TOM Online Inc, an Internet company controlled by Hong Kong billionaire Li Ka-shing, posted a 15 percent rise in second-quarter profit on sales of ring tones and games to handset users in China's mainland. It forecast revenue would fall this quarter.
Net income was US$11.8 million, or 27 cents per share, compared with US$10.24 million, or 24 cents, a year earlier, the Beijing-based company said in a statement yesterday, according to Bloomberg News. Sales rose 17 percent to US$50.1 million from US$42.8 million. Third-quarter revenue may fall as much as 35 percent from the second to between US$32.5 million and US$34.5 million, the company said.
Demand in the mainland has risen for ring tones, games and other services for mobile phones as the number of cellular subscribers surges. China Mobile Ltd, the mainland's biggest mobile carrier, added a record number of users in the second quarter after cutting prices in May. The carrier also introduced rules in July making it harder to market services to handset users.
"The mobile services market has potential, but the problem now is that it's risky, with the possibility new regulations will restrict the business," Wendy Huang, an analyst with Evolution Securities in Shanghai, said before the earnings release.
Tom Online's third-quarter sales forecast lagged behind expectations of US$47.25 million in revenue for the current quarter, according to the median estimate of six analysts by Thomson Financial. The firm gets 94 percent of revenue from sales to handset users.
For the second quarter, Tom Online was expected to report profit of US$12 million on sales of US$51.2 million, according to the median estimate of nine analysts surveyed by Thomson. The company said in May that it expected second-quarter revenue of between US$50 million and US$51.5 million.
