July 31, 2012 (Chinavestor) Over the past three years, KongZhong Corp. (NASDAQ:KONG) has been steadily increasing its annual revenue with its 2011 revenues 21% higher than its 2009 revenues. And given that its first quarter 2012 revenues have reached a new high, 2012 should continue the trend of increasing revenues. While in 2011, revenues had decreased 6% in the later quarters compared to the earlier quarters, KongZhong Corp. (NASDAQ:KONG) picked it up in 2012 with an 12% increase in revenue. KongZhong Corp. (NASDAQ:KONG) has started to adjust to the new market environment and also started focusing on its Internet games and pushing out sales from that. Revenue is on an upward trend.
Net income is another story. Since 2010, KONG’s net income has not been doing as well. Last year, it reported a net loss of $7.65 million, where its net incomes had been over $12 million the previous two years. A major contributor to that was an operating expense, the impairment loss on goodwill, most of which came from the WVAS reporting unit failing in the impairment test, which came out to $20.26 million. There have also been changes in the market environment for WVAS. Mobile providers such as China Mobile, with whom companies such as KongZhong Corp. (NASDAQ:KONG) depend on for their services, are starting to create services that compete with KONG’s.
Regarding KONG’s earnings per share, it has been steadily improving over the years. However, it has not been a stable improvement. On average, the diluted earnings per ADS have gone up 40% in the first quarter of 2012 when compared to the first quarter of 2010, from $0.15 per ADS to $0.21 per ADS. But looking at it from a quarterly basis, it has gone to as low as $.10 per ADS while continually rising before dropping again.
Overall, KongZhong Corp. (NASDAQ:KONG) has in a transitional period where it has been changing its focus in terms of operations. The change from WVAS to Internet gaming, as well as the acquisition of a game developing company have made 2011 a year of investment in the future for the company. 2012 is where those efforts will pay off.