Netease.com, Inc. announced today that it will report its financial results for the second quarter of 2004 on August 2, 2004 (Eastern Time).
The earnings announcement will take place at 9:00 pm Eastern Time on August 2, 2004 (Beijing/Hong Kong Time: 9:00 am, August 3, 2004). Michael Tong, Executive Director, and Denny Lee, Chief Financial Officer, will be on the call to discuss the quarterly results and highlights, and answer questions. A replay of the call will be available by dialing (719) 457-0820, with confirmation code 135697. The replay will be available from 11:00 pm Eastern Time on August 2, 2004 until 11:00 pm Eastern Time on August 9, 2004.
Netease.com also announced today that its preliminary second quarter 2004 revenue for its wireless value-added and other fee-based premium services, which are predominantly short messaging services (known as SMS), were lower than management had anticipated. Based on these figures, management believes that revenue (net of applicable business tax) derived from wireless value-added and other fee-based premium services for the second quarter will decline by between approximately 37% and 41% compared to the prior quarter. However, management expects that revenue from online games and advertising will increase in the second quarter of 2004 compared to the prior quarter in line with management's expectations and that total revenue (net of applicable business tax) will be between US$23.4 million and US$23.8 million for the quarter.
Michael Tong, Executive Director, stated, "Although we will not have final results until later in the month, preliminary indications are that second quarter revenue from wireless value-added and other fee-based premium services, net of applicable business tax, will be between US$4.3 million and US$4.0 million, which represents a decline of approximately 37% to 41% from US$6.8 million in the first quarter. This is primarily attributable to a decline in our sales of SMS services due to a decrease in the total number of new users of these services between the first and second quarters of 2004 and an increase in turnover of our SMS users during the period, which we believe resulted principally from the following two factors.
First, we are continuing to see intense competition in the SMS market in China. Second, under the direction of the Chinese governmental authorities, the mobile phone operators, China Mobile and China Unicom, together with all third party service providers such as our company have adopted certain new policies and procedures, which on the one hand can facilitate mobile phone users to cancel the wireless value-added monthly subscription services which are no longer needed, and on the other hand, make it more complicated for mobile phone users to order and receive new wireless value-added services by requesting the mobile phone users to send a re-confirmation SMS message using their mobile phones to the service providers confirming the services they ordered through the Internet. The first measure we believe has led to the increased churn rate and the second measure we believe has led to the slow down in growth rate of our new subscribers."