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Total Revenues Sink For Hurray's Troubled China Mobile Business

Chinese wireless value-added services company Hurray (HRAY) unveiled its unaudited financial results for the first quarter ended March 31, 2008 and said its total revenues hit US$13.2 million, representing a decline of 16.7% quarter-over-quarter and 19.5% year-over-year.

Chairman and CEO of Hurray QD Wang issued a statement that read, "We missed our guidance for Q1 primarily due to the performance of our music business which was impacted by the cancellation of certain planned as well as anticipated concerts in preparation for the Beijing Olympics. However, our WVAS business stabilized and margins improved partly as a result of seasonal factors as well as improved operating efficiency. We further streamlined our organization structure to reduce our costs in an effort to get back on the path to profitability. We enjoy a strong cash position, which provides us with the financial resources to execute our strategy to become a leading entertainment content production and distribution house in China."

Total wireless value-added services revenues were just above US$11 million for the first quarter of 2008, representing a slight increase as compared to US$11.0 million in the previous quarter and declines of 26.3% as compared to US$14.9 million in the first quarter of 2007. Recorded music revenues, which represent revenues of the firm's controlled music companies Freeland Music, Huayi Brothers Music and Hurray Secular Bird, were US$2.2 million, representing a decline of 54.1% as compared to US$4.9 million in the previous quarter and growth of 47.9% as compared to US$1.5 million in the first quarter of 2007.

Total gross margin was 36.5% for the first quarter of 2008 as compared to 28.5% for the previous quarter and 32.8% for the first quarter of 2007. Gross margin for wireless value-added services was 35.0% for the first quarter of 2008, as compared to 26.9% in the previous quarter and 30.9% for the first quarter of 2007. Margins improved as we have higher margins in our SMS services compared to IVR. Recorded music gross margin was 43.8% for the first quarter of 2008 as compared to 32.0% in the previous quarter and 51.0% for the first quarter of 2007.

Total gross profit was US$4.8 million for the first quarter of 2008, representing growth of 6.9% as compared to US$4.5 million for the previous quarter and a decline of 10.4% as compared to US$5.4 million for the first quarter of 2007.

Total operating expenses were US$4.7 million for the first quarter of 2008, representing a sharp decline of 87.4% as compared to US$37.1 million for the previous quarter and growth of 7.3% as compared to US$4.4 million for the first quarter of 2007. Net income was US$4.9 million for the first quarter of 2008.

At the end of the quarter, the company had US$67.4 million in cash and cash equivalents.

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