Chinacnet hit the reef: secretly downsizing and suspension of employee bonuses

[Sohu IT News] (WEN/Lin Fenglei) on August 18, April 28, sources told Sohu IT that the Chinese network portal business is being adjusted and laid off, and yesterday, chinacnet has also announced the suspension of internal quarterly bonuses to save money.

According to insiders of the Chinese network, since 2008, the Chinese network has been compressing the compilation and secretly laying off employees. It is understood that since the end of 2007, the number of employees of chinacnet has been reduced by more than 40%, from more than 300 to about 170. Since the end of 2008, the pace of layoffs on the Chinese network has been accelerating. In the past few months alone, nearly 20% of layoffs have been laid.

It is reported that in July 2008, the Chinese network abolished the broadband department. Subsequently, since the end of 2008, chinacnet has reduced the number of employees in most departments, while the number of employees in the game Department and other marginalized departments in the internal sector has been reduced by more than half.

"At the end of 2007, chinacnet also occupied a three-story office building, and now our remaining staff is just packed with one of them ." A Chinese network employee said with emotion.

Recently, after chinacnet announced its suspension of quarterly bonuses, many employees fell into a low mood. "After a hard quarter, I suddenly told us that there is no bonus, which is unacceptable. I wonder if the company will go down further in the future ." Said chinacnet employee.

In addition to compressing the bonus, the compensation for layoffs also shows that the company is in some financial dilemma. According to Chinese network's layers, Chinese network only compensated its employees for one month, while compensation for some employees who have been internships for nearly half a year was even less pitiful.

"The layoff and suspension of bonuses of chinacnet are closely related to its huge losses ." Lu Benfu, senior Internet analyst, said.

According to the financial report, CNET lost 2008 Hong Kong dollars in 26.78 million, and 2007 lost 0.6 billion Hong Kong dollars. However, CNET's parent company, CNET Investment Group (CDC), also suffered huge losses. Financial reports show that the fourth quarter net loss of CDC was $84.3 million.

When receiving a message from Sohu IT, several industry analysts said that chinacnet had already been marginalized and this situation is normal now.

An analyst who asked not to be named said that the board of directors of the Chinese network group is not focusing on Internet businesses, games and software businesses, but on capital operations and financing.

In 1999, chinacnet went public in NASDA and raised $86 million. It was called "The first stock of China concept". In January 2000, chinacnet again issued new shares and raised $0.3 billion from Nasdaq; then in March 2000, chinacnet split its Hong Kong Net International Network Company (HK: 8006) and listed it on the Hong Kong growth enterprise market, raising $0.17 billion. Chinacnet once had $0.56 billion in cash in its heyday.

Subsequently, chinacnet's capital operation has not stopped, for example, crazy acquisition of software business companies, shares in online gaming companies. The internal services of chinacnet are very complex.

In an interview with Sohu IT in 2007, Chen Xiaowei, then president of chinacnet, said that chinacnet is planning to split its online game business into public offerings. However, this listing plan has not yet been implemented.

Surprisingly, despite a loss in its Hong Kong-listed Chinese Internet business, the Chinese net announced on February this year that it would distribute a special dividend of $3.66 per share to shareholders. So far, according to estimates, chinannet will pay a dividend of 0.392 billion Hong Kong dollars for this purpose. The company's founder, Ye Keyong's family, will receive nearly 0.31 billion Hong Kong dollars, ye Ke Yong himself received 27.8 million Hong Kong dollars, and more than 30 million Hong Kong dollars will be allocated to the account of 7 executives of China net.

In the eyes of the top management of the Chinese Web portal business, Ye Ke Yong, CEO of the Chinese web, does not seem to be very concerned about the performance of the Internet business. "He sees Internet business managers at the Hong Kong horse racing club every time and often scales up his family ." According to a Chinese net insider.

"In recent years, Sohu and other portal websites have emerged, while the absent-minded Chinese network has become increasingly marginalized. The lack of competitiveness is an important reason for their layoff and bonus deduction ." Analysts said.

According to financial figures, CNET's total revenue in 2008 was USD 13.7 million. In the same period, in 2008, the advertising revenue of Sohu portal was USD 0.1759 billion, with a total revenue of USD 0.4291 billion.

With regards to layoff and bonus deduction, Sohu IT called Wu Yali, vice president of Zhonghua network and spokesman. As of press time, Wu Yali did not respond to the above message.