Chinadotcom Loss Doubles in 2nd Quarter

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

. 

 ◆ Chinadotcom Loss Doubles in 2nd Quarter

Internet conglomerate chinadotcom corp, which has slashed staff to align itself with the harsh realities of its industry in Asia, said Friday its second-quarter net loss more than doubled from the first quarter as revenue tumbled. "Overall, I would characterize the second quarter as one of significant structural adjustments for us," Chief Financial Officer Daniel Widdicombe said in an interview. While tough market conditions will likely continue, Widdicombe expects the company, whose main businesses are online consulting and online advertising, to post a narrower cash operating loss and to see a slower rate of revenue decline in the third quarter. "Because most of the cost reductions we took in the second quarter were at the end of the quarter, we are going to see benefits in the third quarter," Widdicombe added. "We expect to reduce our cash operating loss further in the third quarter at the moment." Shares of chinadotcom ended at US$2.52, or down 4.9 percent, in Friday's Nasdaq trade. The stock is down nearly 45 percent from the beginning of the year. The company posted a loss of US$58.7 million, including a one-time charge of US$28 million, compared with a first-quarter loss of US$27.9 million. A year-earlier it had posted a loss of US$14.6 million for the year-earlier period. Excluding a large range of costs such as amortization, depreciation, interest expense and goodwill impairment, the company said its loss would have been narrowed to US$17 million from US$19.7 million in the first quarter. But it widened from the US$10.6 million loss posted a year earlier. Revenue fell more than 18 percent to US$18.2 million from US$22.3 million in the first quarter. Excluding some discontinued operations, revenue fell to US$17.5 million from US$20.8 million in the first quarter and US$30.3 million a year-earlier. Chinadotcom had been expected to report revenue of about US$18.7 million, according to the average forecasts of three analysts polled by Reuters. Analysts were looking for a pro forma loss of US$16 million to US$24 million, The search for revenues While revenues in the third quarter will be lower than second-quarter levels, Widdicombe expects the rate of decline to slow. Like many of its Internet peers, chinadotcom is seeking ways to generate more revenue -- through new in-house products in the e-marketing and travel areas. It is also seeking partnerships with software companies, offering them a way to get revenue from countries where they do not have a presence. "We are chasing any type of work," said John Winslow, co-chief operating officer and head of the company's e-solutions business. "Last year we were pretty picky. This year we are aggressively going after any kind of work and focusing on partnerships, which we didn't do well last year. "I do think we are seeing a bit of a bottom," he added of the e-business unit. "I don't want to be too optimistic, but our losses will be less than last quarter." Mainland China holds a ray of light for Chinadotcom's e-marketing business as companies still see the market as having huge potential for products. Although pro forma revenues slipped, revenues from Mainland China rose 95 percent to US$4.4 million from a year-earlier and comprised 25 percent of the quarter's total. The Internet company has cut its head count from 2,450 early in the year to just above 1,600 at the end of the second quarter as part of its aggressive cost-cutting efforts. During the quarter, the company also said it ended its support relating to the AOL Hong Kong operation. "Assuming that the business doesn't deteriorate further we are very comfortable with the reductions we have seen so far," Chief Executive Peter Yip said in an interview. The company plans to use some its US$397.3 million in cash and short-term securities for acquisitions in Asia, especially in China, where the economy is relatively strong. "You can expect us to make more investments as we are sitting on cash," Yip said. "This isn't a bad time to make investment acquisitions as valuations have come down tremendously. We are taking this opportunity to aggressively look at those opportunities in the next couple quarters." Executives said any acquisitions would have to help the company's core businesses, increase gross margins and boost its dominance in certain markets.