AsiaInfo (ASIA) has announced third quarter results for the period ended September 30, 2005.

Meeting guidance, net revenue for the third quarter was US$22 million, an increase of 53% year-over-year and a 7% decrease sequentially.

Earnings per basic share also met previously stated guidance of US$0.01.

Gross revenues for the third quarter were US$25.2 million, representing an increase of 26% year-over-year and a decrease of 7% sequentially.

Gross margins grew to 43% in the third quarter compared to 42% in the year-ago period and 41% in the previous quarter. This represents AsiaInfo's fourth consecutive quarter of growth in gross margins, a result of the company's continued focus on developing its high-margin core businesses.

Revenue from software products and solutions for the third quarter was US$15.3 million, an increase of 59% from the year-ago period and a decrease of 5% sequentially.

Service revenue increased to US$6.3 million, a 47% increase year-over-year and an 11% sequential decrease. Third-party hardware revenue in the quarter fell to US$3.6 million as the company continued its focus on high margin software solutions and services.

During the third quarter, Lenovo-AsiaInfo contributed approximately 26% to net revenue, including a 21% contribution to software products and solutions revenue and a 36% contribution to service revenue.

Total operating expenses for the quarter were US$11.4 million, an increase of 44% year-over-year and a 4% increase sequentially. The increase from the year-ago period is largely due to the expenses associated with the integration of Lenovo-AsiaInfo.

Lenovo-AsiaInfo contributed 34% to operating expenses for both the third quarter and for the nine months ended September 30, 2005.

Following the increase in operating expenses, AsiaInfo's operating loss for the quarter was US$0.43 million, compared to a US$0.42 million operating profit in the year-ago period and a US$0.18 million operating profit in the second quarter.

Net income for the third quarter was US$0.43 million, or US$0.01 per basic share.


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