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

Source: China.com Inc