Linktone (LTON) presentation from Goldman Internet conference

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.