3SOF

Might be an opportunity @ lower fibs retracement from current 4.12 area-
@ 38.6% fib retracement @ 3.2
@ 61.8% retracement of 2.27 and
@ 78.6% @ 1.61. ....

In the Oct/Nov. dilution of 4.1 million shares @ 4.3$ -- NVAX retraced down to 2.73 area from 6$ ~ 61.8% fibs retracement to 2.73 area -- (55% hair cut from 6$) before bounced to 4.88 area -- those holders prolly took the opportunity to dump at above 4.3$...

Comes January who knows - but looks like NVAX mgmt want to pay up for some new year bonuses!

So watch out those fibs levels @ 38.6% and 61.8% retracements

Cheers!
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Novavax files $100 mln equity shelf offering
Wed Dec 21, 2005 04:31 PM ET
WASHINGTON, Dec 21 (Reuters) - Biotech company Novavax Inc. (NVAX.O: Quote, Profile, Research) on Wednesday said it may periodically sell up to $100 million in common and preferred stock and warrants.

The company said it plans to use the proceeds for general corporate purposes, which may include clinical development of avian and seasonal flu vaccines, internal research and development, expansion of facilities and general working capital.

If filed a shelf registration statement with the U.S. Securities and Exchange Commission. Under a shelf registration, a company may sell securities in one or more separate offerings with the size, price and terms to be determined at the time of sale.

Zacks.com Announces That Gregory Spear Highlights the Following Stocks: Novavax, Vical, and Crucell



BusinessWire
All Business Wire News

Gregory Spear and his team, from the Spear's Security Industry Analyst newsletter, offer insight on three avian flu related stocks. Learn about Novavax NVAX, Vical VICL, and Crucell CRXL. Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=84

Highlights from the October 19 Featured Expert column by Gregory Spear include:

Commentary

The bird flu stocks are definitely experiencing a mini-mania and that creates a certain danger, especially for stocks of companies that don't have P/E ratios greater than zero. Momentum traders are notoriously fickle and momentum always operates in both directions, up and down. Thus, several of Gregory Spear and his team's new buys have limits on them.

That said, one of the avian flu companies Spear and his team have been watching, Novavax NVAX, experienced a volume surge late in the day on Monday suggestive of institutional accumulation. Why? In a study published in the medical journal Vaccine, researchers found that Novavax`s Virus-Like Particle, or VLP, flu vaccine protected animals that were exposed to a strain of avian flu. The VLP components are nano-sized proteins synthesized from cloned virus genes that quickly stimulate an immune reaction. Moreover, their VLP technology uses a scalable, high volume manufacturing process with short production lead times.

Vical VICL is working on a variety of vaccines using a proprietary DNA technology. Conventional vaccine development and manufacturing technologies are slow, often taking several years to refine and ramp up after the emergence of a new pathogen. Vical's DNA processes allow initial production of vaccines much more quickly, in as little as 3 months. The company has also received funding from DARPA to scale up manufacturing processes, potentially allowing production of millions of doses in a matter of weeks.

Crucell CRXL owns patents on the most efficient way to make commercial quantities of vaccines without injecting chicken eggs. The company provides vaccine technology and services to 40 partners worldwide, including most of the large players like Merck, Sanofi-Aventis and GlaxoSmithKline. Crucell reported great revenue gains and a lower loss in the most recent quarter.

Read Gregory Spear's complete commentary and take a look at other stocks by clicking: http://at.zacks.com/?id=85

About Zacks Featured Experts

Successful investing requires professional advice from knowledgeable experts who can help investors achieve their financial goals in good markets and improve their portfolios, especially in bad ones. That is why Zacks Investment Research has assembled the best investment experts in the business to offer their powerful advisory newsletters on all the major investment topics: Stocks, Mutual Funds, Bonds, Options, Futures etc.

Additional recommendations from Zacks.com Featured Experts are highlighted in the free investment newsletter, Profit from the Pros. Each issue highlights several Featured Experts in this free e-mail newsletter. Register for a free subscription to "Profit from the Pros" at: http://at.zacks.com/?id=86

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 to compile, analyze, and distribute investment research to both institutional and individual investors. The guiding principle behind Zacks work is the belief that investment experts, such as brokerage analysts and investment newsletter writers, have superior knowledge about how to invest successfully. The goal is to unlock these pros' profitable insights for individual investors hard-pressed to find this valuable information in one source. A free subscription to "Profit from the Pros" weekly e-mail newsletter provides the best way to use these experts' insights for more profitable investing. Register now for a free subscription to the Profit from the Pros newsletter at http://at.zacks.com/?id=87

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact Information: Zacks.com Alex Kolb, 312-630-9880 Ext. 149 [email protected] www.Zacks.com

http://news.moneycentral.msn.com/ticker/article.asp?Feed=BW&Date=20051021&ID=5212296&Symbol=US:NVAX

WWAT on Barrons... here is the world article

Shining Everywhere: The Next Generation

Investors interested in solar stocks should consider reaching beyond the U.S.,
where the primary pure plays are relatively smaller. Some of the world's
largest solar companies are based in Germany and Japan, both of which have
provided rich subsidy programs designed to speed adoption of the technology as
an alternative to fossil fuels. Here's a quick rundown on some of the world's
solar stocks.
Recent
Company Price Ticker/Country Business
Arise Technologies C$0.25 APV/Canada Small-cap renewable-energy firm
outfited Canada's first solar neighborhood.
ATS C$13.78 ATA/Canada Parent of Photowatt, largest solar operator in
France.
Carmanah C$3.15 CMH/Canada Canadian firm builds integrated solar products,
such as bus shelters, streetlights.
Conergy €84.35 Germany World's largest wholesaler of solar power.
Cypress Semi $15.40 CY/U.S. Parent of SunPower, solar-cell company now in
registration for intitial offering.
Daystar 13.76 DSTI/U.S. Maker of alternative non-silicon solar systems;
shares have sextupled in 12 months.
Energy Conv Devices 37.66 ENER/U.S. Alternative energy company includes
solar arm.
Evergreen Solar 7.59 ESLR/U.S. Solar-wafer maker uses unique string ribbon
wafer process, requiring less raw material.
Kyocera 7.20 KYO (ADR)/Japan World's second-largest solar company; though
only small percentage of overall revenues.
MEMC 19.43 WFR/U.S. One of the world's largest silicon-wafer producers.
Motech TW $380.00 Taiwan Taiwanese company makes cells and modules.
Phoenix SonnenStrom €14.94 Germany German solar systems wholesaler sales
grew 57% in 2005's first half.
Q-Cells – IPO Speculated/Gr Germany's largest solar-cell producer seen going
public soon.
Renewable Energy – IPO Speculated/Gr Ranks among leaders in raw silicon,
solar cells; IPO considered imminent.
Sekisui Chemical ¥743 Japan Manufactured home builder; 60% include solar.
Sharp ¥1644 Japan World's largest solar-power company.
S.A.G. Solarstrom €7.92 Germany Produces solar systems; came public in 2004.
Solar Integrated Tech 168 pence U.K. U.K. maker of industrial solar systems.
Solar-Fabrik €12.92 Germany German maker of solar modules, inverters,
accessories and systems.
Solartron 11.8 baht Thailand Leading Thai solar-power company.
Solarworld €113.10 Germany Largest pure-play solar-power company by market
cap, slightly over $1 billion.
Solco A $0.35 Australia Australian maker of solar water heaters and pumps.
Solon €28.68 Germany Producer of solar inverters and modules.
Spire $10.52 SPIR/U.S. Leading supplier of equipment and technology to make
photovoltaic power cells.
Sunways €13.00 Germany Producer of solar cells and inverters.
Tokuyama ¥1031 Japan Diverse chemical company is Japan's largest silicon
producer.
WorldWater $0.59 WWAT.OB/U.S. Micro-cap provider of residential,
agricultural solar systems, including solar pumps and motors.
XsunX $0.23 XSNX.OB/U.S. Development-stage company focused on technology for
producing solar power on glass.

Sources: Corporate Websites, CLSA Asia-Pacific Markets, Yahoo Finance

The Next Generation

Though the number of publicly traded solar companies remains small, venture
capital firms are funding a steadily increasing number of new players. A
sampling of some recent fundings in the sector:
Company Business Amount Investors
COLED Tech Developer of materials and processes to manufacture organic
light-emitting diodes. $1,200,000 ITU Ventures, HCF Partners
CSG Solar AG Developer of thin-film solar-module technology. $31,135,000
Apax Partners, Good Energies, Q-Cells, Renewable Energy, IBG
Nanosolar Developer of nanostructured solar cells. $20,000,000 Mohr Davidow
Ventures, Mitsui & Co., Onpoint Tech, Benchmark Capital, U.S. Venture Partners
Miasole Manufacturer of thin-film solar cells. $16,000,000 Kleiner Perkins
Caufield & Byers, Bessemer Venture Partners
Konarka Tech Developer of technology for producing photovoltaic energy
products. $7,000,000 New Enterprise Associates, Draper Fisher Jurvetson,
Vanguard Ventures, others
HelioVolt Developer of solar-energy technology. $8,000,000 New Enterprise
Associates
Energy Innovations Developer of low-cost rooftop photovoltaic solar
concentrator systems. $16,500,000 Mohr Davidow Ventures, Idealab
Advent Solar Developer of photovoltaic cells, modules and integrated products.
$8,000,000 EnerTech Capital, CMGI, @Ventures, Fort Washington Capital


Source: Cleantech Venture Network


A Place in the Sun

By ERIC J. SAVITZ

SUNSHINE IS FREE. That simple fact is what gives the solar-power business so
much allure. You don't have to extract it from the ground, it's not subject to
embargos, it's nonpolluting and if the supply ever ran out, we'd have a bigger
problem than high gasoline prices. On the surface, at least, it certainly seems
like an obvious way to address some of the economy's ongoing energy problems.

It's also well understood: America has been tinkering with solar power for
decades. In a symbolic act during the 1979 energy crisis, Jimmy Carter
installed solar panels on the roof of the White House. (He also urged us to
wear more sweaters.) But as the crisis faded, so did interest in solar. After
Ronald Reagan and his brown suits moved into 1600 Pennsylvania Ave., the White
House solar panels were removed -- and solar power resumed its previous
position as a technology considered more suitable for calculators and pool
heaters than powering the grid.

But with talk growing of a new energy crisis, thanks to record prices for crude
oil and gasoline, solar companies have been attracting renewed attention.
Michael Rogol, an analyst with CLSA Asia-Pacific Markets who tracks the global
solar market, says the stocks in the sector are up about 150% over the past 12
months. Wall Street is ramping up to slake the thirst for solar stocks with
more supply: SunPower, a subsidiary of chip-maker Cypress Semiconductor, has
filed to come public, as has Q-Cells, a large, fast-growing German solar-cell
company that Rogol calls "the Netscape of the solar sector." Another large
player, Norway's Renewable Energy Corp., or REC, has also said it plans an IPO.

Encouraged by this new enthusiasm for the sector in the public markets, venture
capitalists have been funding a steadily increasing number of solar-related
start- ups, sinking more than $100 million into new solar companies in the
first half of 2005. (See table: The Next Generation.) The recently passed
energy bill provides some modest incentives for solar power, and many states
have installed solar-friendly tax incentives of their own.

While solar represents a tiny percentage of global power generation, it is
growing rapidly. Worldwide, solar power production this year should reach 1.5
gigawatts, double the 2003 level. By 2010, according to CLSA, the total should
quadruple to six gigawatts. Industrywide revenue, the firm predicts, will grow
from $11 billion this year to $36 billion in 2010.

Now that's some nice, Google-style growth. But investing in the sector isn't
easy. Many of the biggest producers of solar cells are actually divisions of
much larger companies -- BP, Sharp, Shell, General Electric -- that you'd
hardly consider pure plays. And most of the more focused solar companies, with
a few exceptions, are still private or trade outside the U.S.

Meanwhile, just as demand seems poised to take off, the solar industry finds
itself grappling with a shortage of polysilicon, the raw material used to
create both silicon cells and semiconductors. At least for the next few years,
the industry's growth rate will be muffled not by any shortage of demand, but
rather by insufficient supply. In all, finding good investments will require
ingenuity.

The basic idea of solar power is simple. Energy from the sun strikes a silicon
panel, releasing electrons and creating electricity. Those panels are connected
together in modules, which can provide power standing alone or hooked into the
electrical grid. One of the standard, but magical, pitches made by solar
equipment providers is the image of your electricity meter running backwards:
When the sun is shining and demand for power is high, you can be selling power
back to the grid, while others buy it.
[Sun]
The Bottom Line: Though solar stocks have surged over the past year or so, some
could rise further. Some analysts think MEMC, the largest-capitalization play
on solar, could jump another 50%.



What's not so simple is the economics of solar power. For starters, while the
sun's energy is abundant, it isn't available 24/7. (You may be familiar with a
fascinating natural phenomenon known as "night," and another frequent but less
predictable factor called "clouds.") Ergo, solar power is more practical in
some places than others. Also, silicon panels are rather inefficient: Most of
the potential energy in sunshine is lost. So to create meaningful amounts of
electricity from solar panels, you need lots of them.

The good news is that as the industry has grown, the retail cost of solar
energy has dropped an average of 6%-7% a year for the past 15 years, says Rhone
Resch, director of the Solar Energy Industries Association, a trade group.
Within 10 years, Resch says, solar should reach parity with the average retail
electricity price.

"This is not your grandpa's solar," says Ron Pernick, the principal of Clean
Edge, a Portland, Ore.-based research firm. He figures the costs of production
have been dropping about 18% for every doubling of output -- and output is
doubling every two or three years. Still, the industry isn't at parity yet.
Resch says solar power, at 22-23 cents per kilowatt, costs about twice as much
as the average retail price of electricity in the U.S.

Keep in mind, too, that installing a solar system requires a large upfront
capital investment that may require some creative financing. Putting a solar
system on your roof with enough cells to run your house could set you back
$25,000-$30,000. You do get to lock in costs, though: Resch likens it to buying
a car and paying for 25 or 30 years of gasoline upfront.

One small company, Sun Edison, has set up an intriguing scheme where it places
solar systems on the flat roof of a supermarket or big-box retailer, then sells
the power back to them. The equipment itself is owned by an investor -- in each
of the four installations they've completed, it's Goldman Sachs -- which
benefits from tax incentive programs. Sun Edison's payoff comes years from now
as it gradually buys back the equity and associated income in the equipment.

Fortunately for the solar-power industry, a number of state and national
governments have decided that there is a public good in developing alternatives
to fossil-fuel based energy production, and have installed lucrative subsidy
programs designed to overcome the cost differential.

The most substantial incentives have been offered by Japan and Germany. While
neither country is among the world's sunnier climes, both have become the
global leaders in solar power. So it should be no surprise that many of the
more successful publicly held solar companies are traded in Frankfurt or Tokyo,
not New York. (See table: Sunny Prospects)

For domestic solar advocates, that situation is a source of no little
frustration. "Our resources are orders of magnitude better," sighs the trade
group's Resch. "But Germany has created the best incentives in the world."
Germany's policy, designed to reduce the country's reliance on fossil fuels,
provides a fixed payout of about 54 cents per kilowatt hour for as much power
as you can produce.

Rick Feldt, CEO of Evergreen Solar, a Marlboro, Mass., solar-cell company,
complains that the incentives in the recently passed federal energy bill
provides little help. He notes that the bill offers only two years of tax
credits, with no assurances after that -- not enough to get manufacturers to
commit investment capital in the business.

In the U.S., the industry suffered a blow recently from the demise of
California Gov. Arnold Schwarzenegger's so-called Million Solar Roofs
initiative, which would have provided substantial incentives in the nation's
largest state for both residential and commercial buildings. Though the measure
passed easily in the state Senate, it fizzled after the governor threatened a
veto over amendments to the bill in the state Assembly that would have required
solar-installation work to be handled by licensed electricians at the
prevailing union wage rate. The governor lately has talked about stepping
around the legislature via the adoption of similar incentives through the
state's Public Utility Commission.

WHILE THE STATUS OF THE CALIFORNIA MEASURE is important, the talk of the solar
industry is the ongoing shortage of polysilicon, the raw stuff used to
manufacture photovoltaic cells. For many years, the only real use for that
particular material was to make silicon wafers for the semiconductor industry;
the solar industry's needs were minimal. But not anymore.

Thanks in no small measure to the incentive programs in Germany and Japan,
solar-cell demand has expanded 40% or more for several years running, versus
20%-25% in the past. The result is that by 2006 almost half of the world's
polysilicon supply will be soaked up by the solar-cell makers. Richard
Winegarner, proprietor of consulting firm Sage Concepts, says the market is
about 10% short this year, with the solar-cell industry, and not chip makers,
absorbing most of the resultant pain.

"I can't find a data point anywhere that shows anything other than a very real
shortage of polysilicon that is going to get worse over the next two or three
years," says Paul Leming, an analyst with Princeton Tech Research. "It would
take a solar-panel market collapse to bring any slack capacity to the
polysilicon business any- time soon."

Not surprisingly, polysilicon prices have soared: Winegarner says contract
pricing has moved from about $32 a kilogram to $45 since 2003. Spot pricing,
depending on whom you ask, is running $60-$80 a kilogram, though Winegarner
notes that there is "essentially no volume" in the spot market. "The industry
has already wrung out every nook and cranny of inventory and scrap," he says.

Tables: Sunny Prospects and The Next Generation




The world's polysilicon makers are working frantically to add capacity, but
supply is unlikely to catch up for a while. Optimists think the shortage could
be cured by 2007. Neil Gayle, coordinator of the Critical Materials Council of
Sematech, a chip-industry consortium, thinks there could be shortages though
2009.

The bottom line is that there won't be enough solar cells to meet demand for at
least the next several years, potentially triggering a supply crisis for some
smaller players that lack contractual supply arrangements with polysilicon
producers.

The chip industry has expressed its own concerns about the potential for the
shortage to slow the electronics business. But this is a lot bigger problem for
solar-cell companies than for the chip industry: While silicon represents less
than 1% of the cost of semiconductor products, they account for more than 30%
of the raw-material costs for solar cells. A doubling of silicon pricing
wouldn't mean much for chip makers, but it would be a big problem for the solar
business, which must hold down costs to compete with conventional power.

The obvious play on the polysilicon shortage is MEMC Electronic Materials
(ticker: WFR), a St. Peters, Mo., company that is one of the world's largest
producers of silicon wafers. Unlike some of its rivals, MEMC produces most of
its own silicon feedstock, and in fact sells some excess supply back into the
market. The result is that MEMC benefits from soaring wafer pricing without
suffering the associated increase in raw-material pricing. MEMC shares have
doubled over the past year, to a recent $19.79, boosting the company's market
capitalization to about $4 billion. That makes MEMC the largest-cap play on
solar growth.

And there may still be some juice left in MEMC shares. Leming of Princeton Tech
Research thinks the stock could move up another 50%, and says he can "sketch a
scenario where it can double or triple from here," noting that the company
trades for only about 12 times expected 2006 earnings of $1.56 a share. Profits
at that level would be up 39% from an expected $1.12 a share this year. And
this, by the way, is for a company that does not yet do much direct business
with the solar industry. Leming thinks MEMC could eventually cut a deal with
solar-panel makers to provide dedicated wafer supplies. If so, Lemming says,
the growth could lift the stock to $50.

MEMC ranks fourth in the world in polysilicon capacity, behind Hemlock
Semiconductor, which is partially owned by Dow Corning. Third on the list is
the other potential wafer investment, Japan-based Tokuyama. Also in the top
five are Wacker Chemie, a privately held German chemical conglomerate, and
Advanced Silicon Materials, which was recently sold by Japan's Komatsu
Electronic Metals to Renewable Energy Corp., the Norwegian solar-panel maker.
The purchase of Advanced Silicon by REC, which as noted is planning an IPO,
assures the company of sufficient silicon supplies.

Then there's SunPower, the Cypress subsidiary now in registration to come
public. It is losing gobs of money -- for the first half of this year, it lost
$13.6 million on revenues of $27.3 million. But the company is attracting
considerable interest for its highly efficient solar cells: The company claims
in its SEC filings that it generates up to 50% more power per unit of area than
conventional cells. In an industry where driving costs lower is a key to
long-term success, SunPower should attract eager buyers.

The only current domestic pure-play solar option is Evergreen Solar (ESLR) of
Marlboro, Mass. -- and it has some similar attractions. Evergreen shares have
increased sixfold over the past 18 months. The company uses a novel process for
generating solar cells that it claims uses 35% less silicon than conventional
manufacturing processes. That should give Evergreen an edge in the race to
reduce costs. And CEO Rick Feldt says the company has a pilot project that
would cut the silicon used per wafer by another 50%.

WHILE CERTAINLY THE STREET IS ENAMORED of Evergreen's technology, analysts are
equally enthused about its joint venture with Germany's Q-Cells. The two
companies are building a new solar-cell manufacturing plant near Q-Cells'
headquarters in Thalheim, in eastern Germany. The plant will dramatically
increase Evergreen's capacity, adding 30 megawatts of cell production to the 15
megawatts it can produce at its own factory in Massachusetts. Feldt thinks the
German plant will be far more efficient than the company's domestic plant,
perhaps generating $100 million a year in revenue with gross margins of
30%-35%. Assuming the plant comes on stream as expected, Feldt says, the
company should turn profitable on a run-rate basis sometime in 2006.

Moreover, Feldt says that if the German venture is successful, the partners
would increase their production to as much as 120 megawatts. And if that
happens, he says, the joint venture could add additional capacity in other
locations. If that all plays out, says J. Michael Horwitz, an analyst at
Pacific Growth Equities, "it could be one of the better stocks in 2006." And if
the German project has problems? Then so will the stock.

CLSA's Michael Rogol, a big Evergreen fan, in a report earlier this year,
listed a total of 15 solar stocks to buy. Many are outside the U.S.: Kyocera,
Sharp and Sekisui Chemical of Japan; Thailand-based Solartron; Motech of
Taiwan; Carmanah and ATS in Canada; and Germany's Conergy and SolarWorld.

The global range is a reflection of the fact that, unlike oil or gas or coal,
producing energy from the sun is about creative engineering and -- at least for
the moment -- bold government policy, not geographic advantage. No one is going
to discover a new source of sunlight, but it's possible to figure out better
ways to use it. Anyone can get in the game. Even America.

TCOM closed strong on very good volume today! took out the recent high of .57 --- looking to take out .76 soon the 1 month high

TCOM chart look great!

dhclyyay[dc][pc9!c14!c20!c50!c100!c200!d20,2!h.02,.20!f][vc60][iul14!la12,26,9!lh39,3!li14,3!lh14,3!lp14,3,3!lp5,3,3!le12,26,9!ld20!lyb20,2.0!lc20!lk14!lya7,14,28!lf!lg!lb5!lb14!lb39!lh45,17!lv25!lw25][j56510609,y]] http://stockcharts.com/def/servlet/SC.web?c=tcom,uu[g,a]dhclyyay[dc][pc9!c14!c20!c50!c100!c200!d20,2!h.02,.20!f][vc60][iul14!la12,26,9!lh39,3!li14,3!lh14,3!lp14,3,3!lp5,3,3!le12,26,9!ld20!lyb20,2.0!lc20!lk14!lya7,14,28!lf!lg!lb5!lb14!lb39!lh45,17!lv25!lw25][j56510609,y]

Quick DD from Stockhouse.com... accumulation in progress, a trading pattern reminds me of HYRF's one preceeding a current rally.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Importance of TCOM SME's to Baidu

Remember the good old days? January 2000, when foreign taxi drivers had stock tips and your stock broker actually made you money? Well it was deja vu all over again on Friday when the shares of Baidu (NASDAQ: BIDU) gained 400% on the opening day of a new NASDAQ IPO.

If you haven't watched the news since Friday or picked up a newspaper, you likely don't know that Baidu is billed as the Google of China. The company commands about 80% of the search engine market in China but unlike Google, its revenue is dramatically lower (forecasted to be in the range of $30 million U.S. for 2005). However, it's the future earnings potential that has everyone licking their lips.

In the United States (297 million people), approximately 68% of the population use the internet. In China (1 Billion people), approximately 10% of the population are on the internet. This also doesn't factor in the 300 million mobile phone users in China who are very tech savvy. Many analysts (including myself) believe China is at the point of internet usage we saw in North America during the mid 1990's. And we all know the type of explosive growth companies saw within a few years of that (in particular the early market leaders).

Many parts of China will unfortunately never see the technology needed for internet access but even with 50% market penetration in three years, the numbers are staggering. As China's population and economy continue to grow, the number of internet users could grow to several hundred million. First consider the following statistics:

Population estimate for North America in 2005 - 328,387,059
Internet users as of June, 2005 (68.0% penetration rate) - 223,392,807

Right now Google commands a market cap in the range of $80 billion. Baidu is currently worth $4 billion (based upon a share price of $125). The big difference right now is in revenue. For the last quarter, Google reported huge revenue of $1.3 Billion and Q2 net profit of $343 million. Baidu on the other hand will see revenue in the range of $30 million for all of 2005.

So how is it a company with such small revenue by comparison can command a market cap in the range of $4 billion? It's because of the statistics above and the future growth potential. Institutional investors, hedge funds, and even retail investors, are all gambling that China is in the early stages of the same cycle we saw in North America several years ahead of the 2000 tech boom.

Importance of SME's (Small and Medium Enterprises)

For several years no one could understand how to make money on the internet - particularly through search engines. Even in 2000, companies like Yahoo, MSN, and Google were receiving enormous traffic to the search engines, but no one had a profitable business model. It was a lot like having a computerized index system for the world's largest library and shopping center. Millions were walking through the door every day using your system for free, but who was going to pay the bills? It sure wasn't going to be the visitor or consumer - even though they wouldn't know where to start without your service.

Then along came a company called goto.com who thought of charging the businesses interested in selling something. The business or vendor (SME) knew by that stage it was impossible to get listed at the top of the search engine results and if you weren't on that first page, it was like finding a needle in a haystack. So Goto came up with a "pay per click" business model that didn't serve up the banner ads everyone was ignoring, but instead moved search results for specific keywords to the top - but only those results people or companies paid for. The vendor got exposure and only had to pay each time the user clicked on that search summary ($0.05 to $XX based upon a competitive bidding process for keywords).

It was a lucrative model and the first time major search engines saw a method of making money from search results - and making lots of it. It didn't take long for Yahoo to buy out Overture for $1.6 billion and now companies like Google are raking in enormous amounts of cash from search results using that same Overture concept.

So what is the importance of the SME?

Search engines depend upon millions of people like you and I to search for stuff on the internet every day. But do we pay for it? No. Large corporations are search engine advertisers but primarily it's the small to medium sized business - anything from Jane Smith selling knitted sweaters in Alaska to a midsized insurance company in Toronto that employs 300 people.

If you took a detailed look at who is generating the revenue for companies like Google, Yahoo, and MSN, it's not the world's largest corporations or the individual consumer. It's the thousands of small and medium sized businesses (SME's) across North America who have something to sell.

China is no different, and while investors are awestruck over the growth potential of the internet in China, everyone is overlooking the importance of the SME in that country. Even with Baidu, when the smoke settles, it will be the SME's across China and abroad (those that want to sell something to the billion people in that country) that will pay the bills and drive top line revenue growth for the search engines.

That Brings us to Telecom Communications, Inc. (TCOM/OTCBB $0.57)

One of the reasons we started following this company in the first place, was their advanced technology for the internet and mobile phones, world class customer service, and their experience and understanding of this huge but unique market. Of particular importance, and the area that most are overlooking even with Baidu, is their focus on one million SME's in China.

A major component of TCOM's (OTCBB: TCOM) business model is providing products, services, and technology tailored specifically for the needs of the SME. Technology that not only assists them with marketing and promotion over the internet, but over mobile phones and wireless devices. When you consider that this country already has 300 million mobile users, the potential of this aspect is incredible when you combine it with growth of the internet.

TCOM may lack the public profile of Baidu but it's access to SME's and decision to quietly focus its resources on building that niche market is very important. It's the SME that keeps the lights on at the end of the day. The company has already signed up thousands of SME's for their latest technology services and they have a very strong working relationship with a private company called ICChina. ICChina is likely the largest B2B network in China linking hundreds of thousands of SME's with government agencies, suppliers, etc.

Conclusion

Our last StockHouse update on TCOM was July 4th in the low/mid $0.20's. On Friday TCOM hit $0.75 and pushed our one month gains as high as 200% before moving back into the mid $0.50's. We're still looking at a nice double for the month but TCOM is intended as a long term play for us. The internet has a long way to go in China and these early leaders will likely see the bulk of their gains in the years to come. Besides Baidu, there are half a dozen other major players in China that trade on NASDAQ but they are all priced in the double digits.

TCOM's current market cap is in the range of $40 million - a far cry from everyone else who boasts valuations in the billion dollar range. TCOM still has a lot of work ahead of it to catch up on the revenue side (forecast is $15 million for 2005) but their % growth to date has been tremendous and I believe we are only seeing the tip of the iceberg right now. Their business model is very solid, the potential in China enormous, and their decision to focus on the SME is very wise as no matter how you slice it, the SME is the cash cow.

TCOM's chart
http://stockcharts.com/def/servlet/SC.web?c=tcom,uu[w,a]daclyyay[pb50!b200!f][vc60][iut!Lp14,3,3!La12,26,9]&pref=G

IIJ Announces ADS Ratio Change and Stock Split 
Wednesday August 3, 10:00 pm ET

TOKYO--(BUSINESS WIRE)--Aug. 4, 2005--Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI) today announced that its board of directors approved a change in the ratio of its American Depositary Shares ("ADSs") to the shares of common stock of IIJ ("Shares") from 1 ADS = 1 / 2,000 of a Share to 1 ADS = 1 / 400 of a Share and a stock split (1 to 5) of Shares.

The ratio change and stock split will not affect the total number of ADSs in issue and are not expected to affect the ADS trading price on the NASDAQ market, because: (1) the ADS ratio change will be reciprocal to the stock split and (2) the effective date for the ratio change will be the payable date for the stock split.

In connection with the ratio change and stock split, the ADS depositary facility at The Bank of New York will be temporarily closed for deposits of Shares for delivery of American Depositary Receipts ("ADRs") representing the ADSs and withdrawal of Shares upon surrender of ADRs from and including Friday, August 26, 2005, to, and including, the payable date for the stock split, Tuesday, October 11, 2005. The holders of IIJ ADSs will be able to trade its ADSs on the NASDAQ market as usual during the period in which the depositary facility is closed for deposits and withdrawals of Shares.

Summary of the ADS Ratio Change:

1. Outline

    (1) Current ratio:             1 ADS = 1 / 2,000 of a Share
    (2) New ratio:                 1 ADS = 1 / 400 of a Share
    (3) Effective date:            Tuesday,  October 11, 2005 (EST)
    (4) ADS Depositary Bank:       The Bank of New York

Summary of the Stock Split

1. Purpose of the stock split:    To reduce our stock price per
                                   investment unit by means of the
                                   stock split

2. Outline of the stock split:

    (1) Number of additional       The number of Shares outstanding as
    shares to be issued in         of August 31, 2005 multiplied by
    connection with the stock      four (153,440 Shares when estimated
    split:                         based on the number of Shares
                                   outstanding as of August 4, 2005 =
                                   38,360 Shares)

    (2) Method:                    A 1 to 5 stock split will be made
                                   for shareholders of record listed
                                   in the register of shareholders as
                                   of the end of business on
                                   Wednesday, August, 31, 2005

3. Payable date:                  Tuesday, October 11, 2005

4. Dividend calculation           April 1, 2005
    commencement date:

5. Increase in the number of      In accordance with Clause 2,
    authorized shares:             Article 218 of the Commercial Code,
                                   the Articles of Incorporation of
                                   IIJ will be amended as of Tuesday,
                                   October 11, 2005 and the number of
                                   authorized shares will be increased
                                   by 302,080 shares to 377,600
                                   shares.

(Reference)

1. There will be no increase in stated capital in relation to the
    stock split. Stated capital as of August 4, 2005 is 13,765,372
    Yen.

2. The exercise price per share for stock acquisition rights will be
    adjusted to reflect the stock split.

About IIJ

Founded in 1992, Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI) is one of Japan's leading Internet-access and comprehensive network solutions providers. The company has built one of the largest Internet backbone networks in Japan, and between Japan and the United States. IIJ and its group of companies provide total network solutions that mainly cater to high-end corporate customers. The company's services include high-quality systems integration and security services, Internet access, hosting/housing, and content design.

The statements within this release contain forward-looking statements about our future plans that involve risk and uncertainty. These statements may differ materially from actual future events or results. Readers are referred to the documents furnished by Internet Initiative Japan Inc. with the SEC, specifically the most recent reports on Forms 20-F and 6-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.
Contact:

     IIJ Corporate Communications
     +81-3-5259-6310
     [email protected]
     http://www.iij.ad.jp/