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The First US-listed China Concept Stock Chinadotcom Sold Its Internet Portal Business. The End of An Era or A Farce?
Chinadotcom announced to sell its Internet portal business to Guoguang Global Media Holdings Limited, for HKD 90.80 million ($11. 8mn). The board decided to sell the non-profitable business so as to better allocate the existing resources, according to its statement.
Today’s people don’t care about Chinadotcom — younger ones haven’t heard about it. But China.com did sound like a big deal when the company was selling the China Internet dream in 1990’s, and, before the Internet bubble burst, became the first Chinese Internet company to list in the U.S. and Hong Kong.
The company filed bankruptcy protection and was delisted from the NASDAQ in 2011. In the first half of this year it sold 325.9 million yuan worth of shares and New Horizon Capital IV, L.P.
James McGregor, former chief executive of The Wall Street Journal and Dow Jones & Company in Mainland China, witnessed how Chinadotcom got started and wrote about it in one of his books, One Billion Customers. Here is a brief summary of it.
Peter Yip, a Hong Kong Chinese, helped Xinhua News Agency to register China Internet Corportation (CIC) in Hong Kong in 1994 and managed to raise $25 million to start off.
CIC bought domain names, china.com, hongkong.com and taiwan.com, and then was renamed Chinadotcom which would list on the NASDAQ and Hong Kong GEM in 1999 and 2000, respectively. The listings raised about three-quarters of a billion US dollars.
Chinadotcom was never perceived by many as a serious business but a deal that brought Peter Yip and his pals, and Xinhua News Agency a lot of money. An estimated $500 million was burned through in the next four years while the online services it offered never gained traction.
The Real Game
Sina, Sohu, Netease and Tencent became the Big Four in Internet portal in China. The first three listed in the U.S. in 2000, not long after Chinadotcom’s listing there. Tencent made it in Hong Kong in 2004. To this day, the four are of the largest Chinese Internet companies.
Except for Sina whose major revenue source has been online advertising and who is figuring how to make money off Weibo, the micro-blogging service, the other three have been making a majority of revenues from online games.
Online portal business has been declining in the past years in Mainland China, too. Sina sensed it and now bets big on Weibo — it is believed advertising on its news portal has been cannibalized by the micro-blogging service.