Though Global Sources was able to increase total revenue 11% and online revenue 19% compared to the third quarter of 2007, its profit for the third quarter of 2008 sunk over the same period of last year as it reported financial results for the third quarter ended September 30, 2008 and notified shareholders that its CEO will sell some of his shares.
Global Sources' chairman and CEO, Merle A. Hinrichs, said: "For 37 years, Global Sources' management has successfully led the company through many economic disruptions and our business model enables us to effectively adapt to challenging business environments like we have today. Revenue for the quarter increased 11%, compared to the third quarter of 2007, driven by the continued success of our online business, which grew 19%. Global Sources' resilient financial condition, successful product offerings and focused strategy have the company well positioned for continued prosperity as we look to the future."
GAAP net income was USD2.3 million, or USD0.05 per diluted share, which included a credit of USD0.4 million, or USD0.01 per share of non-cash, stock-based compensation expense based on a stock price of USD10.07 on September 30, 2008. For the third quarter of 2007, GAAP net income was USD5.1 million, or USD0.11 per diluted share.
Cash, cash equivalents and available-for-sale securities were USD183.2 million as at Sept. 30, 2008, down 1% from USD184.9 million as of September 30, 2007, reflecting the recent purchase of real estate for a sum of USD47.9 million.
Global Sources' CFO, Eddie Heng, said: "Although revenue was less than expected, we have been adjusting our spending and investment plans. As a result, our GAAP EPS of USD0.05 exceeded our guidance of USD0.02 to USD0.03. For the fourth quarter, we expect growth to range between 4% and 5%. Regarding earnings, we plan to continue to carefully manage expenditures, and we anticipate achieving GAAP EPS between USD0.12 and USD0.13."
The company also disclosed that Hinrichs intends to close and complete, before the end of December 2008, a sale of six million common shares of Global Sources to Hung Lay Si Company Ltd, at a price of USD8.00 per share. After giving effect to this sale, Hinrichs would own approximately 48.3% of the outstanding common shares of Global Sources. Part of the sale consideration of this transaction is to be used to repay a portion of Hinrichs' outstanding loan from Hung Lay Si.
At the same time Global Sources has announced that it intends to commence an issuer tender offer before the end of November 2008, with expected completion before the end of December 2008, for 6.25 million shares, or approximately 13.4% of its outstanding common shares as of September 30, 2008, at a purchase price of USD8.00 per share in cash. This will have the effect of reducing the dilution on the remaining outstanding shares — including those held by Hung Lay Si.