PCCW - info

NetStock! By Steve Harmon
chairman & CEO
e-harmon.com, Inc.
Internet Investment Provider
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2000.02.17:

Pacific Century Cyberworks, The Chinese Dragon?
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The Chinese celebrated the New Year a few weeks ago and it is the Year of
the Golden Dragon. Investors began playing that idea (at least of a dragon)
in the Internet space recently with Hong Kong's CMGI meets wanna-be
broadband Web giant in the making Pacific Century Cyberworks (1186.HK).

The stock -- 1186 (numbered which is how stocks are known in Hong Kong; also
known as PCCW) -- has literally gone from being a few pennies a share to a
few dollars (Hong Kong). In U.S. dollars PacCentury commands a $30 billion
market cap, on par with its U.S. counterpart CMGI (CMGI).

Now if it weren't for the past success of the founder and chairman, Richard
Li, the valuation would seem out of whack with conventional metrics. Some of
the expectation comes from Pac Century's share swaps for stakes in other
Internet ventures such as 3.4% of CMGI (mentioned above). More recently a
20% stake in Hikari Tsushin.

The firm has 8.816 billion shares outstanding, which is exponentially many
more times the number of shares you'll find in any U.S. company.

CMGI exchanged stock for stock $350 million worth last September which sent
shares up a bit.

Before that Intel bought a double-digit stake which now sits at about 13.5%.
Intel bought it for about $50 million.

Pacific Century's goal is to build out a broadband Internet access platform
in Asia. Li built and sold satellite TV provider Star to News Corp. a few
years back for $1 billion. So he's not new to launching ventures.

In many ways the broadband Internet idea echoes the strategy plays to Li's
experience of TV delivery via satellite, serving Asian cities from the air
rather than from national telecom infrastructures. Only different this time
seems to be what the bird transmits.

In addition Pac Century has an exclusive with the Hong Kong government to
build out a Cyber-Port (a high-tech center for Hong Kong).

Cyper-Port to me is the equivalent of owning pastureland in Silicon Valley
before Fairchild Semiconductor spawned the tech mecca for the world.

At $30 billion is there any upside left for investors? In the last six
months Pac Century's venture investments have gained $1.5 billion.

Ultimately the value of Pacific Century is if it can indeed become a
platform for broadband content and commerce into Asia.

It may take some time before Pac Century grows into the expectation and I
expect we may see Softbank coming soon to China. Or is Pac Century the
Softbank of China? Time and execution will tell.


about us:

e-harmon.com, Inc.
the internet investment provider

Hummer Winblad Venture Partners is the primary investor in e-harmon.com,
Inc. Other investors include Netscape co-founder and Internet pioneer Marc
Andreessen, GeoCities founder David Bohnett, Quote.com (now part of Lycos)
founder Chris Cooper, Go2Net founder and chairman Russ Horowitz, XOOM
founder and NBC Internet CEO Chris Kitze, MP3.com founder and CEO Michael
Robertson, On24 CEO Sharat Sharon, Infosel co-founder and Terra Network MD
Arturo Galvan.