CyberWorks and Legend to Announce Internet Alliance on Monday, Legend Says
Top Financial News
Fri, 25 Feb 2000, 10:48pm HKT
By Biddy Chan
CyberWorks, Legend to Announce Web Alliance Monday (Update1)
(Adds background about a partnership between America Online
and Gateway; more detail on Legend's Internet plans; CyberWorks
intention to issue statement on HKT; updates share prices.)
Hong Kong, Feb. 25 (Bloomberg) -- Pacific Century CyberWorks
Ltd. will announce an alliance Monday with Legend Holdings Ltd. to
pre-install its Web software on personal computers made by China's
No. 1 computer maker, a Legend executive said.
CyberWorks and its Singapore-listed parent, Pacific Century
Regional Developments Ltd., were suspended today pending a
statement on a ``substantial price-sensitive transaction.' The
trading halt fueled speculation that CyberWorks was poised to
announce details of a proposed bid for Cable & Wireless HKT Ltd.
Instead, Monday's news conference will detail a pact under
which CyberWorks will bundle its planned Internet service with
some of Legend's computers, allowing buyers of those computers to
gain immediate access to the Web, according to the Legend
executive. She declined to elaborate.
Analysts said the alliance will help raise the profile of
CyberWorks in China. ``It should be quite a good arrangement to
strengthen its distribution in China,' said Adrian Au, an analyst
at G.K. Goh Securities in Hong Kong.
The pact will bring together two of Hong Kong's largest
technology companies to explore China's fast-growing Internet
industry. CLSA Global Emerging Markets expects China's Internet
users to grow to 110 million by 2003 from 9 million last year,
making it Asia's largest Internet market.
CyberWorks, Asia's third largest Internet investment company,
is embroiled in what may amount to a bidding war for Cable &
Wireless HKT Ltd., Hong Kong's dominant telephone company.
Singapore Telecommunications Ltd. is also in merger talks with
HKT, which is owned by Cable & Wireless Plc of the U.K.
CyberWorks said it will publish a statement in Monday's Hong
Kong newspapers responding to press reports about the HKT merger.
Strengthen
CyberWorks' proposed merger with HKT, whose fixed-line
network covers 80 percent of Hong Kong households, is also seen as
a move to strengthen the distribution of its Internet services.
Its partnership with Legend mirrors one announced in October
between America Online Inc., the world's biggest online service,
and Gateway Inc., the nation's No. 2 direct seller of personal
computers.
The two U.S. companies forged an alliance to distribute each
other's services and products. As part of the agreement, America
Online will invest $800 million in cash and stock in Gateway,
while Gateway will allow America Online to run its Internet
service unit, Gateway.net.
The Legend executive wouldn't say whether the alliance would
involve an investment by CyberWorks in its stock.
Like CyberWorks, Legend is also making a big push into the
Internet to take advantage of China's growing online population.
The Chinese computer company, which accounts for a quarter of
China's market for new computers, introduced its first Internet
computer in December, which has special function keys to allow
simpler access to the Internet.
Legend has said it expects to sell 500,000 of its Internet
computers this year. It also has its own portal called
``fm365.com.'
Legend said last month it intends to make acquisitions and
form partnerships with Internet content providers to complement
its computer hardware, though it has yet to announce details of
any such plans.
Response
CyberWorks will meet with analysts at 4 p.m. on Monday to
discuss its Legend partnership, the Legend official said. A news
conference will be held at 5 p.m., and senior Legend officials
will attend.
CyberWorks rose 1.6 percent to HK$22.15 in three minutes of
trade today before its suspension. In Singapore, Pacific Century
Regional Developments Ltd. rose 9.9 percent before its suspension.
HKT shares rose as much as 9.6 percent in early trade before
paring the gain. The stock was recently up 3.2 percent at
HK$25.80.
Legend shares rose as much as 7.8 percent to HK$35.80.
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