Business Impact

South Korea's top Web portal looking to expand

May 23, 2007

SEOUL, South Korea (AP) – NHN Corp., South Korea’s top Web portal, may seek to acquire an Internet company or to be taken over by a rival if that helps it become a global player, CEO Chae Hwi-young said.

”We’re particularly interested in acquiring a company with advanced search engine technology,” Chae told Dow Jones Newswires in an interview this week. ”Also, we don’t mind becoming a takeover target if the case makes sense.”

NHN, dubbed South Korea’s Google because it operates the top Korean-language search engine by both revenue and number of searches, hopes to expand its global presence through acquisitions and partnerships, the executive said.

”Search-related online advertising is still in its infancy stage,” he said. ”Search ads and online games will continue to be our main growth drivers for years to come.”

Chae said that NHN has not been approached by Internet giants like Google Inc. and Yahoo! Inc. for possible acquisition talks.

In South Korea alone, the search ads market is expected to more than double to 1.6 trillion won (US$1.72 billion; euro1.23 billion) by 2010 from 700 billion won (US$752 million; euro559 million) this year, he said.

NHN, the largest company listed on the tech-heavy Kosdaq exchange with market capitalization of 7.58 trillion won (US$8.14 billion; euro6.1 billion), is more than 50 percent owned by foreign investors. It launched its search business in 2000.

It posted record quarterly net profit on record sales in the first quarter, backed by an 85 percent on-year rise in its Web search advertising revenue.

The company’s Naver search engine is South Korea’s dominant Web portal, accounting for 77 percent of Internet-related searches in the country, according to KoreanClick, a company that tracks Web surfers’ page views.

Yahoo, which was once the leading search engine in South Korea, accounts for only 4.4 percent of the market, while Google has a market share of 2 percent.

NHN also operates popular online game sites in China, Japan and South Korea. Early this month, it opened a game portal in the United States.

Chae said the company wants to take its success in South Korea to Japan by launching a trial Japanese service late in the third quarter or early in the fourth quarter.

”Japan has a culture similar to Korea,” he said. ”And we have successfully run Hangame Japan, a leading Japanese game portal, for years. That’ll help us take a foothold in the search engine market there.”

Chae added that if that proves successful, the company will move on to China, Vietnam and other places.

NHN USA Inc., a wholly-owned subsidiary of NHN, early this month launched an English-language game Web site, which has secured 3 million registered users with an offering of 40 online games.