Tom.com, Hutchison Whampoa's and Cheung Kong (Holdings)'s Internet vehicle, lost HK$193.89 million in the first six months largely because of substantial spending on branding and the development of its Web sites. The company, the hottest stock market listing this year, said most of the loss occurred in the second quarter, when it had HK$148.5 million of red ink. It lost HK$45.4 million in the first quarter. Turnover in the half was a mere HK$5.27 million. The loss per share was 7.08 HK cents. Chief executive Sing Wang said there was substantial capital investment in the second quarter for marketing and promoting last month's launch. During the half Tom.com spent US$20 million on Web site development and branding, and US$10 million on operating expenses. Chairman Frank Sixt yesterday said Tom.com, formed late last year, would place increasing emphasis on mainland-related investments and acquisitions to accelerate growth. The worse-than-expected result came as other portal operators also reported growing losses. Mainland portal-operator Sohu.com had a second quarter loss of US$6.5 million on revenues of US$1.3 million. The loss widened from the US$4.1 million in the first quarter - when its revenue was just US$800,000. Losses at mainland portal, Netease.com, widened to US$3.3 million in the second quarter after a previous quarter's US$2.9 million loss. Investors' confidence in Tom.com could be hit hard if the company failed to come up with a clear strategy to become profitable, analysts said. Analyst complained about management's failure to disclose a firm business plan for the next 12 months. Tom.com caused a buying frenzy when it listed on March 1. The counter's share price closed at HK$7.75 on its first day of trading, up from its HK$1.78 issue price. Yesterday it fell 25 HK cents to finish at HK$5.35. Mr Wang declined to discuss the company's earnings prospects. But he said it would continue to restructure to lower operating costs. On Friday, it said it was laying off 80 staff to cut costs. It also terminated contracts with 30 temporary employees. According to analysts, total spending of Tom.com per month had grown to HK$57 million before the layoffs. It is expected to fall to about HK$30 million after the restructuring. Mr Wang said the company had approval from Beijing to set up a wholly owned investment vehicle. With a registered capital of US$30 million, it would invest in telecommunications, electronics and computing ventures. Analysts said the move to cut operating costs in portal development and the mainland acquisition plan indicated Tom.com was slowing its portal business. They said it could become a diversified unit involved in Internet-related deal-making. Some analysts speculated that Tom.com could become a financial vehicle of Cheung Kong and Hutchison Whampoa to buy Internet assets from its major shareholders. Analysts predicted Tom.com would see a full-year loss of more than HK$300 million. Meanwhile, UBS Warburg regional Internet analyst Jasmine Koh said she did not expect either Sohu or Netease to be profitable until after 2003. They were expected to boost sales and marketing expenses to protect market shares. Based on this year's forecast revenues, they were trading at price-revenue multiples of about 20, compared to industry leader Sina.com at 40, and Yahoo! at 64. Sohu and Netease's shares ended Monday at US$6.37 and US$6.06, respectively, down 50.9 per cent and 60.8 per cent since they listed about a month ago.