Asia Online Pulls Plug on Hong Kong
United Press International
KATHERINE ARMS, UPI Correspondent
October 30, 2001
HONG KONG, Oct 30, 2001 (United Press International via COMTEX) -- Asia Online, one of the oldest Internet service providers in the region, has been placed under liquidation and an end to service in Hong Kong could happen any day, the company's liquidators said in a Tuesday letter to subscribers.
Gabriel Tam of KPMG Financial Advisory Services, the company handling the liquidation, said in the letter that he was conducting a review as to whether to sell the company.
Asia Online provided dial-up service and business services such as business grade connectivity, hosting and managed Web services.
While many companies in Hong Kong, including Asia Online, have been tightening their belts for more than year in an increasingly gloomy economic climate, the closure of the company's Hong Kong operation came as a surprise.
Asia Online's Australia operation is to be taken over by its chief rival Internet service provider OzEmail. Last week Asia Online posted a message on its Web site advising its 30,000 customers there of the change, the only indication that the company is in trouble.
Asia Online's New Zealand operation has also has been placed under administrators. The company still has operations in China, Malaysia, India and the Philippines.
Asia Online's troubles began last year when it had to drop a $100 million Nasdaq initial public offering after the stock market was hit in the Internet bust. Though the company managed to raise about $135 million in venture capital in the past few years, it wasn't able to find enough cash to keep operations going.
"This is just a very poor visibility climate now for even traditional media," said a financial analyst who declined to be identified. "Even established operations like television companies are having a hard time obtaining advertising revenues. Everyone's getting clobbered now. Who knows how far we are from a recovery?"
Last August Asia Online's President Ed Roberto said the company was close to making a substantial deal but that it would be less than the $100 million it had hoped for. The company's revenue at that time was pegged at $39 million and media reports said Asia Online was on the road to meeting its $47 million goal for the year.
The firm's major investors include U.S.-based Softbank Venture Capital, JP Morgan Partners, Dell Computer Corporation, GE Equity and Nexus Capital Partners I, L.P.
The sagging economy has affected more than Asia Online. Hong Kong's exports fell 9 percent in August and growth slipped to 1 percent. The unemployment rate in Hong Kong has hit a 17-month high of 5.3 percent and officials say it will climb.
Copyright 2001 by United Press International.
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