The chief executive officer and chief operating officer of NetEase.com Inc. resigned Monday shortly after the China-based Internet company said it expanded the scope of its internal investigation to include a review of its audited financial statements for the fiscal year ended December 31, 2000.

Chairman and founder William Ding will replace CEO King Lai and COO Susan Chen, who left to pursue other opportunities.

On May 8, 2001, NetEase.com announced that it has discovered that one or more of its employees may not have correctly reported the terms of several contracts between the company and third party advertisers to NetEase.com’s internal finance department. “At the time, based on information then available, NetEase.com’s management believed that the possible misreporting would not impact any period other than the fiscal quarter ended March 31, 2001,” the company said in a statement. “However, the Audit Committee of the company’s Board of Directors, which is overseeing the investigation, has determined with the assistance of the company’s independent auditors and outside legal counsel that the misreporting may also extend to contracts in year 2000 and impact NetEase.com’s audited financial statements for the fiscal year ended December 31, 2000.”

The company said its investigation is currently focusing on contracts for approximately $3 million of revenue, which may have been attributed to incorrect periods during 2000. In addition, the Audit Committee is continuing its investigation into the previously disclosed misreporting, which occurred in the fiscal quarter ended March 31, 2001 and its impact on the company’s financial statements for that period, said the company.

“This expanded investigation is still in progress, however, and no definitive conclusions can be made as to the full effect of these misrepresentations until the investigation is complete,” the company added.

“The depth of the investigation ordered by our Board and management has now proven its worth by uncovering possible additional incorrect attributions of revenue beyond those initially suspected,” said William Ding, Chairman of the Board of Directors, in the statement. “We believe that our thoroughness will benefit our shareholders and help restore confidence in our prospects and financial results.”

Regarding the management resignations, Ding said in a separate statement, “I am confident that these changes will have a minimal impact on NetEase.com’s business continuity and will endeavor to make the transition as seamless as possible for our employees.”

NetEase.com offers applications, services and other technologies for the Internet in China.

Small Businesses Are Spending Less on Technology

Small businesses are spending less on technology in 2001 than they did in 2000, but not alarmingly less, according to a survey by IDC, a division of IDG.

According to the survey, small businesses plan to purchase fewer PCs but will expand their use of the Internet, high-speed services, and PC networking products. In fact, IDC expects to see double-digit sales gains in some areas.

According to IDC, the percentage of small businesses using broadband communications capabilities has increased from 11 percent in 1999 to nearly 15 percent in 2000. And look ahead, over 13 percent of small firms plan to add broadband this year compared with 7.5 percent who planned to add broadband in 2000.

Lots of Interest in Kraft IPO

The once comatose IPO market could take a giant step closer to recovery later this week when Kraft goes public.

Investors have been slowing warming up to newly public companies in the past few weeks. But, there is a lot of anticipation building for the Philip Morris unit, given its size and recognizable brand names, such as Nabisco and Maxwell House.

The food giant, which is planning to offer 280 million shares later this week, could wind up raising more than $9 billion, as the issue has been strongly oversubscribed, according to Reuters. The price range for the offering has been lifted to $30-$31 from its earlier indicated range of $27-$30, according to Reuters.

If it’s right, the 16 percent stake that is being taken public is expected to raise $9.03 billion, making it the second largest IPO ever after last April’s $10.6 billion offering in AT&T Wireless.

Kraft plans to use all of this dough to pay down debt.

The offering has been covered seven to eight times, says Reuters, which obviously indicates strong investor interest in this deal, both in the U.S. and overseas.

Its lead underwriter, Credit Suisse First Boston, said that the final price will be announced after the markets close on Tuesday.

Today’s Debt News

• Excite At Home Corp. said it raised $100 million through the private sale of zero- percent, five-year convertible secured notes. The notes are convertible into series A common stock at a 10 percent premium to the weighted average trading price of Excite At Home on Friday, or $4.38 a share. The shares closed on Nasdaq Friday at $3.92. The financing was arranged by Promethean Capital Group LLC.

• Mission Energy plans to privately sell $1.2 billion of 7-year senior secured notes in the 144a market next week, led by Goldman Sachs, according to bondresources.com.

• John Deere Capital Corp. sold $200 million in two-year floating- rate notes, led by Merrill Lynch and Banc of America Securities Inc. It was rated A2 by Moody’s and A-Plus by S&P.