Tom Online sank Friday after slashing its third-quarter revenue guidance. The company warned that it expects sales for the third quarter ended Sept. 30 to be flat with second-quarter levels. Tom Online had previously predicted a 10%-15% sequential sales gain. The company blamed a pornography crackdown aimed at its Chinese Internet rivals for the shortfall. The comment came a day after the Beijing-based wireless Internet company delayed for two weeks the release of its third-quarter results. Tom said it would publish the numbers, which had been scheduled for release Friday, on Nov. 10 instead. Friday morning, the company added that it expects to post revenue of $28 million to $32 million for the quarter, roughly flat with the second quarter's $31 million. Tom cited a slowdown in sales of so-called interactive voice services, "in response to sanctions imposed by mobile operators on other wireless value-added service providers." China's Internet stocks were huge gainers in 2003, in many cases rising by percentages in the four digits. But they have been hurt this year by the crackdown, directed by the Beijing government and wireless provider China Mobile. "While we are not experiencing a double-digit growth in revenue that we had expected, after incorporating our Treasure Base acquisition effective mid-August 2004, we expect our revenue to maintain and grow as we are seeing a gradual stability in the overall market," said Tom Online CEO Wang Lei Lei. The news was accompanied by a mild selloff in other Chinese Internet stocks occasioned by a
weak forecast from Sohu.com ( SOHU - Get Report). Sohu dropped 15% Friday, and peers NetEase ( NTES - Get Report) and Sina ( SINA - Get Report) each dropped fractionally. On Friday, Tom slipped 12 cents to $12.20.