Linktone Releases Unaudited 4Q and Full Year 2011 Financial Results
Mar 13, 2012 (Close-Up Media via COMTEX) --
Linktone, a provider of media and entertainment content and services in key strategic markets in Asia, announced its financial results for the fourth quarter and fiscal year ended Dec. 31, 2011.
In a release dated March 8, the Company said cash and cash equivalents and short-term investments available for sale totaled $97.5 million as of Dec. 31, 2011, compared with $92.8 million as of September 30, 2011.
Linktone's financial results for the three months ended Dec. 31, 2011 included:
Gross revenues decreased 2.4 percent sequentially to $16.2 million in the fourth quarter of 2011, compared with $16.6 million in the third quarter. The quarter-on-quarter revenue decline was primarily attributable to the VAS data-related services revenue, which were impacted by more stringent restrictions imposed by regulators in Indonesia, and a seasonal decline in revenue from interactive voice response services in China.
On a year-over-year basis, revenue increased slightly from $16.1 million in the fourth quarter of 2010. This increase was primarily attributable to an increase in media content revenue, partially offset by the aforementioned decline in VAS data-related services revenue.
GAAP net income in the fourth quarter of 2011 was $0.1 million, or $0.002 per diluted ADS, compared with GAAP net income of $4.6 million, or $0.110 per diluted ADS, in the third quarter of 2011 and a GAAP net loss of ($1.4) million, or ($0.033) per diluted ADS, in the fourth quarter of 2010. The Company's third quarter 2011 net income included gains totaling $4.8 million related to the sale of $10 million of senior secured notes in Aerospace Satellite and a pooled investment fund with a value of $3.4 million.
"Our focus through much of 2011 was on the continued expansion of our entertainment service portfolio and content distribution capabilities with the goal of positioning Linktone for sustainable, profitable growth in 2012 and over the longer-term. For the fourth quarter, revenue exceeded the high-end of our revenue projected in Q3 2011 by $1.2 million as we increased media content sales, continued to diversify our business geographically and reduced our dependence on wireless value-added services," said Hary Tanoesoedibjo, Group Chief Executive Officer.
"In the fourth quarter, we grew media content revenue 56 percent over the third quarter and increased revenue contribution from this segment to 38 percent of total net revenues, from 23 percent in the third quarter. While our revenue base in 2012 will continue to be weighted toward WVAS, we are committed to diversifying Linktone's business and reducing revenue concentration over the longer-term through the pursuit of new growth opportunities and expansion of our presence in targeted, high growth businesses such as mobile gaming and media content distribution.
"Looking ahead, we will continue to focus on our strategic initiatives aimed at expanding Linktone's business, both in new territories and new areas of the broad multimedia marketplace. To this end, our InnoForm Group subsidiary was recently appointed as the exclusive video content distributor for our controlling shareholder PT Media Nusantara Citra, and will distribute MNC Group content including individual programs, series and television channels in targeted regions. We see great potential in this model, and are in the process of establishing an entity, which will distribute MNC-owned content and pay TV channels to markets outside Indonesia, and sell third-party content to both MNC Group and other media companies in Indonesia. MNC Group is, by far, Indonesia's largest media conglomerate, and this partnership will significantly reduce the barriers to entry for Linktone, while giving the Company a considerable competitive advantage as we establish this business in the Indonesian market. As we continue to diversify our traditional media capabilities, we are actively capturing growth opportunities within the online and mobile media segments, creating a comprehensive suite of multi-genre media distribution services for media platform owners, advertisers and potential corporate partners.
"Execution against our key growth initiatives remains on track, and we expect that 2012 will be a year of important progress for Linktone. We are continuing to expand our geographic reach, our content portfolio and our media distribution capabilities through organic growth and targeted investment opportunities. We are confident that through this strategy, we can further transform Linktone into a geographically diverse, multi-platform provider of multimedia content and services that span music, video, gaming and social media."
Fourth Quarter Revenue Mix
The shift in fourth quarter 2011 revenue mix was primarily related to an increase in media content sales in Singapore, partially offset by a decline in IVR revenue from audio-related services in China and VAS data-related revenue in Indonesia.
Data-related services revenue in the fourth quarter accounted for 45 percent of gross revenues, or $7.3 million, a decline of 16 percent from the third quarter of 2011. The sequential decline was primarily due to a decline in SMS revenue from Linktone's Indonesian operations, related to more stringent restrictions imposed by the Indonesian regulators.
Short messaging services decreased 19 percent on a sequential quarter basis, primarily due to a $1.9 million decline in SMS revenue from Linktone's Indonesia operations. This was partially offset by a $0.5 million increase in SMS revenue generated by Linktone's operations in China.
Audio-related services revenue in the fourth quarter accounted for 10 percent of gross revenue, or $1.6 million, a 47 percent decline from the third quarter of 2011. The Company's audio-related services revenue in the third quarter of 2011 was driven by a seasonal increase in IVR revenue during the summer school holidays in China.
Media content revenue increased 56 percent sequentially to $6.1 million for the fourth quarter of 2011. The quarter-on-quarter revenue growth was due to a realization of deferred revenue.
The drivers behind Linktone's key operating benchmarks and changes in balance sheet items for the fourth quarter of 2011 include:
-Gross profit margin decreased from 41 percent to 37 percent on a sequential-quarter basis. Third quarter gross margins benefitted from above-average margins generated by the Company's subsidiary, PT Linktone.
-Operating margin increased on a sequential-quarter basis, primarily due to a reversal of a contingent consideration payable in one of the operating companies in China.
-Selling and marketing expenses decreased on a sequential-quarter basis, in-line with the declines in SMS and IVR revenue.
-Other general and administrative expenses increased $1.0m on a sequential-quarter basis due to a write-off of unrecoverable and other debtors in China.
-Income tax expense increased due to a valuation allowance in deferred tax asset on one of the operating companies in China.
-Cash and cash equivalents and short-term investments available for sale, totaled $97.5 million as of Dec. 31, 2011. The $4.8 million net increase from the third quarter of 2011 was attributable to a $4.4 million revaluation gain on short-term investments.
Share Repurchase Activity
Linktone purchased shares of its stock on the open market under the Company's previously announced buyback program. During the fourth quarter, the Company purchased approximately 1.05 million ADS at an average price of $1.31 per ADS. Through Dec. 31, 2011, Linktone purchased a total of 1.1 million ADS at an average price of $1.29 per ADS.
First Quarter 2012 Outlook
For the first quarter ending March 31, Linktone anticipates gross revenues to be in the range of $11 million to $13 million.
Linktone is a provider of services and content to traditional and new media consumers and enterprises in Mainland China, Indonesia, Malaysia, Hong Kong and Singapore.
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