This summary is based on the fourth quarter fiscal 2006 earnings call conducted by AsiaInfo Holdings, Inc. (ASIA: chart) on January 24, 2007.

Management:

Investor Relations: Eileen Chu
President and Chief Executive Officer: Steve Zhang
Chief Financial Officer: Ying Han

Key Investors Issues

- EPS were 5 cents per share.
- Net revenue was $25.4 million, an increase of 58% year-over-year, and an increase of 8% sequentially.
- Sales and marketing expenses increased 22% year over year and 16% sequentially.

Fourth Quarter Highlights

Security products and service business unit performed well, with net revenue growing 28% over the previous quarter.

- The company continued to focus on delivering telecom software solutions to China’s telecom carriers, making progress on a number of fronts.
- The demand of AsiaInfo’s leading operational assistance and CRM solutions is continuing to rise, as carriers seek to differentiate their services, win customers and improve profitability in an increasingly competitive market.
- The company constructed new business support systems for Hubei and Shanxi Unicom. The company upgraded Beijing Mobile’s operational CRM - customer relationship management system, to improve their sales and marketing processes.

- With the expansion of China’s mobile user base and the advent of 3G, the company expects operators to roll out new data service offerings in areas such as music download, entertainment, WAP, and the mobile media, and AsiaInfo is in a unique position to benefit from this strength. The company signed an agreement to build a content billing system at China Mobile’s headquarters that will provide higher flexibility in handling data on the value-added services.
- In late 2006, the company formed an innovative revenue sharing agreement with China Unicom to launch a range of interactive voice response services.
- The company signed a new customer in the fourth quarter, signing a break-through contract with Shanxi Netcom to develop their business intelligence system, and expanded business relations with two China Mobile subsidiaries, Vietnam Mobile and Tibet Mobile. The company is now working with 27 of China Mobile’s 31 subsidiaries.

Telecom software products and solution revenues rose 41% year over year and 9% sequentially, as telecom operators invested in BOSS and BI system upgrades to increase their competitiveness.

- Telecom service revenues decreased 13% sequentially, primarily due to a large contract with China Unicom that was recognized in the third quarter of 2006.
- Total net revenue for the telecom business increased 32% year over year and 5% sequentially.

- Lenovo-AsiaInfo’s net revenues increased 876% year over year and 28% sequentially. The year-over-year increase was primarily due to lower-than-expected shipment volume for the business unit in the year-ago period. The sequential increase reflected strong sales efforts.
- Gross margin for Lenovo-AsiaInfo also increased from 45% in the third quarter to 52% in the fourth quarter, as revenue growth outpaced the growth in costs. Gross margins for the group decreased 1% sequentially, primarily due to greater third-party hardware passed through in the fourth quarter.

- Total group operating expenses were down 64% year over year, but rose 11% sequentially. The year-over-year decrease was primarily due to $21.2 million non-cash charge for impairment of good will and acquired intangible assets related to the Lenovo-AsiaInfo business unit in the year-ago period.
- Sales and marketing expenses increased 22% year over year and 16% sequentially. The sequential increase was in line with the increased sales and marketing activities during the fourth quarter of 2006.

- Group G&A expenses increased 31% sequentially.
- Group R&D expenses were marginally lower both year over year and sequentially.
- Telecom business posted a contribution profit before corporate G&A expenses of $3.5 million. Lenovo-AsiaInfo posted a contribution loss before corporate G&A expenses of $0.1 million.

Non-GAAP net income was $3.1 million, or 7 cents per basic share.

- Non-GAAP net loss in the year-ago period was $18.3 million, or 40 cents per basic share. Non-GAAP net income in the previous quarter was $2.7 million, or 6 cents per basic share.
- Operating cash flow was $27.6 million, reflecting strong year-end collection efforts.

- Total cash and cash equivalents plus short-term investments increased sequentially about $30.9 million to $150.5 million, reflecting the large positive cash flow during the quarter.
- Both notes receivable and accounts receivable decreased sequentially due to the enhanced collection efforts. DSO was 120 days versus last quarter’s 147 days.

Fiscal 2006 Highlights

- Net revenue was $86.7 million, a 16% increase year over year, mainly reflecting the continued growth in the telecom business and improvement in the Lenovo-AsiaInfo business. Lenovo-AsiaInfo contributed 10% to total net revenue during the year.
- Revenue from telecom software products and solutions grew by 32% compared to 2005, leading to an 18% increase in telecom net revenue for the year.