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Three NASDAQ-listed Chinese Internet companies released their first quarter results yesterday before the one-week Labor Day holiday beginning on May 1, but the stocks of two companies fell due to market worries about their wireless message business.
Sohu.com Inc achieved record revenues of US$25.9 million for the first quarter with a year-on-year growth of 80 percent.
However, the quarter-on-quarter growth of Sohu's revenues was only 5 percent.
Its net profits reached US$10.9 million, down from US$11.6 million in the previous quarter.
Its earning per diluted share was 27 US cents in the first quarter.
Sohu's stock price fell almost 15 percent to US$19.20 on the NASDAQ.
Slow growth of wireless revenues was the major reason for the company's slowdown.
It said in the guidance to this quarter that the revenues from non-advertising business, mainly including to wirelesss message services, will be between US$13.5 million to US$14.1 million.
The company said it was stepping up efforts in new wireless products and expanding its distribution network for high growth in the second half.
Sohu also said it would buy back stocks worth no more than US$30 million in no less than six months.
Tom Online, listed on the Growth Enterprise Market in Hong Kong and the NASDAQ, overtook Sohu in revenues for the first time with US$26 million, growing 14 percent quarter-on-quarter.
The Chinese wireless service provider achieved a 25 percent quarter-on-quarter growth in wireless services to US$23.8 million, while its advertising revenues doubled those of the fourth quarter to US$1.2 million.
New services like the voice chat IVR (interactive voice response), wireless Internet surfing WAP (wireless access protocol), and multimedia messaging services were the biggest driving forces for Tom Online.
Tom Online's net profits rose almost 13 times year-on-year to US$8.4 million and its earning per American depository share (ADS) was 22 US cents.
Its shares in Hong Kong fell almost 7 percent to HK$1.14 (15 US cents) yesterday, while its ADS shed almost 6 percent to US$12 on Wednesday.
"Sohu's main problem is wireless business and overseas investors might begin to worry about who will be the next after Sohu and this sentiment has led to the fall of the stocks," said Michael Yin, a senior Internet analyst with Shanghai iResearch Co Ltd.
Yin said US investors' worries about a possible overheating of the Chinese economy led to a cooling down of China Concept stocks on the NASDAQ.
A recent regulation from the Ministry of Information Industry on short messaging service may also make some investors take a wait-and-see attitude to Chinese stocks.
Yin said the slow-down of Sohu's wireless revenues further added to their concerns about the prospects of the mobile message business in China.
Shanghai-based online travel service provider Ctrip.com International Ltd was the only company surviving the fall among Chinese Internet companies listed on the NASDAQ.
Ctrip recorded revenues of US$7.8 million, doubling those of the same period last year, on profits of US$2.6 million, a 220 percent year-on-year increase.
Although Ctrip's revenues were 5 percent lower and profits 12 percent lower than in the previous quarter - as the first quarter is usually the weakest season for the travel industry in China due to the Chinese Lunar New year - it beat the company's guidance for the quarter, which predicted its revenues might decline by 16 percent over the fourth quarter.
iResearch's Yin pointed out that since its online travel service model is recognized by US investors and has less risks than wireless messages, Ctrip's good results as well as its leading position in the market helped the company win investors' favor.
(China Daily April 30, 2004)
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