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Author: mbushman Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 390  
Subject: People.cn = nascent SINA? Date: 1/10/2012 4:15 PM
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See below for the whole story from Reuters. Hope posting on the SINA board doesn't bother anyone too much - I think the relativity (wrong usage, but reckon you get the point!) justifies it?


On the one hand, investing alongside the government and getting (a piece of) 25% of the company at an overall ~$330M valuation looks pretty good, especially relative to the valuations on SINA (or Sohu). Hey, the Chinese government has not exactly shown itself to be a hands off institution, right? What are the chances future legislation helps People.cn / hurts SINA (and/or Sohu)?

On the other hand, People.cn is tiny compared to SINA or Sohu. Plus, government controlled entities, in China or anywhere, have rarely shown themselves to be the nimblest of competitors, especially in the fast paced online world. This may also be the 1st step in the Chinese government divesting themselves entirely, to create more of a sense of objectivity (tho I think this last possibility is pretty unlikely).

Note that Xinhua may be in play soon as well.

So, is it a foolish opportunity - or a black hole?


From Reuters:

"China-controlled People's Daily to list news portal
By Samuel Shen

SHANGHAI, Jan 9 (Reuters) - The online news portal of Chinese government mouthpiece People's Daily plans to raise about 527 million yuan ($83.52 million) through an initial public offering (IPO) in Shanghai.

People.cn Co Ltd, which competes with more commercially operated rivals such as SINA Corp and Sohu , aims to raise cash by selling 69.1 million new shares, or 25 percent of its enlarged capital base, to fund expansion, according to a preliminary prospectus posted on the website of China's securities regulator.

The China Securities Regulatory Commission will vet People.cn's IPO application on Friday.

Beijing is encouraging IPOs by state-owned news websites as part of efforts to strengthen control over the media in the Internet age. China's state news agency Xinhua also plans to list its online portal in Shanghai to raise about 1 billion yuan, two sources with knowledge of the deal told Reuters last month.

People.cn faces "big challenges" from commercial websites such as SINA and Sohu, which benefit from the opening of the Internet services industry as well as ample funding, the company said in its prospectus.

Its website www.people.com.cn has 19,608 visitors per one million people, compared with SINA's traffic volume of 247,343 visitors per one million people, according to the prospectus.

People.cn, which is controlled by People's Daily and counts state-owned telecommunications giants including China Mobile, China Unicom and China Telecom as shareholders, plans to use the IPO proceeds to upgrade technology, develop mobile services and strengthen its editorial team.

Its net profit almost quadrapled to 81.6 million yuan in 2010 from a year earlier, with online advertising contributing to about half of the company's revenue."
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