Chinese wireless value-added services firm KongZhong (KONG) says it had a 16% sequential quarterly revenue increase as it announced its unaudited fourth quarter and fiscal year 2007 financial results.

KongZhong's Chairman and Chief Executive Officer Yunfan Zhou, said, "We are happy that our WVAS business has regained growth momentum in Q4 2007. We expect the company to have a better WVAS business in 2008. In regards to our wireless Internet business, we are glad that we have achieved continual growth in our mobile advertising revenues. We are confident about the future of our wireless Internet business and will continue our efforts to develop in 2008."

Total WVAS revenues for the fourth quarter increased 16% sequentially to US$19.47 million. Revenues from 2.5G services accounted for approximately 29% of total WVAS revenues and revenues from 2G services represented the remaining 71%. Revenues from 2.5G services, which include services delivered using wireless application protocol, multimedia messaging service, and JAVA technologies, increased 2% sequentially to US$5.62 million. WAP revenues in the fourth quarter of 2007 were US$2.15 million, an increase of 11% sequentially. MMS revenues in the fourth quarter of 2007 were US$2.80 million, an increase of 2% sequentially. JAVA revenues in the fourth quarter were US$0.66 million, a decrease of 22% sequentially.

Revenues from 2G services, including short messaging service, interactive voice response, and color ring back tone, increased 23% sequentially to US$13.86 million in the fourth quarter of 2007, as we enhanced our 2G sales and promotion efforts. SMS revenues in the fourth quarter of 2007 increased 6% sequentially to US$8.00 million. IVR revenues in the fourth quarter of 2007 were US$4.27 million, a 64% increase sequentially. CRBT increased 42% sequentially to US$1.59 million in the fourth quarter of 2007.

The aggregate revenues from China Unicom, China Telecom and China Netcom accounted for approximately 23% of the total fourth quarter WVAS revenues, while revenues from China Mobile accounted for the remaining 77%. Total mobile advertising revenues, which were mainly generated from KongZhong's wireless Internet sites, increased 12% sequentially to US$298,000 in the fourth quarter of 2007.

Operating expenses related to the Company's wireless Internet sites were US$3.22 million, which included $2.14 million in marketing and advertising expenses.


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