Daum Kakao posts loss on merger costs

Daum Kakao said Friday that it posted a net loss of 6.3 billion won ($6 million) in the third quarter of this year due to one-time expenses incurred from the merger between Kakao and Daum Communications.

Asset revaluation of its subsidiaries and commission payments to M&A brokers following the merger had cost the company 51.7 billion won after taxes. The costs also included account receivables from sales of Lycos, an overseas search engine that Daum acquired in 2004, the company said.

The merger expenses, in addition to marketing and labor costs, had driven down its operating profit by 6 percent on-year to 30.8 billion won.

However, the company said this would not affect its core profitability in the future, noting that it posted solid sales thanks to its growing mobile business. Its revenue rose about 21 percent to 221.8 billion in the July-September period due to increased mobile advertisements, games and shopping.

“The third-quarter consolidated result of Daum Kakao reflected merger-related one-off expenses, revaluation of assets, and conservative accounting,” said Kwon Ki-su, head of the company’s business planning, in a statement.

“In the fourth quarter, we plan to focus our energy on setting the foundation for a solid mobile lifestyle platform by maximizing synergy. We anticipate that these efforts will lead to tangible results in our earnings next quarter.”

By Park Hyong-ki (hkp@heraldcorp.com)