BIZCHINA / Weekly Roundup
Dot coms quarterly net jump
(chinadaily.com.cn)
Updated: 2006-02-28 10:22
China's leading online companies announced their unaudited financial
results for the fourth quarter and fiscal year ended December 31, 2005
this week (February 20-26) except Sohu which did two weeks earlier.
As the number of Internet users and online gamers in the world's most
populous country expands, some of the largest Chinese Internet portals
and gaming companies are reaping the rewards, posting
better-than-expected earnings results even as competition heats up.
Financial results
Sina Corp shares fell Thursday after the Chinese Internet and wireless
media firm reported lower sales and profit for its fourth quarter. Sina
Corp reported on Wednesday revenues were US$52 million for the fourth
quarter, a 9 % drop year-over-year, due to a continuing slowdown of its
wireless messaging services for mobile phone users, but a 5 % rise from
the previous quarter.
Chinese Internet media firm Sohu.com reported revenues were US$30.5
million, up 27% year-on-year and 8% quarter-on-quarter, led by strong
growth in its wireless business and large tax benefits, sending its
shares up 10 %.
U.S. shares of Baidu.com Inc. rose in premarket trading, a day after the
Chinese-language search engine reported better-than-expected
fourth-quarter results. For the full year, Baidu said fourth quarter 2005
total revenues increased to US$14.2 million, representing a 29.2%
increase from the previous quarter and a 167.7% increase from the
corresponding period in 2004, exceeding projections by Wall Street
analysts.
Chinese online game provider NetEase.com on Thursday said its profit rose
111 % amid surging use of its enduringly popular Westward Journey game,
pushing shares up as much as 10 %. The fourth quarter revenue rose to
US$60.4 million, up 5.3 % from $33.6 million a year ago. Online game
revenue beat its prior forecasts, increasing to US$49.7 million, NetEase
said.
China's top online travel agent, Ctrip.com International Ltd, said on
Wednesday its quarterly profits rose 57 % to US$ 19.2 million, fueled by
growth in airline ticket and packaged tour sales.
**Highlights For Fiscal 2005
Sina-- Net revenues of $193.6 million decreased 3% year-over-year;
Sohu-- Record total revenues of US$108.3 million, up 5% year-on-year;
Baidu -- Fiscal year 2005 total revenues increased to US$39.6 million,
representing a 171.8% increase from 2004.
Netease-- Total revenues grew 76.8% to US$210.0 million;
Ctrip-- Net revenues were US$64.6 million in 2005, compared to US$40.3
million in 2004.
Comments
Sohu, which has been under the shadow of Sina for many years, has seen
its gap between Sina narrowed significantly, China Daily reported on
Friday.
"Although Sina maintained its title as the No 1 portal in China, the
challenge from Sohu is stronger than ever before," said Peter Lu, a
veteran Internet industry analyst.
"We are proud of another record revenue quarter in our advertising
business and are pleased with our overall 2005 results in light of the
continued challenging environment surrounding the mobile value-added
service sector in China," said Wang Yan, chief executive officer of Sina.
Charles Zhang, Chairman and CEO of Sohu.com stated, "We had a very good
quarter. We continued to execute on our core business initiatives of
growing our online advertising business and developing our healthy
sponsored search segment following our search product upgrade to Sogou
2.5. "
"With Sohu's win of the Olympics sponsorship role, we have seen the
continued strengthening of the Sohu brand via our expanding advertising
revenue base. " concluded Dr. Zhang.
"We are pleased that Baidu has achieved another quarter of strong revenue
and earnings growth despite increased efforts by our peers in the Chinese
language search market," said Robin Li, Baidu's Chairman and CEO.
"We are very pleased with our record results for the fourth quarter of
2005, achieving a 57% year-on-year net revenue growth. We saw healthy
growth across all of our service sectors, reflecting the continued
momentum of our business," said James Liang, Ctrip Chairman.
"New customer additions were the primary driver of top-line growth,"
Piper Jaffray analyst Safa Rashtchy wrote in a note. Piper Jaffray has an
investment banking relationship with Ctrip.
"Strong branding, effective (marketing) alliance and superior execution
has enabled Ctrip to increase its active customer base," Lehman Brothers'
Lu Sun wrote.
Business Outlook
Sina estimates that its total revenues for the first quarter of 2006 to
be between $44.5 million and $46.5 million, with advertising revenues to
be between $21.5 million and $22.5 million, non-advertising revenues to
be between $23.0 million and $24.0 million. Non-GAAP net income for the
first quarter of 2006 is projected to be between $8.5 million and $9.5
million.
Sohu estimates total revenues for first quarter 2006 to be between
US$28.0 million to US$30.0 million, with advertising revenues of US$19.0
million to US$20.0 million and non-advertising revenues of US$9.0 million
to US$10.0 million.
Baidu currently expects to generate total revenues in an amount ranging
from US$15.5 million to US$16.1 million for the first quarter of 2006,
representing a 174% to 185% increase from the corresponding period in
2005.
William Ding, Chief Executive Officer of NetEase said, "In 2006, we
remain focused on continuing our momentum with our current MMORPG games,
Fantasy Westward Journey and Westward Journey Online II. Additionally, we
look forward to the launch of our two new major game titles, Datang, our
first 2.5D release, and Tianxia, our first 3D release."
Ctrip expects revenues in the first quarter of 2006 to decrease from the
fourth quarter of 2005, as the first quarter of each year is generally
the weakest quarter due to the seasonality factor associated with the
travel business. For the full year 2006, the company expects to continue
to thrive in a healthy travel industry in China at an approximately 35%
year-on-year revenue growth rate.
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