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PacificNet (ticker: PACT), a provider of outsourcing and value-added services
in China, finally announced Q4 and FY2004 results today. The company reported EPS of $0.06. There were no analyst estimates. The company came in at the low end of "revised" Q4 revenue guidance, and missed its FY 2004 revenue guidance.


Q4 Results:
(all percentage changes and comparisons are year on
year, unless stated otherwise)

  • Revenue increased 1,053% to $10.1 million. Company guided between $10 - 11 million.
  • Operating income increased to $1.0 million from a loss of ($1.6 million).
  • Net income increased to $446,000 from a loss of ($846,000). Company expected net income to double from Q3 2004. It reported net income of $136,000 in Q3 2004.
  • EPS of $0.06 versus a loss of ($0.14).
  • Cash and equivalents were $6.8 million as of December 31, 2004, compared to $3.8 million at the end of fiscal 2003.
  • Continued profitability in each of the acquired subsidiaries and investments: YueShen, Epro, Linkhead, Smartime, and Cheer Era.

PACT's "Revised" Guidance for FY 2004 (Provided in February 2005):

  • Guidance: Revenue of $30.0 million.
  • Actual: Revenue of $29.7 million.

FY 2005 Guidance:

  • Revenue of $45 - $50 million.
  • Net income of $2.8 - $4.2 million.
  • EPS of $0.25 - $0.38.

Q1 2005 Guidance:

  • Revenues of $8.5 - $9 million.
  • Net income of $300,000 - $400,000.
  • EPS of $0.03 - $0.04.

Q2 2005 Guidance:

  • Revenues of $10.5 - $12 million.
  • Net income of $550,000 - $700,000.
  • EPS of $0.05 - $0.06.

General Guidance for 2005:

  • PacificNet's strategy in 2005 is to capture market share and top-line growth in the VAS and IVR market in China while enhancing profit margins.
  • The Company expects continued revenue and profit growth in 2005 through organic growth and accretive acquisitions in the VAS and IVR market in China.
  • The results
    variance between Q4 2004 and Q1 2005 is due to
    seasonal fluctuations in quarterly performance. Traditionally,
    the first quarter from January to March is a low season due to
    the long Lunar New Year holidays in China. Revenue and income from
    operations tend to be higher in the fourth quarter due to year-end
    holiday promotions.

Tony Tong, Chairman of
PacificNet:

....2004 was a milestone year for PacificNet highlighted by rapid
revenue growth, accretive acquisitions, a strengthened balance sheet
and business expansion in China. We were very pleased by our strong fourth quarter
results, which was our fourth consecutive profitable quarter with
improving margins. We continued to build scale through the acquisition
and integration of various companies in our value chain. Most
importantly, we are now profitable in all acquired subsidiaries in
China and Hong Kong. We have grown the company into a 1,000-employee
organization with a presence in Hong Kong, Beijing, Shenzhen,
Guangzhou, Shandong, and the US. We continue to execute on our
strategy of capturing market share and revenue increases through
organic growth, accretive acquisitions, and synergistic value
creation. We believe that our fundamentals are stronger than ever and
that market opportunities for sustainable growth and profitability in
China's CRM and VAS sector are vast.

PACT stock market performance:
Pact418


Source: PacificNet (PACT) reports profit, but misses FY04 revenue guidance (4Q04)