Business News

CDC Estimates Second Quarter of 2008 to Beat Consensus Estimates

2008-07-15 07:53:00

Revenue Estimated at an All-Time Record for a Second Quarter, With

Improved Profitability Anticipated

HONG KONG & ATLANTA–(EMWNews)–CDC Corporation (NASDAQ: CHINA), a leading global enterprise software

and new media company, today announced preliminary revenues for Q2 2008.

CDC Corporation, based upon preliminary financial information,

anticipates total revenue for Q2 2008 to be between approximately

(U.S.)$107.3 -108.5 million, which would represent an increase of 9-10

percent from (U.S.)$98.3 million in Q1 2008 and would be a record second

quarter for the company. This anticipated revenue range for Q2 2008

exceeds the Wall Street consensus estimate of $102.9 million. This

includes license revenues of approximately (U.S.) $14.2 – $14.7 million,

up from (U.S.)$12.3 million in Q1 2008, and higher than the consensus

estimate of approximately $13.0 million.

CDC Corporation also anticipates an improvement in its adjusted net

income and in its adjusted EBITDA (earnings before interest, taxes,

depreciation and amortization, including stock based compensation) for

Q2 2008 compared to Q1 2008. During the second quarter of 2008, CDC

Software implemented several cost reduction measures, in addition to

those previously completed, such as reducing facilities and related

administration expenses, eliminating redundant and non-essential

positions and accelerating integration of past acquisitions. These cost

reductions implemented toward the end of the second quarter of 2008 are

expected to yield additional annual savings of approximately (U.S.)$15

million. Total cost reductions undertaken over the last 12 months are

expected to yield approximately (U.S.)$31 million annually.

We are very pleased that our expected Q2 2008

revenues and profitability will exceed Wall Street consensus estimates

for the second consecutive quarter, said

Peter Yip, CEO of CDC Corporation. Despite

the downturn that has been impacting the broad economy, we are pleased

to see total revenue growth from our first quarter of 2008 and achieve

an anticipated all-time record for total revenues in the second quarter.

We plan to continue to improve our operating metrics with consistent

execution quarter over quarter and we are very focused on cash

preservation and cash generation.

The second quarters

results were led by strong performance at CDC Software and CDC Games,

continued Yip. Both divisions are anticipated

to post record quarterly revenues, and total revenues are expected to

exhibit at or near double digit sequential improvement relative to the

first quarter of 2008. CDC Software saw robust results from its CDC

Supply Chain and CDC Factory product lines. We anticipate the

continuation of these trends, given that, with rising transportation,

fuel and commodity costs, CDC Factory and CDC Supply Chain are

strategically positioned to provide new and existing customers with the

critical tools they need to better manage their own internal costs in

this highly inflationary and difficult environment. Despite our cost

reduction efforts, we expect to continue to maintain our healthy

research and development budget within CDC Software to ensure we

maintain our competitive advantage relative to enhanced product

functionality and our highly differentiated vertical expertise.

In addition, in the second quarter, we saw

robust growth in our China-based businesses, with CDC Games expected to

deliver a double-digit increase in revenues. We also have an exciting

roll-out schedule of new game launches planned for the second half of

the year. Overall, we are confident that we have taken the steps

necessary to manage our cost base in anticipation of an on-going

difficult operating environment and look for improving operating metrics

and profitability going forward. As a result, we are cautiously

optimistic about the improving prospects for CDC Corporation.

Q2 2008 Earnings Release

CDC intends to report full Q2 2008 results in the first half of August


About CDC Corporation

The CDC family of companies includes CDC Software focused on enterprise

software applications and services, CDC Games focused on online games,

and focused on portals for the greater China markets. For more

information about CDC Corporation (NASDAQ: CHINA), please visit

About CDC Software

CDC Software, The Customer-Driven Company, is

a provider of enterprise software applications designed to help

organizations deliver a superior customer experience while increasing

efficiencies and profitability. CDC Software’s product suite includes:

CDC Factory (manufacturing operations management), Ross ERP (enterprise

resource planning) and SCM (supply chain management), CDC Supply Chain

(supply chain management, warehouse management and order management),

Pivotal CRM and Saratoga CRM (customer relationship management), CDC

MarketFirst (marketing automation and lead management), Respond

(customer complaint and feedback management), c360 CRM add-on products,

industry solutions and development tools for the Microsoft Dynamics CRM

platform, Platinum HRM (human resources) and business analytics


These industry-specific solutions are used by more than 6,000 customers

worldwide within the manufacturing, financial services, health care,

home building, real estate, wholesale and retail distribution

industries. The company completes its offerings with a full continuum of

services that span the life cycle of technology and software

applications, including implementation, project consulting, outsourced

business services, application management and offshore development. CDC

Software is the enterprise software unit of CDC Corporation (NASDAQ:

CHINA) and is ranked number 12 on the MBT 2007 Global 100 List of

Enterprise and Supply Chain Management Application vendors. For more

information, please visit

About Inc. is a leading operator of Internet portals, serving a broad

range of audiences in China. In 2006, it was chosen as the first company

to host Google’s Video Adsense which serves video ads targeted at

China’s English-speaking audience. also was appointed by the

Jilin government as the exclusive web sponsor of the 2007 Asian Winter

Games. was listed on the GEM of the Stock Exchange of Hong

Kong Limited on March 9, 2000. In December 2000, Inc. was

admitted as a constituent stock of the Hang Seng IT and IT Portfolio


About CDC Games

CDC Games is one of the market leaders of online and mobile games in

China with more than 140 million registered users. The company pioneered

the “free-to-play, pay-for-merchandise” online games model in China with

Yulgang and launched the first free-to-play, pay for merchandise FPS

(first person shooter) game in China with Special Force. Launched in

July 2007, Special Force has consistently ranked in the Top 10

downloaded games in China and becoming the top revenue producer for CDC

Games. Currently, CDC Games offers six popular MMO online games in China

that include: Special Force, Yulgang, Shaiya, Mir III, Shine and Eve

Online. In March 2007, the company announced the formation of CDC Games

Studio to establish strategic relationships with selected games

development partners to accelerate the development of new, original

online games for China and other targeted global geographies. Through

its CDC Games International (CGI) subsidiary, the company launched a

long-term strategy to be a global publisher of MMO games. As part of

this long term strategy, CDC Games launched the

portal to showcase online games and related content in North America.

For more information on CDC Games, visit:

Cautionary Note Regarding Forward-Looking Statements

This press release includes “forward-looking statements” within the

meaning of the United States Private Securities Litigation Reform Act of

1995. These forward-looking statements include statements regarding our

range of anticipated revenue and license revenue for Q2 2008 as well as

our expected improvement in adjusted net income and adjusted EBITDA, our

expectations to post record quarterly revenues and exhibit double-digit

sequential improvements relative to the first quarter of 2008, our

expectations regarding the yields of our current, past and planned cost

savings measures, our plans to continue improving our operating metrics,

consistently execute our plans quarter over quarter and focus on cash

preservation and cash generation, our expectations regarding the

continuation of sales performance trends for CDC Factory and CDC Supply

Chain, our expectation to continue to maintain our research and

development budget within CDC Software to help ensure we maintain our

competitive technological advantage and our vertical expertise, our

beliefs regarding the components of our Q2 2008 performance and the

continuation of trends relating thereto, our beliefs regarding our

future prospects, our intentions regarding the timing of our Q2 2008

earnings release, our beliefs regarding the strength of our installed

base customers and sales, our beliefs regarding customer preferences,

our beliefs regarding our position and ability to continue our growth

strategy and continue to see improvements in operating margins, our

beliefs regarding our past and present cost savings initiatives,

including restructurings and headcount reductions, and the effects

thereof, including effects on out financial performance and profit

margins, and other statements that are not historical fact, the

achievement of which involve risks, uncertainties and assumptions. If

any such risks or uncertainties materialize or if any of the assumptions

proves incorrect, our results could differ materially from the results

expressed or implied by the forward-looking statements we make. These

statements are based on management’s current expectations and are

subject to risks and uncertainties and changes in circumstances. There

are important factors that could cause actual results to differ

materially from those anticipated in the forward looking statements,

including the following: (a) the ability to realize strategic objectives

by taking advantage of market opportunities in targeted geographic

markets; (b) the ability to make changes in business strategy,

development plans and product offerings to respond to the needs of

current, new and potential customers, suppliers and strategic partners;

(c) the effects of restructurings and rationalization of operations; (d)

the ability to address technological changes and developments including

the development and enhancement of products; (e) the entry of new

competitors and their technological advances; (f) the need to develop,

integrate and deploy enterprise software applications to meet customer’s

requirements; (g) the possibility of development or deployment

difficulties or delays; (h) the dependence on customer satisfaction with

the company’s software products and services; (i) continued commitment

to the deployment of the enterprise software solutions; (j) risks

involved in developing software solutions and integrating them with

third-party software and services; (k) the continued ability of the

company’s enterprise software solutions to address client-specific

requirements; (l) demand for and market acceptance of new and existing

enterprise software and services and the positioning of the company’s

solutions; (m) the ability of staff to operate the enterprise software

and extract and utilize information from the company’s enterprise

software solutions; (n) the continued cooperation of our strategic and

business partners; (o) risks relating to economic conditions and other

matters beyond our control; (p) the risk that the preliminary financial

results provided herein could differ from our actual results of

operations and financial condition; and (q) the continued strength of

revenues from our installed base customers.. Further information on

risks or other factors that could cause results to differ is detailed in

filings or submissions with the United States Securities and Exchange

Commission made by CDC Corporation in its Annual Report for the year

ended December 31, 2007 on Form 20-F filed on June 30, 2008. All

forward-looking statements included in this press release are based upon

information available to management as of the date of the press release,

and you are cautioned not to place undue reliance on any forward looking

statements which speak only as of the date of this press release. The

company assumes no obligation to update or alter the forward looking

statements whether as a result of new information, future events or


CDC Corporation
Investor Relations

Bahl, 678-259-8510
[email protected]

Lorretta Gasper, 678-259-8631
[email protected]

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