PacificNet (PACT) raises guidance - but did it really?

Feb.28.05 | About: Pacificnet Inc (PACT-OLD)

PacificNet (ticker: PACT), a provider of outsourcing and value-added services (VAS) in China, informed investors today that it is raising guidance for Q4. But take a look at its Q4 guidance from its Q3 earnings release. Anything new?


Q4 and FY2004 guidance from the Q3 earnings release:

  • For Q4 2004, PacificNet expects that total revenues will be from $8 to $11 million.
  • PacificNet expects profitability for Q4 and for fiscal year 2004.

Today's "revised" Q4 and FY2004 guidance:

  • For Q4 2004, the Company raised its quarterly revenue guidance from $8-$10 million to $10-$11 million, an increase of about 30% over Q3, and is expected to exceed the high end of previous guidance estimates.
  • The Company expects full year profitability for fiscal year 2004, versus a loss in fiscal 2003.
  • For fiscal year 2004, the Company raised its annual revenue guidance to $30 million, a significant increase versus 2003.
  • For Q4 2004, the Company expects quarterly net income to be more than double that of Q3, an increase of over 100% over Q3.

Quick thought: Well, the revenue guidance is consistent with what management previously suggested in the Q3 earnings release. So revenue guidance didnt change - except for the possibility of some upside - which they probably would have known about at this point. The $30 million in revenue for FY2004 is also consistent with previous guidance - if you add the high end of the revenue guidance to the $19.6 million in revenue that the company generated in the first nine months of 2004. Not only that, but we already knew that the company would be profitable for both Q4 and FY2004.

So the news is that Q4 net income is expected to more than double from Q3, an increase of over 100%. But the company didnt guide for Q4 net income. So they arent exactly raising guidance either.

So what are investors cheering so enthusiastically today?

PACT's stock market performance:

Pact2