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| Portals Revise Earnings Forecasts Down |
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Major Chinese Internet portals, including Sina, Sohu and Tom Online, revised downwards their profit or revenue forecasts in the next quarter after China Mobile imposed a strict policy that will affect their ability to attract new subscribers for value-added mobile phone-based services. The policy, which compels the Websites to offer users a one-month free trail and asks users to double confirm before they pay, took effect yesterday. "The policy change may be significantly more negative than previously considered," Tom Online said in a statement, adding that it expected its business would "operate at 15 percent lower". Sohu said the new policy will cause a drop of US$1.5 million to US$2 million in its quarterly wireless revenue in the second half of this year. The firm's first quarter wireless revenue was US$8 million. KongZhong revised down its revenue projection for fiscal year 2006 to the range of US$85 million to US$105 million. On May 18, the firm projected its fiscal year 2006 revenue at between US$110 million and US$115 million. The mobile service providers, including Tom, are forced to extend free trial periods for its services and are required to send two reminders to subscribers under new rules implemented by government-backed China Mobile. China Mobile will also begin to cancel existing WAP (Wireless Application Protocol) subscriptions that have not been active for more than four months. In the next two months, China Mobile and its provincial subsidiaries plan to gradually send messages to all existing value-added mobile service subscribers to remind them about their subscriptions and fees being charged. If the users ignore the messages, China Mobile will stop charging them. "The policy changes will reduce Sina's ability to acquire new monthly subscribers and increase churn of the company's existing monthly subscribers," Sina, which gets 49 percent of its revenue from value-added services, said yesterday. A churn is an industry term that describes the turnover rate of an operator's subscribers. (Shanghai Daily July 11, 2006)
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