Google/China Telecom Form Online Ad Alliance

Google Inc. signed an agreement with China Telecom to sell online advertising on 400 of its websites. The deal gives Google access to China Telecom's network of websites that provide local business directories and other services. China Telecom boasts a total of 30.5 million broadband users. The companies will share revenues from the online ads; financial terms were not given. This is the third partnership Google has formed with a Chinese carrier over the past year as it seeks to gain traction in the world's number two internet market; Baidu.com's market share of 58% in Q4 2006 was more than triple Google's 17%. Credit Suisse Group estimates online ad sales in China may hit $3.1 billion by 2011, seven times 2005's $420 million figure. Google also said today it is working with Intel Corp. to make it easier for chip resellers and computer makers to purchase online advertising. Internet analyst Foo Xinghua: "This is a big win for Google because Microsoft and Baidu both wanted this agreement with China Telecom... China Telecom likely picked Google because they have better technology for Web ads."

Sources: Shanghai Daily, Bloomberg
Commentary: Amazon/eBay, Yahoo/Google: Internet Trading Pairs With Good Potential • Setting the Record Straight: Baidu is No Google • Online Campaigns: The New Way Marketers Can Reach Out to Chinese Consumers
Stocks/ETFs to watch: Google Inc. (GOOG), China Telecom Corp. Ltd. (CHA), Intel Corp. (INTC), Baidu.com Inc. (BIDU), Microsoft Corp. (MSFT). ETFs: iShares Trust FTSE-Xinhua China 25 Index Fund (FXI), PowerShares Golden Dragon Halter USX China Portfolio (PGJ), Internet HOLDRS (HHH)

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