Help For Companies Going East

"As of Dec. 31, 1999, we had an accumulated deficit of approximately US$13.1 million, of which US$10.4 million was incurred during 1999. Our expenses have grown faster than our revenues in recent quarters, and we expect to increase our spending significantly."

HONG KONG - A perfect candidate for an initial public offering in America's superheated environment for Net stock investing? You bet. Right up to the wire. Yet, this is a Chinese company.

Based largely on the potential for American Web companies to reach disparate languages and markets from Singapore to Shanghai, Asiacontent.com pulled in US$70 million from Nasdaq investors on April 13 - the same day the Nasdaq Composite index sunk 7.1 percent in its second-largest decline ever, dragged down by a dour financial outlook for legally beleaguered Microsoft.

Asiacontent shares fell that first day from US$14 each when it got its money to US$11 at the end of the day. But the 20 percent-plus plunge did not depress its chief executive, Chris Justice, who handed out free CDs, personal stereos, balloons and bumper stickers outside Nasdaq to celebrate.

"The window may be closed" for more Internet initial public offerings, Justice said at company headquarters in Hong Kong the following week. "But now we can grow . . . and, if we had delayed, we were not sure when we could go out again."

Asiacontent is in the "infostructure" business. It creates news and entertainment sites for Net users in mainland China, Hong Kong, India, Japan, Malaysia, Singapore, South Korea and Taiwan, then delivers advertising and conducts commerce on behalf of itself and a variety of U.S. content partners.

For example, if CNet wanted to expand into multiple Asian markets without creating its own network of servers, putting its own editorial and administrative personnel on the ground or creating its own marketing, it could go to Asiacontent. The company would make CNet's news, software, music files or other material available over the Web, and DoubleClick Asia would sell the ads. CNet could expand as, say, Korea.CNet.com, but Asiacontent would be the 51 percent owner of the joint venture and the actual operator of the site.

Asiacontent's venture partners now include many of the big names in Internet entrepreneurship from across the Pacific, from E! Online to NBC Internet to SportsLine.com.What Justice offers is one-stop shopping for eight major Asian markets, having already figured out how to develop local content in local languages and under local law and custom. "English is just a niche," he said. "The true strength is the local language."

But Asiacontent also can keep its partners ahead of the game, as new technology takes root.

For instance, if MTV wanted to reach the rapidly growing and intense population of mobile phone users, Asiacontent could get it prepped - in format and language. And deliver music or concert ticket info to the handheld receptacle as well.

Of course, the path to profitability is not necessarily clearer in Asia than it is back in the U.S. Only about one in 20 banner ads get clicked on by Net users. Online commerce is still minimal. And Asiacontent is still waiting to capitalize on the rumbling growth in Internet usage. Last year, the company lost US$13.1 million on revenue of just US$3l.0 million.

Which is why going public in the face of a pending bear market made sense to Justice.

"You can't always look to future value," he said.