SMS Spamming Presents Challenge for Internet
Portals
Changing attitudes to receiving SMS spam on their mobile
phones is set to affect earnings for China's major Internet
portals, Sina, Netease and Sohu. Since 2002, revenues
for these companies have depended on SMS messaging. Now,
Chinese users say that they are getting too many unsolicited
messages on their mobile phones.
For the Internet portals, it comes at a bad time, just
as they are about to announce their earnings at the end
of July. In the past week, the share price of Sina and
Netease, two of the largest portals, have fallen 15-20%
on Nasdaq based on the fear that they will lower earnings
expectations. All three portals claim that they will have
difficulty meeting downwardly adjusted earnings expectations.
In China, complaints from Chinese users have forced the
carriers, China Mobile and China Unicom, to take action
to block messages sent out by the portals. In the case
of China Mobile, a special phone line has been set up
so that users can have messages blocked which are sent
out by the portals on the behalf of their advertising
clients.
In the case of the portals, most of the messages sent
are horoscope, dating, job-hunting and other generic services.
Users are charged for the messages they receive, which
has caused a strong reaction from mobile phone users when
they see that their monthly phone bills are much higher
than they expected.
This has led to Chinese government action to block the
unsolicited messaging.
The takeoff of SMS (short message service) led to the
dramatic
rise of the share price of the three Internet portals,
which are all listed on Nasdaq, in 2002 and 2003. This
revenue depends on revenue-share contracts with China's
major carriers, China Unicom and China Mobile.
All three companies are making strong internal efforts
to restructure and lessen their revenue dependency on
SMS messaging, which now accounts for more than half of
their revenues.
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