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Non-Tech : CAOL: The Chinese AOL and Internet Lottery -- Ignore unavailable to you. Want to Upgrade?

To: gizmo&jack who wrote (516)	7/3/1999 2:53:00 PM
From: SteelerStu	Respond to of 720

China.com hopes to woo U.S. investors HONG KONG (AP) - What's in a name? For China's first Internet company that plans to go public on the U.S. stock market, it's all in the tempting monicker: China.com. Wearing China hype and Internet frenzy on its sleeve, the Chinese-language Web site partially owned by the mainland government hopes to raise more than $60 million in its share offering, which is widely expected next week on the Nasdaq Stock Market. Even though the company would not say precisely when the 4.2 million shares are being floated for $14 to $16 each, analysts are already predicting strong demand. ''People are just salivating at the potential of attacking the China market,'' says Hanson Cheah, executive director of venture capital firm AsiaTech Ventures. Still, whether China.com can deliver value in the long run remains tentative. China.com is pinning its hopes on future earnings, and analysts say it will need more than just what seems like the perfect name if it is to carve out a niche in China's nascent information industry. Cheah estimates there are 3.3 million Internet users in China and that just 100,000 of them use China.com -- far below the 900,000 users logging on to market leader Sina.com, and lagging other middle-range players including Yahoo!, Netease.com and Sohu.com. ''China.com is not a leader. A 'participant' would be a better way of putting it,'' says Kaushik Shridharani, a media analyst at investment bank Salomon Smith Barney. But an infusion of capital from its IPO may help to change that. ''Investors will buy because of the shortage of ways of investing in the growth of the market,'' says Kaushik Shridharani, a media analyst at investment bank Salomon Smith Barney. ''I think it will sell. Investors are not very educated about Internet companies in China.'' China.com's past performance certainly has been rocky. ''We have incurred significant net losses since inception and expect to continue to incur significant losses on a quarterly and annual basis,'' the company said in its prospectus for the share offering. Citing strict regulations of the U.S. Securities and Exchange Commission, neither the company nor its underwriters Lehman Brothers and Bear Stearns would give any detailed financial information -- such as the size of its losses. Key shareholders include Hong Kong-based New World Infrastructure, with 22.7%, and U.S. Internet provider America Online Inc., with 10%. AOL also has warrants to purchase an additional 15% of China.com. China's Internet market has the potential both for huge growth and huge problems. The possible audience is massive, but disseminating information in China is a tricky proposition. The Chinese government remains cautious over the Internet, blocking many overseas sites it regards as politically or morally suspect. Beijing has repeatedly warned that state security and anti-pornography laws apply online as well as off. Ellen O'Gorman, spokeswoman for China.com, declined comment on whether China's state-run Xinhua News Agency, which owns a 13.6% stake, could exercise a heavy hand on the Web site's contents -- and consequently discourage users from logging on. China.com can trace its origins to another company that sought to conquer the Chinese Internet market. China Internet Corp., 60% owned by Xinhua, was set up five years ago as a content-controlled Web site for mainland Chinese users, with touchy subjects like politics and dissent filtered out. When CIC failed to gain a following, CIC set up China.com based in Hong Kong to offer Web services, e-commerce and advertising focusing on mainland China, Taiwan and Hong Kong. The planned share offering underscores the importance of U.S. equity markets as a place for Chinese companies to raise capital, despite Beijing's on-again, off-again relationship with Washington, Shridharani said. Despite doubts about China.com, the company could ultimately prove the naysayers wrong. A Nasdaq listing will make China.com answerable to private investors -- which might force the company to work harder on delivering profits, analysts say.