Question-and-Answer Session
Operator
Your first question comes from the line of [C. Ming Zhao] - SIG.
Analyst for C. Ming Zhao - SIG
I have a couple of questions. Your fourth quarter guidance looks like it implies modest growth. May we know where this growth is from?
Sam Sun
We think the growth will mainly come from the IVR side and the WAP side. Of course, the mobile advertising revenue should also see growth. For IVR, we think we will have a growth of about 30% quarter over quarter. For WAP revenue, we think we probably will have about a 10% increase quarter over quarter. For other revenue lines such SMS, MMS, JAVA and IVR, we think those revenue lines will remain stable or may have very modest growth. For mobile advertising revenue, as I just mentioned, we should be able to see some growth also in the mobile advertising area.
Analyst for C. Ming Zhao - SIG
Does this mean you think the wireless sector has already hit the bottom?
Sam Sun
As Yunfan just mentioned, we think that WVAS business has begun to stabilize, so that’s the reason why we think our Q4 guidance can be higher than Q3.
Analyst for C. Ming Zhao - SIG
What’s the expense related to your WAP service in the third quarter? Why did the G&A expense decrease in this quarter? Will this trend down?
Sam Sun
Excuse me, what’s the question?
Analyst for C. Ming Zhao - SIG
What’s the expense related to your WAP service in the third quarter? The mobile wireless service, the related expense?
Sam Sun
Our wireless Internet expense in Q3, the operating expenses for Q3 is $2.6 million.
Analyst for C. Ming Zhao - SIG
Why did your G&A expense decrease in this quarter? Will this trend down? Will this margin keep going, stable?
Sam Sun
In Q3 we also took significant efforts to control the costs. We believe that’s the major reason why G&A expenses decreased compared to Q2. We think we already are doing pretty well in cost control so our feeling is that in Q4, we won’t see a further decrease. At least not a significant further decrease in the operating expenses.
Analyst for C. Ming Zhao - SIG
Given your competitors such as Hurray have done some restructuring, will KongZhong also make some strategic changes in the near term?
Yunfan Zhou
We saw that Hurray announced a merger yesterday. Actually, we have really been able to focus on the wireless for the past few years and this year we are strengthening our efforts in the wireless Internet business. We have signed partnerships with the NBA, MSN and other partners and we believe this is the right strategy we have, which is to focus on the wireless sector, including wireless value-added services and wireless Internet.
- To read the full transcript on Seeking Alpha, click here »
