Code JDMBA2b: April 2005

Saturday, April 30, 2005

500,000 Peak Concurrent Users For World Of Worldcraft?

500,000 Peak Concurrent Users For World Of Worldcraft?

From billsdue quoting Sina:

If this turns out to be true it is great news for The9 and the 3d MMORPG market in General.

Disclosure: I currently have no position in NCTY, nor am I making any investment advice on this blog. Please do your own research before investing.

Friday, April 29, 2005

Cisco and Macromedia Acquire Strategic Stake in Indiagames

TOM Online Announces Cisco, Macromedia Acquire Strategic Stakes in Indiagames

"The strategic investments are beneficial to all parties," said Wang Lei Lei, TOM Online Chief Executive Officer and Executive Director. "I have confidence Cisco and Macromedia will bring significant value to Indiagames going forward given their strength and leading position in their respective business areas."

"I am delighted to have Cisco and Macromedia as investors in Indiagames," said Gondal, Chief Executive Officer and Director of Indiagames. "We now have Chinese, Indian and American investors, all leaders in their respective verticals. This combination is really very unique and will surely help accelerate our global growth plans, keeping us on the cutting edge of mobile, broadband and Internet technology."

"The global wireless games market is expected to grow 50% per year in the next three years, reaching US$8.4 billion in 2008, according to industry estimates. Indiagames, the owner of one of the largest wireless content development facilities in the world with more than 200 highly experienced professionals, is well placed to benefit from that growth."

I am currently long TOMO shares. I am not making any investment recommendations here. Please do your owb research.

Thursday, April 28, 2005

Great 1st Quarter For Ctrip

They beat guidance in what is supposed to be the weakest seasonal quarter of the year:

CTRP clearly has a large lead in the China market. Their recent partnership led to great growth in airline ticketing recenue this quarter. Travel packaging also seems to be a big growth area going forward.

I am still looking closely at LONG despite CTRP being the market because of its low valuation and large cash position.

Recent eLong deal with Yahoo:

Disclosure: I currently have no position in either CTRP or LONG

Wednesday, April 27, 2005

Tom-Skype and VoIP Ambitions

Two recent interesting articles:

Tom-Skype seems to be growing quickly adding 50,000 news users every day. VoIP seems like a great way to attract more users to Tom Online to build traffic to help advertising revenue and consume other Tom Online products and services. I like the way TOMO has executed its business plan over the last 6 months or so. I am eager to here more about India Games during their conference call.

Disclosure: I am long TOMO

SOHU 1Q Earnings

They beat average estimates both on revenue and earnings side slightly:

I am listening to the conference call right now and am liking what I have heard so far:

It looks like advertising and are doing well and WVAS is back on the growth pattern. I also like the Go2Map acquisition.

Recent coverage:

I am long SOHU. Please do your own research before investing

NTES Research Reports

Recent research reports as reported on billsdue:

I am surprised that NTES did not do well today. Apparently the market is listening to the concerns of Pacific Growth Equities and others. I am still long NTES

NTES 1st Quarter Performance

Great numbers for Netease across the board:

Advertising: Increased 1.3% to US$5.5 million from the preceding quarters US$5.4 million. There is a seasonal slowdown in the Chinese online advertising market and Netease performed better than most expectations here.

WVAS: "Total revenues from wireless value-added and other fee-based premium services for the first quarter fell by 18.7% quarter-over-quarter to RMB20.3 million (US$2.4 million), largely as a result of a decrease in SMS and MMS revenue. SMS and MMS revenues continued to decline as traditional SMS services are becoming less popular in China and competition in this sector remains intense. While the Company did experience strong demand for its WAP services during the quarter, this growth was not sufficient to offset the decrease in SMS and MMS revenues."

  • WVAS is now a pretty small percentage of NTES revenue
  • WAP demand should continue to be strong and MMS should begin to recover

Gaming: "Revenues from online game services for the quarter showed continued strong growth, increasing by 25.9% quarter-over-quarter and 135.3% year-over-year to RMB262.1 million (US$31.7 million) driven by the success of Fantasy Westward Journey, which became one of China's most popular massively multi-player online role-playing games (MMORPG), with peak and average concurrent user numbers reaching 588,000 and 244,000, respectively, for the month of March 2005. Strong demand for the game can be attributed to a number of factors, including content enhancements through expansion packs released during the first quarter, improved stability of the game technology leading to smoother game play through better technical service quality and an increase in the overall number of users during the Chinese New Year holiday, which is traditionally a peak season for online game playing. Westward Journey Online II, another in-house developed game remained one of the top-five MMORPG games in China, and reported solid growth during the quarter, achieving record peak and average concurrent users of 389,000 and 175,000, respectively, for the month of March 2005."

  • 389,000 + 588,000 = 977,000 PCU in March. With a recent count on 1,069,000 there has already been a 9.4% increase in PCU since March for FWJ + WJ2!
  • Gaming is now 80% of Netease revenues
  • Gross margins for online games further increased from 88.3% to 89.0% in the first quarter due to increasing economies of scale
  • FWJ is now the most popular MMORPG in China!
  • Casual Game Platform is coming soon
  • Fly For Fun should be commercially launched later this year
  • 2.5d and 3d games seem to be coming along as planned
Tax Rate Change: "The Company also noted that its effective tax rate increased in the first quarter because one of its subsidiaries, which was previously exempted from paying PRC income tax, became subject to a 18% tax rate (15% Enterprise Income Tax plus a local income tax of 3%) during the quarter. The Company is in the process of applying for various preferential tax treatments for its operating subsidiaries in the PRC, as well as conducting certain tax restructuring arrangements with a view to reducing the effective tax rate of the group in China. However, there is no guarantee that such preferential tax treatments can be obtained or that such restructurings will be successful."

Overall: Great earnings and forecast. 53 cents profit per diluted ADS beat 45 cent estimate by 8 cents. More importantly they forecasted $46 million to $47 revenue for Q2 compared to forecasts around $40 million. I am excited about their upcoming casual game portal.

PGE Downgraded NTES earlier Tuesday before the earnings were released based on valuation and upcoming competition from SNDA and NCTY.
PGE was way off on both their revenue and profit estimates for Q1. I expect they will realize their mistake and upgrade NTES again soon (they have a history of changing their recommendations at strange times).

The only real bad news in the report has to do with the tax issues for one of their subsidiaries. I think the end result (of any attempt to get the tax rate back to zero) may be based on whether they are classified as a high technology company (software) or a entertainment company.

Disclosure: I am long NTES
I am not making any recommendations here. Please do your own research before investing.

More online gaming news:

Monday, April 25, 2005

Interview with WOW Closed Beta User

From Pacific Epoch:

Free registration with Pacific Epoch may be required. I eagerly await statistics on the number of peak and concurrent users The9 is able sign up during open beta testing starting this week.

A Positive Of New Bankruptcy Law

I still do not like the new law overall for various reasons. It will become much harder for many who are laid off, have large medical bills or failed as an entrepreneur to get a fresh start.

One positive of the new law is the additional protection given to IRA's and certain types of college savings:

This will encourage more people to save for retirement and roll over their 401K balances to an IRA after changing jobs.

This Supreme Court Ruling will be trumped by the new bankruptcy law (which will take effect 180 days from when it was signed by the President last week):

My original post about bankruptcy reform:

Another Jump In Sogou Traffic

There has been another jump in traffic over the last few days:

This is good news for SOHU. Lets hope we hear more about it on the Sohu conference call in a few days:

Sunday, April 24, 2005

2005 NBA Playoffs

I like Phoenix and Detoit to go all the way to the finals.

Who do I think will win the first round?

In the West:
San Antonio

In the East

That is right the only upset I see in the first round is Houston over Dallas. I would like to see Denver pull out an upset over San Antonio, but unless Tim Duncan has some major problems with his recent injury I think it will be unlikely.

Saturday, April 23, 2005

Spam Threatens Tom Online

Tom Online better act fact if it wants to prevent outgoing email messages from users being catergorized as spam by the Spamhaus Project.

From iResearch:

"Tom Online (TOMO) made an announcement recently that its email users now have access to an expanded storage capacity and new anti-virus features, but the company's email system is still in danger of soon experiencing problems because of its refusal to remove spammers from its systems.

In recent weeks the world's largest anti-spam organization, Spamhaus Project, has notified both and the Internet Society of China (ISC) that's Internet Protocol (IP) addresses might soon be placed in Spamhaus' global blocklists. Spamhaus' blocklists are used by over 260 million Internet users around the world to stem the flow of unsolicited bulk email. is currently hosting a number of notorious Chinese spammers, including Wang Jingjing, and Spamhaus has warned the China portal repeatedly of that spammer's actions.

With a registered email user base of almost 30 million, Tom Online is one of the largest providers of email service in China.

'Email service always has been Tom Online's strength. Since we launched the 163 e-mail service two years ago, the growth rates of's email user numbers have been consistently higher than that of the industry average. As at the end of 2004, the number of Tom email users almost topped 30 million. That is an enviable 65% increase from 2003,' said Wang Lei Lei, Tom Online Chief Executive Officer and Executive Director."


Lets hope this Press Release from Tom Online will handle the above issues:

I am long TOMO and eagerly awaiting their earnings release. I am not making any investment advice here. Please do you own research before investing.

More on Shanda IPTV Efforts

From iResearch:
Shanda will apparently be launching its home entertainment strategy in the near future. There are currently about 20 million online game players in China. Apparently there are about 240 million homes with televisions. Shanda believes there is a large opportunity here.

"The company has decided to move some of its entertainment branches - including games, music and literature - from the computer platform to the TV platform through a set-top box.

The set-top box is expected to use Intel's processors, Microsoft's operating system and mother boards from the Taiwanese firm Gigabyte. The boxes may be produced by the Taiwanese electronics maker Inventec."

Not everyone thinks this will be such a good business for Shanda. Here is a link to another billsdue article stating that an influential Softbank partner still feel that IPTV success is 4-5 years away:

Eachnet Cuts Listing Fees

Here in an excellent article from billsdue:

He has cited a recent Forbes article which is very interesting as well:

"Ebay entered China in 2002 by paying $30 million for a one-third stake in Eachnet, an auction site set up three years earlier by Harvard graduate Yibo Shao and a partner. A year later Ebay bought the rest of Eachnet for $150 million, keeping on its chief, Shao. He vows that Ebay Eachnet, as the site is known, will win: "There can be only one big [consumer auction] site in China."

Ma[Jack Ma, Alibaba CEO] countered by teaming up with Masayoshi Son's Softbank to launch the Taobao consumer site for $56 million. He picked the ideal partner:Son had beaten back Ebay in Japan by taking an early lead in auctions with his Yahoo Japan joint venture. Ebay closed its Japan site in early 2002.

"We were both thinking the same thing:Son kicked Ebay out of Japan. I have the same chance in China," Ma says. "Ebay doesn't think we are a threat. China will be a worse defeat than Japan." His swagger rankles some observers. Last year Ma gave a presentation on his grand scheme to half a dozen Wall Street types, and one of them stalked out midway through the pitch, with a parting shot:"Ebay will win!""

Ebay better be careful or they will lose in China too. If I was Ebay I would try to buy Alibaba (who controls Taobao) now before the price gets higher. If they want to compete on their own they should launch PayPal ASAP, better localize their services and make listings free to better compete with Taobao.

For a detailed Review of the Chinese Auction Market read this:
A smaller free version available upon iResearch registration

Thursday, April 21, 2005

eLong and Yahoo! China Deal

From The China Stock Blog:

"eLong will become Yahoo! China's exclusive travel services information provider. eLong will provide travel information, and hotel and air ticket booking services on Yahoo! China's travel channel."

Comment (from The China Stock Blog): "Finally some good news from eLong, and the company hasn't even released the information. Of course, investors would probably not pay much attention anyway. As the company discussed in its most recent conference call, it is supremely focused on the long-term strategy, and less concerned with near-term profitability. Investors have heeded that call - take a look at the company's stock performance."

I do not currently own LONG but am seriously thinking about adding a position at these current price levels. eLong has lots of cash in the bank and seems to be concentrating on gaining market share long term instead of maximizaing current profits. CTRP is clearly the market leader right now but I think there is room for multiple players in China and eLong seems to be in a good position for long term growth as well.

Online Gaming News

Shanda just officially announced the licensing of Dungeons & Dragons Online from Turbine:
The game is expected to launch sometime in the second half of 2005. Financial terms were not disclosed in the press release

Netease will be launching two more internally developed games this summer:

One game will be 2.5d and the other will be 3d. Lets hope both games can continue the success WJ2 and FWJ are having currently:

Here are two interesting reads about The9 from billsdue:

More Shanda rumors also from billsdue:

I am currently long both NTES and SNDA. I eagerly await the upcoming earnings release and conference call of NTES next week. I am hoping to hear more about casual games which is an area I hope to see them give more attention to going forward. As always I am not making any investment advice. Please do your own research before investing.

Monday, April 18, 2005

Supreme Court Rules On IRA Bankruptcy Issue

Supreme Court rules IRAs can be shielded from creditors

"The unanimous decision sides with a bankrupt Arkansas couple fighting to keep more than $55,000 in retirement savings. As a result, IRAs now join pensions, 401(k)s, Social Security and other benefits tied to age, illness or disability that are afforded protection under bankruptcy law."

"IRAs should not be treated any differently because the benefits are tied to people's age, the court said."

"The case involves Richard and Betty Jo Rousey of Berryville, Arkansas, who accumulated $55,000 in company-sponsored pension and 401(k) plans at Northrop Grumman Corp. before he took early retirement in 1998. When Betty Jo Rousey was laid off a month later, they rolled the funds over to IRAs."

"The Rouseys have been unable to hold down new jobs, in part due to his chronic back pain, according to their lawyers. Richard, 60, and Betty Jo, 57, now live on $2,000 a month."

"Under bankruptcy law, the retirement savings won't be given blanket protection. A separate provision in the law shields the assets only to the extent the money is reasonably necessary for the support of the debtor and any dependent."

I am happy about this ruling.

The new bankruptcy reform bill I do not like so much however:
While it does have some positives it will make it much harder for people to get a fresh start and hamper entrepreneurs from starting another new business if they failed the first time and are deep in personal debt.

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Anonymous JD/MBA Student

Update on MSO Short and Sirius News

I no longer think that MSO is that great of a short. I originally talked about the possibility in early March when MSO was trading at $33.95:

I talked about MSO again on April 1 when it was trading at $22.32:

As of right now MSO trades at $20.42 and I no longer endorse a short here. Some reasons include the short as a percentage of the float being VERY high and the Sirius radio news today:

Anyone who shorted MSO last month has made a lot of money. It is time to take your profit in my opinion.

I am not making any investment advice here. Please do your own research and determine your personal risk profile before investing

SIFY Earnings and Intel WiMAX Trial

Sify will announce fiscal 2005 and 4Q earnings tomomorrow. The conference call will be 9:00 ET:

Frankly I am a little disappointed they only gave investors one day notice. Short notice generally will decrease the number of investors and analysts who call in and ask questions during the conference call. I do not understand why they cold not have made this announcement several weeks ago. I am expecting a very slight loss this quarter and a forecast of a small profit next quarter. Once SIFY becomes profitable it should be able to gain more attention from investors.

On a more positive note, it appears as if SIFY will start testing Intel WiMAX technology later this year. WiMAX is an excellent method for providing wireless broadband connectivity to the last mile, particularly when traditional cable or DSL connections are not available. India seems like a GREAT market for WiMAX.

Disclaimer: I am long SIFY but am not making any investment recommendations here. Please do your own research and determine your risk profile before investing.

Sunday, April 17, 2005

Thoughts On Chinese Internet Stocks

From Paul Waide of Pacific Epoch as reported by

Some key points from the article:
  1. Fantasy Westward Journey from Netease has passed World of Legend from Shanda and Legend of Mir III from Optisp to become the most popular MMPORG in China.
  2. Sohu is expanding content which should help them bring more traffic (and advertisers) to their website properties. ( Sogou may also help Sohu expand its advertising base in the near future (
  3. Sina is adding more servers for Lineage 2.
  4. Shanda seems to be diversifying its revenue base in hopes of becoming an entertainment powerhouse in China.
  5. Tom Online has hired a new CFO.

Earnings will start to come in over the next few weeks with NTES reporting first. I am looking for good earnings from Netease on the strength of FWJ and WJ2. I am currently long NTES, SOHU, SINA, SNDA and TOMO. I am not making any recommendations here. Please do your own research before investing.

Saturday, April 16, 2005

Worldwide Internet Usage Statistics

I want to thank one of my readers for sharing this link with me:

While internet penetration is already very high in South Korea, Japan, Hong Kong, Singapore and Taiwan most of Asia has room for huge growth over the next several years. I agree with my readers comment that the rapidly growing Internet market in India should present tremendous opportunity going forward.

Worldwide statistics:

Thursday, April 14, 2005

Congress Passes Bankruptcy Reform Bill

From the Associated Press:

Congress Passes Bill Making It Harder to Wipe Away Debt, Biggest Bankruptcy Reform in 25 Years

"Tens of thousands of people who want to wipe out their debts in bankruptcy court would have to work out repayment plans instead under legislation Congress approved Thursday."

"A 302-126 vote by the House sent the legislation to President Bush, who is eager to sign it, the biggest rewrite of the bankruptcy code in a quarter-century. It marks the second major change in law to benefit business since Republicans increased their House and Senate majorities in last fall's elections."

"Between 30,000 and 210,000 people -- from 3.5 percent to 20 percent of those who dissolve their debts in bankruptcy each year in exchange for forfeiting some assets -- would be disqualified from doing so under the legislation, according to the American Bankruptcy Institute."

"Taking effect six months from enactment, the measure would set up an income-based test for measuring a debtor's ability to repay debts. Those with insufficient assets or income could still file a Chapter 7 bankruptcy, which, if approved by a judge, erases debts entirely after certain assets are forfeited. Those with income above the state's median income who can pay at least $6,000 over five years -- $100 a month -- would be forced into Chapter 13, where a judge would then order a repayment plan."

"The legislation also would require people in bankruptcy to pay for credit counseling."

I expect the number of chapter 7 filings will rise dramatically over the next few months as people seek to file under the existing laws before the new law takes effect in 180 days. I see both positives and negatives to this legislation. It will help reduce the cost of debt to Americans as a whole as creditors will no longer have to write off as much bad debt due to bankruptcy. It will also make it harder for the wealthy to shield certain types of assets and still file chapter 7. It will help prevent some convulsive gamblers, etc from filing bankruptcy if they still meet the states median income and minimum payment ability requirement. On the down side it will hurt those who may may massive medical bills or forced into taking a much lower paying job after a layoff, but still have income enough to be forced into chapter 13.

Wednesday, April 13, 2005

Kingsoft Plans 2005 3Q IPO

From Reuters:

"Rival Shanda Networking Co. Ltd., which last year raised US$152 million in a Nasdaq IPO, operates two of the three most popular online games in China, according to IDC. The research firm said Kingsoft's JX Online game was the sixth-most popular game in China last year.

Kingsoft plans to sell 10 percent of its share capital through the listing, which would value it at between US$1 billion and $3 billion, the source said.

Founded in 1988, Kingsoft says on its Web site that it is the largest software developer in China."

JX Online is certainly popular but I am not sure what measure Kingsoft based its "largest software developer in China" comment on. Kingsoft is definitely a major player in the China online gaming market and I like their internal development capabilities, but I would need to see the exact valuation and financial data before I can make a good judgment on it.

Air China Profit Soars

From China Daily:

"Air China profit soars on traffic surge"

"Air China, the country's flagship carrier, yesterday reported a jump in 2004 net profit of nearly 15 times, thanks to stronger passenger numbers fuelled by the mainland's soaring economy.

Air China, the last of the country's three large airline groups to list, is expected to benefit from improved efficiencies after it absorbed two smaller rivals under a broad consolidation of China's State-controlled airline industry.

"We expect the Chinese economy to continue to grow at a rapid pace, and demand for traffic to increase rapidly over the next three years with an annual growth rate of about 13-15 per cent," Ma Xulun, president of Air China told a news conference."

This should be good news for LONG, CTRP and the China travel market in general. I do not maintain a position in either LONG or CTRP at the moment. Please not that this news does not directly correlate to the other smaller chinese airlines such as China Eastern and China Southern who do not have the same level of International traffic and are unable to hedge their fuel costs for domestic flights.

Need For More Chinese Entrepreneurs

"Student entrepreneurs a rarity"

From China Daily:

"With Chinese universities turning out as many as 3 million new graduates a year, the nation is quickly discovering the need to equip its young people not with just knowledge but the courage to build their own enterprises."

"According to some recent figures from East China's Jiangsu Province, only 56 out of last year's 240,000 graduates chose to start their own businesses."

"Jiangsu is hardly unique. Nor is there a sign of change for 2005. In late 2004, a survey of 2,659 university students from Guangdong, another more industrialized province in China, showed only 2.6 per cent of them had start-up plans. While 80.9 per cent reportedly preferred grabbing a job first, moving to a better job second, and starting one's own company only in the last."

I do not have the hard statistics to support it, but I would bet that Chinese with a Western education that return home are much more likely to become entrepreneurs. Entrepreneurship while fairly common in capitalist countries is hardly natural to a nation with communist roots. Just look at all the very highly educated engineers and other professionals in Russia who became unemployed after the fall of the Soviet Union. Many of them moved to the west or took low skilled jobs instead of using their skills to start a new business. I am sure over time entrepreneurship will become more common in China and other countries as globalization continues and people there realize entrepreneurship is a viable path to success.

iResearch China Instant Messenger Report

I just read the 2004 iResearch China Instant Messenger Report:

There is a smaller free version available to registered users for those that cannot afford $1600 for the full report. Tencent certainly seems to have a dominant position in this market at the moment. I would be interested in a Tencent NASDAQ IPO assuming a reasonable valuation. IM is an important market and can help bring users to related portal, online gaming SMS, MMS and other related services. Tom/Skype was late entering the market so they had very low market share (at least as of the end of 2004). However the Tom/Skype IM technology seems very good at least in the area of voice quality and it is also popular with online gamers. I am betting that they are gaining market share (from a very small base) and hope to see an update on the registered or concurrent users soon. I am not making any investment advice here. Please do your own research before investing.

Disclosure: I am currently long TOMO

Jamdat Launches New Wireless Games In China

From China Tech News:

Global wireless entertainment publisher Jamdat Mobile (JMDT) has announced the launch of two new titles in China, "Lord of the Rings - Two Towers" and "Collapse".

The games will be played on China Unicom's network. The new titles will be the first distributed through C-Valley following Jamdat's recent investment in the company.

"The launch of these new titles in China under our C-Valley partnership demonstrates our commitment to aggressively deliver wireless content to this strategic market," said Mitch Lasky, Chairman and CEO of Jamdat Mobile Inc. "We look forward to bringing two of our most popular titles to wireless subscribers throughout China."

I think that the Chinese mobile gaming players including KONG, TOMO, SNDA, and Tencent need to hurry up and grab market share before American firms such as ERTS, JMDT, THQI, YHOO and others gain too much ground.

Tuesday, April 12, 2005

SOHU Buys Go2Map

I am glad that Sohu has finally decided to start spending its money to acquire good content instead of the low quality sms businesses they had been buying in the past. I hope that Sohu continues along these lines with the continuation of their share buyback plan and content acquisition instead of buying more WVAS firms. I would also like to see a bigger push into online gaming. Casual gaming might be a good area to concentrate on in the short term as it is easier and cheaper to develor and or license casual games and it will help bring more traffic to Sohu until they can develop some high quality MMORPG's. Here is a link to the acquisition story from the Associated Press:

I am currently long SOHU. I am not making any investment recommendations on this blog. Please do your own research before investing.

Monday, April 11, 2005

2.5g Services Now Available To Prepaid China Mobile Users In Shanghai

From Safa Rashtchy and The China Analyst:

It looks like China Mobile has begun to allow prepaid customers in Shanghai to use 2.5G services. Piper Jaffray seems to think this is good news for all the WVAS players particularly TOMO and HRAY. The article also mentions that contract renewals with China Mobile will likely lead to many of the smaller WVAS firms exiting the market. This should be good news for the larger publicly traded players. I like reading the China Analyst (I may be biased since I used to work as a Financial Advisor for Piper) and recommend my users to do the same:

However according to billsdue it looks like Piper will be losing Xiong Yuzhu who was helping Safa Ratschy with China coverage:

Hopefully they can hire someone else in China soon.

New PCU Record for Netease

XYQ and XY2 are both doing great. According to this Netease news release a new record of 1.069 million peak concurrent users was reached this Sunday:

For my non Chinese readers I would recommend using a free online translation service such as:

Lets hope the upward trend in peak and average concurrent users continues. I am hoping for a good 1Q earnings release in a few weeks. As a full disclosure, I am currently long NTES. I am not making any recommendations here. Please do your own research before investing.

Thursday, April 07, 2005

New Links

I have added links to several other blogs over the last few days. I would like to encourage my readers to check out all of the blogs I have linked to on the right side of the page. I think you will find many of them interesting.

On another note I would like to encourage my readers to email me with any ideas on topics you would like me to blog about. If you feel you have a website with relevant content I would also be happy to link to your site to help you increase traffic. Please feel free to link to my blog if you think it would be interesting to the readers of your blog or website.

Wednesday, April 06, 2005

Interesting Alibaba Article


Alibaba is doing very well in China. I would be interested in buying some shares if they went public at a reasonable price. However it seems they already have enough cash available for building their business and have no need to IPO in the short term. If I were EBAY I would try to buy Alibaba soon. The price will surely rise as Taobao gains more market share from Eachnet. Alipay also seems to be doing relatively well and EBAY has not yet launched PayPal in China.

Saturday, April 02, 2005

ROI for JD, MBA or MD

From the New Yorker:

"William Weeks, a Dartmouth professor, has done a number of studies on the work life of physicians. He and his colleagues found that working hours for physicians are indeed longer than for other professions. (In 1998, the typical general surgeon worked sixty-three hours per week.) He also found that, if you view the expense of going to college and professional school as an investment, the payoff is somewhat poorer in medicine than in other professions. Tracking the fortunes of graduates of medical schools, law schools, and business schools with comparable entering grade-point averages, he found that the annual rate of return by the time they reach middle age is sixteen per cent per year in primary-care medicine, eigh-teen per cent in surgery, twenty-three per cent in law, and twenty-six per cent in business. Not bad, in any of these fields, but the differences are there. A physician’s income also tends to peak when he has been in practice between five and ten years, and then decrease in subsequent years as his willingness and ability to work the long hours wane."

I would like to see the "statistics" from this study. I also would like to see the definition of "middle age" since MD's spend more years in school and residency (with low pay) while their JD and MBA counterparts are already working. MD's likely have fewer years to work before reaching "middle age". However MBA's may be older on average (due to prior work experience) before starting grad school. I would also like to see the average number of hours worked per week for the people included in the study.

Here is a link to the full article:

Update on Tom Online

From China Daily:

Some excerpts from the article:
"Chinese wireless Internet service provider Tom Online is seeking to improve its performance in this quarter after slow down.

"Interactive voice response (IVR), wireless application protocol, and ringback tone will be three pillars for the company this year," said company CEO Wang Leilei.

He said in an interview in Beijing on Monday the slowdown of Tom Online's businesses had stabilized in the fourth quarter over the previous quarters and the momentum is likely to continue in this quarter.

The Hong Kong Growth Enterprise Market and NASDAQ-listed company saw its revenues in the fourth quarter grow by 13 per cent to US$31.95 million over the third quarter. The quarter-on-quarter growth rates were 1.6 per cent and 17 per cent respectively in the second and third quarters.

Wang said the growth will mainly come from voice-based IVR, personalized mobile ringtone downloads, and wireless Internet surfing and downloading WAP, which contributed 65 per cent of Tom Online's revenues in the past quarter.

While many people believe the traditional text messaging service known as SMS will keep declining , Wang said it is "just a good opportunity."

"When SMS revenues of other companies are falling, ours will grow and more importantly we will use this platform to promote our new services," he said."

"Tom Online will use the resources of its newly-acquired Indiagames, an Indian mobile game developer, to develop overseas markets.

Wang said Indiagames has good co-operations with mobile carriers and distributors in Europe and the United States, so Tom Online will use that advantage to distribute picture and ringtone downloads and WAP services to Chinese users in those countries.

But overseas business will not have significant contribution to the company's financial performance this year."

I am currently long TOMO and am thinking about adding some more shares before 1Q 2005 earnings are released. I am not making any investment advice here. Please do your own research before making any investment decisions.

Friday, April 01, 2005

China Versus India

Many American investors have given much more attention to China than India in recent years. Some of the reasons for this include more NASDAQ traded Chinese companies to invest in (particularly Internet companies). The truth is both nations have been experiencing high GDP growth rates and will continue to grow rapidly over the next few decades.

This recent article from Marketwatch talks about the China versus India issue and talks about some of the advantages that the Indian economy actually has:

Here are some excerpts:

"In many ways, India's prospects in the 21st century are superior to those of China. The institutional framework in the two countries could hardly stand in greater contrast.

India is a full-fledged democracy, with a parliament in New Delhi that is the equal to that in London or Ottawa. China remains a Communist state, under one-party governance.

India enjoys all the advantages for person and property provided by the British rule of law, again in stark contrast to China whose legal system is murky at best where both property and certainly person is concerned.

Then there is language, more specifically English which is now the global language of both business, and science. As Ram Narayanan points out is his excellent commentary on Indian/American relations, India has the advantage of a huge university-educated pool of top-notch scientific, technological and managerial manpower that has the unique advantage among Asia nations of being able to "think" in English."

Note I am currently long SIFY and may purchase IFN in the near future. I am not making investment advice here. Please do your own research before buying or selling any securities.

Update on my MSO Post From Last Month

Anyone who read my blog on March 3, 2005 knows my opinion about Martha Stewart Living Omnimedia (MSO):

I still feel it is overvalued. Anyone who shorted MSO back in early March is doing very well today. On March 3rd when I blogged about MSO the closing price was $33.95. Today the closing price of MSO was $22.32. This amounts to quite a nice profit to anyone who shorted MSO over the last month!

Once again I am not making investment advice on this blog. Please do your own research and make your own investment decisions.

E-Commerce Growing Quickly in China

From China Daily:

"According to Sun from Evolution Securities, e-commerce only accounted for 8 per cent of the Chinese Internet market's revenues in 2003, with the ratio increasing to 11 per cent in 2004.

The combination of e-commerce and online advertising will contribute to about 80 per cent of the total revenues of the Internet industry in 2008, he forecasted.

Sun believed Shanghai-based Ctrip, the country's biggest Internet travel service company, will enjoy a bright future as more and more people opt to shop online.

Ctrip's revenues almost doubled year-on-year to US$40.3 million in 2004 and its net profits also increased from US$6.5 million to US$16.1 million over the same period.

"Although Ctrip's profit earning (P/E) ratio is already quite high, it is actually safer to invest in high P/E stocks, because they have good potential and less regulatory uncertainties," said Sun.

According to market research house iResearch Co Ltd, the online travel service market will grow from 610 million yuan (US$73.67 million) in 2004 to 2.8 billion yuan (US$338 million) in 2007.

Henry Yang, president of iResearch, also pointed out that the e-commerce business will enjoy rapid growth in the coming years with the increasing number of netizens and an improvement in the online trading environment.

The research house estimates the online shopping market will grow from 4.5 billion yuan (US$543 million) in 2004 to 29.6 billion yuan (US$3.57 billion) in 2007."

I do not currently own CTRP or LONG but have been watching both of them for a while. CTRP is clearly the industry leader, but LONG currently has a pretty attractive valuation in my opinion. I am not making any recommendations here. Please do your own investment research before purchasing any securities.

"Telkomsel targets 6 million new mobile phone users"

From The Jakarta Post:

"In view of the country's current low mobile density, Indonesia's largest cellular firm PT Telkomsel has optimistically set its sights on an additional six million subscribers this year.

"As of this month we have 16 million subscribers and we are aiming at 22 million by the end of this year," Telkomsel's newly appointed president director Kiskenda Suriahardja said on Thursday.

He explained the target was feasible as the country's mobile density had reached only 12 percent -- meaning that there are only around 26 million people out of the total population of 220 million who use cellular phones.

"We seek to expand in areas outside the big cities and add our coverage throughout the country," he said, adding that for areas that have a high concentration of mobile services the company would develop more advanced technology services such as 3G.

The company plans to launch by mid-year the trial of its 3G service, an advanced third generation technology which would enable cellular subscribers to enjoy triple-play technology such as video streaming, video conferencing through cellular phone, in addition to a much faster data transfer.

Cellular phone manufacturers are already racing to release new products compatible with 3G.

"Subscribers who have complied with 3G technology can enjoy the services offered by the technology," Kiskenda said, adding that the company did not set a quantitative target from the trial but would focus on establishing a quality service first with the current infrastructure.

However, since the 3G license it has is for trial only, Telkomsel will wait for a formal operating license and frequency bandwidth to fully operate the 3G technology from the Ministry of Communications.

The government has so far granted PT Natrindo Telepon Seluler/Lippo Telecom and CAC, an affiliate of Thailand's leading cellular operator Telecom Orange Asia, 3G licenses and allocated frequency spectrum in 2003.

However, neither company has started using the technology.

Telkomsel, together with Indosat, jointly shares 83 percent of the total 22.7 million subscribers in the cellular market, followed by PT Excelcomindo Pratama and new-comers PT Bakrie Telecom and PT Mobile-8 Telecom.(003)"

This is exactly the type of news I was hoping for when I bought TLK a few days ago. Wireless penetration in Indonesia is very low compared to much of Asia and the expansion into smaller cities and 3G services should help to improve penetration. As of right now my TLK shares are up over 5% today.