No Random Walking!

Heard in a conference in Shenzhen, attended by private investors and CEOs of startup companies , on how to survive the recession for startup companies in semiconductor chip industry: (some are my translation from presentations given in English)

“现在是研发（R&D）的最佳时候，而不是扩大生产的时候”。

“山寨化不等同于低质低价，山寨化不是目的，而是手段。山寨化的目的是利用自己在成本，市场，语言，以及售后服务等方面的优势，降低以前被西方控制的技术门槛以及系统合成门槛，达到迎头赶上甚至创新的目的。”

“订单下降，但宣传不能停止。要用最少的成本继续推销你产品的价值”。

“危机中资金不够的公司将倒闭或被兼并，使得那些资金充足的公司轻而易举就获取了更大的市场份额”。

“新能源技术和国防技术前途光明”。

“研发新药必须从蛋白质(protein)层面而非基因(gene, DNA)层面上寻求答案”。

“创业者从一开始就要有清晰的公司行政和股权结构，要有健全的财务档案”。

“公司被收购或上市时会有很多陷阱，需要很好的法律咨询，切勿为省钱请便宜律师”。

“不能从客户身上挣钱的话，不妨试图从同行那里挣钱”。

“It was the best of times. It was the worst of times - Charles Dickens"。

[Update: Just one day after the following post, it appears that UTStarcom becomes one of the first beneficiaries from CT's 3G rollout: UTStarcom Selected to Deliver First Mobile TV System in Hainan Province. UTSI's stock is up over 20% on the news. More thoughts on UTSI to come.]

China Telecom surprised many this week by starting 3G services in 120 cities nationwide, beating China Mobile's much hyped and debated 3G rollout which is still only available in a few cities.

I see explosive growth ahead for 3G equipment and services in China, if China Telecom's 3G rollout runs smoothly. You only need to spend some time in a bus or subway in a Chinese city to see the demand. Many people in China spend hours commuting between office and home. They kill time by accessing online news, chatting with friends using QQ or reading e-books, now enabled by GPRS technology of China Mobile or CDMA-1 of the former China Unicom, for about 5 yuan per month. China Telecom uses EVDO technology for its new 3G service, which is said to be about 20 times faster than GPRS or CDMA-1 [I've used both, they are as fast as a 64k modem connection we used to have in the late 1980s.]. China Telecom plans to charge between 150 to 300 yuan per month for the data services, but I see the cost coming down in a few years.

Not surprisingly China Telecom's stock (CHA) has performed much better than China Mobile (CHL) and China Unicom (CHU) in last three months.

In other developments ---

Shanda's stock (SNDA) reached all-time high today, thanks to the initial success of its newly-acquired online game, while Nine City (NCTY) crashed further after it lost to NetEase the right to operating one of the hottest online games in China.

The following charts, which incorporated some of the new algorithms that aimed to spot long-term trend reversal, show that there were clear signs long before the US markets caved in in last September. The trouble started one year earlier - in September 2007:

Technology stocks have performed well in US lately (relative to other sectors), but that red dot at the tail end, i.e, the current time, on the chart above looks ominous. [Need to update the chart with end-of-the-week data].

Similarly there were clear signs before China market's 70% decline in 2008 and just before an equally-powerful recovery since last November:

the Shenzhen composite index is up over 70% and there is no sign yet that this trend is going to stop.

The market meltdown hasn't all been bad for me. For one thing it offered me an opportunity to test some of the technologies/processes I've developed over the years. Some worked, others didn't and still others have emerged out of the new experience and new data.

[Cautions: 1) The techniques do not work all of the time. 2) These signals are for long-term purpose and the markets may go the opposite directions in short term. 3) Not all chart options are available in the public version].