CyberWorks suffers double blow as partners pull out
scmp.com
HUI YUK-MIN
Pacific Century CyberWorks' claim to be the "partner of choice in Asia" has been put to the test by two companies that have announced plans to withdraw from separate joint ventures.
United States-based Internet-investment company CMGI said on Thursday it would forego plans to establish a US$1.5 billion venture-capital fund with CyberWorks and another US investment company, Hicks, Muse, Tate & Furst. The scrapped fund was part of CMGI's plan to speed up its return to profitability.
Earlier in the day, GigaMedia, Taiwan's sole Internet-service provider, said it was pulling out of a venture with CyberWorks and Taiwan entertainment-content company ERA Communications to provide Chinese-language Internet content.
In response to the news, CyberWorks' share price fell 4.69 per cent yesterday to HK$13.20, its lowest level since April 26.
Brokers said the counter was under heavy selling pressure, with 79.4 million shares changing hands.
CyberWorks, CMGI and Hicks, Muse, Tate & Furst had announced a plan to form a fund to invest in emerging Internet businesses in Europe.
CyberWorks said the venture would enable it "to advance its vision for online traditional media convergence on a global scale" by leveraging on the media assets of its partners.
Analysts said the lapse of this joint venture would hurt CyberWorks' plan to build a global-scale Internet content platform.
CyberWorks announced its joint venture with GigaMedia and ERA in May. As part of this arrangement, GigaMedia and CyberWorks were to pay each other US$50 million to take a direct equity stake in ERA.
However, after talks dragged on for months, GigaMedia has decided not to take the stake in ERA.
"It's more of an issue of valuation. The two parties [CyberWorks and GigaMedia] cannot reach an agreement on the pricing of [ERA's] US shares," said GigaMedia chief financial officer Zhang Yichun in an interview with Dow Jones Newswires.
Although CyberWorks claimed it would "accelerate co-operation" with GigaMedia and the two are still in talks over other forms of co-operation, Worldsec Securities investment analyst Chris Cheung described the relationship between the two as "shaky".
He said GigaMedia pulling out of the deal would hamper CyberWorks' plan to enrich its Chinese Internet content and expansion into the Taiwanese market.
Analysts said they were worried about the certainty of other CyberWorks joint-venture deals.
"This is definitely bad news for CyberWorks. This is a threatening signal for other CyberWorks deals," Mr Cheung said.
Analysts said they would have to re-value CyberWorks. |
