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Unease as Netease Awaits NASDAQ Delisting Decision Over Reports
The NASDAQ-listed Chinese dotcom Netease may be delisted this week, although company leaders hope to avoid that fate.
The firm is being threatened with the move after failing to submit an accurate 2000 financial report for seven months. An audited report was filed on Friday. The earlier report was deemed false in May.
"We have submitted our financial report for 2000 and we will try to prove that we are honest in handling the false reporting affair,'' Netease founder and acting CEO William Ding said.
The audited Netease report released on Friday said it adjusted its revenues in the 2000 fiscal year from the previous US$7.9 million to US$3.7 million, a 53.2 per cent decrease. The company's net losses hit US$20.4 million, not the US$17.3 million previously reported. the report said.
Netease's net cash balance remained unchanged between the earlier and present report at US$85.6 million.
Netease officials said they still must adjust its first-quarter report and release its second-quarter financial conditions. Both have been under investigation for more than three months, so the company may be subjected to more NASDAQ pressures.
No date was given for the release of those reports.
"The possibility of Netease's delisting is slight, although it may receive punishments from the NASDAQ for its wrongdoings,'' said Lu Benfu, a senior Internet researcher with the Chinese Academy of Social Sciences.
Other NASDAQ problems are on the horizon. The price of Netease stock has been below US$1 for more than 30 consecutive trading days, which could also prompt delisting. The stocks ended at US$0.65 on Friday, dropping 4.5 per cent that day.
Its listing qualification and reputation among Chinese Internet users remain attractive to investors, Lu said.
"The price of Netease is already very low, so it's not a bad time to buy,'' Lu said.
Still, Lu warned, it is critical for potential investors to learn the real financial situation of the company before buying.
NetEase.com Faces Nasdaq Delisting
NetEase.com, Inc, a leading Internet technology provider in China, announced Monday that on July 19, 2001, it received notice from The Nasdaq Stock Market that Nasdaq intends to delist the company's American Depositary Shares from the Nasdaq National Market at the opening of business on July 27, 2001.
In the notice, Nasdaq asserted that NetEase.com is in violation of Nasdaq Marketplace Rule 4310(c)(14) because it has not yet filed with Nasdaq and the US Securities and Exchange Commission its Annual Report on Form 20-F.
Source: China Daily
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