Linktone Lowers Outlook for Q4, FY 2005; Stock Down 24% in Early Trading (LTON)

Linktone (ticker: LTON), a China wireless value-added services company lowered its outlook for Q4 and FY 2005 today. Linktone now expects:

Q4 GAAP net income of approximately $0.03 - $0.04 per fully diluted ADS vs. previous guidance of approximately $0.15 per fully diluted ADS.

Q4 gross revenue of $20.4 - $20.6 million.

FY 2005 GAAP net income of approximately $0.43 - $0.44 per fully diluted ADS vs. previous guidance of approximately $0.54 per fully diluted ADS.

The Company attributes the lower than expected GAAP net income for Q4 to the following:

Higher costs associated with the Company's wireless value-added services, including in particular increased revenue share payments to content providers reflecting a greater percentage of its revenues derived from third party content-based services.

Lower than expected revenue for the Company's services in several provinces in China resulting principally from decreased promotional activities with the mobile operators in such provinces.

Increased expenditures due principally to the Company's continued investment in media advertising, which the Company increased in the fourth quarter to maintain its competitive position in the market, and in new businesses and product lines.

Higher than expected operating expenses, including one-time personnel related charges.

LTON 1-Yr Price Performance: