Chinese software company Ninetowns (NINE) today reported its financial results for the first quarter of 2006. Total net revenue for the first quarter of 2006 was US$6.1 million, representing a 23.9% decrease, compared to US$7.7 million for the first quarter of 2005.

Net revenue from sales of enterprise software for the first quarter of 2006 was US$5.0 million, representing 82.0% of total net revenue, as compared to 83.1% for the first quarter of 2005.

Net revenue from software development services for the first quarter of 2006 was US$1.1 million, representing 17.4% of total net revenue, as compared to 16.9% for the first quarter of 2005.

Gross profit for the first quarter of 2006 was US$5.8 million, or 94.6% of total net revenue, representing a decrease of 22.2% compared to US$7.2 million, or 92.6% of total net revenue for the first quarter of 2005.

Tommy Fork, Chief Financial Officer of Ninetowns, said, "Despite the transition and the slow seasonality, I am pleased that we were still able to achieve profitability in the first quarter of 2006. As a result, our financial position continued to improve with cash balance increased to US$116.8 million. As we continue to face the challenges in the marketplace, we will continue our best efforts in cost controls."

Operating income for the first quarter of 2006 was US$2.4 million, representing a 57.0% decrease compared to US$5.4 million for the first quarter of 2005. Operating margin for the first quarter of 2006 was 39.6%, compared to 70.1% for the first quarter of 2005.

Net income for the first quarter of 2006 was US$2.9 million, representing a 53.1% decrease compared to net income of US$5.9 million for the first quarter of 2005.

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