Word: hkt
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Dates: during 2000-2000
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Hong Kong tycoon Richard Li seemed to be walking on air last March when he used his 10-month-old start-up, Pacific Century CyberWorks, to acquire the territory's dominant telecommunications company, Cable & Wireless HKT. The $35.9 billion merger was the largest in Asia outside Japan. Analysts fell over one another to issue buy recommendations on CyberWorks' stock, which they predicted would soar into the stratosphere. Whoops! Put a hold on that order. Six months later, analysts say the new firm's strategy of linking broadband Internet services to an Old World telco is no longer so compelling...
...from its February high of $3.38.) It was dragged down partly by NASDAQ's own lackluster performance, but there was another, more direct cause. Britain's Cable & Wireless, the parent of the Hong Kong firm, dumped a quarter of its 20.1% stake in CyberWorks, acquired after the merger with HKT was approved in August. According to analysts, the move suggested that Cable & Wireless expects CyberWorks' shares to fall further. "Actions speak louder than words," says Henry D.C. Lee, managing director of Hendale Asia, an investment-advisory firm in Hong Kong. "The signal was clear. They wanted...
...things change. When news of CyberWorks' plan to take over the telecom giant emerged on Feb. 15, the move was seen as inspired. The merger effectively allows CyberWorks to use HKT's assets, such as its broadband Internet service, cellular-phone system and potential third-generation cellular technology, as well as the right to offer programs of a former Richard Li property, Star TV network (a satellite broadcaster that runs mostly English-language programming across Asia) over the broadband network...
...will see big growth in three to four years' time, but in the short term, CyberWorks will remain an old phone company," says Lee. After a share-price drop earlier this month, analysts calculate that CyberWorks' net worth, at $24.5 billion, is about equal in value to just the HKT portion--effectively putting a zero valuation on the company's Internet business. Li's dream of walking on air has dropped below the clouds--and suddenly the future is looking more stormy than it did six months...
Even in his hour of triumph, Richard finds it hard to get 100% of the credit. Many analysts point out that all of Hong Kong's telecom licenses expire in 2006, and the decision on whose gets renewed will surely be made in Beijing. That's why HKT chose Richard, the analysts say--because Li Ka-shing's clout in China will smooth the way. To others, however, it looks like Superboy is perfectly capable of flying...