Linktone Ltd. (LTON), a provider of wireless interactive entertainment and advertising in China, reported second quarter 2008 financial results yesterday afternoon. Investors cheered the news by sending LTON shares 20% higher today, or $0.30, to close at $1.80 on five times normal trading volume.
Revenues for the second quarter rose 63% year-over-year to $19.1 million. On a sequential basis, revenues fell 7% from $20.5 million in the first quarter. GAAP net loss swelled to $10.6 million, or 26 cents per ADS, compared to a net loss of $3.2 million, or 13 cents per ADS, for the same period in 2007. Non-GAAP net loss, excluding a one-time non-cash impairment charge of $6.0 million and other charges, was $4.4 million, or 11 cents per ADS, compared to a non-GAAP net loss of $2.9 million, or 12 cents per ADS, for Q2 2007. The dilution in loss per ADS is accounted for by an increase in the number of ADSs from 23.9 million on June 30, 2007 to 41.5 million on June 30, 2008.
“Excluding the one time impairment charge of $6.0 million associated with Linktone’s strategic decision to terminate its cooperation agreements with the Chinese Youth League Internet, Film and Television Centre (”CYL”) with regard to Qinghai Satellite Television (”QSTV”), the Company’s other operating expenses for the second quarter totaled $6.4 million, which were down 12% from the prior quarter,” said Michael Li, Linktone’s Chief Executive Officer.
He continued, “This reduction in operating costs reflects our commitment to cost containment as we look to further streamline the Company and return it to profitability. With the termination of these contracts, the Company can focus on its core wireless and fixed line value-added business, and also leverage PT Media Nusantara Citra (”MNC”) resources to explore synergistic investment opportunities for future growth. Returning back to profitability becomes the top priority for Linktone.”
The company provided revenue guidance for the third quarter of $18.0 – $19.5 million. Shares of LTON have traded in a 52-week range of $1.40 – $4.40. LTON has a market cap of approximately $75 million.
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