Chinadotcom to Be Profitable by End of 2001Chinadotcom Corporation, the first Asian Internet company listed on Nasdaq, is forecast to become profitable by the end of next year, according to a report released in Hong Kong Thursday by two Internet analysts of the Salomon Smith Barney (SSB).Pete Hitchen, SSB's Regional Internet Research Analyst, and Pratik Gupta, SSB's Head of Regional Internet Research, expect the company to incur losses in the near term given the build-out of operating infrastructure in all divisions of the company. "But with revenues expected from multiple sources in the medium to long term, we expect Chinadotcom to be one of Asia's first profitable Internet plays. Based on current estimates, we expect Chinadotcom to be net-income positive by the fourth quarter of 2001," they said. The report expects Chinadotcom's revenues to increase at a compound average growth rate of 132 percent over the next two years, driven mainly by web services and online advertising agency. They believe that Chinadotcom's expanding portal network will have to depend mostly on advertising revenue in the near term, as the market in the Chinese mainland, Hong Kong and Taiwan is at a less mature stage in terms of online transactions and, consequently, e-commerce revenues. Chinadotcom recorded 561 million US dollars in liquid funds as of the end of the first quarter of 2000, with an average monthly burn rate of only 3 million US dollars. "With many dotcoms in Asia unable to source funding, Chinadotcom is in a strong position to play the role of a major consolidator by acquiring companies that will fit in with its portfolio of companies," said Hitchen and Gupta. |
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