HK's PCCW Spent Total US$70M On Internet Ops By End 2000
Updated: Friday, May 25, 2001 03:07 AM ET
HONG KONG (Dow Jones)--Pacific Century CyberWorks Ltd. (H.PCW, news, msgs) had spent a total of US$70 million on all its Internet activities combined at the end of 2000, Chairman Richard Li said Friday, reiterating that by the end of this year total expenditure on the company's business-to-consumer Internet activities will be capped at US$200 million.
These expenses will be booked as they occur, PCCW's Chief Financial Officer David Prince told reporters after the company's annual general meeting. Last year however, PCCW also made a provision of around US$30 million towards equipment and technology within this business that it felt was obsolete, Prince added.
These Internet investments include Network of the World (NOW, news, msgs), the company's struggling broadband multimedia operation, which it has been forced to scale down compared with Richard Li's original vision. The rollout of NOW has also been slower than initially planned and in the 2000 financial year the business-to-consumer operations reported a loss of US$261 million.
PCCW has however promised a new strategy for NOW, that will be revealed by the end of June, Li said Friday.
Li also told shareholders at the AGM that PCCW's main focus now is to develop a strategy for long-term growth for the entire group, adding that, "the core telecom business is profitable and efficient and we will strive to improve shareholder value."
This should have been a welcome promise for the company's shareholders who have had to witness a slide in the company's share price from a record high of HK$27.859 in February last year to the current HK$2.675. But it's apparently not enough.
At the meeting, which was relayed to media by closed circuit TV without any English translation, disgruntled minority shareholders took the chance to throw a series of questions at the management regarding the company's negative equity position and the reason for it not paying any dividend last year.
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Li attempted to assure shareholders at the AGM that the negative equity position - which means that the company's net liabilities exceed its net assets - is a result of a conscious choice on how to handle its goodwill write-offs, not a reflection of bad performance by its directors.
"We made this choice so that we can grow profits immediately after the merger (with Cable & Wireless HKT)," Li said, referring to PCCW's decision to write off the US$22 billion goodwill from the acquisition against reserves, instead of amortizing it against profits in years to come.
He noted that had the company not written off this large sum against reserves, it would have had positive equity, or shareholders funds, of over US$17 billion at the end of last year.
Li also said that PCCW has said all along that it won't be paying any dividends in the first year of the merger.
However, questions on those subjects kept being asked and finally Li found it necessary to call upon shareholders to "maintain order."
After the meeting he repeated to reporters that there is "no urgency" in finding a new chief executive officer for PCCW and that he will "not even consider a replacement until after the (full-year) results next year."
On being directly asked, he acknowledged that there is a lot of talent within the company adding that "a new CEO can very well come from there."
Last week Li confirmed he may consider recruiting a managing director or chief executive to help in day-to-day operations of PCCW but said he plans to remain chairman.
-By Anette Jonsson, Dow Jones Newswires; 852-2802-7002; anette.jonsson@dowjones.com
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