CReATION: Tom.com HKdollars 148.5m ad, promotion spend fuels company losses

Troubled Tom.com reported HKdollars 163 million in losses in the three months to September 30 after spending HKdollars 148.5 million on advertising, promotion and Web design. The company had sacked more than a quarter of its Hong Kong workforce in July, while its subsidiary iTravel cut back 83 per cent of its total staff at the company's Hong Kong office in September. Tom.com chief executive Mr Richard Li said the group expected its monthly burn rate to fall by 30 per cent by the end of this year, with operational costs to be cut from HKdollars 15.3 million to HKdollars 6.3 million. He also did not rule out the possibility of more lay-offs. During the three-month period to March, the company had spent HKdollars 28.4 million on advertising and promotion. That figure was raised to HKdollars 45.8 million from April to June. For the three-month period to September this year, the company spent more than HKdollars 31 million on advertising and promotion. According to Tom.com, its total number of advertisers has reached 100. Other Hong Kong-based dotcoms also continued to report losses for the third quarter of this year. Portal Chindotcom's losses widened by almost 41 per cent in the third quarter to USdollars 20.53 million. Netease.com had earlier posted a loss of USdollars 5.02 million in the third quarter, while rival Sohu.com announced a net loss of USdollars 4.3 million. Sina.com also reported third-quarter losses at USdollars 6 million. Tom.com had earlier announced it would acquire more than 49 per cent of Kunming Fench Star Information Industry, a China-based outdoor media and advertising company. The acquisition followed a string of other recent investments by Tom.com, which include 163.net, YC Press and Shawei.com. Meanwhile, Tom.com's page views during the third quarter of this year hit 26 million, a five-fold increase according to the company. About 50 per cent of the page view reportedly came from internal growth, while the remaining half was generated from recent mergers and acquisitions. Tom.com also said it was looking to generate advertising revenue through a joint venture announced in November with Great Wall Computer Software and Systems (GWSS) and Great Wall Broadband Network Services (GWBN), which is to provide quality software and information services to broadband users in mainland China. The company said revenue was to be generated from advertising, subscription, ecommerce and product sales. It outlined plans to develop home-user services such as property management; video-on-demand; real-time news and stock market updates; online games; payment services, and online shopping. General manager of GWBN Yang Yu Hang said: "Looking forward, with the Great Wall's broadband network as the backbone, the JV company will exploit the broadcasting as well as the telecommunications broadband network value-added service market. It will also set up a nationwide sales network using residential property management companies as distribution channels."

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