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Technology Stocks : Pacific Century CyberWorks (PCW, PCWKF) -- Ignore unavailable to you. Want to Upgrade?

To: sbt48 who wrote (299)	2/11/2000 11:07:00 AM
From: david sandel	Respond to of 4541

Cable & Wireless HKT is in the spotlight again as a new suitor enters the picture. Telecom Mania shifts from Europe to Hong Kong today. Cable & Wireless HKT (NYSE:HKT - news), the local incumbent in Hong Kong, came alive at week's end after many months in the shadow of China Telecom (NYSE:CHL - news). HKT's parent company, Cable & Wireless (NYSE:CWP - news) has made no secret of its desire to sell its Hong Kong subsidiary, which is one of its largest global telecom assets and an important, though somewhat slow-growing, profit contributor. A sale would free funds and management resources to pursue enhanced telecom services through its other far-flung empire, and develop its ambitious Internet strategies. HKT looked like being the bride in an arranged marriage with Singapore Telecom (OTC:SGTCY - news). That was still the story before the Asian markets shut down for Chinese New Year last week. But fund managers and brokers have mostly been cool to such a combination. As one broker told me, the common view is that ``two bad managements in one merged entity are worse than one bad one in each of two companies.' Unkind Cut It's an unfair slur on both. Yes, they are slow growing, but that is a problem of success. Penetration is so high in both Hong Kong and Singapore already that the growth opportunities from plain old telephone service are limited. They could perhaps say more about their exertions in the Internet and enhanced service fields, which are not inconsiderable. The additional rap on SingTel is that the stock is overvalued. Well, it was overvalued at its IPO eight years ago, when the world's greediest investment bankers launched it at a price that discounted its 1999 growth opportunities. But now it's 2000, and SingTel sells for a fraction of the valuation of European telecoms with similar long-term prospects. In any case, new suitors may be emerging for HKT. Speculation arose early this week that Li Ka-Shing's Cheung Kong (OTC:CHEUY - news) group would make a bid. It makes sense. The group is into telecoms in China through its CK Infrastructure unit, in Hong Kong itself through Hutchison Whampoa (OTC:HUWHY - news), which is also the single largest shareholder in Mannesman (OTC:MNNSY - news) after selling Orange to it. The Cheung Kong group is involved in other utility businesses, not least Hong Kong Electric. A New Wrinkle Here's the new wrinkle: Pacific Century Cyberworks (OTC:PCCLF - news), the Internet development and investment vehicle of Li Ka-Shing's second son Richard, has apparently approached Cable & Wireless about entering the bidding. No doubt the punters in HKT would go mad over a deal with Pacific Century, but what would the Pacific Century shareholders do? There seems to me more than just a chance that the reaction would be negative, as in the other major recent instance of a new economy company taking over and old economy one -- I refer to America Online's (NYSE:AOL - news) bid for Time Warner (NYSE:TWX - news). Investors in whizzy Internet stocks dislike the dilution in growth rates that comes with the acquisition of real assets, no matter how solid and no matter how good a deal they get. HKT was up 22% in morning trading before being suspended at the company's request. Pacific Century rose 5% before being suspended, and Chinatel ended a record-breaking day for the Hang Seng Index 6% higher. Cheung Kong gained 7%, Hutch 8%. SingTel lost a fraction. Cable & Wireless is 9% higher in London, with money draining away from other UK telecom shares. This is limiting the gains in Colt Telecom (Nasdaq:COLT - news) and Vodafone (NYSE:VOD - news) and sending British Telecom (NYSE:BTY - news) for a 3% loss. Profit Taking in the UK Profit taking is hitting the London market fairly hard today. Many recent market leaders in the banking and media sectors are down 4% or so. These include British Sky Broadcasting (NYSE:BSY - news), Bank of Scotland, Barclays (NYSE:BCS - news), and WPP Group (Nasdaq:WPPGY - news). Other European markets are faring better than the British, and telecom and technology shares are some of the firmest features. Telecom Italia's (NYSE:TI - news) 6% rise on news of acquisitions and reorganization of Internet interests is powering the Mibtel Index to a gain of 2%. Cap Gemini is up 7% after announcing an e-commerce partnership with Microsoft (Nasdaq:MSFT - news). Canal-Plus (OTC:CNPLY - news) is stronger by 7%, and Alcatel (NYSE:ALA - news) by 5%. Bank shares are again leading the German market's rise on speculation of mergers within the country or across borders. Commerzbank and Dresdner Bank (OTC:DRSDY - news) are up 5% each, Hypovereinsbank 3%, and Deutsche Bank (OTC:DTBKY - news) more than 1%. David H. Smith is managing director of Vector Management & Research, a global financial markets research firm. Smith's column analyzes global economic and corporate events that happened overnight, and tells investors how those events affect their portfolios. At the time of writing, he owned Alcatel and China Telecom, though positions can change at any time. Go to www.worldlyinvestor.com to see all of our latest stories.