China.com Reports Financial Results for the Third Quarter of 2006

China.com Reports Financial Results for the Third Quarter of 2006

November 13, 2006

Continual Profitability and Strong Balance Sheet

    -- Financial highlights for the three months ended 30
September, 2006:
    -- Total revenue was HK$132 million, up 22%
year-on-year 
    -- Gross profit was HK$82 million, up 33% year-on-year
    -- Profit attributable to shareholders was HK$17.5
million, up 251% year-
       on-year
    -- Company sustained positive operating cash flow and
has maintained a 
       strong balance sheet, with over HK$949 million in
net cash and cash 
       equivalents


    BEIJING, Nov. 10 /Xinhua-PRNewswire/ -©¤ China.com Inc.
("China.com"; Hong Kong Stock Code: 8006), a
mobile value added services ("MVAS"), Internet
services and online game provider operating principally in
China, and a 77%-owned subsidiary of CDC Corporation
(Nasdaq: CHINA), today announced its financial results for
the three months ended 30 September, 2006.  During the
period, the Company recorded total revenue of HK$132
million, representing an increase of 22% over the same
period last year, while gross profit was HK$82 million, up
33% year-on-year.  Profit attributable to shareholders was
HK$17.5 million, up 251% from Q3 2005.  Balance sheet
position remained strong with net cash and interest-bearing
securities at over HK$949 million as at 30 September 2006.

    Mobile Value Added Services

    As noted in prior announcements, the company was
alerted in June to policy changes for all subscription
services on China Mobile's ("CMCC") Monternet
platform which may affect the company's MVAS subscription
services. The changes, which are being implemented under
the policy directives of China's Ministry of Information
Industry, were aimed to address industry-wide objectives
including reduction of customer complaints, increase in
customer satisfaction and to promote the healthy
development of the MVAS industry and CMCC's Monternet. 

    As expected, the company's MVAS business activity was
initially negatively impacted at the beginning of Q3.  Its
July revenue from mobile services and applications
experienced a 39% month-on-month decline and a 29% decrease
compared to the same period last year.  However, the company
had already begun a recovery by the middle of the quarter
and had shown continuing growth on a monthly basis since
the end of July. 

    In August, it successfully reversed the downtrend of
mobile services and applications revenue, with a 2%
month-on-month increase.  In September, it continued the
growth trend with a 21% increase in revenue compared to
August.

    The main reasons for the growth can be attributed to
its proactive revamp of the service offerings and marketing
channels, as well as exploring new cooperation opportunities
with mobile operators in China, in an effort to minimize the
impact of the policy changes.  In August, the company won a
contract from Beijing Mobile for the exclusive right to
design, develop and operate the graphic channel of
"Beijing in my hand", which features and promotes
popular products through the download of WAP pictures.  The
company was also awarded the contract from Jiangsu Wuxi
Mobile to send MMS on its behalf to its VIP customers. 
These contract wins further demonstrate China.com's
leadership position in the MVAS sector.

    In early August, the company announced the acquisition
of TimeHeart Science Technology Limited and Beijing
TimeHeart Information Technology Limited (collectively
"TimeHeart Group"), another MVAS operator with a
full line of mobile services and applications products. 
The company believes this acquisition complements its
current mobile services and applications platforms and
provides it with the opportunity to further expand its
market share. Further, due to the short-term industry-wide
negative impact resulting from the regulatory changes,
China.com is acquiring the company at a relatively low
price/earnings ratio of approximately 4.5x.  The company
will continue to aggressively look at other opportunities,
as it believes that this is an opportune time to make
further acquisitions and consolidate its position in the
industry.

    "With more than 500 million mobile phone
subscribers, China's mobile market remains the largest in
the world and will continue to be the largest in years to
come.  We have strong confidence in the long-term future of
the sector.  MVAS has been our core business unit and will
continue to provide us with growth opportunities.  The
Group will employ its strong cash position to selectively
acquire synergistic and earnings accretive companies in the
industry.  We aim to become one of the top three players in
the Chinese mobile value added services sector.  We are
currently in the late stages of evaluating a number of
value added service providers in the Chinese mobile
industry.  Some of them have won exclusive contracts for
vertical industry applications while others have innovative
products and services or strong local provincial or
municipal marketing and distribution channels," said
Dr. Xiaowei Chen, Executive Director and Chief Financial
Officer of China.com.

    Online Games    

    In Q3 2006, the online game revenue increased by 10% to
HK$66.8 million as compared to Q2 2006.  Yulgang, the
company's current blockbuster online game in China,
maintained a stable performance in Q3 2006.  After 3
consecutive quarters of robust growth, the peak concurrent
users and the average concurrent users of Yulgang remained
healthy at 331,000 and 218,000 respectively, a slight drop
of 5% and 7% respectively from Q2 2006.  However, the
registered users increased to 37,000,000 in Q3 2006, up 23%
from 30,000,000 in Q2 2006.  The number of virtual items
that have been sold in the game climbed 29% higher to 27.4
million.  Server groups throughout China supporting Yulgang
and the company's other online games numbered 54, up 13%
from 48 server groups in Q2 2006.

    The company has licensed 3 new games, 1) Special Force,
2) Stone Age 2 and 3) Lord of the Rings Online: Shadows of
Angmar, during the quarter to strengthen its China gaming
pipeline and currently plan to launch the games in 2007.

    Portal

    Based on the agreement signed by Google and China.com
in July 2006, Google is extending its advertisers' reach to
millions of China.com's audience, in both China and abroad. 
China.com is leveraging Google's leading technology to
provide search service for its users.  Google will also
expand its presence on China.com beyond the text search
functions when it launches video ads in China.com's English
Channel serving primarily multinational companies (MNC) in
China.  This is the first time Google Video Adsense will
enter China's Internet market.

    During the quarter, the China.com portal has also been
appointed by Jilin Government as the exclusive web sponsor
of the 2007 Asian Winter Games.  This is the first time
that Asian Winter Games athletes will all register online,
using China.com's web platform.

    The portal online video program, "The Straight
Show", has achieved wide popularity among Chinese
Internet users.  The program has been downloaded 5 million
times during this quarter.  "The Straight Show"
is specifically positioned as mobile content for the 3G
era.  It is another demonstration of the synergies between
the company's MVAS and portal businesses. 

    Overall, China.com is strengthening its position as the
leading portal for Chinese professionals.  The company's
focus channels include Entertainment (including The
Straight Show), Lifestyle, Health and Career.  The portal
most recently launched v.china.com, which features an
interactive platform of online video programs.

    The company believes that interactive platforms will
continue to be the direction of Internet development, and
this is a direction that fits strategically with its
position as the leading portal for Chinese professionals. 
To strengthen its position in the Chinese Internet
industry, China.com recently launched a US$20 million Web
2.0 Developer Program to establish strategic relations with
leading local Web 2.0 companies to accelerate the
development of innovative products and services targeted
specifically for the Chinese market.  The company is
currently evaluating a number of potential investments,
including companies specializing in community, instant
messaging, and interactive technology service providers.
China.com will also leverage its deep relations with
advertisers and broad knowledge of the market as one of the
first Internet companies in China to provide marketing,
advertising and sales support to its partners for their
products and services.  As part of the strategic
partnership, the development partners' will also be able to
leverage the extensive market coverage of the Group
including millions of growing subscribers of our MVAS and
Portal businesses.

    Dr Chen concluded: "Looking forward, China.com
will continue to explore new growth opportunities and
create values for our customers through continuous
innovation and expanded offerings.  As the Chinese new
media space continues to evolve with changing regulations
and market landscape, we will continue to seek the best
opportunities, leading the market with both organic growth
and strategic acquisitions."

    Notes to the Editors:

    This press release should be read in conjunction with
the announcement posted on the website of the Growth
Enterprise Market of The Stock Exchange of Hong Kong
Limited.

    About China.com Inc

    China.com Inc. (stock code: 8006; website:
http://www.inc.china.com ), a leading Mobile Value Added
Services (MVAS), and Internet services company operating
principally in China, and a 77%-owned subsidiary of CDC
Corporation (formerly chinadotcom corporation) (Nasdaq:
CHINA; website: http://www.cdccorporation.net ), 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.

    Safe Harbor Statement

    There is no assurance that the current growth of
China.com Inc.'s business can be maintained.  The
statements in this news release, other than historical
financial information, may contain forward-looking
statements that involve risks and uncertainties that could
cause actual results to differ from anticipated results. 

    For more information, please contact:

     Jenny Hu
     China.com
     Tel:   [phone] x662
     Fax:   [phone]
     Email: [e-mail]

SOURCE  China.com Inc