Tom Online (TOMO) today reported that 4Q 2005 net profits were up 55% year on year and that fiscal 2005 revenues were up 40% year on year as it announced its financial results for the fourth quarter and full year ended December 31, 2005.

Wang Lei Lei, Tom Online Chief Executive Officer and an Executive Director, said, "Through better operational efficiency and team efforts, Tom Online has been able to further consolidate its leadership in the wireless internet industry in 2005, which has in turn helped us achieve our growth targets and establish a credible reputation in the industry and among its partners. I believe 2006 will hold more successes for us."

The company's unaudited consolidated revenues for the three months ended December 31, 2005 were US$48.12 million, an increase of 39.5% over the same period in 2004 and an increase of 4.7% quarter on quarter.

Gross profit was US$21.37 million, representing an increase of 39.4% over the same period last year and a 5.5% increase QoQ.

Gross margins stabilized at 44.4% from 44.1% in the previous quarter, as benefits from sustained higher confirmation rates in the Company's SMS business and increased contribution from its online advertising business offset increasing channel and content costs.

Operating income was US$12.14 million, up 70.9% from the same period last year and 5.7% higher than the previous quarter. Operating margins stabilized at 25.2% from 25.0% in the previous quarter.

During the fourth quarter, the company increased its sales and marketing activities to US$2.78 million from US$1.76 million in the third quarter, representing a 57.3% sequential increase, but only a 19.6% YoY increase, as it usually increases its sales and marketing activities in the fourth quarter of each year.

For the fourth quarter, net interest income increased to US$0.57 million from US$0.27 million in the third quarter.

Net income was US$12.72 million, an increase of 55.1% YoY but a decrease of 1.3% QoQ as the CNY appreciated slower in the fourth quarter than in the previous quarter. Excluding this factor, the net income increased almost 8% from the last quarter. Net income margins declined sequentially to 26.4% in the fourth quarter from 28.0% in the previous quarter during which the Company had a US$1.13 million benefit from the appreciation of CNY.

US GAAP basic earnings per ADS were US$24.16 cents for the quarter. US GAAP basic earnings per Hong Kong ordinary share were US$0.302 cents for the quarter. Shares used in computing US GAAP basic earnings per ADS were 52.65 million and shares used in computing US GAAP basic earnings per Hong Kong ordinary share were 4,212.07 million.

US GAAP diluted earnings per ADS were US$23.85 cents for the quarter. US GAAP diluted earnings per Hong Kong ordinary share were US$0.298 cents for the quarter. Shares used in computing US GAAP diluted earnings per ADS were 53.32 million and shares used in computing US GAAP diluted earnings per Hong Kong ordinary share were 4,265.83 million.

The company's balance of cash, short-term bank deposits and marketable securities was approximately US$140.25 million as of December 31, 2005.

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