Daum Kakao vows aggressive investment

Daum Kakao, South Korea’s leading Web portal and mobile messenger operator, said Thursday that it would make full-fledged efforts this year to increase its presence in the highly competitive mobile platform sector at home and abroad.

“In this highly competitive business environment, Daum Kakao will have to make bold investments in new services in the next two years rather than to increase returns to shareholders,” said Choi Se-hoon, the cochief executive of the Internet giant, participating in a conference call for annual earnings Thursday.

He added that the company would cut its dividend rate to a high single-digit.

Before the merger between Web portal Daum and mobile messenger firm Kakao last October, Daum maintained more than a 10 percent dividend rate while Kakao, which was unlisted, gave no dividends.

His remarks reflected his determination to bolster the company’s mobile businesses and to catch up with competitors at home and abroad such as Naver, which runs mobile messenger Line, and Alibaba, the Chinese e-commerce behemoth.

Choi also said that Daum Kakao would more than double its marketing budget to 80 billion won ($72 million) this year to create new services and improve the existing ones.

As for the development of new services including Kakao Taxi, an Uber-like taxi-hailing service, and Kakao TV, a video-sharing social network, the co-CEO said the company has been making some progress and would announce the outcome soon.

Daum Kakao posted 254 billion won in sales in the fourth quarter last year, up 21 percent on-year, and 65.7 billion won in operating profit, up 71 percent, according to the company’s first post-merger earnings report.

Mobile platform businesses including commerce, advertising and games were key revenue sources, accounting for 49 percent of the firm’s annual sales.

The company’s Web and mobile commerce platforms grew 171 percent on-year in the fourth quarter thanks to the robust growth of Kakao Talk services, including allowing mobile users to send digital gift coupons to their friends.

The Seoul-based firm also increased its footing in the fintech (a portmanteau of finance and technology) sector as its mobile payment system Kakao Pay’s subscription base stood at 3 million users and more retailers are planning to work with Daum Kakao in the sector.

Regarding its plan to tap the Chinese mobile game publishing market, Choi said the company would release its first mobile game in the second quarter this year, and 2015 will become a watershed year for the firm and its partners to foray into the Chinese market.

By Kim Young-won (wone0102@heraldcorp.com)