The nation's top software companies face accounting difficulties during this year's expected flurry of mergers and stock market offerings, a director of a top Western consultancy said last week.
David Chao, director of financial advisory services at the Taiwan branch of Pricewaterhouse Coopers (
"The intangible nature of the assets of software companies makes this sector particularly difficult to quantify," Chao said. "A lot of software companies planning to go public still need to learn the basics."
Software companies can choose to apply for listing on the existing Over-the-Counter (OTC) market or opt for flotation on a second OTC board that will have relaxed profit and capital criteria and is expected to open later this year.
Chao also said shareholders may quickly lose confidence in the second OTC board due to low returns on investment in software companies and other high-tech firms unaccustomed to serving stock market investors.
"It's a matter of attracting investors," he said. "If the firms listed on the second OTC have little or negative equity per share there will be a big problem and interest in these shares -- although very high right now -- is sure to fall off."
Eight software firms floated on the OTC market last year and another 20 companies are expected to list this year.
The government on Wednesday extended assistance in the software sector to include applications service providers (ASPs) in a bid to encourage software sector mergers and stock market flotations, and to encourage a shift towards Web-centered software production.
Wu Dian-tung (
The move gives ASPs access to the same tax relief and training subsidy incentives enjoyed by other Internet companies -- such as Internet service providers and Internet content providers.
Hwang Tai-yang (
The number of Web service firms may rise to between 150 and 200 next year, with turnover growing from NT$1.7 billion last year to an estimated NT$2.6 billion this year and NT$15 billion by 2005.
The government has been urging hardware producers to develop Internet Appliances, multimedia terminals and embedded software -- in addition to promoting software development -- in a bid to make Taiwan a global Web software producer and the center of the world's Chinese-language content production, Hwang said.
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