Richard Li seemed to be walking on air in March when he used his 10-month-old start-up, Pacific Century CyberWorks, to acquire Hong Kong's dominant telecommunications company, Cable & Wireless HKT. The $35.9 billion merger was the largest ever in Asia, outside Japan. Analysts were falling over one another to issue buy recommendations on CyberWorks' stock, which they predicted would soar into the stratosphere. Six months later analysts say the new firm's strategy of linking broadband Internet services to an old-world telecoms company is no longer so compelling—and Li is losing altitude fast. CyberWorks' share price plunged 25% last week, to $1.12. (It's down almost 70% from its February high of $3.66.) It was dragged down partly by NASDAQ's own lackluster performance, but there was another, more direct cause: Britain's Cable & Wireless dumped a quarter of its 20.1% stake in Cyberworks, acquired after the merger with HKT was approved in August. According to analysts, the move suggested that Cable & Wireless expects CyberWorks' shares to fall further. Actions speak louder than words, says Henry D.C. Lee, managing director of Hendale Asia, an investment-advisory firm in Hong Kong. The signal was clear. They wanted to get out.How things change. When news of CyberWorks' plan to take over the telecoms giant emerged on Feb. 15, its shares closed at $3.38. To many, Cable & Wireless HKT seemed like a sweet deal: the merger effectively allows CyberWorks to use HKT's assets, such as its broadband Internet service, cellular phone system and potential third-generation cellular technology, as well as the right to offer Star TV's programs over its broadband network. But back then, say critics, CyberWorks was overvalued; so they were relieved when its shares plunged. The market is finally reverting to rational analysis, says David Webb, editor of financial monitoring site Webb-site.com, who had valued CyberWorks' shares at 54 cents in February. The company can't resume its rocket-like trajectory. CyberWorks declined to comment on its business strategy last week when contacted by Time, but on Thursday Li said the fact that Cable & Wireless' shares were snapped up by buyers showed confidence in and support for PCCW, our business plans and our overall strategy. This week, CyberWorks' share price may well bounce back. Its interim results are due out on Thursday, and Li, or the company, can then buy back shares. But some analysts say CyberWorks' problems go deeper than short-term stock volatility. Several strategic joint ventures have failed to materialize in recent months. A venture fund between CyberWorks and NASDAQ-listed CMGI Inc. was abandoned on Sept. 8. The same day, a three-way joint venture among CyberWorks, ERA Communications Co. and Taiwan's GigaMedia was called off by GigaMedia over a disagreement on how to value CyberWorks. The deal had been intended to enable CyberWorks to distribute Chinese-language content to the mainland. CyberWorks has also been unable to persuade Japanese Internet giant Softbank to distribute its Network of the World (now) TV and satellite Internet service. This suggests they aren't as attractive as their potential partners once thought they were, says Chris Cheung, an investment analyst with Worldsec International in Hong Kong.Although CyberWorks has several projects on the go, it is pinning its hopes primarily on now, a broadband Internet service delivered across Asia to TV sets, computers and wireless devices. Launched initially in London in June, now has so far garnered a lukewarm response. now is trying to keep a step ahead of fast-moving times by using broadband, but the rest of Asia is barely connected. It's like inventing the cart before you have the horse, says Lee. CyberWorks may be too far ahead of its time.Li has been seeking strategic partnerships across Asia to gain local distribution. But as his shine fades, fewer potential partners seem interested in linking up with him. Broadband will see big growth in three to four years' time but in the short term, CyberWorks will remain an old phone company, says Lee. After this week's share price drop, analysts calculate that CyberWorks' net worth, at $24.5 billion, is about equal in value to just the HKT portion—effectively putting a zero valuation on the company's Internet business. Li's dream of walking on air has dropped below the clouds—and suddenly the future is looking more stormy than six months ago.