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Linktone Issues Embarrassing Quarterly Results

Sputtering Chinese wireless value-added service company Linktone (LTON) says its year-on-year revenue dropped by about 50 percent as it announced its unaudited financial results for the second quarter ended June 30, 2007.

Linktone recorded paltry revenues of US$11.7 million, compared with US$14.2 million in the first quarter of 2007 and US$23.3 million in the second quarter of 2006. GAAP net loss of US$3.2 million, compared with net loss of US$3.4 million in the first quarter of 2007 and net income of US$3.1 million in the second quarter of 2006.

Chief Executive Officer Michael Li said, "Like most wireless providers in China, we continued to face a challenging regulatory environment for our wireless value added services business during the second quarter. However, longer term, we believe these regulations will only help improve the industry and increase the user's overall experience as demand for mobile data and audio services further develop. We remain confident in the development and potential of our core wireless services in China as fundamentals remain strong, and we forecast that our wireless business can grow from the levels reported in this most recent quarter."

Advertising service revenue accounted for 14% or US$1.6 million of total revenues in the second quarter of 2007, compared with 4%, or US$0.6 million for the first quarter of 2007. The sequential increase was primarily the result of more advertising and product promotion sponsorship contract wins resulting from Linktone's cooperative agreements with CYL which commenced in January 2007.

Cash and cash equivalents, as well as short-term investments available for sale, totaled US$47.4 million, compared with US$48.4 million for the first quarter of 2007.

For the third quarter ending September 30, 2007, Linktone expects gross revenue to grow by almost nothing to approximately US$12 to US$13 million. The company says it anticipates GAAP net loss in the third quarter of 2007 to decrease sequentially to approximately US$0.09 to US$0.11 per fully-diluted ADS.

1 Comment

  1. "Embarrassing"!? What kind of evil biased news agency are you? Fox News!? A headline like that and then no commentary on the earnings in the body of the article. Actually, LTON's earnings were better than guidance and their Q3 guidance is for revenue growth and less loss. They are saying the worst is over for WVAS. What exactly were you reading? You must have a short position!

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