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Sina CEO's Resignation, Signal for Change?
The resignation of CEO Wang Zhidong could be a sign of major changes at top Chinese Internet portal Sina.com, according sources and analysts.
A statement released by Sina on Sunday said Wang had resigned his post as CEO, president and director of the board out of concern "for his personal interests outside of Sina."
The statement also revealed the portal would cut 15 per cent of its 600-strong work force, or roughly 90 employees, by the end of this month to reduce costs.
Wang Zhidong and Sina spokespersons declined to specify the reasons for Wang's resignation, but sources in Beijing said they thought Wang's resignation could be related to major changes taking place within Sina.com.
According to an unidentified Sina executive, the company has been in talks with Chinadotcom, a Hong Kong-based Internet portal which was listed on the NASDAQ together with Sina, about a possible merger.
The source said Sina's decision to seek a merger with Chinadotcom was made before the June 1 meeting in the United States, at which Wang resigned.
He said one of the factors for the appointment of the new CEO -- Daniel Mao -- is his experience working for US investment bank Walden. Mao's understanding of capital operations will likely prove helpful in any merger talks.
The Jinan-based Economic Observer also cited a senior source from Chinadotcom who revealed the two companies had reached a co-operation agreement and who said the Internet content department of Chinadotcom would be moved from Shenzhen to Beijing to integrate with that of Sina.
However, both sources said since the two companies were both listed on the NASDAQ, it could take a long time to finish a merger.
A spokeswoman for Chinadotcom said she did not know anything about the so-called merger, adding that such a deal was not "practical."
The Sina spokesperson declined to make any comments aboutthe topic.
Lu Benfu, director of the China Internet Development and Research Centre of the Chinese Academy of Social Sciences, also described the rumours as impractical. He explained that Wang's resignation and Sina.com's trimming of its work force could be explained simply as a disagreement between Wang and the board of directors over the dotcom's operations.
"Sina's stocks were not performing well," Lu said. "Under Wang's leadership, the company still relies heavily on advertising for revenues and the board might be impatient with that present strategy."
He also pointed out that Wang and the board of directors also had different opinions on reducing the work force.
"Wang was one of Sina's founders -- firing people who have spent a long time at the company might not have been something Wang wanted to see," he said.
Lu said he believed a major change of strategy may be inevitable for Sina and speculated that Daniel Mao may just play a transitional role.
The updating of news on Sina.com was much less frequent than usual on Monday morning, hinting that Wang's resignation has had an effect on operations. The company nevertheless plans to hold a press conference today to launch an online education programme.
Sina's shares ended at US$1.74 on the NASDAQ on Friday. They have fallen more than 40 per cent in the past five months.
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