Thursday, January 31, 2008

China Finance Online dives in with China Telecom

I have had my doubts about China Finance Online. It's a small company which has struggled to define a compelling strategy and justify its NASDAQ listing.

So, it's very interesting to see, less than 10 days after the Xinhua PR Newswire deal with, the China Finance (JRJC) is linking up with China Telecom. The deal is designed to "to deliver a variety of compelling financial information services to more than 40 million broadband users across China Telecom’s internet platform and offline distribution network". It goes on to note that "CFO will provide accurate, timely and comprehensive financial content to “JRJC-Vnet Finance”, the co-branded finance channel, and develop subscription-based financial information and analytical products, including free-trial and fee-based versions, dedicated to China Telecom’s broadband subscribers. China Telecom will distribute CFO’s products through the Vnet portal as well as its over 10 thousand business halls, and the two parties will split the revenues according to the agreed-upon scheme under the alliance agreement".

We'll be watching the next few quarters with great interest. Stock watching site Seeking Alpha thinks this is a great deal. "As the reality of the strategic alliance surfaces, the stock has tremendous potential to form legs and continue the run. Given the fact that China Telecom’s 40 million broadband subscribers only comprise 20% of its total customer base, the number of subscribers to the financial portal can only continue to grow", it says.


Anonymous said...

Emm... As you said, Paul, it is a small company and the deal enables China Finance Online to engage China Telecom with something, sounds to me, like content provision.

... As far I know, most of the content provision deals in China don't come with the favorable terms for the content producer, and the distributor has nothing to lose besides to offer a fraction of distribution channels + free content for its customers.

But, CFO definitely has earned PR from the news, as I've read from you, they are struggled to have anything compelling for the market.

Paul Woodward said...

I quite agree Eddie. The phone companies in China are enormously powerful and march to the beat of their own drum (as Steve Jobs learned in his iPhone negotiations with China Mobile).

CFO probably doesn't have much to lose by doing this deal and a good deal to gain in pushing itself more into the mainstream. Its own sites seem to me pretty small beer for a NASDAQ-listed company.