Friday, Rediff.com India Ltd. (REDF), an online news and information provider, reported a loss for the third quarter compared to a profit last year, hurt by a sharp decline in online advertising spending and a considerable depreciation of Indian Rupee against US dollar.
The Mumbai, India-based company reported a net loss of US$2.75 million or US$9.40 per ADS, compared to net income of US$1.00 million or US$3.39 per ADS in the same period last year.
Commenting on the results, Ajit Balakrishnan, Chief Executive Officer said, "The October-December 2008 quarter saw the international financial crisis come full force to the domestic Indian economy and this is reflected in a sharp decline in online advertising spending, particularly from other online companies in the travel, jobs, credit card, and real estate sectors. In addition some companies in these sectors face liquidity challenges."
Balakrishnan further said that these developments resulted in lower revenues and consequent lower gross margins as well as higher than normal provisions for doubtful accounts. The revenue numbers were also impacted by a 23% year-over-year average depreciation of the Indian Rupee against the US dollar.
Total revenues for the quarter declined 38% to US$5.30 million from US$8.53 million in the fourth quarter of previous year.
Looking ahead, Rediff said it is reducing operating expenses, by cutting back on development projects that have long payback periods and by re-allocating resources away from "nice-to-have" services to those which the company believes will make a tangible difference in the coming months.
However, investments in mobile, local search and Indian language services have been stepped up, the company noted.
REDF closed Thursday's regular trading on Nasdaq at $2.02.
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