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SCMP Reporter

Internet company Chinadotcom's cost-cutting measures have helped narrow its fourth-quarter net loss by 58.91 per cent.

The Nasdaq Stock Market-listed, Hong Kong-based company cut its net loss for the three months to December to US$10.19 million, down from US$24.8 million in the previous quarter.

The firm said net loss for the full year doubled to US$121.61 million, while revenue almost halved to US$38.89 million. The company recorded a US$59.8 million net loss on US$65.3 million revenue the previous year.

Chief financial officer Daniel Widdicombe attributed the quarterly improvement to a 49.15 per cent cut in selling, general and administration expenses to US$11.1 million.

Mr Widdicombe said the substantial drop reflected the benefits of continuing cost-reduction initiatives started over the past year.

Since last May, Chinadotcom's cost-cutting measures have included slashing staff numbers to 1,300 from 2,400, and closing or disposing of non-core businesses.

On a full-year basis, Chinadotcom cut its selling, general and administrative costs by more than US$50 million.

Cash operating loss for the fourth quarter was slashed by 72.32 per cent to US$4.4 million, compared with a US$15.9 million loss in the third quarter.

Chinadotcom saw its first net cash inflow - of US$3 million - from operations, after taking into account US$7.39 million interest income from its US$388 million net cash reserve.

'We've reached the first step, which is stop burning the cash,' Mr Widdicombe said.

Chinadotcom also saw a halt to falling revenues, by posting a 2.55 per cent, or US$443,000 gain, to US$17.75 million.

The firm's revenues fell in the four previous quarters.

SG Securities' Jonathan Iu said Chinadotcom's revenue growth in the fourth quarter was a good sign for the Internet sector as it indicated the beleaguered advertising market had bottomed out.

'We're not going to see much downside [in the advertising market],' Mr Iu said.

'Advertising is a fixed budget, they can't not advertise at all... traditional advertisers will keep a minimal budget, but they will still advertise.'

Portal operator hongkong.com - 80 per cent controlled by Chinadotcom - posted a 60.1 per cent increase in turnover in the fourth quarter to HK$22.22 million.

Although Chinadotcom expressed confidence in achieving break even by the end of the year, Mr Widdicombe said it was expecting to see a seasonal dip in the first quarter due to the two-week Lunar New Year Holiday in China.

Revenue from the mainland market accounted for about 26 per cent of the company's revenue last year, up from 12 per cent in 2000.

Chinadotcom said it would continue to seek acquisition targets to enhance earnings.

Chief executive Peter Yip said the company was in talks on three potential acquisition deals, but offered no details.



Chinadotcom cost cuts squeeze losses