ad info

TIME Asia Home
Current Issue
Magazine Archive
Asia Buzz
Travel Watch
Web Features
  Photo Essays

Subscribe to TIME
Customer Services
About Us
Write to TIME Asia
TIME Canada
TIME Europe
TIME Pacific
TIME Digital
Latest CNN News

Young China
Olympics 2000
On The Road

  east asia
  southeast asia
  south asia
  central asia

Other News
From TIME Asia

Culture on Demand: Black is Beautiful
The American Express black card is the ultimate status symbol

Asia Buzz: Should the Net Be Free?
Web heads want it all -- for nothing

JAPAN: Failed Revolution
Prime Minister Yoshiro Mori clings to power as dissidents in his party finally decide not to back a no-confidence motion

Cover: Endgame?
After Florida's controversial ballot recount, Bush holds a 537-vote lead in the state, which could give him the election

TIME Digest

TIME Asia Services
Subscribe to TIME! Get up to 3 MONTHS FREE!

Bookmark TIME
TIME Media Kit
Recent awards

TIME Asia Asiaweek Asia Now TIME Asia story

OCTOBER 2, 2000 VOL. 156 NO. 13

Frederic J. Brown/AFP.
Richard Li is viewed as Net-savvy, but investors are losing confidence in his firm.

Hong Kong Cyber Kid Takes a Hit
Richard Li's once mighty Pacific Century CyberWorks is brought down to earth by failed deals and rising doubts
By WENDY KAN Hong Kong

Richard Li seemed to be walking on air in March when he used his 10-month-old start-up, Pacific Century CyberWorks, to acquire Hong Kong's dominant telecommunications company, Cable & Wireless HKT. The $35.9 billion merger was the largest ever in Asia, outside Japan. Analysts were falling over one another to issue buy recommendations on CyberWorks' stock, which they predicted would soar into the stratosphere. Six months later analysts say the new firm's strategy of linking broadband Internet services to an old-world telecoms company is no longer so compelling—and Li is losing altitude fast.

CyberWorks' share price plunged 25% last week, to $1.12. (It's down almost 70% from its February high of $3.66.) It was dragged down partly by NASDAQ's own lackluster performance, but there was another, more direct cause: Britain's Cable & Wireless 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 to get out."

COVER: High-Fiving It
China's once dour athletes are winning—and having fun
Personal Glory: Sports institutes adapt to China's Me Generation
The Apologists: Japan's Olympians make an exhibition sport of saying sorry
Notebook: Highs and lows from the Sydney Games

TIME at the Olympics: Sydney 2000
TIMEasia, TIMEeurope, TIMEpacific and bring you our take on the first Olympics of the new millennium

Other than a dash to freedom by two French hostages, the assault on Muslim rebels in the south is producing few results

Market skepticism brings Richard Li's high-flying Pacific Century CyberWorks down to earth

VIETNAM: Getting Connected
Authorities are hoping the nation's youth will transform the communist country into a major software exporter

MALAYSIA: Free to Be Me
The jailing of Anwar Ibrahim for sodomy has not stifled the growing number of citizens who are gay and proud of it

TECHNOLOGY: Down to the Wire
Napster has changed the world by transforming our notions of business, content and culture—but can it survive the week?
Downloads Galore: All intellectual property is vulnerable

CINEMA: Asian Cocktail
The latest crop of the region's films, showcased in Toronto, is more eclectic, more savvy and more commercial than ever

Talk Can Be Cheap for Tech-Savvy Travelers

How things change. When news of CyberWorks' plan to take over the telecoms giant emerged on Feb. 15, its shares closed at $3.38. To many, Cable & Wireless HKT seemed like a sweet deal: 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 Star TV's programs over its broadband network. But back then, say critics, CyberWorks was overvalued; so they were relieved when its shares plunged. "The market is finally reverting to rational analysis," says David Webb, editor of financial monitoring site, who had valued CyberWorks' shares at 54 cents in February. "The company can't resume its rocket-like trajectory." CyberWorks declined to comment on its business strategy last week when contacted by Time, but on Thursday Li said the fact that Cable & Wireless' shares were snapped up by buyers showed "confidence in and support for PCCW, our business plans and our overall strategy." This week, CyberWorks' share price may well bounce back. Its interim results are due out on Thursday, and Li, or the company, can then buy back shares. But some analysts say CyberWorks' problems go deeper than short-term stock volatility.

Several strategic joint ventures have failed to materialize in recent months. A venture fund between CyberWorks and NASDAQ-listed CMGI Inc. was abandoned on Sept. 8. The same day, a three-way joint venture among CyberWorks, ERA Communications Co. and Taiwan's GigaMedia was called off by GigaMedia over a disagreement on how to value CyberWorks. The deal had been intended to enable CyberWorks to distribute Chinese-language content to the mainland. CyberWorks has also been unable to persuade Japanese Internet giant Softbank to distribute its Network of the World (now) TV and satellite Internet service. "This suggests they aren't as attractive as their potential partners once thought they were," says Chris Cheung, an investment analyst with Worldsec International in Hong Kong.

Although CyberWorks has several projects on the go, it is pinning its hopes primarily on now, a broadband Internet service delivered across Asia to TV sets, computers and wireless devices. Launched initially in London in June, now has so far garnered a lukewarm response. now is trying to keep a step ahead of fast-moving times by using broadband, but the rest of Asia is barely connected. "It's like inventing the cart before you have the horse," says Lee. "CyberWorks may be too far ahead of its time."

Li has been seeking strategic partnerships across Asia to gain local distribution. But as his shine fades, fewer potential partners seem interested in linking up with him. "Broadband 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 this week's share price drop, 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 six months ago.

Write to TIME at

This edition's table of contents
TIME Asia home


Quick Scroll: More stories from TIME, Asiaweek and CNN


U.S. secretary of state says China should be 'tolerant'

Philippine government denies Estrada's claim to presidency

Faith, madness, magic mix at sacred Hindu festival

Land mine explosion kills 11 Sri Lankan soldiers

Japan claims StarLink found in U.S. corn sample

Thai party announces first coalition partner


COVER: President Joseph Estrada gives in to the chanting crowds on the streets of Manila and agrees to make room for his Vice President

THAILAND: Twin teenage warriors turn themselves in to Bangkok officials

CHINA: Despite official vilification, hip Chinese dig Lamaist culture

PHOTO ESSAY: Estrada Calls Snap Election

WEB-ONLY INTERVIEW: Jimmy Lai on feeling lucky -- and why he's committed to the island state


COVER: The DoCoMo generation - Japan's leading mobile phone company goes global

Bandwidth Boom: Racing to wire - how underseas cable systems may yet fall short

TAIWAN: Party intrigues add to Chen Shui-bian's woes

JAPAN: Japan's ruling party crushes a rebel at a cost

SINGAPORE: Singaporeans need to have more babies. But success breeds selfishness

Launch CNN's Desktop Ticker and get the latest news, delivered right on your desktop!

Today on CNN

Back to the top   © 2000 Time Inc. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.