HONG KONG -- Investors in Internet portals don't seem to care about traditional numbers -- like earnings. They are, however, supposed to care about the number of people who use a portal and the number of those who click on the ads.
Sadly, in Asia even the most basic measures of portal use are hard to come by, and estimates of even very basic numbers, like the total of Internet users in the region, vary so wildly as to be close to worthless.
That hasn't stopped Internet-mad investors, though. Take
, a portal with boring content supplied by its part owner, the state-controlled
New China News Agency
, more commonly known as
China Internet Network Information Center
, about the only source on estimating site usage, ranked China.com 17th in the country before its listing on the
in July. Since then, the stock has risen almost 500%, even though China.com has plunged to 38th in Web site popularity.
And it has risen even though
New China News Agency
, the same company that owns a portion of China.com, is working with Australian phone company
to set up a competing portal.
What has investors fired up is China's about-face on allowing foreign parties to own Internet businesses. In September, the highly protectionist minister in charge of telecommunications said they couldn't. But in order to get the U.S. to agree to let China enter the
World Trade Organization
, China backed off that position. And that prompted portals to jump. The price of China.com, despite its dry content and slipping popularity, doubled in the space of a few days.
With China.com trading at 130 times sales, there is little wonder that the actual market leader among Chinese portals,
, is furiously working toward its own listing in New York, as well on Hong Kong's brand-new
Growth Enterprise Market
. (GEM is a second stock exchange board designed for technology stocks. It began trading on Thanksgiving Day.)
Is the Chinese Internet market worth all the fuss? Numbers measuring the market vary so much that they are positively meaningless. According to American investment house
, about 1.5 million Chinese, a little more than one one-thousandth of China's 1.2 billion people, were Internet users as of April last year. The Internet Network Information Center puts the current number at 4 million. Australia's New Tel, scrambling for its own slice of the Chinese pie, recently estimated the number at 7 million.
One of the most aggressive Internet investment banks,
, said in its inaugural Asian Internet report that while
averaged 200 million average daily page views in the U.S., the average in Asia is "several million a day." Thanks, Merrill. Can you imagine buying a stock after an analyst told you it was a bargain, selling at "several times earnings?"
Another prominent U.S.-listed Asian portal company is
, which has quadrupled since listing in October. Merrill Lynch, which underwrote the issue, projects losses for the company into 2001. In its report, the brokerage says Satyamonline.com, the company's portal, got about 13 million page views in October. An interesting number, considering that Satyam's S-1 filing to the
says: "During August 1999, our six Web sites generated approximately 6.5 million page views."
If that kind of growth were real, why does Merrill have only an "accumulate" rating on the stock?
One problem about banking on portals in big, poor Asian countries is that e-commerce is some time away from takeoff. China still lacks the courier or bank credit card infrastructure to support e-commerce, said Rohit Sobti, an analyst at
in Hong Kong.
The most ambitious portal company in Asia outside Japan is
Pacific Century Cyberworks
, a company controlled by Richard Li, the son of Hong Kong tycoon Li Ka-shing. The company hopes to introduce broadband Internet access in Asia early next year, at the same time starting up an ad-supported TV channel and a global portal service.
Will it make money? These days, nobody seems to care.
Philip Segal is a Hong Kong-based freelance reporter who has covered Asian financial and business developments for several years.