Hong Kong-listed Chinese instant messaging and mobile firm Tencent Holdings Limited worries that online advertising will take a hit as advertisers decrease their budgets in the worsening economic environment.

As the company today announced its unaudited consolidated results for the fourth quarter of 2008 and audited consolidated results for the year ended December 31, 2008, it stated the first quarter is generally a seasonally weak quarter as advertising activities slow around Chinese New Year holidays. In a press statement, the company said it has just started to experience the rippling effect of the global recession on China, and it believes that the negative impact on its advertising business will be substantial in 2009 and it is very difficult to predict the timing of recovery.

For the full year of 2008, Tencent's total revenues were CNY7.15 billion, increase of 87.2% over the year ended December 31, 2007. Total revenues of the fourth quarter of 2008 were CNY2.10 billion, an increase of 3.6% over the third quarter of 2008 and a whopping increase of 86.9% over the fourth quarter of 2007.

Ma Huateng, chairman and CEO of Tencent, stated, "While we continue to see significant long-term potential in the Internet market, we are conscious of the potential negative impact of a slowing economy and intensifying competition in the market. Our online advertising business will experience particular pressure as advertisers reduce or delay their advertising budget, while our user-paid small ticket based entertainment and membership services will be relatively more resilient. To navigate through this challenging macro environment and position the Company for future growth, we will manage our business rigorously while continuing to make necessary investments in our platforms and our people."


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