- Operating income was $1.9 million compared to an operating loss of $27.1 million in 2005. The operating loss in 2005 was again primarily due to the large non-cash impairment charge incurred in the fourth quarter of 2005 relating to the Lenovo-AsiaInfo business unit during the same period.
- Net income was $5.8 million, or 13 cents per basic share. Non-GAAP net income was $8.1 million for the full year 2006, or 19 cents per basic share. Non-GAAP net loss in 2005 was $14.4 million, or 32 cents per basic share.
- AsiaInfo’s net operating cash flow was $35.8 million, driven by strong year-end collection efforts.

Fiscal 2007 Outlook

- Revenue net of hardware passed through in the first quarter of 2007 is expected to be $23 million to $24 million, representing 22% to 28% year-over-year growth.
- The company expects first quarter earnings per basic share from continuing operations to be 3 cents to 4 cents. This is compared to earnings per basic share of 1 cent in the first quarter of 2006.
- The company anticipates that the Lenovo-AsiaInfo business unit will make a loss of $0.6 million to $0.8 million lost in the first quarter due to seasonality in the business relating to the long Chinese New Year holiday.

Key questions from the fourth quarter earnings call conducted by AsiaInfo Holdings, Inc. on January 24, 2007.

Chang Qiu (Forun Technology Research): You had a good recovery in the Lenovo-AsiaInfo business. There is some seasonality in the first quarter. When you will achieve break-even for that business?

Steve Zhang: We expect to achieve operational results break-even in quarter two or quarter three of this year. We are striving to get to the break-even point in the second quarter.

Chang Qiu (Forun Technology Research): You have business with 27 of the provincial China Mobile subsidiaries out of 31. Could you breakdown between CRM or BI business?

Steve Zhang: We have about nine-and-a-half provinces we are providing BOSS and the billings. We have 15 provinces where we are providing the BI solution. There is some overlap for this nine and 15, but we also provide other solutions to other provincial subsidiaries, like our Short Messaging Gateway, or BOSS network management systems.

Chang Qiu (Forun Technology Research): Do you expect any adoption by other provincial carriers for the BOSS system?

Steve Zhang: We are working on that. In the year 2006, we increased our market share for our business intelligence, BI, solutions. We increased the market share by two provincial subsidiaries, and we will work hard to see whether we can grow our BOSS solutions in 2007.

Chang Qiu (Forun Technology Research): You mentioned you may win some newer contracts in 2007. Is that basically with China Mobile or also with the other telecom carriers?

Steve Zhang: Because China Mobile’s IT support systems build-up is well ahead of other operators, and so this new advanced, real-time analysis system, we have seen that we most likely will see the first deployment in China Mobile. The deployment at the other operators will not happen until 2008.

Chang Qiu (Forun Technology Research): What is the timing for China Mobile implementation of the new tool?

Steve Zhang: I cannot give you a precise timing for the deployment. Most likely quarter three of 2007, because right now we are doing the trials in the headquarters and they are going to have their planning meeting session in March. If we are lucky, we will sign the contract in the second quarter and start deployment in the third quarter. It takes some time for them to approve the solution and make sure all the provincial subsidiaries are starting to plan for this.

Ben Kedem (Kedem Capital Corporation): During the quarter, you announced many contracts with all the major Chinese telecom companies. Can you tell us when these contracts are going to make meaningful contributions to your numbers?

Steve Zhang: They will start making contributions in the year 2007. Normally when we sign the contracts, it takes us nine months to deliver the full contract.

Ben Kedem (Kedem Capital Corporation): Will it take approximately nine months until we will see contributions?

Steve Zhang: No, it will take us nine months to deliver 90% of the contract. Basically, over the nine months, we base it on our revenue recognition policy. We will recognize part of the contract as revenue. Normally when we sign the contracts, it takes nine months for us to get the customer to sign the preliminary acceptance test, pass the preliminary acceptance test. That is the milestone when we need to recognize about 90% of the contract value.

Ben Kedem (Kedem Capital Corporation): Will the contribution start almost right away when you announce the contract?

Steve Zhang: No, when we start delivering. For example, we may need to install our software, and also when we have a project team that starts working on those projects, we will recognize the revenue based on a policy that is in line with project progress.