- As of September 2008, AsiaInfo’s total short-term investments amounted to $34.8 million.
- The effective tax rate was 19.6% during the quarter compared to 18.3% in the year-ago period and 23% in the previous quarter. The effective tax rate for the first nine months of 2008 was approximately 19.7%.
Net income excluding share-based compensation expenses, amortization, and impairment charges, dividend income, and gain on discontinued operations, or non-GAAP net income, was $7.6 million in the third quarter of 2008, or $0.16 per basic share.
- Non-GAAP net income in the year-ago period was $4.8 million, or $0.11 per basic share.
- Non-GAAP net income in the previous quarter was $6.2 million, or $0.14 per basic share.
- DSO’ in the third quarter of 2008 were 113 days versus 107 days in the previous quarter.
- Operating cash flow for the quarter was a net inflow of approximately $716,000.
Total cash position, including cash and cash equivalents, restricted cash, and short-term investments was $210.6 million.
Deferred revenue at the end of third quarter was $38 million, an increase of 107% and 6% when compared to the September 2000 balance and June 2008 balance, respectively.
For the fourth quarter 2008, AsiaInfo expects net revenues to be in the range of $47 million to $48 million, or 34% to 37% year over year growth, and fourth quarter EPS to be $0.14 to $0.16.
Net income from continuing operations per basic share in the fourth quarter of 2007 was $0.15.
AsiaInfo has not yet received approval for its ""New Technology Enterprise"" and ""Advanced Technology Enterprise"" status, but expects to receive these statuses and to recognize a tax benefit.
Key questions and answers from the third quarter fiscal 2008 earnings call conducted by AsiaInfo Holding, Inc. (ASIA) on October 30, 2008.
Donald Lu (Goldman Sachs):
My first question is on the margin side. I don’t see the margin guidance for the fourth quarter.
Steve Zhang: Our operating margin of net revenue in the third quarter was 12.4% and we didn’t give out the guidance on the fourth quarter. I think it will be certainly higher than our third quarter net margin number.
Eileen Chu: Actually, historically, we never give out guidance on our operating margin, but if you look at our 2007 quarterly operating margin, you can see that Q1 and Q2 is always our lowest season and Q3 and Q4 is our high season.
Donald Lu (Goldman Sachs):
Based on your current tender result at China Telecom, China Unicom, what is your current outlook for growth margins and operating margins for those new accounts?
Steve Zhang: We normally won''t give our next quarter’s guidance. But for next year, traditionally we have been growing our revenues with the rate of 30% with a gross margin on net revenue pretty stable around 55%. And that’s our target also for next year.
You can see over the last three, four years, our gross margin on our net revenue has been relatively stable around 55%, so that will continue.
Donald Lu (Goldman Sachs):
Recently we have heard in the China Telecom’s tender the price competition has been very severe. This Huawei basically offer free coupon at a loss. Have you seen similar kind of cut throat competition?
Steve Zhang: I think on the IT side, we didn’t see that kind of cut throat competition. It’s because China Telecom knows that lower price won''t generate good results. So, we are happy with our tender results, and we are happy also with the pricing we got from China Telecom.
Donald Lu (Goldman Sachs):
You have given us some very impressive design wins for China Telecom and China Unicom. For China Unicom, are they going to start really considering you a supplier for their billing system in each province?
Steve Zhang: China Unicom opened up eight provinces in the southern part of China for bidding. And the bidding was basically done and we expect to get the official results pretty soon. It should happen in this quarter. We are continuing to aggressively pursue the Unicom opportunity and I think the challenge for China Unicom is in the northern provinces because they need to formulate a plan to integrate a very complex wireless billing system with a very complex fixed line billing system. And we are still working with our customers to formulate a design for that work.
Karl Keirstead (Kaufman Brothers):
I had a question for you about all of these new deals that you’ve won from Telecom and that you are hoping to win from Unicom. I am wondering how many of those recent wins actually did you derive revenues from during the third quarter or do most of those recent wins not kick in and affect your P&L until the fourth quarter or the fourth quarter, may be you could talk a little about how we convert recent bookings into revenues?
