Chinese consumer products direct marketing and television shopping company Acorn (ATV) says it is in negotiations to acquire Yiyang Yukang Communication Equipment Company, a domestic communication equipment and electronic component producer and distributor.

Acorn says the negotiations remain ongoing and the terms of the acquisition have not yet been finalized, and all details remain subject to final approval by Acorn's board of directors. The company has not released any specifics on timing or the amount the transaction could be worth. Acorn has been struggling as its second quarter 2008 net revenues were USD47.2 million, a decrease of 25.4% compared to USD63.3 million in the second quarter of 2007.

Acorn's revenues fell in the second quarter of 2008 due to more intense competition in the TV direct sales industry as well as a tougher operating environment brought about by Sichuan's Wenchuan earthquake. Direct sales net revenues were USD37.6 million, down 27.6% compared to the second quarter of 2007. The decrease in direct sales net revenues was largely due to a 74.7% year-over-year decline in sales of mobile handsets, despite growth in its GPS products, cosmetics and posture correction products.

Acorn's cash and cash equivalents totaled USD147.5 million at the end the second quarter of 2008, nearly the same as at the end of the first quarter of 2008.

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