CDC Estimates Second Quarter of 2008 to Beat Consensus Estimates
July 15 2008 - 8:53AM
Business Wire
CDC Corporation (NASDAQ: CHINA), a leading global enterprise
software and new media company, today announced preliminary
revenues for Q2 2008. CDC Corporation, based upon preliminary
financial information, anticipates total revenue for Q2 2008 to be
between approximately (U.S.)$107.3 -108.5 million, which would
represent an increase of 9-10 percent from (U.S.)$98.3 million in
Q1 2008 and would be a record second quarter for the company. This
anticipated revenue range for Q2 2008 exceeds the Wall Street
consensus estimate of $102.9 million. This includes license
revenues of approximately (U.S.) $14.2 - $14.7 million, up from
(U.S.)$12.3 million in Q1 2008, and higher than the consensus
estimate of approximately $13.0 million. CDC Corporation also
anticipates an improvement in its adjusted net income and in its
adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization, including stock based compensation) for Q2 2008
compared to Q1 2008. During the second quarter of 2008, CDC
Software implemented several cost reduction measures, in addition
to those previously completed, such as reducing facilities and
related administration expenses, eliminating redundant and
non-essential positions and accelerating integration of past
acquisitions. These cost reductions implemented toward the end of
the second quarter of 2008 are expected to yield additional annual
savings of approximately (U.S.)$15 million. Total cost reductions
undertaken over the last 12 months are expected to yield
approximately (U.S.)$31 million annually. �We are very pleased that
our expected Q2 2008 revenues and profitability will exceed Wall
Street consensus estimates for the second consecutive quarter,�
said Peter Yip, CEO of CDC Corporation. �Despite the downturn that
has been impacting the broad economy, we are pleased to see total
revenue growth from our first quarter of 2008 and achieve an
anticipated all-time record for total revenues in the second
quarter. We plan to continue to improve our operating metrics with
consistent execution quarter over quarter and we are very focused
on cash preservation and cash generation. �The second quarter�s
results were led by strong performance at CDC Software and CDC
Games,� continued Yip. �Both divisions are anticipated to post
record quarterly revenues, and total revenues are expected to
exhibit at or near double digit sequential improvement relative to
the first quarter of 2008. CDC Software saw robust results from its
CDC Supply Chain and CDC Factory product lines. We anticipate the
continuation of these trends, given that, with rising
transportation, fuel and commodity costs, CDC Factory and CDC
Supply Chain are strategically positioned to provide new and
existing customers with the critical tools they need to better
manage their own internal costs in this highly inflationary and
difficult environment. Despite our cost reduction efforts, we
expect to continue to maintain our healthy research and development
budget within CDC Software to ensure we maintain our competitive
advantage relative to enhanced product functionality and our highly
differentiated vertical expertise. �In addition, in the second
quarter, we saw robust growth in our China-based businesses, with
CDC Games expected to deliver a double-digit increase in revenues.
We also have an exciting roll-out schedule of new game launches
planned for the second half of the year. Overall, we are confident
that we have taken the steps necessary to manage our cost base in
anticipation of an on-going difficult operating environment and
look for improving operating metrics and profitability going
forward. As a result, we are cautiously optimistic about the
improving prospects for CDC Corporation.� Q2 2008 Earnings Release
CDC intends to report full Q2 2008 results in the first half of
August 2008. About CDC Corporation The CDC family of companies
includes CDC Software focused on enterprise software applications
and services, CDC Games focused on online games, and China.com
focused on portals for the greater China markets. For more
information about CDC Corporation (NASDAQ: CHINA), please visit
www.cdccorporation.net. About CDC Software CDC Software, The
Customer-Driven Company�, is a provider of enterprise software
applications designed to help organizations deliver a superior
customer experience while increasing efficiencies and
profitability. CDC Software's product suite includes: CDC Factory
(manufacturing operations management), Ross ERP (enterprise
resource planning) and SCM (supply chain management), CDC Supply
Chain (supply chain management, warehouse management and order
management), Pivotal CRM and Saratoga CRM (customer relationship
management), CDC MarketFirst (marketing automation and lead
management), Respond (customer complaint and feedback management),
c360 CRM add-on products, industry solutions and development tools
for the Microsoft Dynamics CRM platform, Platinum HRM (human
resources) and business analytics solutions. These
industry-specific solutions are used by more than 6,000 customers
worldwide within the manufacturing, financial services, health
care, home building, real estate, wholesale and retail distribution
industries. The company completes its offerings with a full
continuum of services that span the life cycle of technology and
software applications, including implementation, project
consulting, outsourced business services, application management
and offshore development. CDC Software is the enterprise software
unit of CDC Corporation (NASDAQ: CHINA) and is ranked number 12 on
the MBT 2007 Global 100 List of Enterprise and Supply Chain
Management Application vendors. For more information, please visit
www.cdcsoftware.com. About China.com Inc. China.com is a leading
operator of Internet portals, serving a broad range of audiences in
China. In 2006, it was chosen as the first company to host Google's
Video Adsense which serves video ads targeted at China's
English-speaking audience. China.com also was appointed by the
Jilin government as the exclusive web sponsor of the 2007 Asian
Winter Games. China.com was listed on the GEM of the Stock Exchange
of Hong Kong Limited on March 9, 2000. In December 2000, China.com
Inc. was admitted as a constituent stock of the Hang Seng IT and IT
Portfolio Indices. About CDC Games CDC Games is one of the market
leaders of online and mobile games in China with more than 140
million registered users. The company pioneered the "free-to-play,
pay-for-merchandise" online games model in China with Yulgang and
launched the first free-to-play, pay for merchandise FPS (first
person shooter) game in China with Special Force. Launched in July
2007, Special Force has consistently ranked in the Top 10
downloaded games in China and becoming the top revenue producer for
CDC Games. Currently, CDC Games offers six popular MMO online games
in China that include: Special Force, Yulgang, Shaiya, Mir III,
Shine and Eve Online. In March 2007, the company announced the
formation of CDC Games Studio to establish strategic relationships
with selected games development partners to accelerate the
development of new, original online games for China and other
targeted global geographies. Through its CDC Games International
(CGI) subsidiary, the company launched a long-term strategy to be a
global publisher of MMO games. As part of this long term strategy,
CDC Games launched the www.12FootTall.com portal to showcase online
games and related content in North America. For more information on
CDC Games, visit: www.cdcgames.net. Cautionary Note Regarding
Forward-Looking Statements This press release includes
"forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. These
forward-looking statements include statements regarding our range
of anticipated revenue and license revenue for Q2 2008 as well as
our expected improvement in adjusted net income and adjusted
EBITDA, our expectations to post record quarterly revenues and
exhibit double-digit sequential improvements relative to the first
quarter of 2008, our expectations regarding the yields of our
current, past and planned cost savings measures, our plans to
continue improving our operating metrics, consistently execute our
plans quarter over quarter and focus on cash preservation and cash
generation, our expectations regarding the continuation of sales
performance trends for CDC Factory and CDC Supply Chain, our
expectation to continue to maintain our research and development
budget within CDC Software to help ensure we maintain our
competitive technological advantage and our vertical expertise, our
beliefs regarding the components of our Q2 2008 performance and the
continuation of trends relating thereto, our beliefs regarding our
future prospects, our intentions regarding the timing of our Q2
2008 earnings release, our beliefs regarding the strength of our
installed base customers and sales, our beliefs regarding customer
preferences, our beliefs regarding our position and ability to
continue our growth strategy and continue to see improvements in
operating margins, our beliefs regarding our past and present cost
savings initiatives, including restructurings and headcount
reductions, and the effects thereof, including effects on out
financial performance and profit margins, and other statements that
are not historical fact, the achievement of which involve risks,
uncertainties and assumptions. If any such risks or uncertainties
materialize or if any of the assumptions proves incorrect, our
results could differ materially from the results expressed or
implied by the forward-looking statements we make. These statements
are based on management's current expectations and are subject to
risks and uncertainties and changes in circumstances. There are
important factors that could cause actual results to differ
materially from those anticipated in the forward looking
statements, including the following: (a) the ability to realize
strategic objectives by taking advantage of market opportunities in
targeted geographic markets; (b) the ability to make changes in
business strategy, development plans and product offerings to
respond to the needs of current, new and potential customers,
suppliers and strategic partners; (c) the effects of restructurings
and rationalization of operations; (d) the ability to address
technological changes and developments including the development
and enhancement of products; (e) the entry of new competitors and
their technological advances; (f) the need to develop, integrate
and deploy enterprise software applications to meet customer's
requirements; (g) the possibility of development or deployment
difficulties or delays; (h) the dependence on customer satisfaction
with the company's software products and services; (i) continued
commitment to the deployment of the enterprise software solutions;
(j) risks involved in developing software solutions and integrating
them with third-party software and services; (k) the continued
ability of the company's enterprise software solutions to address
client-specific requirements; (l) demand for and market acceptance
of new and existing enterprise software and services and the
positioning of the company's solutions; (m) the ability of staff to
operate the enterprise software and extract and utilize information
from the company's enterprise software solutions; (n) the continued
cooperation of our strategic and business partners; (o) risks
relating to economic conditions and other matters beyond our
control; (p) the risk that the preliminary financial results
provided herein could differ from our actual results of operations
and financial condition; and (q) the continued strength of revenues
from our installed base customers.. Further information on risks or
other factors that could cause results to differ is detailed in
filings or submissions with the United States Securities and
Exchange Commission made by CDC Corporation in its Annual Report
for the year ended December 31, 2007 on Form 20-F filed on June 30,
2008. All forward-looking statements included in this press release
are based upon information available to management as of the date
of the press release, and you are cautioned not to place undue
reliance on any forward looking statements which speak only as of
the date of this press release. The company assumes no obligation
to update or alter the forward looking statements whether as a
result of new information, future events or otherwise.
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