2nd day in a row with great news! Although, I don't like that in the following article
cbs.marketwatch.com
they initially focus on net loss increasing. Although, they mention later that:
"Its operating loss ratio against revenue was minus 43 percent, the same as in the second quarter and much narrower compared to the minus 169.7 ratio in the third quarter a year ago."
They also a mention that a major increase in expenses was KEPCO increasing lease fee rates charged on bandwidth, but they fail to mention the following which was in the PR:
From PR
"Effective July 1, 1999, KEPCO increased lease fee rates
charged on bandwidth capacity, and on
ancillary facilities that we lease from KEPCO. The rate
increase only applies to the lease agreement
stipulating bandwidth capacity and ancillary facilities,
and does not affect our cable network lease
contract. As a result, the amount of lease payments to
KEPCO for data communications business
increased by 53% to KRW 10,122 million in 3Q99 from
KRW 6,622 in 2Q99.
On December 14, 1999, KEPCO agreed that it will lower
lease fee rates to the pre-July 1, 1999 level,
with retroactive adjustment from July 1, 1999. KEPCO
will reimburse Korea Thrunet for the difference
in the lease fees. The reestablishment of lower lease fee
rates will result in a decrease of KRW 3.4
billion in operating costs for 3Q99"
But overall it is a good story. I am just being picky b/c KOREA released some great news. They have great revenue growth and they beat Lehman's estimates. This should continue to go up (hopefully to infinity and beyond!!!)
Thrunet Q3 revenue rips, loss widens
Strategy focus: more cable partners, new services
By Bill Clifford, CBS MarketWatch
Last Update: 1:28 AM ET Dec 17, 1999 Net Stocks
SEOUL (CBS.MW) -- Korea Thrunet Co.'s revenues surged 755 percent in the July-September quarter from a year ago, but the company's net loss widened, as expected.
Thrunet (KOREA: news, msgs), a high-speed Internet provider in South Korea, said its net loss ballooned to $16.2 million (19.7 million won) in the third quarter, seven times more than the loss of 2.8 million won it chalked up in the same period last year.
Nasdaq-listed Korea Thrunet
The company reported results after the U.S. stock market closed Thursday. Thrunet shares soared 30 percent to 72, up 16 5/8 on Nasdaq. The rally continued in after-hours trading, up 4 percent to 75.
Thrunet's surge came amid another record run for the tech-driven Nasdaq ($COMPQ: news, msgs), which gained 2.6 percent in its first close above 3700. But the big push came from Lehman Brothers Asia's issuing its top "1-Buy" recommendation on Thrunet shares and setting a target price of $100, as first reported by CBS.MarketWatch.com. See full story.
The company said most of its third-quarter revenue gains came from "steady but strong growth in data communications services, and a dramatic increase in revenues from broadband Internet services." See Korea Thrunet's third-quarter report.
Total revenue increased to $16.7 million (20.33 million won), up 31 percent from the second quarter and 755.4 percent more than the 2.37 million won in July-September 1998. It's also more than the $15.4 million in revenue predicted by Lehman Brothers, the U.S. investment bank that took Thrunet public on November 17.
Subscribers and services
The number of Thrunet's broadband Internet end users increased 90,693 as of September 30, up 53 percent from 59,347. As of the end of November, the company said it has 112,995 end users and 47,817 accounts.
"Our immediate strategy focuses on the expansion of our subscriber base," the company said.
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To increase the number of its subscribers, Thrunet needs to broaden relationships with cable operators and keep improving its services. "As one of the three marketing channels of our broadband Internet services," it said, "we will continue expanding our exclusive agreements with cable system operators beyond the current 33 partners."
Among the Thrunet's new services is the "Open Bulletin Board System," launched this month. It's South Korea's first free bulletin-board service accessible to surfers using not only computers but also mobile phones and other wireless devices.
For 150 existing corporate clients and potential customers, Thrunet's Alpha service was launched in November to provide dedicated fiber-optic lines connected directly to their premises.
Operating loss
All this costs money to develop and deploy, which is why Thrunet is spending much more than it earns. The company posted an operating loss of $7.2 million, or 32 percent greater than its second-quarter loss and more than double that of a year earlier. Its operating loss ratio against revenue was minus 43 percent, the same as in the second quarter and much narrower compared to the minus 169.7 ratio in the third quarter a year ago.
Much of the increase in Thrunet's operating costs come from a substantial increase in usage of Korea Electric Power Corp. for using KEPCO's fiber-optic and hybrid-fiber-coaxial cable (HFC) networks, as well as higher lease fee rates for bandwidth capacity and ancillary facilities.
Thrunet said it'll expand its services not only in KEPCO's network, but also by deploying its own HFC network.
KEPCO is a leading shareholder of Thrunet, with a stake of seven percent. Microsoft Corp. (MSFT: news, msgs) owns 11 percent, and South Korea's No. 2 computer-maker Trigem owns 13 percent.
Large increases in television and newspaper advertising expenses boosted Thrunet's overall selling, general and administrative expenses in the third quarter from a year earlier. But SGA expenses decreased by four percent in absolute terms. And with revenue rising, SGA expenses as a fraction of revenue decreased even more sharply |
