Tom Online (TOMO) misses, but shows less reliance on messaging, stock up (4Q04 earnings)

Includes: KZ, LTON, TOMOY
by: Ezra Marbach

Tom Online (ticker: TOMO), a Chinese wireless media company, missed Q4 2004 consensus EPS estimates. Q4 results were not broken out in the company's press release. Here are the details provided by an e-mail response from CFO Peter Schloss, and the company's conference call presentation:

Q4 2004:
(all percentage changes and comparisons are sequential, unless stated otherwise)

  • Revenues up 10% to $34.5 million
  • Revenue breakdown: SMS $11.1 million, MMS $5.7 million, WAP $6.1 million, IVR $6.8 million, ring back tones $2.2 million, online advertising $2.0 million, commercial enterprise solution $505,000.
  • Gross Profit up 13% to $15.3 million
  • Net income up 13% to $8.2 million
  • EPS was $0.17 vs $0.16. Reuters consensus estimate was $0.175.

Q4 wireless product revenue breakdown (sequential growth in brackets):

  • Voice response: $9 million (+47%).
  • 2.5G: $11.8 million (+45%).
  • SMS: $11.1 million (-21%).

Q4 wireless product revenue as % of total wireless revenue in Q4 (vs Q3):

  • Voice response: 28% (vs 22%).
  • 2.5G: 37% (vs 29%).
  • SMS: 35% (vs 49%).

CEO Comments:

“I’m very proud of our results for 2004 where we achieved record high revenue and net profit. The Company has demonstrated
that wireless internet services are a sustainable and viable business
despite having encountered unexpected regulatory challenges during
the year. While the Company benefits from its diversified revenue
and product mix, its successful track record of mergers and acquisitions
lays for the Company a road ahead to more organic growth. It is
my belief that our diversification strategy will continue to help
us capture any growth opportunities in 2005,