TOM Group Ltd, the media company controlled by Hong Kong billionaire Li Ka-shing, yesterday posted its first annual loss in five years after sales to Chinese customers fell. The company's chief executive resigned.
The net loss was HK$297 million (US$38 million), compared with a profit of HK$32 million a year earlier, the Hong Kong-based company said in a statement to the city's stock exchange yesterday. Sales at the provider of phone ringtones and music downloads fell to HK$2.68 billion from HK$2.8 billion.
The company's shares have declined 71 percent since Tommei Tong was appointed chief executive in 2006 as mobile operators China Mobile Ltd and China Unicom Ltd tightened access to their customers. The government this week asked the wireless operators to review ways of reducing unwanted advertisements to phones, said Bloomberg News.
"Tom Online's wireless business was seriously impacted by the changes in regulatory and related mobile-operator policies," Tom Group said.
Tong resigned as chief executive officer for personal rersons and will remain with the company as non-executive director. She quit to "spend more time at home to take care of her family," the statement said.
Tong will be replaced by Ken Yeung, 43, who joined Tom Group this year as chief operating officer, the statement said. Separately, Tom Online executive Wang Leilei has been appointed Tom Group's deputy chairman, the company said.
Internet decline
Tom Group's Internet revenue, mainly sales of mobile-phone related content, fell 21 percent to HK$1.1 billion last year, it said. The company, which also operates publishing and outdoor units on the mainland and Taiwan, and runs a Chinese television venture with Time Warner Inc, derived almost half of its 2006 revenue from Internet businesses including Tom Online.
In May, China Mobile, the country's biggest wireless carrier, started sending fee reminders to users of mobile Web-browsing services, Tom Online said in June.
In 2006, China Mobile and China Unicom introduced rules that required providers of mobile-phone content including Tom Online and Sina Corp to offer longer free-trial periods. Under the rules, content providers also must send at least two messages to subscribers to confirm the start of services.
Tom Group's loss included a HK$127 million impairment charge in its Internet business after the mobile companies changed their marketing guidelines, the statement said. The Hong Kong company also lost HK$104 million from Tom Eachnet, an online auction venture with Ebay Inc in China, it said in the statement.
In August, Tom Group paid about HK$1.6 billion to take Tom Online private after a decline in the unit's stock.