News and Research on Pacificnet, Inc. (PACT)
Business Description
Pacificnet, Inc., through its subsidiaries, provides outsourcing services, value-added telecom services (VAS) and products, such as telecom and gaming services. The company’s business process outsourcing (BPO) services include call centers, providing customer relationship management (CRM), and telemarketing services; and information technology outsourcing (ITO) includes software programming and development.
The company is a value-added reseller and provider of telecom VAS, which comprises interactive voice response (IV) systems, call center management systems, and voice over Internet protocol (VOIP), and mobile phone VAS, such as short messaging services (SMS) and multimedia messaging services (MMS). The company’s products (telecom and gaming) include gaming technology and communication products distribution. The company's operations are primarily targeted in Greater China and certain Asian country markets.
The company also designs, manufactures, and markets electronic gaming machines (EGM), video lottery terminals (VLTs), Amusement with Prizes (AWP) machines, keno and bingo machines. The company is also involved in gaming operations, in which it places participation games, including gaming machines linked to wide-area progressive (WAP) jackpot systems, local-area progressive (LAP) jackpot systems and non-linked, gaming machines in legal gaming venues. The company serves the gaming industry in Macau, Asia and Europe.
The company, through its subsidiaries invests in and operate companies that provide outsourcing services, telecom value-added services (VAS) and products (telecom & gaming) services in Asia, primarily Greater China, which includes the People's Republic of China (PRC), or mainland China, Hong Kong Special Administrative Region (HKSAR), Macau Special Administrative Region, and Taiwan. The company operates through its various subsidiaries throughout China headquarters in Beijing and Hong Kong, offices in Shenzhen, Guangzhou, Macau, and branch offices in 28 provinces in China.
Business Groups
The company operates its business in four groups:
Customer Relationship Management (CRM) and Outsourcing Services: The company provides - Business Process Outsourcing (BPO), such as call centers, CRM and telemarketing services; and IT Outsourcing (ITO), such as software programming and development services.
Telecom Value-Added Services (VAS): The company is value-added resellers and providers of Content Providing (CP), Platform Providing (PP) and Service Providing (SP) telecom VAS, such as interactive voice response (IVR) systems, call center management systems and voice over internet protocol (VOIP), and mobile phone VAS, such as short messaging services (SMS) and multimedia messaging services (MMS).
Telecom and Gaming Products and Services: The company’s telecom and gaming products and services include distribution services, multimedia interactive self-service kiosk distribution, online mobile phone distribution, and the design, manufacture, and marketing of gaming machines (Asian multi-player electronic gaming machines). In addition to gaming machines, the company also offers hotel, casino and slot hall operators based in Macau, China and other Asian gaming markets and gaming technology solutions, including gaming related maintenance.
Other Business Services: The company has various subsidiaries that it uses primarily for administration, internal control and acquisition purposes. One of the subsidiaries is engaged in the air-conditioning subcontracting business.
SUBSIDIARIES
The company conducts business operations through the following subsidiaries:
Customer Relationship Management and Outsourcing Services Group
PacificNet Epro Holdings Limited (formerly known as: EPRO Telecom Holdings Limited): PacificNet Epro Holdings Limited (referred to herein as Epro), a company incorporated in the Hong Kong Special Administrative Region of the PRC, is engaged in the business of providing call center and customer relationship management (CRM) services, mobile marketing and promotion services, call center training, management and consulting services, call center software, IVR systems, mobile payment and mobile point of sale (POS) solutions, Internet e-commerce and mobile commerce, mobile applications based on short messaging services (SMS), multimedia messaging services (MMS), outsourced telemarketing and customer support services, and other mobile value-added services (VAS). Epro's business serves Hong Kong and the PRC's telecom operators, banks, insurance, and other financial services companies in the PRC. Epro's clients include telecom operators, banks, insurance and financial services companies in Greater China, such as China Telecom, China Unicom, PCCW, CSL, SmarTone Telecom, Sunday Communications, Hutchison Whampoa Limited, Swire Coca-Cola, Samsung, Dun & Bradstreet, DBS, Dao Heng Insurance, Shenzhen Development Bank, Hong Kong Government Housing Authority and Hong Kong Post.
Pacific Smartime Solutions Limited: Pacific Smartime Solutions Limited (referred to herein as Smartime) is an IT outsourcing company incorporated in Hong Kong that operates through its China subsidiary Pacific Solutions Technology ( Shenzhen ) Co., Ltd. (referred to herein as: Soluteck Shenzhen), which is a provider of outsourcing services, including software development, R&D, and project management services in China. Smartime provides outsourcing services to the telecom, banking and financial services companies in China, including Huawei, IBM, and Bank of East Asia.
PacificNet Solutions, Ltd.: PacificNet Solutions, Ltd. (referred to herein as PacSo), incorporated in Hong Kong, is a subsidiary that specializes in systems integration, software application, and e-business solutions services in Hong Kong and Greater China. The scope of PacSo's products and services includes smart card solutions, web based front-end applications and web based connections to backend enterprise planning systems.
Telecom Value-Added Services (VAS) Group
Guangzhou Wanrong Information Technology Co., Limited (Incorporated in the PRC): In January 2006, the company consummated an agreement to acquire 51% majority interest in Guangzhou Wanrong Information Technology Co., Ltd. (Guangzhou Wanrong), one of the value-added telecom service providers in China. It operates in its VAS including SMS, WAP, JAVA, MMS, IVR, multimedia entertainment download services, media interactive products, mobile email services, life, sports, entertainment, and business information services.
Guangzhou 3G Information Technology Co. Limited (Incorporated in the PRC): In March 2005, the company entered an agreement to acquire a controlling interest in Guangzhou 3G Information Technology Co. Ltd. (Guangzhou3G-WOFE), a PRC registered wholly owned foreign enterprise (WOFE), through the purchase of 51% interest in Guangzhou 3G's parent company, Pacific 3G Information & Technology Co. Limited, a British Virgin Islands Company (Guangzhou3G-BVI). Guangzhou3G-WOFE conducts it VAS operations with Guangzhou Sunroom Information Industrial Co., Ltd. (Sunroom-DE), a PRC registered Domestic Enterprise (DE), through a series of contractual agreements.
Products (Telecom & Gaming) Group
Pacificnet Communications Limited: PacificNet Communications Limited (PacCom), incorporated in Hong Kong, is a wholly owned subsidiary of PacificNet that specializes in the sales and distribution of mobile communication products, accessories, phone cards and mobile SIM cards, and telecom related services in Hong Kong and Greater China.
PacificNet iMobile (Beijing) Technology Co., Ltd.: The company, on February 06, 2006, entered into an agreement to acquire a 51% majority interest in PacificNet iMobile (Beijing) Technology Co., Ltd (iMobile), one of the Internet information portal and e-commerce distributors for mobile phone and accessories and mobile related value-added service providers in China. iMobile operates its e-commerce business via two Internet portals, ‘http://www.iMobile.com.cn and http://www.18900.com’ and one WAP portal ‘17wap.com’ for mobile phone browsing. In addition, iMobile's 18900.com operation is the designated Internet distributor for Motorola, Nokia, and NEC's mobile products in China.
Take1 Technologies Group Limited (Take1): Take1 is a designer, developer and manufacturer electronic multimedia entertainment kiosks, coin-op kiosks and machines, electronic gaming machines (EGM), bingo and slot machines, AWP (Amusements With Prizes) games, server-based downloadable games systems, and Video Lottery Terminals (VLT), such as Keno and Bingo machines, including hardware, software, client- server systems and cabinets. Take1 designs, develops and manufactures multimedia entertainment and communication kiosk products, including photo and video entertainment kiosks, digital camera photo development stations, multimedia messaging services (MMS) and mobile content download stations for mobile phones, and other coin-operated peripherals and consumables. Take1 Technologies is based in Hong Kong and markets and distributes its products around the world, including the USA, Canada, Mexico, Europe, China, and Southeast Asia.
PacificNet Games Limited (PacGames): PacGames provider Asian multi-player electronic gaming machines, gaming technology solutions, gaming related maintenance, IT and distribution services for the hotel, casino and slot hall operators based in Macau, China and other Asian gaming markets. PacGames products include multi-player electronic gaming machines, such as Baccarat, Fish-Prawn-Crab, Sib-Bo Cussec, Roulette, and other multi-player electronic gaming machines, and other legacy slot machines. PacificNet's software R&D and outsourcing unit, Pacific Solutions Technology, is a CMM Level 3 certified software development center with approximately 200 software programmers located in Shenzhen, China, and specializes in the development of client-server application software, internet e- commerce software, online and casino gaming systems and slot machines, banking and telecom applications using Microsoft Visual C++, Java, and other application development tools.
Other Business Entities
PacificNet Limited: PacificNet Limited is incorporated in Hong Kong as a wholly owned subsidiary of PacificNet, Inc. Its primary purpose is to handle the general administrative operations of PacificNet in Hong Kong.
PacificNet Strategic Investment Holdings Limited: PacificNet Strategic Investment Holdings Limited (referred to as PacInvest), is a wholly owned subsidiary of PacificNet that specializes in strategic investment, direct investment, mergers and acquisitions, joint venture development, and other financial and investment services in Hong Kong and Greater China.
Pacific Financial Services Limited: Pacific Financial Services Limited is a wholly owned subsidiary of PacificNet, Inc. Its primary purpose is to provide financial services in Hong Kong.
PacificNet Technology (Shenzhen) Limited: PacificNet Technology (Shenzhen) Limited (referred to as PacSZ) is a wholly owned subsidiary of PacificNet Limited Hong Kong. Its primary purpose is to provide administrative support back-office, IT support and software development services, to support PacificNet's operations in China, and to conduct the general administrative operations of PacificNet in China.
PacificNet Beijing Limited: PacificNet Beijing Limited (referred to as PacBJ) is a wholly owned subsidiary of PacificNet Limited Hong Kong. Its primary purpose is to provide administrative back-office support, IT support and software development services, to support PacificNet's operations in China, and to conduct the administrative operations of PacificNet in China.
Products and Services
GAMING TECHNOLOGY OPERATIONS
Pacificnet Games Limited: PacificNet Games Limited (PacGames), incorporated in the British Virgin Islands (BVI), is 51% owned subsidiary of PacificNet. PacificNet Games Limited (PacGames), is a provider of Asian multi-player electronic gaming machines, gaming software for online and land based casinos, gaming technology solutions, gaming related maintenance, IT and distribution services for the hotel, casino and slot hall operators based in Macau, China and other Asian gaming markets. PacGames products include multi-player electronic gaming machines, such as Baccarat, Fish-Prawn-Crab, Sib-Bo Cussec, Roulette, and other multi-player electronic gaming machines, and other legacy slot machines.
Take1 Technologies Group Limited (‘Take1’, Formerly Known As: Cheer Era Limited): Take1 Technologies, a member of PacificNet group, is in the business of designing and manufacturing electronic multimedia entertainment kiosks, coin-op kiosks and machines, electronic gaming machines (EGM), bingo and slot machines, AWP (Amusements With Prizes) games, server-based downloadable games systems, and Video Lottery Terminals (VLT), such as Keno and Bingo machines, including hardware, software, client- server systems and cabinets. Take1 designs, develops and manufactures multimedia entertainment and communication kiosk products including photo and video entertainment kiosks, digital camera photo development stations, multimedia messaging services (MMS) and mobile content download stations for mobile phones, and other coin-operated peripherals and consumables. Take1 Technologies is based in Hong Kong and markets and distributes its products around the world, including the USA, Canada, Mexico, Europe, China, and Southeast Asia.
Through its gaming technology subsidiaries in Macau, China, the company designs, manufactures and markets electronic gaming machines, bingo machines, AWP and VLTs for customers in gaming jurisdictions in Macau, Asia, and Europe. The company’s video gaming machines include localized Chinese and Asian themes, contents, graphics and digital sound effects and music. The company generates product sales revenues from the sale to casinos and other licensed gaming machine operators of new and used gaming machines and VLTs, conversion kits, including theme and/or operating system conversions, parts; and original equipment manufacturing (OEM) for third parties. The company earns gaming operations revenues from leasing participation gaming machines and VLTs, and earn royalties that it receives from third parties under license agreements to use its game content.
PRODUCT SALES: The company offers various gaming technology products for sale, including:
Electronic gaming machines (EGM): The company’s line of electronic gaming machines combine localized Chinese and Asian themes and content, graphics, digital sound effects and music, and secondary bonus games.
Cabinet Design and Sales, Parts Sales, OEM Games: The company designs and sells gaming machine cabinets, replacement parts.
Other products: The company’s other products include Multi-player Electronic Table Games, Multi-player Electronic Baccarat Machines, Multi-player Electronic Sicbo Machines, Multi-player Electronic Roulette Machines, Multi-player Electronic Fish-Prawn-Crab Machines, Slot Machines, Electronic Bingo Machines, Video Lottery Terminals (VLTs), Server-Based Gaming Machines (SBG), Amusement With Prices (AWP) Machines, Online Gaming Software Development, Client-Server Gaming Systems, and CMM Level 3 Certified Gaming Software Development Center in China.
Gaming Technology Operations
The company’s gaming technology operations business includes:
Participation games: Company-owned gaming machines that the company leases based upon any of the payment methods are referred to as participation games - a percentage of the net win of the gaming machines, fixed daily fees, or in the case of wide-area progressive gaming machines, a percentage of the amount wagered or a combination of a fixed daily fee and a percentage of the amount wagered.
Wide Area Game Network, Community Gaming: Wide Area Progressive Jackpots (WAP) participation games electronically link gaming machines that are located across multiple casinos within a gaming jurisdiction. The linked gaming machines contribute to system-wide progressive jackpots and are designed to increase gaming machine play for participating casinos by giving the players the opportunity to win a jackpot than on a gaming machine.
Local Area Progressive Jackpots (LAP) participation games: A LAP system electronically links gaming machines that are located within a single casino to a progressive jackpot for that specific casino. The company’s LAP products are designed to give the player the chance to win multiple progressive jackpots.
Video Lottery Terminals: The company’s VLTs include video gaming machines featured with localized Chinese and Asian themes and contents, graphics, digital sound effects and music and incorporate the same features from its other gaming machines. The company offers various multi-game and single-themed VLTs. Its VLTs would be operated as interface with central monitoring computers operated by government agencies. Its VLTs typically are located in places where casino-type gaming is not the principal attraction, such as racetracks, bars and restaurants. The company offers VLTs in 2007. VLT operators purchase its VLTs. In other jurisdictions, VLT operators lease the company’s VLTs and pays it a lease rate based on the net earnings of the gaming machine. The company does not include VLTs in its installed base of participation games.
Server-based Gaming: PacificNet’s server-based gaming (SBG) would be the next significant technology development in the gaming machine industry. Server-based gaming initiatives would require regulatory approval in gaming jurisdictions prior to implementation and represent a significant addition to its existing portfolio of product offerings. The company’s implementation for SBG emphasizes localized Chinese and Asian game themes and excitement for the Asian players.
LEGACY BUSINESS: CRM AND TELECOM BUSINESS
The company provides customer relationship management (CRM) and gaming technology, which are expanding business sectors in Asia. The services offered by each of its subsidiaries would be classified within three business groups:
CRM Outsourcing Services
BUSINESS PROCESS OUTSOURCING: Pacificnet Epro Holdings Limited (Epro) operates the company’s call center offering 24 hour staff-answering and automatic-answering service hotlines in its service areas, handling customer inquiries regarding services, billing, and technical support, and customer complaints. The company offers services targeted at corporate customers. The company provides them with dedicated account executives, on-site visits, and systems for collecting comments and handling complaints. Epro provides outsourced call-center services with approximately 15 years of field experience in greater China. Epro's business consists three categories:
Outsourced Call Center Services: Epro's ISO 9001 certified outsourcing contact center hosts approximately 1,000 workstations and 1,200 agents, processing approximately 100,000 calls daily and provides multi-lingual inbound and outbound CRM services. Epro permits its clients to recruit and hire their own personnel to work in its call center, for which Epro provides managerial services, call center seats, and equipment. Its inbound call center services include sales inquiry hotline, telephone orders, technical helpdesk, and customer service. Certain of its clients also engage the company to provide telemarketing and telesales for their products and for promotions, to conduct market surveys, and to provide administrative functions, such as appointment setting.
Training and Consulting Services: The Epro Call Center Training Institute (ECCTI) provides Contact Center Management Consulting and Training services, which helps clients to maximize the return on investment of their CRM operations. Through ECCTI, the company provides on-site training and consulting services, and it offers courses and seminars for call center managers and professionals, sales representatives, customer service representatives and telemarketing service representatives and trainers.
Call Center Management Software Products and Solutions: WISE-xb Call Center agent performance management and reporting software is Epro's proprietary call center management software. Wise-xb has been installed in approximately 60 customer sites in the PRC. Epro's products also include Automatic Call Distribution (ACD) System, Unified Messaging System (UMS), SMS, and VAS.
INFORMATION TECHNOLOGY OUTSOURCING: Pacific Smartime Solutions Limited (Smartime), Through Pacific Solutions Technology (Shenzhen) Company Limited, its operating subsidiary in Shenzhen, China, provides outsourced consulting services and programming services, including software development, R&D, and project management to telecom, banking and financial services companies that include Huawei, IBM, Bank of East Asia and others.
Pacificnet Solutions Limited (PacSo): PacSo specializes in systems integration, software application, and e-business solutions services in Hong Kong and Greater China. The PacSo's products and services include smart card solutions, web based front-end applications and web based connections to backend enterprise planning systems.
TELECOM VALUE-ADDED SERVICES: GUANGZHOU3G-WOFE is a value-added telecom and information services providers in China with both voice (IVR and call center) and data (SMS, MMS, WAP, JAVA, GPRS) connections to the four major telecom operators - China Mobile, China Unicom, China Telecom, and China Netcom, covering both mobile and fixed-line networks. Guangzhou 3G also offers various IVR and other wireless and fixed-line, value-added telecom services including color ring back tone (CRBT) services, background music (BGM) services, VICQ mobile instant messaging services, sports and soccer news, weather forecasts, stock prices, jokes, short stories, dramas, songs and mobile karaoke, mobile TV, games, entertainment, and community-oriented services, such as chat line and dating services. Mobile and fixed-line phone users would access Guangzhou 3G IVR services through four telecom operators' networks.
TELECOM PRODUCTS: Pacificnet Communications Limited (referred to herein as PacCom), incorporated in Hong Kong, is a wholly owned subsidiary of PacificNet that specializes in the sales and distribution of mobile communication products, accessories, phone cards and mobile SIM cards, and telecom related services in Hong Kong and Greater China.
IMOBILE: iMobile's Internet portal has been traffic sites and has achieved approximately 5.4 million registered online users and approximately 1,200,000 active users, with 10 million daily page views and 40,000 blog postings per day, which makes iMobile the top ranked site in its category in China.
Significant Events
Acquisition of Guangzhou Wanrong Information Technology Co., Limited: In January 2006, the company consummated an agreement to acquire 51% majority interest in Guangzhou Wanrong Information Technology Co., Ltd. (Guangzhou Wanrong), a value-added telecom service provider in China.
Acquisition of Pacificnet Imobile (Beijing) Technology Co., Limited: In February 2006, the company acquired 51% majority interest in PacificNet iMobile (Beijing) Technology Co., Ltd. (iMobile), one of the Internet information portal and e-commerce distributors for mobile phone and accessories and mobile related value-added service providers in China.
Additional Acquisition of Pacificnet Games Limited: In November 2006, the company acquired an additional 6% interest in PacificNet Games Limited (PacGames). The company owns 51% of PacGames.
Addditional Acquisition of Take1 Technologies in Q1 2007: In January 2007, the company entered into a Securities Subscription Agreement to acquire an additional 31% interest in Take1 Technologies Limited (Take1). PacificNet has become the majority and controlling shareholder of Take1 with its ownership percentage increased from 20% to 51%.
Forming a Call Center Joint Venture with Bellsystem24 in Shanghai, China: In January 2007, the company entered into a joint venture agreement with Bellsystem24, the telemarketing call center in Japan, to form a new joint venture company called BELL-PACT Consulting Limited. The new joint venture company is jointly owned 40% by PacificNet and 60% by Bellsystem24.
Sale of Guangzhou 3G: In April 2007, the company’s wholly owned subsidiary, PacificNet Strategic Investment Holdings Limited, entered into a stock purchase and sale agreement with Heyspace International Limited to sell its 51% interest in Guangzhou 3G's parent company, Pacific 3G Information & Technology Co. Limited.
Customers
The company’s clients include telecom companies, banks, insurance, travel, marketing and business services companies and telecom consumers in Greater China, such as China Telecom, China Mobile, Unicom, PCCW, Hutchison Telecom, Bell24, Motorola, Nokia, SONY, TCL, Huawei, American Express, Citibank, HSBC, Bank of China, Bank of East Asia, DBS, TNT, Hong Kong Government, and hotel-casinos in Macau and Asia.
Outsourcing Services (including BPO, ITO, and Call Center Services) Customers: The company's customers in the outsourcing services group include - PCCW Limited, Bank of China Group Insurance Company, American Express Bank, Acnielsen (China) Ltd., HSBC, SONY, BELLSYSTEM24, MCDONALD'S, Hong Kong Government, and China Government.
Telecom Value-Added Services Customers: The company’s telecom value-added services customers include China Telecom, China Netcom, China Mobile, China Unicom, Nokia, and Motorola.
Products (Telecom & Gaming) Customers: The company’s gaming customers include casinos, hotels, gaming operators, bingo, slot and AWP operators in Macau, SE Asia, and Europe. The famous casinos that are using its gaming products include - Sociedade de Jogos de Macau (SJM), Sociedade de Turismo e Diversoes de Macau (STDM), Casino Lisboa, Holiday Inn Macau, Jai Alai Casino Macau, Galaxy Waldo Casino Macau (Galaxy Entertainment Group), and other land-based gaming operators and bingo operators in the Philippines, Asia and Europe. The company’s telecom products customers include - China Telecom, China Netcom, China Mobile, China Unicom, and major mobile phone manufacturers such as Motorola and Nokia.
Competition
The company’s competitors include International Game Technology (IGT), Shuffle Master/ StarGames, WMS Industries, Bally Technologies (formerly Alliance Gaming), Aristocrat Technologies, Novomatic, Atronic Casino Technology, and Lottomatica’s acquired subsidiary G-Tech Holdings.
In the video gaming machine market, the company competes with market IGT, and Aristocrat Technologies, Bally Technologies, Atronic Casino Technology, Progressive Gaming, Konami, Franco and Unidesa. In the VLT market, it competes primarily with IGT, G-Tech Holdings and Scientific Games. The company’s major competitors also include - Chinasoft International Limited; TOM Online, Inc.; SINA Corporation; International Game Technology; and Aruze Corp.
History
Pacificnet, Inc. was incorporated in 1987.
