sold overseas, a number that made up 36 percent of mobile phone sales outside China. Since 1999, too, multinational corporations had invested in about $3.6 billion into the sector. State press reports that China's mobile subscribers are expected to grow to 402 million this year, up 65 percent from 2003. Revenue in the telecommunication sector reached 520.5 billion yuan ($62.8 billion) last year.

- Nokia declares China as its major market, and is expected to overtake the United States as its biggest market within three years. At present, China is Nokia's second-largest market, after the US, with its sales in the country growing 44 percent to $3.6 billion. The company has announced its plans to expand its manufacturing facilities in the country along with research and development even as it looks to the expected rollout of 3G handsets as a factor that would contribute to further surge. Nokia said it is intent on keeping this market share in China.


- Netease.com reported a 55 percent increase in its quarterly sales, with its online gaming services offsetting a decline in advertising and wireless services. The company reported a profit of $15.7 million for the fourth quarter, a 38 percent increase from a year-ago period. The company's online game division generated $23.8 million in the fourth quarter, a 22.6 percent increase from the previous quarter. A company official pointed to the Westward Journey Online Version 2.0 and Fantasy Westward Journey Online games as the force behind the good performance of the online gaming division.

- Ctrip.com announced, for its unaudited financial results for the full year ended December 31, 2004, net revenues of 333.8 million yuan ($40.3 million), compared to 173.1 million ($20.9 million) in 2003. For the fourth quarter of 2004, Ctrip posted net revenues of 98.5 million yuan ($11.9 million), which is a 46 percent increase from the same period in 2003 and a 9 percent increase from the third quarter of 2004. Net income for the fourth quarter of 2004 was 41.6 million yuan ($5 million). The decline in the net revenues was ascribed by the company, a leading consolidator of hotel accommodation and airline tickets in China, to the SARS epidemic in 2004.

- Beijing-based TOM Online has announced the sale completion of Indiagames. With the completion, TOM Online Games, which is wholly-owned subsidiary of TOM Online Inc., has acquired approximately 76.2 percent of the issued and paid-up share capital of Indiagames, with it becoming a non-wholly owned subsidiary of TOM Online. Indiagames, a Bombay-based company is primarily involved in publishing and developing games across platforms like the Internet, PC, broadband, mobile phones, PDAs, handheld gaming devices and consoles.

- Sina Corp, China's largest internet portal, announced its adoption of shareholder rights plan to guard the company against a possible purchase by Shanda Interactive Entertainment Ltd, a top online game operator. The plan, which is known in the industry as a "poison pill" is achieved by flooding the market with shares, making the target company more expensive and difficult to acquire. Shanda earlier said that it had purchased 19.5 percent of Sina's shares, and that it could raise its stake or even buy Sina in the future. Industry analysts said they did not expect a trend of hostile bids to develop in China's Internet sector with many of the huge Internet portals having individual shareholders controlling a majority or a big chunk of company stock. Examples of these companies would be Netease.com Inc., Sohu.com and TOM Online.


- AsiaInfo Holdings, Inc. announced that its Lenovo AsiaInfo division has entered into a management consulting and enterprise resource planning (ERP) implementation contract with Guangdong Shaogang Iron and Steel Group Ltd. The agreement will allow Lenovo AsiaInfo's Han Consulting unit to provide Shaogang Group with management consulting and IT planning services. AsiaInfo Holdings, Inc. is a leading provider of high-quality software and customer solutions to some of China's largest enterprises. It has partnerships also with small and medium sized companies in the country. Organized first as a U.S. corporation, AsiaInfo moved operations to China in 1995 and is considered to have played an important role in construction of the national backbones and provincial access networks for all of China's major national telecom carriers, which include China Telecom, China Mobile, China Unicom and China Netcom.


- Chinese OEMs (Original Equipment Manufacturers) have been singled out iSuppli Corp.'s as coming into their own, with total electronics systems production in China rising to $209.5 billion in 2004, a 13 percent growth from $185.5 billion in 2003. According to iSuppli, China's top OEMs also outperformed the market, with a 23 percent year-on-year increase in sales. The top 50 OEMs system production accounted for about 76 percent of all Chinese OEM system output in 2003, with this percentage growing to 83 percent in 2004.

Media, Entertainment and Gaming

- The9Limited announced its unaudited results for the full year ended December 31, 2004, net revenues increasing 111.9 percent to 34.7 million yuan ($4.2 million). Its net income for the year was 24.5 million yuan ($3 million). Net revenues for the fourth quarter of 2004 were 8.5 million yuan ($1 million). The9, a leading online game operator and developer in China, has a 51 percent interest in 9Webzen Limited, a joint venture that has helped the company in its position as a leading firm among China's online game operators.

- Sohu.Com Inc. announced its launching of the upgraded version of its search engine SoGou. The new version has an expanded breadth of 500 million Chinese language indexed web pages, higher updating speed and shorter search time. SoGou is capable of searching through 500 million indexed web pages. This database is expected to go up to billion pages in the coming months, the company said. Online search marketing has a long-term growth potential in China. Currently, only a small fraction of the more than 20 million small and medium sized companies in China have adopted search engines as a method for marketing. A 94 million strong online population, a fast growing online advertising market and an e-commerce growth are factors that spell great potentials.


- Advanced Semiconductor Manufacturing Corp. has been given by the China Securities Regulatory Commission the approval to launch an initial public offering of up to 467.6 million shares. This is prior to a main board listing in Hong Kong. The Shanghai-based chipmaker will sell up to 425.1 million new shares. Its state shareholders will sell up to 42.5 million existing shares.



- Taiwan Cellular announced its plan to launch its 3G telecommunications services during the second half of this year, to comply with the requirement of the government. The company clarified that the timing of the launch will depend greatly on many factors, like the readiness of handsets and content. Most important of these factors would be the readiness of the consumers themselves. Taiwan Cellular plans a capital expenditure of NT$1 billion ($32 million) this year. One half of this amount would go to 3G services, the company said.


- Powerchip Semiconductor Corp., Taiwan's largest maker of computer-memory chips plans to invest 2.4 billion yuan ($290 million) in China, according to a company official. Part of the plan is relocating an existing plant in Taiwan to China, which make take two years to achieve pending the approval of the Taiwan government. The company said one of the reasons for starting its first chip plant in China is to bring the product closer to customers. Taiwan Semiconductor Manufacturing Co., the world's largest supplier of made-to-order chips, last year was Taiwan's first chipmaker to start production in China.

Hong Kong

Media, Entertainment and Gaming

- WowWee announced that Robosapien, the robot toy, posted a record sale of $80 million, with the company expecting another doubling this year. WowWee sold about 1.6 million Robosapiens at $100 each for Christmas. With the sales, a company official called the robot as a champion of the toy industry described as losing to video and computer games. The company is looking into making the robot into a line, with the plan of releasing new robotic products every two months or so. The firm's previous one-year sales record was a $55 million.


- PCCW is branching out into the commercial sector with its Internet protocol television (IPTV) service with the aim of increasing its revenue from corporate broadband business. The company launched its next-generation information-technology solutions with the name "PCCW CVG" ("convergence"). PCCW is selling its Now Broadband TV at HK$215 ($27.5) per month to non-commercial offices or groups. The deal is for an 18-month contract and brings with it three free news channels. Users who would want a package of more channels have to pay a corresponding increase in the fee. PCCW claims it had 316,000 subscribers last month. Hong Kong Broadband Network said it was not pushing its services into the corporate sector. HKBN claims it has 40,000 IPTV subscribers. Hutchison Global Communications said it has no plans to bring its Galaxy Satellite into the corporate sector. An analyst expressed doubt that companies would be interested in watching television or any other paid entertainment while at the workplace.

- PCCW said it would head the development of China Network Communications Group (Netcom) huge property portfolio. The report said this is one of the four planned areas of cooperation between the telecommunications carriers. A China Netcom official said the company wants to concentrate on the telecoms business and see the wisdom in allowing another company, PCCW, to operate the property business alone. Just in Beijing, China Netcom has about 415 properties. China Netcom said that assets from the joint-venture projects could be injected into the mainland company's listed unit.

- City Telecom (CTI) said capital expenditure would continue to be heavy for the next couple of years before the company goes back into the black. The Hong Kong-listed fixed line operator said the focus of the company is to widen the coverage of its fixed-line network and to work on the growth of its subscriber's base for its broadband, internet phone and pay-TV services. The decline in its profit is ascribed mainly to a decline in international direct dialing revenue and increased investment spending. CTI is one of the smaller contenders in Hong Kong's highly competitive telecommunications industry that include the major players, such as PCCW, i-Cable Communications and Hutchison Global Communications.



- Singapore is setting up a national "cyber threat" monitoring centre as part of its three-year plan against internet virus attacks and cyber terrorism. Considered to be the first of its kind in Asia, the master plan is said to cost some $23.2 million. Expected to be fully operational by the second half of 2006, the center will be tasked with the job of doing a 24-hour tracking of cyber attacks as they take place worldwide. The centre will monitor cyber threats that could cripple the country's infrastructure, such as stock exchange and telecommunications networks. Singapore figured in an international survey last year as Asia's top internet-savvy nation.


- Telekom Malaysia Bhd. Announced a 65 percent growth in net profit for the quarter ended December 31, even as the net profit of the firm was below market expectations. For the fourth quarter, the state-owned company had an increase to M$824.2 million ($216 million) from M$499.8 million ($131 million) a year earlier. The company, Malaysia's biggest telecommunications firm, said demands for telecommunications services is expected to increase with Malaysia's economic growth, as seen in its projected 6 percent increase in its gross domestic product.

A week in tech is brought to you by FinanceAsia, and IRG, Asia's boutique investment bank to the telecoms, media and tech sectors. More can be found at:

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