Noah Education Down; Gives 1Q Sales View Below street's view

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Noah Education Down; Gives 1Q Sales View Below Street's ViewLast update: 8/22/2008 10:44:27 AM

DOW JONES NEWSWIRES
Shares of Noah Education Holdings Ltd. (NED) fell nearly 12% Friday, a day after the Chinese provider of interactive educational content predicted fiscal first-quarter sales below analysts' expectations. The firm sees fiscal first-quarter net income of RMB48 million to RMB50 million on revenue of RMB250 million. Analysts surveyed by Thomson Reuters were expecting net income of RMB45 million on revenue of RMB257 million. American depositary shares of Noah were recently down 12% at $5.15; they have fallen 36% this year. Chairman and Chief Executive Dong Xu said Noah's core handheld digital-learning-device business continued to grow, and based on its consistent strength the company has expanded into other delivery systems. Oppenheimer lowered its investment rating on Noah's stock to perform from outperform as it expects "spotty" DLD volume and prices and amid the company's continued delays in expanding into tutoring centers. Meanwhile, Noah recorded net income for the fiscal fourth quarter ended June 30 of RMB31.2 million ($4.5 million), or RMB0.71 a share, up from RMB3.98 million a year earlier. Net revenue rose 18% to RMB97.9 million. Analysts were expecting earnings of RMB0.37 a share on revenue of RMB95 million. Gross margins rose to 51.1% from 45.3%.

By Shirleen Dorman, Dow Jones Newswires; 201-938-2310;

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Noah Education Updates Financial Guidance for the First Quarter of Fiscal Year 2009
Thursday September 25, 4:15 pm ET


SHENZHEN, China, Sept. 25 /Xinhua-PRNewswire/ -- Noah Education Holdings Ltd. ("Noah") (NYSE: NED - News), a leading provider of interactive education content in China, today revised its financial guidance for the first quarter of fiscal year 2009.

Noah now expects net revenue to range from RMB202 million to RMB203 million and net income to range from RMB21 million to RMB24 million for the first quarter of fiscal year 2009. The Company had previously forecast net revenue of RMB250 million and net income to be in the range of RMB48 million to RMB50 million for the fiscal first quarter.

The change in the Company's fiscal first quarter guidance was primarily attributable to the Company's continuous efforts to revamp and expand its product offerings. While successfully depleting its older inventory with seasonal promotional offers, the Company introduced a new Digital Learning Device (DLD) product in early August for five to nine year-olds called the Kid's Learning Device (KLD), to further expand its market share and enhance its brand. To date, Noah has made considerable progress with its KLD product and recorded solid sales. The five to nine year old age group in China stands at 90 million children and is a largely untapped market segment for learning devices. Therefore, the Company believes this presents an unprecedented growth opportunity for Noah in the next few years.

Other factors that contributed to the change in guidance also include further weakening in e-dictionary product sales as the Company has redirected its focus to offer higher margin DLD products, and a greater-than-anticipated impact from the Beijing Olympic Games.

Mr. Dong Xu, Noah's chairman and chief executive officer, said, "As we have previously stated, a key component of our strategy is to expand our content and services and reinforce our market leadership by adding more innovative products to our offering. With the introduction of our KLD product, we have made great strides toward this goal. While the realignment and the expansion of our product mix impacted our near-term outlook, we are confident that these initiatives will contribute to greater sales, improved margins and greater market share over the longer term."