Chinese wireless Internet firm Tom Online beat its forecast and reported record high revenues for the second quarter yesterday.

The Beijing-based company, listed on the Hong Kong Stock Exchange and the NASDAQ in New York, said yesterday its revenues in the past quarter rose by almost 40 percent year-on-year and over 21 percent quarter-on-quarter to US$42.78 million, which exceeded its forecast of US$37.8-38.88 million.

Net profits reached US$10.24 million, 1.8 percent higher than the same period last year and 11.8 percent higher than the first quarter.

"I am very excited that we set another record," Wang Leilei, chief executive officer of Tom Online, told China Daily over the phone.

However, the stocks of the Chinese firm backed by the richest Chinese Li- Ka-shing fell by almost 6 percent yesterday to HK$1.31 (17 US cents), before the results were announced.

Peter Lu, a Beijing-based Internet analyst, said wireless value-added services have been suffering from a market regulatory campaign since late 2003 and a change of revenue-sharing scheme between China Mobile and service providers like Tom Online. This greatly concerns investors. He added since Tom Online did not meet its previous forecast for the first quarter, investors would also prefer to wait and see future trends of the firm.

Recent changes in the revenue sharing model are actually favourable to big service providers for Tom Online, Wang explained, because China Mobile wants to get more revenues from smaller firms, which do not have the capability to promote their services. For big players like Tom Online, however, the scheme remained unchanged.

"I understand the market still has a dubious eye on wireless value-added services, but we will persist in our business and convince them with our results," said Wang. He pointed out that short messaging service (SMS) and interactive voice response (IVR) were two big contributors to the company's growth.

The text-based SMS rose by 22 percent quarter-on-quarter to US$15.41 million, while the voice-based IVR increased by 24 percent over the first quarter to US$13.2 million.

Tom Online tried to break into the online game market with an imported shooting game Karma Online from South Korea but was not successful. The company yesterday started the commercial operation of Karma Online 2, trying to keep apace with the gaming market for a future take-off.

(China Daily August 12, 2005)