The Hong Kong-based company saw its shares drop 11.69% to $6.65 after reporting what might be regarded as a stunning set of figures with net income up 231% at $4.3m in the quarter to March 31, on revenue 258% higher at $39.9m.
In fact, the boost to its fortunes is almost entirely down to a flurry of acquisitions as Chinadotcom’s business plan is to buy struggling software companies, switch development to China, and use its expanding product range to attacking the booming Chinese manufacturing sector.
The boost to this quarter’s revenue came from completion of its purchase of Vancouver, Canada-based CRM vendor Pivotal Corp, and without this addition, revenue would only show a 3% sequential rise. Earnings per share for the quarter were $0.04 a share, while the consensus amongst Wall Street analysts was $0.05.
Executive chairman Raymond Ch’ien, who will assume Yip’s day-to-day responsibilities during his absence, said the company is transitioning from building scale through acquisitions to a focus on operational integration, customer-driven product development and organic growth in its core strategic sectors of enterprise software and mobile applications.
While the $70m acquisition of ERP vendor Ross Systems was announced in September 2003, the company is extending the time to complete the deal until September to complete the SEC review process.
