Thursday April 27 2:47 AM ET
AsiaInfo Sees Silver Lining in Tech Drop
By Matt Pottinger
BEIJING (Reuters) - AsiaInfo Holdings Inc, which sells Internet hardware and software in China, said on Thursday it would go ahead with plans to buy technology firms this year even though its Nasdaq share price has been hammered.
``We are not putting on hold any acquisitions,'' AsiaInfo (NasdaqNM:ASIA - news) Chief Executive Officer James Ding told reporters.
The company has said it would be shopping all over the world for companies using some of the proceeds from its $138 million Nasdaq share offering on March 3.
In fact, Ding said, there may be a silver lining in the worldwide tumble in tech shares in that sure-footed companies are now able to scoop up battered startups more cheaply.
``I don't think it's a negative thing,'' said Ding, referring to falls this month on Nasdaq. The Nasdaq composite index has dropped about 30 percent from its record high on March 10.
Venture capitalists and common investors were assigning ''more reasonable valuations'' to companies, Ding said. ``That makes our job easier if we decide to acquire a company.''
Money In The Bank
AsiaInfo has been humbled, too, by the mayhem on the tech-heavy Nasdaq.
As one of the first Chinese Internet-related plays available to U.S. investors, the private company based in Beijing made a stellar initial public offering debut on March 3, its stocks soaring 300 percent to $104 from a listing price of $24.
But the Nasdaq correction has eviscerated its share price, which closed at $47 on Wednesday.
Falling share prices have raised the cost of capital for tech firms by making bond issuance, loans and secondary offerings more difficult. But Ding said his company's lower valuation posed no risk to its plans because it had $150 million in the bank.
``That's plenty for us to grow the company. There's no need for additional cash or investment,'' he said.
Ding said AsiaInfo would make acquisitions, set up joint ventures and possibly take minority stakes in tech companies that promise to boost its market share or expand its product lines.
He declined to say which firms it was targeting, but said it would probably shy away from those showing little promise of near-term profitability. ``We're not looking at any dotcom companies at this stage,'' he said.
Profits In 2001
AsiaInfo had revenues of $5.5 million in the first quarter of this year, a year-on-year rise of 77 percent.
Losses were $0.16 per share.
About two-thirds of the first quarter revenues came from contracts to build Internet backbones for Chinese state-owned telecommunications companies, and about a third from selling its e-mail and messaging software to Internet service providers.
The company will expand staff numbers to 740 this year from 544, Ding said. With low Internet penetration in China, and infrastructure still in its infancy, he said the company was poised for rapid growth, he said, adding: ``We believe we will be profitable next year.'' |
