Mind you, sales dropped nearly in half year-over-year.
Lee’s upgrading the stock to Hold from Sell, saying the cash should prop up the shares. That said, he’s got narry a bullish thing to say about the mighty Kong. KongZong’s business is one of providing SMS text messaging and WAP content, a sort of baby version of HTML, for display on mobile phones in China. China Mobile (NYSE:CHL), the country’s dominant cell phone operator, places onerous restrictions on companies such as KongZong and competitor Tom Online (NASDAQ:TOMO), such as preventing the firms from allowing people to follow hyperlinks that lead to other sites (aren’t hyperlinks what Web content is all about?).
Those restrictions were largely responsible for a drastic 16% drop in revenue, notes Lee. What’s more, the company’s operating profit margin went negative for the first time since Kong’s been public.