Chinese wireless value-added services firm Hurray (HRAY) says it has agreed with Enlight Media to terminate a proposed business combination announced on November 19, 2007, and it also reported an annual decline in overall revenue growth.
Due to a divergence in business strategies and a mutual determination that a combination would not be in their mutual interests, the companies have decided to part ways.
At the same time, Hurray says its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2007 show total revenues were US$16.7 million, representing growth of 23.0% quarter-over-quarter and a slight decline of 1.1% year-over-year. Total revenues for fiscal year 2007 were US$61.4 million, representing a 10.7% decrease from US$68.7 million for fiscal year 2006. Net loss was US$31.3 million for the fourth quarter of 2007. For the fiscal 2007, net loss was US$41.7 million, compared to net income of US$5.8 million for the fiscal 2006.
"We are glad that we stabilized our WVAS business and generated growth quarter over quarter in a very challenging environment. We recognized further impairment charges of US$31.1 million, a non-cash expense, writing down substantially all our remaining WVAS goodwill and intangible assets in Q4. We continue to reduce our costs to seek profitable WVAS growth so as to generate positive cash flow. We are very pleased that our music business had a record performance showing excellent growth in this quarter and we are expecting further growth in 2008. Currently, we enjoy a very good cash position, which allows us to execute our strategy through both organic and non-organic growth. We are confident of developing Hurray into a leading entertainment production and distribution company in China. "
Total wireless value-added services revenues were US$11.9 million for the fourth quarter of 2007, representing growth of 4.2% as compared to US$11.4 million in the previous quarter and a decline of 21.5% as compared to US$15.1 million in the fourth quarter of 2006. Total wireless value-added services revenues for fiscal year 2007 were US$50.9 million, a decline of 18.6% as compared to US$62.5 million in fiscal year 2006.
Total gross margin was 29.1% for the fourth quarter of 2007 as compared to 23.5% for the previous quarter and 32.1% for the fourth quarter of 2006. For fiscal year 2007, total gross margin was 29.7% as compared to 35.6% for fiscal year 2006. Gross margin for wireless value-added services was 27.8% for the fourth quarter of 2007, as compared to 19.6% in the previous quarter and 31.9% for the fourth quarter of 2006. Gross margin for wireless value-added services was 27.5% for fiscal year 2007 as compared to 34.9% for fiscal year 2006. Recorded music gross margin was 32.0% for the fourth quarter of 2007 as compared to 43.1% in the previous quarter and 33.6% for the fourth quarter of 2006. Recorded music gross margin was 40.6% for fiscal year 2007 as compared to 42.7% for fiscal year 2006.
Total gross profit was US$4.9 million for the fourth quarter of 2007, representing growth of 52.2% as compared to US$3.2 million for the previous quarter and a decline of 10.2% as compared to US$5.4 million for the fourth quarter of 2006. For fiscal year 2007, total gross profit was US$18.2 million, a decline of 25.5% as compared to US$24.5 million for fiscal 2006.
Total operating expenses were US$37.2 million for the fourth quarter of 2007, representing growth of 143.0% as compared to US$15.3 million for the previous quarter and growth of 734.4% as compared to US$4.5 million for the fourth quarter of 2006.
For fiscal year 2007, total operating expenses were US$61.5 million, an increase of 213.6% as compared to US$19.8 million for fiscal 2006. Impairment charges for Hurray's wireless business were US$41.3 million in 2007. There were no such charges in 2006.
As of December 31, 2007, the company had US$66 million in cash and cash equivalents.
