MARCH 10, 2000 VOL. 26 NO. 9

Straggler in Dotcomland
Out-of-favor MyWeb tries to regain its luster
By ARJUNA RANAWANA Kuala Lumpur

ALSO IN ASIAWEEK Cover: Internet money goes shopping in Hong Kong and what PCCW-HKT means for old-economy firms in Asia • Players: The deal, the winners and the losers • Interview: Richard Li on bagging the region's biggest buy • SingTel: What now for Singapore Telecom? • Chart: Comparing PCCW and Cable & Wireless HKT • No. 1: The Lis are definitely Asia's top business family Editorial: Taiwan should respond to China's peace feeler - hidden in a war threat Editorial: India's RSS must curb its chauvinism Philippines: Amid terrorist attacks in Mindanao, President Joseph Estrada plays tough with MILF insurgents Brunei: The sultanate sues Prince Jefri Singapore: Behind Ong Teng Cheong's maverick presidency • Extended Interview: Ong does not regret riling his former colleagues Nepal: Why the Maoists are resurgent Green Stakes: Why Asia has to clean up - fast • Snapshots: Where countries stand on the environment • Eco-warriors: Fighting to save the planet • By Design: Ideas that can make a difference Exhibitions: The art world - a proxy cross-straits battlefield Newsmakers: India's pointman for defense Real Estate: Building up Indonesia's multimedia dreams MyWeb: As this Malaysian Internet company proves, a U.S. listing is not an automatic road to riches Investing: Don't use yesterday's rules to value tomorrow's hottest telecommunications companies Business Buzz: CLOB gets resolved Viewpoint: Political reform is inevitable in China

Think up a new idea about attracting - and keeping - Internet users to your website. Make Asian emerging economies, including China, your target market. List the venture in the U.S. Watch your stock price zoom to the stratosphere and stay there. A sure-fire formula for dotcom success? Not for MyWeb, a three-year-old San Francisco-based company that runs portals of the same name in Malaysia (where the firm was started), Singapore, Hong Kong and China. While it claims a total of 1.6 million registered users and 3.3 million page views a day, MyWeb's share price has fallen 44% since December. At $187 million, its market capitalization pales beside the $5 billion of Chinadotcom, which listed on America's Nasdaq just eight months ago.

Clearly, not all dotcoms are created equal. What is MyWeb doing wrong? "Ours is an OTC - over the counter - stock and a lot of funds cannot buy OTC shares," says Malaysian T.S. Wong, the company's 28-year-old CEO who has an electrical-engineering degree from the National University of Singapore. "We are working to change that." MyWeb trades on the OTC Bulletin Board, which buys and sells securities not listed on the much bigger Nasdaq or national stock exchanges. MyWeb also needs an image makeover. In addition to its portals, it sells TV set-top boxes that enable people to surf the Net on their television sets. Says Wong: "Investors always ask us: 'How many set-top boxes have you sold?' They value us by the number of set-top boxes. In fact, there are a lot of PC users coming to our portal as well. That message has not got through."

To transfer from the OTC Bulletin Board to Nasdaq, MyWeb must satisfy more stringent capital, sales and reporting requirements. It must also jostle for the attention of sponsoring investment banks, not an easy task in the Year of the IPO - the conventional wisdom is that a dotcom company needs to do an initial public offering in the next six months or risk being left behind. It must convince investors that its prospects will not dim if giant Microsoft, which also sells set-top boxes, were to move to China. And as Asia's love affair with personal computers becomes deeper, more people may choose a PC instead of their TV to surf the Net.

Wong says MyWeb has the edge over the competition. "The hardware distribution [of set-top boxes] is an advantage we have over the other portals," he argues. "It is the one weapon we have over them." At the same time, PC users can also access MyWeb's sites to get free e-mail accounts and download information. Wong says there is no difference in downloading time between TV and PC, and says the remote control unit of the Philips-made boxes allows ease of use with point-and-click surfing. MyWeb has sold 20,000 boxes in Malaysia for about $500 each. In China, where the device costs $160, the target is 1 million units by 2001. "We are halfway through," says Wong. MyWeb markets the set-top boxes with Beijing Telecom. The next targets are Thailand and Indonesia.

But can MyWeb compete on content? "It did not spend enough on advertising and getting eyeballs in Malaysia," says Prasad Nayyar of marketing consulting company Third Eye in Kuala Lumpur, adding that other portals like Catcha.com spent more to promote themselves and sign on content providers. Wong says MyWeb will relaunch in Malaysia at the end of the year. "We plan to go for the over-30s consumer, who has minimal experience with PCs," he says. The come-on will be what Wong calls "e-government" - MyWeb subsidiary Techno Channel is one of two licensees tasked with developing Internet access to government departments. "People can check their bills, summonses [by police for traffic offenses] and other things to do with government," says Wong.

MyWeb is designing customized content for other markets, complementing the existing business-information pages with lifestyle and entertainment features. The focus is on China, where the company's portal recently launched a partnership with sports infotainment channel Shawei.com. "China is such a huge market," says Wong. "We have put almost all our resources there" - although MyWeb China is not among the ten most popular sites in the mainland (Chinadotcom is No. 6). Wong is pushing on. In February, MyWeb signed a deal with Telecom Asia in Thailand to sell its boxes in that country. A portal for Thailand - and later for Indonesia - is under construction. "PC-penetration is pretty low in these markets," says the CEO. "Our results have been very disappointing in [high PC-ownership] places like Singapore."

Analysts see 2000 as the make-or-break year for MyWeb. "We do not know how successful they would be in the end," says Third Eye's Nayyar. Continued funding is crucial. After turning a profit of $375,000 on sales of $1.3 million in 1998, the company lost $3.2 million in the first nine months of 1999 on revenues of $6 million as it spent heavily on marketing. A Nasdaq listing will bring in more capital - assuming MyWeb gets a chance to float there. New technology stock markets are also springing up in Asia, so MyWeb has a number of options. But first it must convince investors that its TV-cum-PC model is superior to the pure-PC scheme of other dotcoms.