NHN sales surge 43%; profits fall

NHN Corp., the operator of Internet portal site Naver, said yesterday that its sales jumped 43.1 percent to 83 billion won ($81.6 million) in the second quarter from the year-earlier period. Net income dropped by 14.6 percent to 14.3 billion won, but an NHN spokeswoman attributed the decline to the expiration of special tax breaks that enterprises classified as “venture companies” by the Small and Medium Business Association can receive for five years. Operating profits rose 46.4 percent to 30.8 billion won. In a first for an Internet company, NHN’s aggregate value in the secondary Kosdaq market passed 2 trillion won on Friday. In the last week, Naver accounted for 69 percent of search engine users in Korea, according to KoreanClick Co., a research agency that measures Internet usage. NHN’s popularity has enabled it to take full advantage of the boom in the online advertising market in Korea. The domestic online advertising market, worth 50 billion won in 2002, is expected to grow to 350 billion won this year and to 800 billion won in 2007. “NHN made profits from its game portal, Hangame, before its search engine made profits,” said Cho Seong-ok, an analyst from Korea Investment & Securities Co. “NHN has stable, profitable sources like games and a shopping mall as well as the search engine.” NHN is also expanding its business overseas to Japan and China. Hangame Japan ranks top in the Japanese online game market, and NHN also has a 50 percent stake in Our Game, China’s largest game portal. “We’re planning to enter Southeast Asia, the United States and Europe,” said Chae Hwi-young, the president of NHN. Despite the encouraging figures, Naver is likely to face stiff competition in the near future, as telecommunications companies, such as SK Telecom Co. and KT Corp., strengthen their Internet business with NHN’s competitors, such as portal sites Nate.com and Paran. NHN shares closed at 120,000 won on the Kosdaq yesterday, down 1.2 percent. by Chang Chung-hoon, Park Sung-ha