Already delayed and scaled-back, the Netease IPO was priced at $15.50 a share and ended its first day of trading at $12.125, recovering somewhat on Wednesday to $13.125. That reception could bode ill for rival China portal Sohu.com, which is set for a July 12 Nasdaq IPO, analysts said. "There's only room for so many horizontal portals in any market, and China won't be an exception to that," said Stephen Moss, chief executive of online ad firm DoubleClick Asia, who said he is bullish on China's longer-term online ad prospects. "You'll have a couple of dominant horizontal portals - three maybe - but I don't think the market can sustain the number of portals you have there today," he said. Some analysts said China is such a large and diverse market it will be able to support five or six portals.

The future isn't now
Besides Netease and Sohu, Sina.com, Chinadotcom, upstart Tom.com and US-based Yahoo! Inc are all portals slugging it out for "eyeballs" in China's fast-growing Internet market. US-based Lycos Inc, which is awaiting a license from the Beijing government, also said it expects to enter the market soon. "The China portal market was crowded a year-and-a-half ago," said Joseph Sweeney, research director at the Gartner Group, who forecast "a lot of bloodletting" among greater China portals.

Analyst Pete Hitchen of Salomon Smith Barney said portals outside of the top three "are going to be fighting for breath." Still, the number of Internet users in China is poised to explode, from 7.2 million users this year to 44.2 million in 2005, Salomon Smith Barney recently forecast. But Salomon Smith Barney also predicted mainland online ad revenue would total just $26 million next year - at the low end of recent estimates. That figure could grow to $111 million in 2005, the report said. China e-commerce revenue, meanwhile, will total just $4 million this year and $15 million next year before mushrooming to $496 million in 2004 and $1.25 billion in 2005, according to Salomon Smith Barney's forecast.

-- Reuters