Mobile value-added services company Linktone (LTON) announced the termination of agreements with some of its Chinese affiliates in regard to a business deal.
Linktone has severed contracts with two of its affiliated companies Shanghai Ling Yu Culture and Communication and Beijing Lian Fei Wireless Communication Technology, and the Chinese Youth League Internet, Film and Television Center effective July 1, 2008, with regard to a Qinghai Satellite TV cooperation deal. The company has not provided further information on why it delayed notice of this cancellation for 6 weeks after the supposed end of the deal.
Ling Yu, Lian Fei and Chinese Youth League Internet, Film and Television Center have supposedly mutually agreed to terminate all contracts associated with QSTV, which include an exclusive advertising agent contract and a cooperation agreement. Linktone's impairment charge associated with its investment in QSTV has been fully reserved and the company estimates the charge to be in the range of USD6 million to USD7 million, which will be included in Linktone's second quarter 2008 financial results.
The company has been re-engineering itself in recent weeks. Earlier this month it named Muliawan Guptha, a Linktone board member, as the company's new chief strategy officer. Linktone has yet to formally state its second quarter earnings for 2008, but its first quarter report shows revenues of USD20.5 million, compared with USD16 million in the fourth quarter of 2007 and USD14.2 million in the first quarter of 2007.