Top Chinese wireless Internet service provider Tom Online reported a 55 per cent increase in net profits in the fourth quarter of 2005 over the same period of 2004.

It follows robust growth in its wireless value-added services provided to mobile phone users, and online advertisement.

Tom Online, listed on the NASDAQ stock market and the Growth Enterprise Market in Hong Kong, said on Friday that its revenue in the past quarter reached US$48.12 million, beating the previous guidance of US$46.75-47.75 million. Its revenue increased by 40 per cent year-on-year, and 4.7 per cent quarter-on-quarter.

Net profits were US$12.72 million, 55 per cent higher than the same period in 2004 and a drop of 1.3 per cent from the third quarter of 2005, mainly due to exchange factors. Diluted earnings per American depository share were 23.85 US cents, down from 25 US cents in the previous quarter.

"Through better operational efficiency and team efforts, Tom Online has been able to further consolidate its leadership in the wireless internet industry in 2005, which has in turn helped us achieve our growth targets and establish a credible reputation in the industry and among its partners," said Wang Leilei, chief executive officer of the company.

The company's stocks in Hong Kong grew by 1.16 per cent to HK$2.175 (29 US cents) on Friday before the figures were announced, in anticipation of a good result.

Peter Lu, an Internet analyst in Beijing, agreed that the results of Tom Online were quite outstanding, amid fierce competition and tighter regulatory control.

Shanghai-based Linktone Ltd, also a NASDAQ-listed wireless value-service provider, saw its net profits in the fourth quarter fall by more than 60 per cent quarter-on-quarter to US$1.5 million, while the net profits of another NASDAQ-listed peer, Hurray!, fell by 40 per cent to US$3 million in the period.

"The competition is very intense, so only with a unique service portfolio and a strong execution can a company win in the market," said Lu.

In the fourth quarter, dominant mobile carrier China Mobile also tightened the regulation on the wireless value-added business, including requiring service providers like Tom Online, Linktone and Hurray! to clear inactive accounts of WAP (wireless access protocol) service, which used to be one of the major revenue pools for the firms.

(China Daily 03/18/2006 page5)