CDC Corp Unveils New Online Game Revenue Model (CHINA 2Q05 conf call quotes)

CDC Corporation (ticker: CHINA) reported Q2 2005 earnings results last week. CEO Raymond Ch'ien discussed CHINA's new online game and future guidance during management's earnings results conference call:

On CHINA's New Online Game

....China.com Inc.'s 48%-owned online game company, 17game, launched a new game called Yulgang. Since Yulgang's commercial launch in July 2005, peak concurrent users have exceeded 160,000 and there are over 6 million registered users. We expect this growth momentum to continue. Unlike traditional online game revenue models, game players of Yulgang buy virtual merchandise and services from the online game shop rather than paying for time spent on the game itself. This particular model, while having proven successful in Korea, is new to China and we are pleased to be a pioneer in this.

On General Guidance

....Our key strategic priorities and areas of focus for the rest of 2005 are our enterprise software and mobile value-added services businesses, as well as our games and advertising and marketing business, which includes the China.com portal.

....These initiatives may result in an adverse effect to the financial results for the Company in the last two quarters. However, we do foresee that these actions will positively impact our results in 2006 and beyond.

(Quotes are from the CCBN StreetEvents transcript.)

FY 2005 Guidance

• Revenue of $240 - $260 million vs consensus estimate of $231.9 million.
• Software revenue of $160 - $175 million.
• Non software revenue of $80 - $85 million.
• Gross profit of $135 - $145 million.
• Gross margin of 50% - 55%.