Chinese wireless VAS provider Linktone is still being affected by the billing rules implemented in China about a year ago. Linktone has reported its second quarter results for the three months ending June 30th, and revenue fell by almost half to $11.7 million from $23.3 million for the same period a year ago. This effectively inverted Linktone’s income, which went from a profit of $3.1 million for the second quarter of 2006 to a loss of $3.2 million for the second quarter of this year. “Chief Executive Michael Li said in a statement the company “continued to face a challenging regulatory environment” during the quarter, but he expects added regulations will improve the industry in the long run” reports AP.
Much of Linktones lost revenue was from its data-related services, which fell to $5.7 million for the quarter (49 percent of total revenues) from $9.1 million for the first quarter of 2007 (64 percent of total revenues), and most of this was lost from SMS revenue, which brought in $4.3 million in the quarter (37 percent of total revenue) compared to $7.1 million for Q1 2007 (50 percent of total revenues). The revenue from most other data services remained stable or grew slightly, the exception being games which fell from $1 million in Q1 to $0.4 million in Q2. Advertising service revenue increased from $0.6 million in Q1 2007 to $1.6 million in Q2 2007, the result of more contract wins. Although Linktone is going the way of a lot of third-party content providers around the world who relied on ringtone and wallpaper sales, it still has $44.1 million in cash so it’s got time to change the focus of its operations. It seems to be doing this, such as buying a stake in a mobile payments company.
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