Wireless value-added services revenue precipitously dropped in the third quarter ended September 30, 2009, for weary Chinese mobile interactive entertainment services company Linktone Ltd.
The company announced its unaudited financial results for the third quarter ended September 30, 2009, and stated it had wireless value-added services and other revenues of USD13.8 million, compared with USD18.3 million in the second quarter of 2009 and USD16.6 million in the third quarter of 2008.
Linktone CEO Hary Tanoesoedibjo attempted to put a happy spin on the dismal numbers by stating: "Linktone was able to continue its profitability despite lower than expected revenues due to our accomplishments in broadening our value-added services platform and maintaining stringent cost controls. During the third quarter, we recognized revenue and profit from our Indonesia VAS project, which represents the first phase of our Southeast Asia expansion strategy. In order to capitalize on extensive growth opportunities in the Southeast Asian market, we will continuously focus on building our core competitive strengths and cultivating strong partnerships in the region."
For that profitability, Linktone's GAAP net income was more of a rounding error of USD0.7 million, compared with net income of USD0.9 million in the second quarter of 2009 and a net loss of USD2.3 million in the third quarter of 2008. The company's GAAP net income from continuing operations was USD0.6 million, compared with net income from continuing operations of USD0.7 million in the second quarter of 2009 and net income from continuing operations of USD1.5 million in the third quarter of 2008.
For its revenue breakdown, data-related services revenue was USD7.8 million, representing 57% of total gross revenues, compared with USD10.6 million or 58% of total gross revenues for the second quarter of 2009. The sequential decrease in Linktone's data-related services revenue was primarily attributable to decreased SMS services revenue resulting from fewer revenue sharing projects with mobile phone manufacturers, which was due to stricter Chinese government policies, and the decrease also resulted from a lower level of revenue generation from Linktone's promotional activities conducted via media channels.
SMS revenue represented 54% of gross revenues, compared with 55% for the second quarter of 2009. SMS revenue was USD7.4 million for the third quarter of 2009, compared with USD10.1 million for the second quarter of 2009. MMS revenue was USD0.1 million for the third quarter of 2009, representing 1% of gross revenues. This was unchanged from the second quarter of 2009.
WAP and Java gaming revenue represented 2% of gross revenues compared with 2% for the second quarter of 2009. WAP and Java revenue was USD0.3 million for the third quarter of 2009, compared with USD0.4 million for the second quarter of 2009.
Audio-related services accounted for 36% of gross revenues, or USD4.9 million, compared with 39%, or USD7.1 million, for the second quarter of 2009. The sequential decrease was primarily due to a decrease in IVR revenue due to decreased returns from media advertising during the quarter.
Linktone's operating loss was 1% of net revenues, compared with operating profit of 1% for the second quarter of 2009 and operating profit of 8% for the third quarter of 2008. The sequential decrease was primarily attributable to decreased returns from Linktone's spending in traditional media channels to promote its services.
For the fourth quarter ending December 31, 2009, Linktone anticipates gross revenues to be in the range of USD14 million to USD15 million.
