Press Releases

Unedited news and product information from vendors.

AsiaInfo Reports Fourth Quarter and Full-Year 2009 Financial Results
Jan 28, 2010 (04:01 PM EST)


BEIJING and SANTA CLARA, Calif., Jan. 28 /PRNewswire-Asia-FirstCall/ -- AsiaInfo Holdings, Inc. (Nasdaq: ASIA) ("AsiaInfo" or the "Company"), a leading provider of telecom software solutions and IT security products and services in China, today announced financial results for the fourth quarter and full-year ended December 31, 2009.

"It was both a historic year and fourth quarter for AsiaInfo," remarked AsiaInfo President and Chief Executive Officer Steve Zhang. "We recorded 42% year-over-year non-GAAP net revenue growth in the fourth quarter and 47% year-over-year non-GAAP net revenue growth for the year. This is especially noteworthy as it comes on top of nearly 40% full-year non-GAAP net revenue growth in 2008. Additionally, in the fourth quarter we announced a merger agreement with Linkage that upon closing will create a market leader in the IT software and solutions space in China, providing a more comprehensive product and service offering to the telecom operators."

Mr. Zhang continued, "During the quarter, we announced a contract with China Unicom to build a centralized 3G business management platform which will enable the operator to efficiently coordinate and manage its 3G sales and services nationwide. We also recently announced a contract win to develop a cost-effective IT system for China Mobile's centralized IT center in Guangzhou and tenders to develop Mobile Number Portability hub platforms for China Mobile and China Unicom to support the trial testing of the government's MNP Policy in Tianjin and Hainan."

Fourth Quarter 2009 Financial Results

Total revenues for the fourth quarter of 2009 were US$76.3 million, an increase of 42.1% year-over-year and 20.0% sequentially. Exceeding guidance, net revenue (non-GAAP) for the fourth quarter of 2009 was US$72.3 million, an increase of 41.8% year-over-year and 18.7% sequentially. The year-over-year and sequential increases were primarily driven by the strong demand from all three of China's major telecom carriers.

Gross margin for the quarter was 57.7%, compared to 53.5% in the year-ago period and 54.6% in the previous quarter. The year-over-year and sequential increases in gross margin were primarily due to a strong contribution from higher-margin software solutions and services. Gross profit as a percentage of net revenue (non-GAAP) was 60.9% in the fourth quarter of 2009, compared to 56.4% in the year-ago period and 57.0% in the previous quarter.

In the fourth quarter of 2009, the AsiaInfo Technologies business unit, which focuses on telecommunications software and services, contributed 80.4% and 80.0% to total revenue and net revenue (non-GAAP), respectively. Total revenues for the AsiaInfo Technologies business unit increased 46.9% year-over-year and 16.7% sequentially to US$61.3 million. Net revenue (non-GAAP) for the AsiaInfo Technologies business unit increased 42.5% year-over-year and 12.4% sequentially to US$57.8 million. The increases in net revenue (non-GAAP) primarily reflect the steady demand from all three major telecom carriers as well as the steady inflow of contract tenders to upgrade and maintain existing installations.

In the fourth quarter of 2009, the Lenovo-AsiaInfo business unit, which focuses on IT security products and services, contributed 19.6% to total revenues and 20.0% to net revenue (non-GAAP). Total revenues for the Lenovo-AsiaInfo business unit increased 25.1% year-over-year and 35.9% sequentially to US$14.9 million. Net revenue (non-GAAP) for the Lenovo-AsiaInfo business unit increased 38.7% year-over-year and 53.1% sequentially to US$14.4 million. The year-over-year increase was mainly due to a high-margin contract signed with a government agency and the sequential increase was partially due to seasonality, as sales in the Lenovo-AsiaInfo business unit are typically strongest in the fourth quarter of each year. Please refer to the end of this press release for condensed segmented financial results for AsiaInfo's two business units.

Total operating expenses for the fourth quarter of 2009 increased 41.5% year-over-year and 21.1% sequentially to US$29.7 million. Sales and marketing expenses for the fourth quarter of 2009 increased 18.2% year-over-year and 11.2% sequentially to US$12.5 million. The year-over-year and sequential increases were mainly due to higher sales commission expenses incurred upon signing new contracts. General and administrative expenses for the fourth quarter of 2009 increased 25.4% year-over-year and 21.8% sequentially to US$4.6 million. The year-over-year increase was largely the result of increases in share-based compensation related to the performance stock unit awards granted to key employees on March 16, 2009 and the non-recurring merger transaction related fee of US$2.1 million. Research and development expenses increased 86.5% year-over-year and 16.2% sequentially to US$12.6 million. This increase primarily reflects a US$3.3 million R&D expense in the fourth quarter related to a government contract from the Company's Lenovo-AsiaInfo business unit and R&D expenses related to the development of Next Generation Business Operation Support Systems and Next Generation Business Intelligence systems.

Income from operations for the fourth quarter of 2009 was US$14.3 million, an increase of 84.5% year-over-year and 40.4% sequentially. Operating margin of total revenue(2) was 18.8% for the fourth quarter of 2009, compared to 14.5% in the year-ago period and 16.0% in the previous quarter. Operating margin of net revenue (non-GAAP)(3) for the fourth quarter of 2009 was 19.8%, compared to 15.2% in the year-ago period and 16.8% in the previous quarter. The year-over-year and sequential margin improvements were mainly the result of improving economies of scale and the Company's continued efforts to improve operational efficiency.

Other income for the fourth quarter of 2009 was US$0.5 million compared to a loss of US$5.1 million in the year-ago period and remained relatively unchanged from the previous quarter. The year-over-year increase was largely due to a non-cash impairment charge of US$6.6 million related to certain short-term investments in stock funds and long-term investments in the fourth quarter of 2008.

In the fourth quarter of 2009, AsiaInfo recorded net income attributable to AsiaInfo Holdings, Inc. of US$13.8 million, or US$0.29 per basic share, compared to US$2.2 million, or US$0.05 per basic share in the year-ago period and US$9.1 million, or US$0.20 per basic share in the previous quarter.

In the fourth quarter of 2009, net income attributable to AsiaInfo Holdings, Inc. (non-GAAP)(4) was US$18.4 million or US$0.38 per basic share. Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) in the year-ago period was US$10.2 million or US$0.23 per basic share. Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) in the previous quarter was US$13.0 million or US$0.29 per basic share. Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) increased 80.4% year-over-year and 41.5% sequentially.

As of December 31, 2009, AsiaInfo had cash and cash equivalents and restricted cash totaling US$244.1 million and short-term investments totaling US$41.4 million. Operating cash flow in the fourth quarter of 2009 was a net inflow of US$43.5 million.

Full-year 2009 Financial Results

Full-year 2009 total revenues increased 42.0% year-over-year to US$249.3 million. Full-year 2009 net revenue (non-GAAP) increased 47.4% year-over-year to US$234.1 million. The strong increases were primarily driven by the Company's ability to capitalize on the telecom sectors 3G rollout in China and subsequent demand for best-of-class IT solutions and services.

Gross margin for full-year 2009 was 54.1%, compared to 50.6% in the year-ago period. The improvement in gross margin reflects a strong execution of the Company's long-term strategy of providing high-quality IT software and services to their customers, the improving operating results of the Company's Lenovo-AsiaInfo business unit and a decrease in revenue derived from the sale of third-party hardware. Gross profit as a percentage of net revenue (non-GAAP) for full-year 2009 was 57.7% compared to 55.9% in the year-ago period.

The AsiaInfo Technologies business unit contributed 85.7% and 86.1% to full-year 2009 total revenues and net revenue (non-GAAP), respectively. Total revenues and net revenue (non-GAAP) for the AsiaInfo Technologies business unit increased 45.5% and 50.6% year-over-year to US$213.8 million and US$201.5 million, respectively.

The Lenovo-AsiaInfo business unit contributed 14.3% and 13.9% to full-year 2009 total revenues and net revenue (non-GAAP) respectively. Total revenues and net revenue (non-GAAP) for the Lenovo-AsiaInfo business unit increased 24.1% and 30.2% year-over-year to US$35.6 million and US$32.6 million, respectively. Please refer to the end of this press release for condensed segmented financial results for AsiaInfo's two business units.

Total operating expenses for full-year 2009 increased 40.8% year-over-year to US$97.9 million, reflecting the Company's efforts to expand its customer base and open new market opportunities through continual investment in research and development, and sales and marketing initiatives.

Operating margin of total revenues was 14.9% for full-year 2009, compared to 11.0% in the year-ago period. Operating margin of net revenue (non-GAAP) for full-year 2009 was 15.9%, compared to 12.1% in the year-ago period.

AsiaInfo recorded net income attributable to AsiaInfo Holdings, Inc. of US$35.9 million, or US$0.79 per basic share, for full-year 2009, compared to US$18.8 million, or US$0.42 per basic share, in full-year 2008. Net income attributable to AsiaInfo Holdings, Inc. excluding share-based compensation expense, amortization of acquired intangible assets, impairment loss on investment, dividend income, gain on discontinued operations and non-recurring merger related expenses (net income attributable to AsiaInfo Holdings, Inc. (non-GAAP)) for full-year 2009 was US$49.8 million, or US$1.10 per basic share. Net income (non-GAAP) for full-year 2008 was US$29.1 million or US$0.66 per basic share.

Operating cash flow for the full-year 2009 was a net inflow of US$52.5 million.

First Quarter 2010 Guidance

AsiaInfo expects first quarter 2010 net income from continuing operations per basic share to be in the range of US$0.19 to US$0.20, an increase of 46% to 54% year-over-year. The Company expects first quarter 2010 net revenue (non-GAAP) to be in the range of US$61 million to US$63 million, an increase of 28% to 32% year-over-year. The Company noted that this guidance includes an estimated US$2.7 million merger-related expense.

    (1)  Net revenue (non-GAAP), a non-GAAP measure, represents total revenue
         net of third-party hardware costs. A reconciliation of net revenue
         (non-GAAP) to GAAP revenue is provided at the end of this press
         release.
    (2)  Operating margin of total revenue is operating income divided by
         total revenue.
    (3)  Operating margin of net revenue (non-GAAP) is operating income
         divided by net revenue (non-GAAP).
    (4)  Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) and net
         income attributable to AsiaInfo Holdings, Inc. (non-GAAP) per share
         measures exclude share-based compensation expenses, amortization of
         acquired intangible assets, impairment loss on investment, dividend
         income, gain on discontinued operations and non-recurring merger
         related expenses. A reconciliation of these non-GAAP measures to the
         most directly comparable GAAP measures is provided at the end of the
         press release.



                             ASIAINFO HOLDINGS, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
       (Amounts in thousands of US$, except shares and per share amounts)

                                          Three Months        Twelve Months
                                       Ended December 31,   Ended December 31,
                                        2009       2008       2009       2008
    Revenues:
      Software products and
       solutions                      $66,675    $45,556   $211,145   $140,187
      Service                           5,385      5,169     22,163     17,473
      Third party hardware              4,202      2,959     16,031     17,883
    Total revenues                     76,262     53,684    249,339    175,543

    Cost of revenues:
      Software products and
       solutions                       24,586     20,038     89,415     62,744
      Service                           3,683      2,200      9,741      7,285
      Third party hardware              3,999      2,709     15,198     16,701
    Total cost of revenues             32,268     24,947    114,354     86,730
      Gross profit                     43,994     28,737    134,985     88,813

    Operating expenses:
      Sales and marketing              12,480     10,557     44,169     36,220
      General and administrative        4,597      3,665     15,588     10,606
      Research and development         12,597      6,755     39,446     22,695
      Government grant                     --         --     (1,342)        --
    Total operating expenses           29,674     20,977     97,861     69,521

    Income from operations             14,320      7,760     37,124     19,292

    Other income:
      Interest income                     517      1,237      2,215      4,670
      Dividend income                      --         12        178        545
      Gain from sales of short-term
       investments                         --        329      1,210      4,866
      Impairment loss on short-term
       investments                         --     (4,634)        --     (4,684)
      Impairment loss on long-term
       investments                         --     (2,042)        --     (2,042)
      Other income (expenses), net         (5)        14        (36)      (559)
    Total other income, net               512     (5,084)     3,567      2,796
    Income before provision for
     income taxes and discontinued
     operations                        14,832      2,676     40,691     22,088
    Provision for income taxes          1,468        476      5,261      4,293
    Income from continuing
     operations                        13,364      2,200     35,430     17,795
    Income from discontinued
     operations                            --         --         --        980
    Net income                         13,364      2,200     35,430     18,775
      Net loss attributable to
       noncontrolling interest            435         11        429         15
    Net income attributable to
     AsiaInfo Holdings, Inc.          $13,799     $2,211    $35,859    $18,790

    Earnings Per Share:
    Net income from continuing
     operations attributable to
     AsiaInfo Holdings, Inc. common
     stockholders:
      Basic                             $0.29      $0.05      $0.79      $0.40
      Diluted                           $0.29      $0.05      $0.77      $0.38

    Net income from discontinued
     operations attributable to
     AsiaInfo Holdings, Inc. common
     stockholders:
      Basic                                --         --         --      $0.02
      Diluted                              --         --         --      $0.02

    Net income attributable to
     AsiaInfo Holdings, Inc.
     common stockholders
      Basic                             $0.29      $0.05      $0.79      $0.42
      Diluted                           $0.29      $0.05      $0.77      $0.40

    Weighted average shares
     used in computation:
      Basic                        46,825,099 43,698,583 45,182,831 44,828,915
      Diluted                      47,771,540 45,424,511 46,386,278 46,675,694



                             ASIAINFO HOLDINGS, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
        (Amounts in thousands of US$, except share and per share amounts)
                                                               As of
                                                   December 31,   December 31,
                                                       2009          2008(1)
    ASSETS:
    Current Assets:
      Cash and cash equivalents                      $238,553       $172,119
      Restricted cash                                   5,540         12,510
      Short term investments-available
       for sale securities                             27,674         28,633
      Short term investments-held to
       maturity securities                             13,716             --
      Accounts receivable, net (net of
       allowances of $2,619 and $2,605 as
       of December 31, 2009 and December
       31, 2008, respectively)                        129,646         52,011
      Inventories, net                                  9,535         12,322
      Other receivable                                  2,841          2,813
      Deferred income taxes - current                   2,968          3,334
      Prepaid expenses and other current assets         5,679          5,425
    Total current assets                             $436,152       $289,167

      Long term investments                             4,696          4,696
      Property and equipment, net                       2,989          2,887
      Other acquired intangible assets, net             3,818          3,008
      Deferred income tax assets - non-current          2,161          2,671
      Goodwill                                         22,262         20,725
      Prepaid land use right                            9,699             --
    Total Assets                                     $481,777       $323,154

    LIABILITY AND EQUITY
    Current Liabilities:
      Accounts payable                                 76,019         13,835
      Accrued expenses                                 21,793         14,235
      Deferred revenue                                 45,547         44,414
      Accrued employee benefits                        39,403         27,570
      Other payables                                    6,187          5,288
      Income taxes payable                              2,862            646
      Other taxes payable                               7,620          6,311
      Deferred income tax liability                     1,340            934
    Total current liabilities                        $200,771       $113,233

    Unrecognized tax benefits                           3,080          1,326
    Other long term liabilities                           135            135
    Total liabilities                                $203,986       $114,694
    Redeemable noncontrolling interest                  1,122             --

    Equity:
    Common stock                                          501            464
    Additional paid-in capital                        244,838        215,948
    Treasury stock, at cost                           (27,749)       (27,749)
    Accumulated deficit                                15,199        (15,566)
    Statutory reserve                                  22,306         17,212
    Accumulated other comprehensive income             20,212         18,093
    Total AsiaInfo Holdings stockholders'
     equity                                          $275,307       $208,402
    Noncontrolling interest(2)                          1,362             58
    Total equity                                      276,669        208,460
    Total Liabilities and Equity                     $481,777       $323,154

    (1)  December 31, 2008 balances were derived from audited financial
         statements.
    (2)  Amount in relation to noncontrolling interest (formerly minority
         interest), as of December 31, 2008 is reclassified in accordance with
         authoritative accounting guidance adopted by the Company on January 1,
         2009.


                             ASIAINFO HOLDINGS, INC.
            CONDENSED INFORMATION FOR OPERATING SEGMENTS (UNAUDITED)
                         (Amounts in thousands of US$)

                                                   December 31, 2009
                                             AsiaInfo     Lenovo      Total
                                          Technologies  -AsiaInfo
    Revenues:
    Software products and solutions            $52,359    $14,316    $66,675
    Service                                      5,271        114      5,385
    Third party hardware                         3,719        483      4,202
    Total revenues                              61,349     14,913     76,262

    Cost of revenues:
    Software products and solutions             20,374      4,212     24,586
    Service                                      3,625         58      3,683
    Third party hardware                         3,534        465      3,999
    Total cost of revenues                      27,533      4,735     32,268

    Gross profit                                33,816     10,178     43,994

    Business unit expenses:
    Sales and marketing                          8,352      4,128     12,480
    General and administrative                     781       (895)      (114)
    Research and development                     8,171      4,426     12,597
    Government grant                                --         --         --
    Total business unit expenses                17,304      7,659     24,963

    Contribution profit                        $16,512     $2,519    $19,031
    Corporate general and administration                               4,711
    Operating profit                                                 $14,320


                                                   December 31, 2008
                                              AsiaInfo      Lenovo     Total
                                            Technologies  -AsiaInfo
    Revenues:
    Software products and solutions            $35,634      $9,922   $45,556
    Service                                      4,864         305     5,169
    Third party hardware                         1,265       1,694     2,959
    Total revenues                              41,763      11,921    53,684

    Cost of revenues:
    Software products and solutions             16,814       3,224    20,038
    Service                                      2,073         127     2,200
    Third party hardware                         1,202       1,507     2,709
    Total cost of revenues                      20,089       4,858    24,947

    Gross profit                                21,674       7,063    28,737

    Business unit expenses:
    Sales and marketing                          6,641       3,916    10,557
    General and administrative                     684         353     1,037
    Research and development                     5,948         807     6,755
    Government grant                                --          --        --
    Total business unit expenses                13,273       5,076    18,349

    Contribution profit                         $8,401      $1,987   $10,388
    Corporate general and administration                               2,628
    Operating profit                                                  $7,760


                                                  September 30, 2009
                                              AsiaInfo     Lenovo      Total
                                            Technologies  -AsiaInfo
    Revenues:
    Software products and solutions            $45,660     $9,222    $54,882
    Service                                      5,703        145      5,848
    Third party hardware                         1,193      1,610      2,803
    Total revenues                              52,556     10,977     63,533

    Cost of revenues:
    Software products and solutions             21,217      2,789     24,006
    Service                                      2,074         87      2,161
    Third party hardware                         1,133      1,540      2,673
    Total cost of revenues                      24,424      4,416     28,840

    Gross profit                                28,132      6,561     34,693

    Business unit expenses:
    Sales and marketing                          8,531      2,692     11,223
    General and administrative                     614       (143)       471
    Research and development                     8,162      2,680     10,842
    Government grant                            (1,342)        --     (1,342)
    Total business unit expenses                15,965      5,229     21,194

    Contribution profit                        $12,167     $1,332    $13,499
    Corporate general and administration                               3,302
    Operating profit                                                 $10,197


Fourth Quarter and Full-Year 2009 Conference Call Details

AsiaInfo management will hold an earnings conference call at 4:00 p.m. Pacific Time / 7:00 p.m. Eastern Time on January 28, 2010 (8:00 a.m. Beijing/Hong Kong Time on January 29, 2010). Management will discuss results and highlights of the quarter and answer questions from investors.

    The dial-in numbers for the conference call are as follows:

    U.S. Toll Free: +1-877-538-6619
    China Local Number: 400-681-6949
    Hong Kong and International: +852-3005-2050

    The passcode for the call is 408313#.

A replay of the call will be available until 7:00 p.m. Eastern Time on February 28, 2010 by dialing one of the following numbers:

    U.S. Toll Free: +1-866-753-0743
    China Toll Free: 800-876-8594
    Hong Kong and International: +852-3005-2020

    The passcode for the replay is 134936#.

Additionally, a live and archived webcast of this call will be available on the Investor Relations section of the AsiaInfo website at http://www.asiainfo.com .

About AsiaInfo Holdings, Inc.

AsiaInfo Holdings, Inc. (Nasdaq: ASIA) is a leading provider of high-quality software and customer solutions to many of China's largest enterprises. In addition to providing software and customer solutions to China's telecom carriers, the Company also offers a wide range of security products and services to small, medium and large sized Chinese enterprises across multiple vertical industries.

Organized as a Delaware corporation, AsiaInfo began operations in the United States in 1993. The Company moved its major operations to China in 1995 and played a significant role in the construction of the national Internet backbones and provincial access networks for all of China's major national telecom carriers, including China Telecom, China Mobile, China Unicom and China Netcom. Since 1998, AsiaInfo has continued to diversify its product offerings and is now a major provider of enterprise software solutions in China.

For more information about AsiaInfo, please visit http://www.asiainfo.com .

Reconciliation of non-GAAP Measures

This earnings release presents the following "non-GAAP financial measures" as defined by applicable U.S. securities regulations. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. The non-GAAP financial measures are provided as additional information to help both management and investors compare business trends among different reporting periods on a consistent and more meaningful basis and enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP measures have limitations, however, because they do not include all items of income and expenses that impact the Company's operations. Management compensates for these limitations by also considering the Company's GAAP results. The non-GAAP financial measures the Company uses are not prepared in accordance with, and should not be considered an alternative to measurements required by GAAP and should not be considered measures of the Company's liquidity. Pursuant to relevant regulatory requirements, we are providing the following reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures.

(1) Net revenue (non-GAAP)

AsiaInfo's net revenue (non-GAAP) represents total revenue net of hardware costs that are passed through to our customers. We believe total revenues net of hardware costs more accurately reflects our core business, which is the provision of software solutions and services, and provides transparency to our investors. It is also the same measure used by our management to evaluate the competitiveness and development of our business.



       Reconciliation of net revenues (non-GAAP) to GAAP total revenues

                                                        2009 Q4
                                        AsiaInfo         Lenovo
                                      Technologies      AsiaInfo       Total
                                             (in thousands of US dollars)
    Net Revenue (Non-GAAP)               57,815          14,448        72,263
    Third Party Hardware Costs            3,534             465         3,999
    Total Revenues                       61,349          14,913        76,262

                                                        2008 Q4
                                        AsiaInfo         Lenovo
                                      Technologies      AsiaInfo       Total
                                             (in thousands of US dollars)
    Net Revenue (Non-GAAP)               40,561          10,414        50,975
    Third Party Hardware Costs            1,202           1,507         2,709
    Total Revenues                       41,763          11,921        53,684

                                                        2009 Q3
                                         AsiaInfo        Lenovo
                                       Technologies     AsiaInfo       Total
                                              (in thousands of US dollars)
    Net Revenue (Non-GAAP)                51,423          9,437        60,860
    Third Party Hardware Costs             1,133          1,540         2,673
    Total Revenues                        52,556         10,977        63,533



                                  2009                        2008
                       AsiaInfo                   AsiaInfo
                        Techno-  Lenovo            Techno-   Lenovo
                         logies AsiaInfo   Total    logies  AsiaInfo  Total
                                    (in thousands of US dollars)
    Net Revenue
     (Non-GAAP)         201,525   32,616  234,141  133,782   25,060  158,842
    Third Party
     Hardware Costs      12,231    2,967   15,198   13,099    3,602   16,701
    Total Revenues      213,756   35,583  249,339  146,881   28,662  175,543


    (2) Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP)

Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) excludes share-based compensation expenses, amortization of acquired intangible assets, impairment loss on investment, dividend income, gain on discontinued operations and non-recurring merger related expenses. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and income that may not be indicative of our operating performance. Management uses the net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) measure to gain a better understanding of the Company's comparative operating performance from period-to-period and as a basis of planning and forecasting future periods. Management believes the Company's net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) measure, when read in conjunction with the Company's GAAP net income measure and other GAAP financial metrics, provides useful information to investors by offering: a) the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; b) the ability to better identify trends in the Company's underlying business and perform related trend analysis; c) a better understanding of how management plans and measures the Company's underlying business; and d) an easier way to compare the Company's most recent results of operations against investor and analyst financial models.



       Reconciliation of net income attributable to AsiaInfo Holdings, Inc.
       (non-GAAP) to GAAP net income attributable to AsiaInfo Holdings, Inc.

                              Three Months Ended  Twelve Months Ended
                                     Dec. 31             Dec. 31      2009 Q3
                                  2009     2008      2009      2008
                                          (in US dollar thousands)
    GAAP net income              13,799    2,211    35,859    18,790   9,065
    Adjustments:
     - Share based compensation   2,033      919    10,665     3,562   3,593
     - Amortization of acquired
       intangible assets            441      359     1,386     1,589     316
     - Impairment loss of
       investment                    --    6,676        --     6,726      --
     - Gain on discontinued
       operations                    --       --        --      (980)     --
     - Gain on settlement of
       escrow                        --       --        --        --      --
     - Non-recurring merger
       related expenses           2,100       --     2,100        --      --
     - Dividend income               --      (12)     (178)     (545)     (4)
    Non-GAAP net income          18,373   10,153    49,832    29,142  12,970

(3) Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) per basic share

Net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) per share is calculated by dividing net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) by the same weighted average shares used in the computation of GAAP net income attributable to AsiaInfo Holdings, Inc. per share. Management believes that net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) per share, when used in conjunction with the Company's GAAP net income attributable to AsiaInfo Holdings, Inc. per share, provides useful information to investors for the same reasons discussed above regarding net income attributable to AsiaInfo Holdings, Inc (non-GAAP). In addition, net income attributable to AsiaInfo Holdings, Inc. (non-GAAP) per share allows investors to evaluate the Company's operating performance from period to period on a per share basis, thus providing a useful basis for assessing the Company's value on a per share basis.



      Reconciliation of net income attributable to AsiaInfo Holdings, Inc.
        (non-GAAP) per share to GAAP net income attributable to AsiaInfo
                            Holdings, Inc. per share

                                     Three Months      Twelve Months
                                    Ended Dec. 31      Ended Dec. 31   2009 Q3
                                    2009     2008      2009     2008
                                          (in US dollar thousands)
    GAAP net income Per Basic
     Share                          0.29     0.05      0.79     0.42    0.20
    Adjustments:
     - Share based compensation     0.04     0.02      0.24     0.08    0.08
     - Amortization of acquired
       intangible assets            0.01     0.01      0.03     0.04    0.01
     - Impairment loss of
       investment                     --     0.15        --     0.15      --
     - Gain on discontinued
       operations                     --       --        --    (0.02)     --
     - Gain on settlement of
       escrow                         --       --        --       --      --
     - Non-recurring merger
       related expenses             0.04       --      0.04       --
     - Dividend income                --       --        --    (0.01)     --
    Non-GAAP net income Per
     Basic Share                    0.38     0.23      1.10     0.66    0.29

Cautionary Note Regarding Forward-Looking Statements

The information contained in this document is as of January 28, 2010. AsiaInfo assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments.

This document contains forward-looking information about AsiaInfo's operating results and business prospects that involve substantial risks and uncertainties. You can identify these statements by the fact that they use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause actual results to differ materially are the following: government telecommunications infrastructure and budgetary policy in China; our ability to maintain our concentrated customer base; our ability to consummate a business combination with Linkage and successfully integrate its business into ours; the long and variable billing cycles for our products and services that can cause our revenues and operating results to vary significantly from period to period; our ability to meet our working capital requirements; our ability to retain our executive officers; our ability to attract and retain skilled personnel; potential liabilities we are exposed to because we extend warranties to our customers; risks associated with cost overruns and delays; our ability to develop or acquire new products or enhancements to our software products that are marketable on a timely and cost-effective basis; our ability to adequately protect our proprietary rights; the competitive nature of the markets we operate in; and political and economic policies of the Chinese government. A further list and description of these risks, uncertainties, and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and in our reports on Forms 10-Q and 8-K filed with the United States Securities and Exchange Commission and available at www.sec.gov.

    For more information about AsiaInfo, please visit http://www.asiainfo.com .

    For investor and media inquiries, please contact:

    In China:

     Sheryl Zhang
     AsiaInfo Holdings, Inc.
     Phone: +86-10-8216-6039
     Email: ir@asiainfo.com

     Justin Knapp
     Ogilvy Financial, Beijing
     Phone: +86-10-8520-6556
     Email: asia@ogilvy.com

    In the United States:

     Ms. Jessica Barist Cohen
     Ogilvy Financial, New York
     Phone: +1-646-460-9989
     Email: asia@ogilvy.com

SOURCE AsiaInfo Holdings, Inc.