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Linktone Ltd. News

Linktone Reports Unaudited Fourth Quarter and Fiscal 2007 Financial Results

SHANGHAI, China, March 27 Xinhua-PRNewswire — Linktone Ltd. (Nasdaq: LTON), a leading provider of wireless interactive entertainment services to consumers in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2007.

Results for the Fourth Quarter — The Company recorded revenue of $16.0 million, compared with $13.3 million in the third quarter of 2007 and $14.0 million in the fourth quarter of 2006. — GAAP net loss of $7.0 million, compared with a net loss of $2.8 million in the third quarter of 2007 and net income of $0.4 million in the fourth quarter of 2006. — GAAP net loss per fully diluted American Depositary Share (ADS) of $0.29, compared with a net loss of $0.12 for the third quarter of 2007 and net income of $0.02 for the fourth quarter of 2006. — Non-GAAP net loss of $1.6 million, compared with a net loss of $2.5 million in the third quarter of 2007 and non-GAAP net income of $0.8 million in the fourth quarter of 2006. — Non-GAAP net loss per fully diluted ADS of $0.07 compared with a net loss of $0.10 in the third quarter of 2007 and non-GAAP net income of $0.03 in the fourth quarter of 2006. — The Company recorded advertising service revenues of $1.3 million, compared with $1.9 million in the third quarter of 2007 and $0.3 million in the fourth quarter of 2006. Results for Fiscal Year 2007 — Gross revenue decreased 31% to $55.1 million from $79.8 million in fiscal 2006. — Net income decreased to a net loss of $16.4 million from a net income of $6.8 million in fiscal 2006. — GAAP net loss per fully diluted ADS of $0.68, a decrease from GAAP net income per fully diluted ADS of $0.26 in fiscal 2006. — Non-GAAP net loss per fully diluted ADS of $0.41 compared to non-GAAP net income per fully diluted ADS of $0.32 in fiscal 2006.

Chief Executive Officer Michael Li said, "We took some definitive steps earlier in the year to help better position the Company for longer-term growth. With the pending MNC investment and subsequent cash infusion, we will be able to aggressively implement our cross media strategy in China, which will become our core platform. We anticipate that MNC's existing expertise in the wireless value added service (WVAS) market will also enable us to access and become an established player in other Southeast Asian markets going forward. We believe this partnership will yield tangible synergies for both sides, allowing each company to pursue numerous advertising and cross selling initiatives."

Fourth Quarter Net loss

Linktone's net loss for the fourth quarter was $7.0 million, or $0.29 per fully diluted ADS, compared with $2.8 million, or $0.12 per ADS, for the third quarter of 2007 and net income of $0.4 million, or $0.02 per fully diluted ADS, for the fourth quarter of 2006.

The net loss for the fourth quarter includes a total of $5.1 million in provisions for impairment in the value of certain assets of the Company, as follows:

— a $2.5 million impairment with respect to the Company's investment deposit in eChinaMobile (BVI) Ltd. (ECM). In the second quarter of 2007, Linktone paid $3 million to purchase 49% of ECM, which was established to provide WVAS and original content to customers of Linktone and eChinaCash, Inc. (ECC) (ECM's other shareholder). ECC has refunded $0.5 million of Linktone's investment deposit, and Linktone is currently considering legal remedies to recover the remaining amount. In view of the uncertainty of recovering this remaining amount, the Company recorded a provision of $2.5 million against the investment deposit; — a $2.0 million impairment of goodwill which arose from the Company's June 2005 acquisition of Brilliant Concept Investments Ltd. (Brilliant), a casual game developer. In light of lower than expected revenue earned in fiscal 2007 and the downward revision of anticipated revenue in future years, the decision was made to recognize this impairment; and — a $0.6 million impairment for the balance of a loan receivable owed by 9 Sky International Ltd to Linktone; Linktone's management considers the repayment of such debt to be uncertain.

Excluding these provisions, the net loss for the fourth quarter would have been $1.9 million. The sequential decrease in net loss excluding these provisions was mainly due to enhanced net income from the Company's WVAS business as the operating environment in that sector improved during the fourth quarter of 2007.

Fourth Quarter Revenue Mix

Linktone's fourth quarter revenue mix includes data-related services (SMS, MMS, WAP, and Java), audio-related services (IVR and CBRT), and advertising service and others (casual game and enterprise services).

Data-related services revenue was $5.9 million, representing 37% of total revenue, compared with $4.7 million or 35% for the third quarter of 2007. The sequential increase in revenue was primarily due to an improved operating environment in the sector. Data-related service breakdowns are as follows:

— Short Messaging Services (SMS) revenue represented 28% of total gross revenue, compared with 26% for the third quarter of 2007. SMS revenue was $4.5 million for the fourth quarter 2007, compared with $3.5 million for the third quarter of 2007. — Multimedia Messaging Services (MMS) revenue represented 4% of total gross revenue compared with 5% for the third quarter of 2007. MMS revenue was $0.6 million for the fourth quarter of 2007, compared with $0.7 million for the third quarter of 2007. — Wireless Application Protocol (WAP) revenue represented 2% of total gross revenue compared with 1% for the third quarter of 2007. WAP revenue was $0.3 million for the fourth quarter of 2007, compared with $0.1 million for the third quarter of 2007. — Java gaming (Java) revenue represented 3% of total gross revenue compared with 3% for the third quarter of 2007. Java revenue was $0.5 million for the fourth quarter of 2007, compared with $0.4 million for the third quarter of 2007.

Audio related services accounted for 52%, or $8.3 million of total revenue, compared with 44%, or $5.9 million for the third quarter of 2007. The sequential increase was primarily due to an increase in the number of interactive programs over local radio stations whereby listeners can participate via the Company's interactive voice response services. Audio-related service breakdowns are as follows:

— Interactive Voice Response services (IVR) revenue increased to 41% of total gross revenue, compared with 35% for the third quarter of 2007. IVR revenue was $6.6 million for the fourth quarter of 2007, compared with $4.7 million for the third quarter of 2007. — Color Ring-Back Tones (CRBT) revenue increased to 11% of total gross revenue, compared with 9% for the third quarter of 2007. CRBT revenue was $1.7 million for the fourth quarter of 2007, compared with $1.2 million for the third quarter of 2007.

Advertising service revenue accounted for 8%, or $1.3 million of total revenue in the fourth quarter of 2007, compared with 14%, or $1.9 million for the third quarter of 2007. The advertising service revenue in the fourth quarter was entirely from television advertising revenue, compared with $1.0 million for the third quarter of 2007 (the remainder of the advertising revenue in the third quarter was derived from product promotion sponsorships).

Margins, Expenses and Balance Sheet

Linktone's key operating benchmarks and balance sheet items for the fourth quarter of 2007 include the following:

— Gross margin was 37% of net revenue, or gross revenue minus business tax, compared with 40% for the third quarter of 2007 and 63% for the fourth quarter of 2006. The sequential decrease was primarily due to the fact that certain joint cooperation projects with third parties to sell the Company's IVR services increased the Company's costs at a higher rate than the increase in revenue from such services. — Operating loss was 46% of net revenue, compared with operating loss of 22% for the third quarter of 2007 and 1% in the fourth quarter of 2006. The sequential increase was primarily due to provisions for impairment of $5.1 million. — Operating expenses totaled $12.9 million, compared with $7.9 million in the third quarter of 2007 and $8.5 million for the fourth quarter of 2006. The sequential increase was primarily due to provisions for impairment of $5.1 million. — Selling and marketing expenses were $3.7 million, compared with $3.2 million for the third quarter of 2007 and $4.7 million for the fourth quarter of 2006. The sequential increase was due to additional marketing and promotion initiatives implemented during the quarter to support the Company's WVAS products. — Product development expenses were $1.1 million, compared with $1.4 million for the third quarter of 2007 and $1.5 million for the fourth quarter of 2006. The sequential decrease was due to further streamlining of our technology team to one location in Beijing compared with two teams (Beijing and Shanghai) prior to the fourth quarter of 2007. — Other general and administrative expenses were $2.9 million, compared with $3.3 million for the third quarter of 2007 and $2.3 million for the fourth quarter of 2006. The sequential decrease was primarily due to the fact that the Company incurred certain costs in connection with the move of its offices in Shanghai and professional costs in the third quarter of 2007. — Cash and cash equivalents as well as short-term investments available for sale totaled $41.6 million, compared with $47.0 million for the third quarter of 2007. Cash flow used in operations totaled $6.2 million. The decrease in cash and cash equivalents as well as short-term investments was due to payments for our exclusive advertising agency right on Tianjin Satellite Television (see also \"Recent business highlights\" below) and certain operation costs in connection with providing advertising services on Qinghai Satellite Television. — Days sales outstanding (DSO) (the average length of time required for the Company to receive payment for services delivered) were 77 days as of the end of the fourth quarter, compared with 91 days at September 30, 2007. The sequential decrease in DSO was due to better collection in the fourth quarter.

Fiscal Year 2007

The Company's gross revenue decreased 31% for the fiscal year 2007 to $55.1 million, compared to $79.8 million reported in fiscal 2006. WVAS revenue continued to decline in the first half of the year due to the impact of the implementation of new mobile operator policies beginning in July 2006, offset in part by a new source of revenue from advertising services. Gross profit margin for fiscal year 2007 declined to 40% of total revenue compared to 62% in 2006. The decline was caused by a decrease in WVAS gross profit margin to 58% in 2007 from 62% in 2006 and a gross loss of 127% for the Company's advertising services.

Full year GAAP net loss was $16.4 million, or $0.68 per fully diluted ADS, compared with a net income of $6.8 million, or $0.26 per fully diluted ADS, for fiscal 2006. Excluding the effect of non-cash stock-based compensation and provisions for impairment, non-GAAP net loss for 2007 was $9.9 million, or $0.41 per fully diluted ADS, compared with non-GAAP net income of $8.3 million, or $0.32 per fully diluted ADS, for 2006. The decline in net income was mainly due to a decrease in WVAS revenue and gross profit, which was impacted by operator policies, the Company's investments in its advertising business and provisions for impairment as mentioned above.

Acting Chief Financial Officer Ms. Him Tiem Foo added, "Looking ahead, we believe that a significant investment in the wireless media market will enable Linktone to capture market opportunities arising from the anticipated launch of 3G and eventually mobile television and flash media products. In addition to the commitments we have in connection with our collaboration with Tianjin Satellite Television and other existing collaborations in our media business, we also plan to invest approximately $10 million in content, coverage, distribution, and programming initiatives in 2008 to bolster the Company's cross media strategy.

Chief Executive Officer Mr. Michael Li concluded, "We believe that the traditional wireless business will always be a solid foundation for Linktone from both a financial and tactical standpoint. By leveraging our strategic partnerships, we are planning for an aggressive rollout of cross media services that will produce unique content and coverage which should translate into strong revenue growth potential through distribution channels and advertising. Our focus in 2008 will be to expand both new and traditional media partnerships and to extend Linktone's market share by capitalizing on the growing opportunities in the cross media segment."

Recent Business Highlights — Indonesian Based Integrated Media Company to Purchase Stake in Linktone. Linktone has entered into a definitive agreement with PT Media Nusantara Citra (\"MNC\"), an Indonesia based, publicly-listed integrated media company, under which MNC will purchase no less than 51% of Linktone's outstanding shares using a combination of a tender offer for existing shares and subscription for newly issued shares. The tender offer commenced on February 6, 2008 and expired on March 26, 2008 with MNC expecting to purchase 6,000,000 ADSs in such offer. MNC also intends to subscribe for a minimum of 180,000,000 newly issued ordinary shares of Linktone at a purchase price of $0.38 per ordinary share. We expect this transaction will close in early April 2008. — Exclusive Advertising Partnership with Tianjin Satellite Television (TJSTV). Linktone, through its controlled affiliated entity Lang Yi has entered into an agreement with TJSTV to serve as its exclusive agent for the sale of all non-4A Category I advertising on TJSTV.

First Quarter 2008 Outlook

For the first quarter ending March 31, 2008, Linktone expects gross revenue to be approximately $18.5 to $19.5 million with WVAS, game revenues to be between $15.0 and $15.5 million, and advertising revenues to be between $3.5 and $4.0 million.

The new Chinese Enterprise Income Tax Law (EIT) became effective starting January 1, 2008, however, there are currently divergent views on how the new EIT will be implemented. There can be no assurance that the new EIT law or any other changes in Chinese tax laws or their interpretation or application will not subject the Company's PRC entities to increased Chinese taxes in the future. It is expected that the PRC governmental authorities will introduce additional implementing regulations with respect to the new EIT law. As and when such additional regulations are adopted, the Company will assess their impact, if any.

2007 AUDIT PROGRESS AND SARBANES-OXLEY ACT SECTION 404 UPDATE

The financial information disclosed above is un-audited. The audit of the financial statements to be included in Linktone's annual report for the year ended December 31, 2007 is still in progress. In addition, because management and auditors assessments of our internal controls over financial reporting in connection with section 404 of the Sarbanes-Oxley Act of 2002 have not yet been completed, we make no representation as to the effectiveness of those internal controls as of the end of our 2007 fiscal year.

Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between our audited financial statements and this un-audited financial information.

Use of Non-GAAP Financial Measures

The reconciliation of GAAP measures with non-GAAP measures for net income or loss and net income or loss per fully diluted ADS included in this press release is set forth after the attached financial statements. All diluted per share computations for the fourth quarter were based on 24.0 million weighted average ADSs outstanding on a fully diluted basis. Linktone believes that the supplemental presentation of adjusted net income or loss and net income or loss per fully diluted ADS calculations, excluding the effect of non-cash stock-based compensation expense and provisions for impairment, provides meaningful non-GAAP financial measures to help investors understand and compare business trends among different reporting periods on a consistent basis, independently of infrequent or unusual events. Thus, the non-GAAP financial measures provide investors with another method for assessing Linktone's operating results in a manner that is focused on the performance of its ongoing operations. Linktone management also uses non-GAAP financial measures to plan and forecast results for future periods. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results for the three-month and year-end periods of 2007 and 2006, respectively, located after the financial statements.

Today's Conference Call

As previously announced, Linktone management will host a conference call to discuss its fourth quarter 2007 and fiscal year end 2007 financial results at 8:00 p.m. Eastern Time on March 27, 2008 (5:00 p.m. Pacific Time on March 27, 2008 and 8:00 a.m. Beijing/Hong Kong Time on March 28, 2008). The dial-in number for the call is 800-240-2430 for U.S. callers and 303-262-2054 for international callers. Chief Executive Officer Michael Li and Deputy Chief Financial Officer Him Tiem Foo will be on the call to discuss the quarterly results and highlights and to answer questions from participants. A replay of the call will be available through April 16, 2008. To access the replay, U.S. callers should dial 800-405-2236 and enter passcode 11109898#; international callers should dial 303-590-3000 and enter the same passcode.

Additionally, a live webcast of this call will be available on the Linktone web site at http://english.linktone.com/aboutus/index.html . An archived replay of the call will be available for 90 days.

About Linktone Ltd.

Linktone Ltd. is one of the leading providers of wireless interactive entertainment services to consumers and advertising services to enterprises in China. Linktone provides a diverse portfolio of services to wireless consumers and corporate customers, with a particular focus on media, entertainment and communications. These services are promoted through the Company's and our partners' cross-media platform which merges traditional and new media marketing channels, and through the networks of the mobile operators in China. Through in-house development and alliances with international and local branded content partners, the Company develops, aggregates, and distributes innovative and engaging products to maximize the breadth, quality and diversity of its offerings.

Forward-looking Statements

This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: changes in the policies of the PRC Ministry of Information Industry and/or the mobile operators in China or in the manner in which the operators interpret and enforce such policies; the risk that other changes in Chinese laws and regulations, including without limitation tax and media-related laws or laws relating to the usage of online or WVAS games, or in application thereof by relevant PRC governmental authorities, could adversely affect Linktone's financial condition and results of operations; the risk that Linktone will not be able to compete effectively in the wireless value-added services market in China for whatever reason, including competition from other service providers or penalties or suspensions for violations of the policies of the mobile operators in China; the risk that Linktone will not be able to realize meaningful returns from strategic partnerships including its cooperation with Hainan Satellite, Shandong Satellite, TJSTV or the Chinese Youth League Internet, Film and Television Center; the ability of the Company to effectively implement its cross-media strategy in China or become an established player in other markets, including the ability of the Company to effectively pursue advertising and cross selling opportunities with MNC with which the Company has no experience; the ability of the Company to recover its investment in ECC or its outstanding loan to 9 Sky and the possibility that the Company may be required to recognize impairments in the value of other assets in future periods; the risk that Linktone will not be able to develop and effectively market innovative services; the risk that Linktone will not be able to effectively control its operating expenses in future periods or make expenditures that effectively differentiate Linktone's services and brand; and the risks outlined in Linktone's filings with the Securities and Exchange Commission, including its registration statement on Form F-1 and annual report on Form 20-F. Linktone does not undertake any obligation to update this forward-looking information, except as required under applicable law.

CONSOLIDATED BALANCE SHEETS (In U.S. dollars, except share data) December 31, December 31, 2006 2007 (audited) (unaudited) Assets Current assets: Cash and cash equivalents 51,445,086 39,325,584 Restricted cash — 320,938 Short-term investments 1,012,230 2,315,334 Accounts receivable, net 12,371,700 10,164,756 Tax refund receivable 784,506 710,683 Deposits and other receivables 3,813,562 12,772,061 Deferred tax assets 1,020,608 1,161,652 Total current assets 70,447,692 66,771,008 Long-term investment — — Property and equipment, net 2,852,735 2,257,479 Intangible assets 2,162,993 1,692,889 Goodwill 16,518,898 14,611,620 Deferred tax assets 691,321 608,676 Other long-term assets 5,475,631 4,403,266 Total assets 98,149,270 90,344,938 Liabilities and shareholders' equity Current liabilities: Tax payable 3,011,537 2,774,827 Accrued liabilities and other payables 5,109,264 9,856,704 Deferred income 247,823 274,640 Deferred tax liabilities 576,600 644,958 Total current liabilities 8,945,224 13,551,129 Long-term liabilities Other long term liabilities 55,203 — Total liabilities 9,000,427 13,551,129 Minority interests — 108,066 Shareholders' equity Ordinary shares ($0.0001 par value; 500,000,000 shares authorized, 260,870,940 and 240,291,330 shares issued and outstanding as of December 31, 2006 and December 31, 2007) 26,087 24,029 Additional paid-in capital 77,041,914 72,202,172 Treasury stock (11,362,575) — Statutory reserves 2,344,525 2,344,525 Accumulated other comprehensive income: Unrealized gain on investment in marketable securities 33,177 — Cumulative translation adjustments 2,172,265 4,717,115 Retained earnings/(accumulated losses) 18,893,450 (2,602,098) Total shareholders' equity 89,148,843 76,685,743 Total liabilities and shareholders' equity 98,149,270 90,344,938 LINKTONE LTD. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In U.S. dollars, except share data) Three months ended December 31, September 30,December 31, 2006 2007 2007 (unaudited) (unaudited) (unaudited) Gross revenues 13,974,549 13,281,093 15,963,724 - WVAS and others 13,640,509 11,345,121 14,696,263 - Advertising 334,040 1,935,972 1,267,461 Sales tax (480,017) (582,363) (572,962) - WVAS and others (454,485) (421,637) (452,682) - Advertising (25,532) (160,726) (120,280) Net revenues 13,494,532 12,698,730 15,390,762 - WVAS and others 13,186,024 10,923,484 14,243,581 - Advertising 308,508 1,775,246 1,147,181 Cost of services (5,055,172) (7,569,436) (9,625,857) - WVAS and others (4,726,782) (4,257,479) (7,017,216) - Advertising (328,390) (3,311,957) (2,608,641) Gross profit 8,439,360 5,129,294 5,764,905 - WVAS and others 8,459,242 6,666,005 7,226,365 - Advertising (19,882) (1,536,711) (1,461,460) Operating expenses: Product development (1,523,506) (1,408,733) (1,093,700) Selling and marketing (4,707,658) (3,197,992) (3,711,602) - WVAS and others (4,571,638) (2,476,933) (3,029,360) - Advertising (136,020) (721,059) (682,242) Other general and administrative (2,291,404) (3,314,468) (2,926,297) Provisions for impairment — — (5,142,396) Total operating expenses (8,522,568) (7,921,193) (12,873,995) Income/(loss) from operations (83,208) (2,791,899) (7,109,090) Interest income 295,848 456,544 274,784 Other income/(expense) 135,712 (18,434) 29,480 Income/(loss) before tax 348,352 (2,353,789) (6,804,826) Income tax benefit/(expense) 55,283 (440,678) (232,041) Minority interest — — — Net income/(loss) 403,635 (2,794,467) (7,036,867) Other comprehensive income: 623,993 467,888 903,506 Comprehensive income/(loss) 1,027,628 (2,326,579) (6,133,361) Earnings/(loss) per ordinary share: Basic 0.00 (0.01) (0.03) Diluted 0.00 (0.01) (0.03) Earnings/(loss) per ordinary ADS: Basic 0.02 (0.12) (0.29) Diluted 0.02 (0.12) (0.29) Weighted average ordinary shares: Basic 239,315,460 239,358,669 240,192,141 Diluted 241,877,584 239,358,669 240,192,141 Weighted average ADSs: Basic 23,931,546 23,935,867 24,019,214 Diluted 24,187,758 23,935,867 24,019,214 LINKTONE LTD. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In U.S. dollars, except share data) Twelve months ended December 31, December 31, 2006 2007 (audited) (unaudited) Gross revenues 79,841,694 55,104,777 - WVAS and others 79,507,654 49,714,795 - Advertising 334,040 5,389,982 Sales tax (3,305,544) (2,203,283) - WVAS and others (3,280,012) (1,751,517) - Advertising (25,532) (451,766) Net revenues 76,536,150 52,901,494 - WVAS and others 76,227,642 47,963,278 - Advertising 308,508 4,938,216 Cost of services (28,982,827) (31,607,399) - WVAS and others (28,654,437) (20,377,795) - Advertising (328,390) (11,229,604) Gross profit 47,553,323 21,294,095 - WVAS and others 47,573,205 27,585,483 - Advertising (19,882) (6,291,388) Operating expenses: Product development (7,372,074) (5,506,938) Selling and marketing (22,728,906) (16,432,105) - WVAS and others (22,592,886) (13,787,153) - Advertising (136,020) (2,644,952) Other general and administrative (11,789,984) (11,762,028) Provisions for impairment — (5,142,396) Total operating expenses (41,890,964) (38,843,467) Income/(loss) from operations 5,662,359 (17,549,372) Interest income 1,589,180 1,269,006 Other income/(expense) 862,830 310,021 Income/(loss) before tax 8,114,369 (15,970,345) Income tax benefit/(expense) (1,267,183) (433,657) Minority interest (54,595) — Net income/(loss) 6,792,591 (16,404,002) Other comprehensive income: 1,478,605 2,511,673 Comprehensive income/(loss) 8,271,196 (13,892,329) Earnings/(loss) per ordinary share: Basic 0.03 (0.07) Diluted 0.03 (0.07) Earnings/(loss) per ordinary ADS: Basic 0.27 (0.68) Diluted 0.26 (0.68) Weighted average ordinary shares: Basic 253,850,193 239,499,334 Diluted 259,529,531 239,499,334 Weighted average ADSs: Basic 25,385,019 23,949,933 Diluted 25,952,953 23,949,933 LINKTONE LTD. NON-GAAP RECONCILIATION (In U.S. dollars, except share data) Three months ended December 31, September 30, December 31, 2006 2007 2007 (unaudited) (unaudited) (unaudited) Net income/(loss) 403,635 (2,794,467) (7,036,867) Stock based compensation expense 373,522 341,918 320,946 Provisions for impairment - investment deposit — — 2,470,382 - goodwill — — 2,000,000 - loan receivable — — 672,014 Non-GAAP net income/(loss) 777,157 (2,452,549) (1,573,525) Non-GAAP diluted earnings/(loss) per share 0.00 (0.01) (0.01) Non-GAAP diluted earnings/(loss) per ADS 0.03 (0.10) (0.07) Number of shares used in diluted per-share calculation 241,877,584 239,358,669 240,192,141 Number of ADSs used in diluted per-share calculation 24,187,758 23,935,867 24,019,214 LINKTONE LTD. NON-GAAP RECONCILIATION (In U.S. dollars, except share data) Twelve months ended December 31, December 31, 2006 2007 (unaudited) (unaudited) Net income/(loss) 6,792,591 (16,404,002) Stock based compensation expense 1,458,559 1,405,983 Provisions for impairment - investment deposit — 2,470,382 - goodwill — 2,000,000 - loan receivable — 672,014 Non-GAAP net income/(loss) 8,251,150 (9,855,623) Non-GAAP diluted earnings/(loss) per share 0.03 (0.04) Non-GAAP diluted earnings/(loss) per ADS 0.32 (0.41) Number of shares used in diluted per-share calculation 259,529,531 239,499,334 Number of ADSs used in diluted per-share calculation 25,952,953 23,949,933 For more information, please contact: Investor Relations Edward Liu Linktone Ltd. Tel: +86-21-6361-1583 Email: edward.liu@linktone.com Brandi Piacente The Piacente Group, Inc. Tel: 212-481-2050 Email: brandi@tpg-ir.com

SOURCE Linktone Ltd.

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