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Linktone (ticker: LTON) presented at the Goldman Sachs
Internet Conference in Las Vegas last week. Here are key points from a
presentation by outgoing CFO Mark Begert and President and CEO Raymond Yang:


General Company Description

  • Interactive entertainment company.
  • Services: personal and media, game entertainment, and online and wireless community.
  • SMS, WAP, MMS, Java and online games.
  • 700 employees in 25 provinces.

Q1 Highlights

  • Acquired online casual game company Brilliant.
  • Brilliant is #5 in users and revenue in China.
  • Acquisition is accretive.
  • Announced new CFO.
  • Initiated stock repurchase program - confidence in business and availability of cash.

Services

  • 30 million wireless users.
  • 7.3 million unique paying wireless users.
  • Brilliant has 15 million registered users for casual games.
  • Wireless - average revenue per user (ARPU) is $0.69.
  • Providing wireless community services.
  • Will be launching wireless instant message service called iChat.
  • Ringtones still incredibly popular and expect continued growth.
  • Deliver ringtones through telecom operator platform.
  • Non-SMS growth strong.
  • Working with telecom operators to increase and improve services.
  • Providing content to broadband companies.

Opportunities

  • China is largest wireless market in the world.
  • Mobile penetration still low.
  • Opportunity for PHS and 3D.
  • Wireless value added services (WVAS) - optimistic about growth
  • See growing number of users and growth in higher margin businesses.
  • Plan to capitalize on growing Chinese disposable income.

Competitive Advantages

  • Local sales strategy.
  • Provincial operator relationships.
  • Diversified marketing channels.
  • Alliances with international partners.
  • Comprehensive service platform.
  • Management track record.

Competitive Landscape

  • 4 or 5 companies including Linktone have significant critical mass.
  • Mobile operators are increasingly more selective about partnerships.
  • Gap widening between top players - Sina (ticker: SINA), Tencent,
    Linktone (ticker: LTON), Tom Online (ticker: TOMO), KongZhong (ticker:
    KONG) - and 2nd tier players.
  • Subtle differences between these wireless value added service companies.
  • Other than Tencent which has a unique product, none have a killer app.
  • TOMO and LTON have broadest service offerings. Others are niche in product and in operator relationship.
  • Success is about operating expertise and agility.

Outlook

  • SMS stabilizing.
  • MMS, IVR and RBT showing rapid growth.
  • Wireless gaming is promising opportunity.
  • Rolling out wireless instant messaging - iChat.
  • Mobile search and SMS entertainment search engine coming soon.
  • Envision interactive entertainment, multi-platform, seamless between wireless and online.
  • Muti-user games over wireless and online.
  • SMS is here to stay.
  • SMS is a powerful marketing tool - can use SMS to promote all sorts of services.

Positioning

  • Linktone wants to be in position to offer services directly to consumers.
  • To do this need mcommerce, online payments, and / or debit and credit card processing.
  • Newly acquired casual game company Brilliant has some of this infrastructure in place.

Why CFO is leaving his post

  • Not going anywhere.
  • Will still be involved as director.
  • Focus on international strategy.
  • New CFO has expertise in financial management - which the company needs now.

Comment: Click here for a link to the audio presentation.

Source: Linktone (LTON) presentation from Goldman Internet conference