At the company's own request, shares in Tom.com, the internet portal company controlled by Hong Kong tycoon, Li Ka-shing, were suspended today at the opening of trading ahead of "an announcement to clarify press articles."
Over the weekend, the company had announced the signing of deals to spend US$50m of its cash pile of about US$800m, buying 100% of sports portal Shawei.com for US$20m and 70% of advertising firm YC Press for US$30m. Tom.com's new chief executive Sing Wang said the acquisitions are expected to contribute annual revenues of HK$230 million. "This important move is in line with Tom.com's focus of strategically building our portfolio and leadership in the booming China Internet market," Mr Wang said.
The announcement may have more to do with recent speculation about an acquisition by Tom.com of Guangzhou-based ISP and portal operator 163.net, a deal which is estimated to be worth up to US$100m. However, such a deal might not be welcomed by the market, which wants Tom.com to follow the recent trend for dotcoms to buy sustainable profits in the 'old' economy. Tom.com has been criticised for not doing enough to develop its business since listing in the spring. The market may also react badly if Tom.com announces the issue of more paper as part of an acquisition - this it would be allowed to do after September 1, so it could form part of a deal announced this week.
Tom.com, controlled by Cheung Kong (Holdings) and Hutchison Whampoa, reported a net loss of HK$194m on turnover of HK$5.27m in the six months to June 30. The company has reduced its work-force of 500 by nearly 20% in recent weeks.
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