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On the Highway to Riches
Who needs a desk and phone when you're a dotcom?
By ERIC ELLIS
February 22, 2000
Web posted at 11:30 a.m. Hong Kong time, 10:30 p.m. EST
Asia doesn't yet have anything quite so ridiculous as NetJ.com Corp., of Capistrano Beach, California, but we are doing our best to strain Internet investor credulity when it comes to wacky tech outfits. NetJ.com Corp., of course, is the NASDAQ-listed company that recently announced the following: "The company currently has no business operations, no employees and no operating revenues. The company has begun negotiations with reverse acquisition candidates; however, previously announced potential acquisitions have failed to materialize and there are no assurances that current negotiations will materialize in an acquisition."
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In English, by the company's own admission, that means NetJ.com Corp. doesn't actually exist. Indeed, it does nothing--zero, nada, zip. All it has is a name and a market listing and how it got those is beyond me, as I've tried both calling them (it rang out) and logging on (it defaulted to something illegible called Izutsuya.com in Torrance, California. NetJ.com should be worth zero but yesterday its shares were quoted at $6.50 each with 311,000 changing hands on the previous trading day.
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It's possibly the height of Internet madness, but Asia also has its contenders. Last year, I went and saw the Singaporean company Pan Pacific Media, which had just dotcommed itself and was enjoying a six-fold rise in its share price as a result. What did Panpac actually do online? Well, the principals had just been to Silicon Valley and were "very excited" about what they saw. Er, yes, go on.
They planned to launch a number of new sites, essentially American ideas cast in an Asian mold. Fine. And they had renamed their office conference rooms eBay and Yahoo and so on to get that Net culture feel. Old media is dead, they loudly proclaimed, conveniently forgetting that the company's revenues and profits came from a collection of middle-ranking trade publications, and still do.
Panpac has subsequently developed a few sites of middling quality, but its great coup was to call itself a dotcom company when in actual fact the closest it had been to the Net was to drive down California Highway 101. It had stretched the boundaries of disbelief. Analysts and journalists who would normally not give it the time of day sought it out, as did investors. And all this was entirely respectable because official Singapore declared that it was now Asia's Wired Island and this was the corporate trend du jour.
Indeed, the rush to dotcom ourselves and make a fast buck has governments and authorities bamboozled. Consider Tom.com, the self-styled China portal barely two months old. This is a bit of a no-brainer and probably good news to the million or so who snapped up Tom.com's IPO applications this week.
Tom.com has been granted major advantages by Hong Kong's listing authorities, mostly about when its backers Cheung Kong (Holdings), Hutchison Whampoa and Pacific Century, can cash out their stakes. Normally, an escrow period of two years applies to new listings, the time span considered appropriately long enough to give the company time to develop critical mass, sales and profits (remember those things?) before management pull some cash out. But in Tom.com's case, the HK exchange has reduced that two years to just six months.
A canny investor should not go near Tom.com. An adventurous one would be shorting it about June this year. Questionable deals that like that have more to do with smoky backroom negotiations than carving out a new wired future for Asia. No amount of phony rhetoric from business leaders and their hipster offspring can spin it any other way.
There is growing outrage about this deal (check out analyst David Webb's take) and there should be more. But I can't help thinking that an Asian NetJ.com is not that far away, and will probably have some sort of official approval.
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