Chinadotcom First-Quarter Revenues Nearly Double
By Cindy Christ

Internet company Chinadotcom Corp. reported an 84 percent rise in first quarter revenues Wednesday, buoyed by strong growth in online advertising and electronic business services.

For the quarter ended March 31, Hong Kong-based chinadotcom posted revenues of $20 million compared to $11 million during the previous quarter.

Due to non-operating gains, including a follow-on offering valued at $282 million, chinadotcom reported a first quarter net profit of $109 million.

On March 9, the company also listed its subsidiary hongkong.com on the Growth Enterprise Market in Hong Kong, raising $172 million.

Operating loss was $18.1 million as compared to $16 million in 1999's first quarter.

A broad measure of cash flow, earnings before interest, tax, depreciation and amortization or EBITDA improved from a loss of $12 million in fourth quarter 1999 to negative $11 million in first quarter 2000, excluding non-operating gains.

During a conference call with analysts and reporters, chinadotcom CEO Peter Yip said his company is on track to turn a profit some time next year.

"Each dimension of our core businesses -- e-business solutions, on-line advertising and our integrated portal network -- is realizing continued rapid growth and increasing gross margins, and decreasing operating cash losses," Yip said in a statement.

Advertising revenue for the quarter totaled $9.3 million, a 105 percent increase from the previous quarter. E-business revenue hit $10.2 million, up 88 percent sequentially.

The company said the boost in e-business revenues was powered by growth in its supply chain management services.

Gross margin in the first quarter rose to $7 million, or 35 percent of total revenues, up from 33 percent sequentially.

The company's cash on hand and other cash equivalents on March 31 were $561 million, nearly 250 percent higher than $125 million reported in the fourth quarter.

Based on explosive growth in registered users and page views, the company said chinadotcom is the fastest growing portal in greater China and well on its way to becoming the country's No. 1 portal.

During the quarter, 4.5 million registered users visited chinadotcom's integrated portal network, a 104 percent jump from 2.2 million registered users at the end of December.

In addition, Chinadotcom continued to pursue partnerships with established Internet players, including a 50/50 joint venture with Softbank Investment Strategic to provide business and e- consulting services in Japan.

"We will continue to expand all dimensions of the e-business solutions, online advertising, and portal operations throughout Mainland China and the Asia-Pacific region," Yip said.

"We believe we are ideally positioned to capitalize on the wealth of business opportunities that will be created by Mainland China's eventual accession to the World Trade Organization," he added.

If admitted, China's entry into the World Trade Organization should benefit Internet businesses there by providing much needed Internet infrastructure development by U.S. telecommunications companies and opportunities for strategic alliances with foreign firms.

Shares in chinadotcom (CHINA) closed down $0.81, or 2.6 percent, at $30.06 after leaping 13 percent intraday.

Chinadotcom went public in July 1999 at $20 a share. During the last 52 weeks, its stock has traded as high as $78 and as low as $6.