Sat, Nov 15, 2003 - Page 11 News List

Tom.com expects full-year profit

RARING TO GO The publishing and Internet company still needs to erase a deficit accumulated in the first nine months, but is optimistic it will post a profit for the year

BLOOMBERG

Billionaire Li Ka-shing's (李嘉誠) Tom.com Ltd, a publishing and Internet company, said it expects to report a profit for the full year after cost cuts helped the company post its second straight quarter of net income.

Third-quarter profit was HK$18.5 million (US$2.4 million), or 0.48 Hong Kong cent a share, compared with a net loss of HK$44.1 million, or 1.34 cents, a year ago. To reach its full-year forecast, Tom.com needs to erase a HK$14 million deficit accumulated in the first nine months and losses in the current quarter from a newly acquired Chinese television channel.

"We are moving closer to full-year profitability," Chief Executive Sing Wang (王新) told reporters. "You can't be growing Internet revenue 30 or 40 percent every quarter indefinitely because the base is getting bigger. But we're still growing."

Listed during the Internet boom in 2000, Tom.com bought publishers in Taiwan and expanded into sports marketing and mobile-phone messaging, helping it to more than double revenue last year.

Third-quarter sales were almost unchanged at HK$456.4 million after organizers canceled sports events and Chinese mobile-phone companies stopped collecting revenue for some third-party Web sites linked to Tom.com's portal.

Shares of Tom.com rose 1.1 percent to close at HK$2.30 in Hong Kong, before the earnings were released. The stock has gained 24 percent this year, lagging a 27 percent jump by the Growth Enterprise Market index, of which it's a member.

Shares of Sina Corp and Sohu.com Inc, two other Web companies that rely on Chinese cellphone users for revenue, have jumped more than five times this year, trading at multiples of more than 70 times earnings, as investors bet more Chinese will pay to download content from their Web sites.

Wang said he expects wireless revenue, which made up about a fifth of Tom.com's third-quarter sales, will grow at more than 10 percent every quarter in 2004. The company, which is expanding into online games, expects to start collecting revenue in the second quarter.

Tom.com's costs of goods sold dropped 11 percent in the third quarter, and administrative expenses fell 22 percent, helping the company to return to profit from a year earlier.

Tom.com wants to sell shares in its Internet unit after agreeing to buy a China wireless messaging business.

The company, which bought control of AOL Time Warner Inc's China Entertainment Television Broadcast Ltd during the third quarter, said the broadcaster will contribute a "significant loss" this quarter.

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