Tom Online warns of flat growth in revenue
Tom Online expects flat revenue growth this quarter due to competition for multimedia services (MMS) from China's leading mobile operator.
The company, dually listed on the Growth Enterprise Market and Nasdaq, said revenue would rise from US$34.48 million last quarter to between US$35.5 million and US$36.2 million this quarter, representing an increase of only 2.9 per cent to 4.9 per cent, against a 9.8 per cent rise in the previous period.
'The migration of MMS services to China Mobile could put pressure on the company's MMS revenue this quarter,' Tom Online said in its earnings statement.
'But strong demand for voice and WAP [wireless application protocol] services may offset the potential downturn,' it said.
Chief executive Wang Leilei said he expected MMS revenue to rebound after the second quarter and that the company would continue to improve on its margin, which climbed to 47 per cent last year from 43 per cent a year ago.
'MMS is only a temporary business for us,' Mr Wang said. 'The business contributed the biggest sales but it is not sustainable in terms of user behaviour. Short messaging remains our cash-cow and, in four to five years, IVR [interactive voice response] services will be our core wireless revenue.'
Tom Online plans to develop a nationwide distribution platform, boost television promotions and embed its offerings in handsets before they are put on the market.
MMS and WAP accounted for 37 per cent of total turnover in the last quarter, while SMS made up 35 per cent and voice - IVR and ring-back tones - made up 28 per cent.
The firm expects the number of WAP users to rise from 35 million to 90 million this year, ring-back tone customers to increase from 20 million to 65 million and IVR consumers to triple to 60 million.
Tom Online saw its net profit rise 73.2 per cent to US$33.9 million last year.
