In a press release issued before the conference call, 51job.com (JOBS) reports that slow sales during the latter part of the month of December would contribute to weaker fourth quarter 2004 revenues.
Rick Yan, President and CEO of 51job, commented, "Sales in the latter part of December were lower than we expected. We do not believe that there has been any change to the competitive landscape or the state of the Chinese economy. Based on our conversations with customers, we think that the softness in December sales is likely a result of human resource managers depleting their budgets earlier in the year."
In late November 2004, the 51job discontinued the sale of stationery and other office supplies to its business customers. A non-core product offering included in other human resource related services and first offered by 51job in mid-2003, this business had not contributed a material amount to total revenues for the Company since its inception. The office supplies business is estimated to have accounted for less than 3% of total revenues for the nine months ended September 30, 2004. The loss in revenue contribution from the discontinuation of this business is estimated to have been approximately CNY3 million in the fourth quarter.
51job now expects fourth quarter total revenues to be between CNY117 and CNY121 million, compared with CNY140 million, the low-end of its previous forecasted range. In addition to the recent developments described above, the revised guidance incorporates a timing adjustment on revenues for the online recruitment services segment.
51job estimates that approximately CNY2 to CNY3 million of online recruitment services revenues that were originally reflected in the third quarter to be included in the fourth quarter. The company now preliminarily expects fully diluted earnings per common share to be between CNY0.24 and CNY0.27, compared with its previous forecasted range of CNY0.42 and CNY0.44. Despite the revised fourth quarter guidance, the executives at the company estimate that 2004 total revenues and net income will represent significant growth rates of more than 60% and approximately 90%, respectively, over 2003 levels.
Mr. Yan concluded, "Although we are disappointed with our estimated fourth quarter results, we currently do not foresee the circumstances that affected fourth quarter performance to take place in the first quarter of 2005. Our operations across the board remain on track and we continue to execute our proven business model. We strongly believe that 2005, like years past, will be a successful one for us."
