Linktone Revenues & Net Q3 08 to Q3 09

Chinese value-added services (VAS) company Linktone (LTON) reported earnings after the US markets closed on Monday. You may notice that there's some discrepancy between the comparable Q2 2009 and Q3 2008 revenue numbers in their release and my numbers above, which are based on what most financial sites have on record. I'll reconcile these if I determine the financial sites are incorrect. Either way, China Wireless News summed it up nicely by calling the Q3 numbers "dismal". Indeed the company seems stuck in a bit of rut and it's clearly not yet seeing meaningful results from diversification into services beyond the SMS & IVR vending of graphics, tones and fortunes or their international expansion initiatives beyond China. Investors are definitely not impressed and have been punishing the stock all morning... it's been down over 20% for most of the early trading session. I think that in order for Linktone to get back in the market's good graces and provide meaningful competition to China's #1 mobile content player, KongZhong (KONG), they're really going to have to step it up in the mobile games space, broaden their offering of 3G oriented services (like their recently announced MLB video deal) and quickly prove that they can be a relevant player in new markets they're pursuing in South East Asia.

KongZhong Got It Goin' On

I've done a bunch of posts about Chinese mobile content kingpin KongZhong (KONG) in the past, so I'm not going to rehash what they do... but, generally you should know, I'm a big fan of this company, with the caveat that I've had lingering concerns that their success is unduly reliant on staying in the good graces of China Mobile. Based on their Q3 earnings conference call, earlier this evening, I feel confident that the company is keenly aware of this and that they're taking all the right moves to mitigate that situation. Currently, the fastest growing (246% y-o-y) sector of KongZhong's revenue mix (23.4% or $8.2mil in Q3) is coming from their catalog of 400 mobile games, which are distributed through multiple channels. Only 33% of their downloadable game revenue is billed through China Mobile, the rest comes equally from handset manufacturer and off-deck WAP channels (including their own Kong.net portal). The company is forecasting revenues of between $37-$38mil for Q4 and they believe mobile games will continue to be the revenue driver. They also mentioned that they are beginning to see real revenues from freemium (try & buy) and virtual goods billing models for games. I think these guys are firing on all cylinders, and given that they are the smartest and strongest player with the most cash ($135mil) in one of the fastest growing mobile markets in the world, I think KongZhong has the potential (within the next 3 years) to be the biggest mobile entertainment company in the world. Someone owes me a drink when that happens.