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Funtalk China Increases Q1 Profits By 133% Through Acquisitions

Published: 07:59 01 Sep 2010 AEST

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Funtalk China Holdings (“Funtalk”)(Nasdaq: FTLK), a China-based retailer and wholesale distributor of mobile phones and other wireless devices, announced for the first quarter of 2010 the company recorded profits of $9.6 million, or $0.19 per diluted share, on revenues of $253 million.  The results represented a year-on-year increase in profits and revenues of 133% and 28%, respectively, driven primarily by growth from the company’s retail segment.

The market reacted mildly to the results as Funtalk’s share price edged slightly upwards by 0.75% to trade at $8.00 on the Nasdaq.  

Retail revenue increased 77.5% on a year-on-year basis to $122.7 million due to the acquisitions of new retail subsidiaries.  At the end of the first quarter, Funtalk had a total of nine retail subsidiaries covering 528 locations compared to six retail subsidiaries covering 198 locations a year ago.  The newly acquired subsidiaries contributed $44.7 million to revenues for the retail segment.

The wholesale segment posted revenues of $130.3 million, a 1.3% increase from the first quarter of 2009.  The increase in wholesale revenues was attributable to larger sales volume that was offset by lower average prices.

As of June 30, 2010, FunTalk had net assets of approximately $130 million, or $2.5 per outstanding share. 

The company also announced that it is now the only wholesale distributor and retailer chosen as a national partner by all three of the mobile carriers in China and the company stands to benefit if Chinese carriers increase subsidies to channels and end-users as expected.

For fiscal 2011, Funtalk expects to earn net income in the range of $40 million to $45 million on revenues between $1.0 billion and $1.2 billion.
 
Funtalk  is a retailer and distributor of wireless communications devices, accessories and content in 30 provinces in China. Funtalk currently has a network 612 mobile phone retail stores in approximately 108 cities.

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