CDC Corporation Expects to Substantially Increase Adjusted Net Income and Adjusted EBITDA in Second Half of 2008

  
    
  
  
    
      CDC Corporation (NASDAQ: CHINA), a leading global enterprise software 
      and new media company, today announced it expects to achieve a 
      substantial increase in adjusted net income (ANI) and adjusted EBITDA 
      for the second half of 2008 compared to the first half of this year.
    
    
      The second half improved outlook is primarily due to anticipated 
      improvement throughout the company’s operating 
      metrics, as a result of CDC’s recent cost 
      reduction efforts. The company now believes it has a scalable business 
      model with higher predictability of revenues. For example, examining the 
      two major divisions of the Company:
    
    
      
        CDC Software, which currently comprises approximately 85-90 
        percent of CDC Corporation’s revenues, 
        anticipates that a large portion of its second half 2008 revenues will 
        be derived from recurring sources such as: a.) maintenance revenues 
        from CDC Software’s 6,000 plus global 
        customer base, which has consistently achieved retention rates of 
        approximately 90 percent and which now makes up a revenue stream with 
        an approximately $100 million per year run-rate; b.) Software services 
        revenues that include upgrades, consulting, software implementations, 
        as well as training services for both new and existing customers and; 
        c.) finally, CDC Global Services, which is also over $100 million per 
        year in revenues, and offers IT services to customers. Several of its 
        customers tend to have longer-term engagements with the company.
      
      
        CDC Games has now delivered three consecutive quarters of 
        sequential revenue growth. This division, with the vast majority of 
        its revenues from China, has a diversified portfolio of 
        awarding-winning and popular games that have a reasonably predictable 
        track record of users’ spending patterns. 
        These games are primarily operated in the largest and fastest growing 
        online games market in the world.
      
    
    
      As recently announced, CDC Software has implemented cost reduction 
      initiatives in the second quarter of 2008 that are expected to yield 
      annual savings of approximately (U.S.) $15 million, making the total 
      cost reductions undertaken over the last 12 months approximately (U.S.) 
      $31 million annually. In addition, over the last six months, CDC 
      Software has seen improvements in several operating metrics including 
      utilization rates for software services professionals, as well as 
      improvements in the company’s sales pipeline. 
      Also, CDC Games is showing a strong recovery and expects to launch 
      several new games in the second half of this year. As a result of all 
      these factors, CDC Corporation is optimistic about the second half of 
      this year.
    
    
      “After the recent management re-alignment and 
      our filing to withdraw the planned initial public offerings for both CDC 
      Games and CDC Software, we are now singularly focused on improving 
      operational metrics and cash generation from the businesses,” 
      said Peter Yip, CEO of CDC Corporation. “Overall, 
      CDC now has much lower corporate overhead and the improved second half 
      guidance is also attributed to CDC Software’s 
      pipeline. In fact, I will be personally meeting with several key 
      customers over the next several months to reinforce CDC Software’s 
      plans to stay ahead by continuing to serve as a strategic technology 
      partner for its customer base by protecting their IT investments now and 
      into the future. We plan to accomplish this by providing the solutions 
      that will empower our customers to maximize productivity in this 
      challenging environment of rising fuel, transportation and commodity 
      costs.
    
    
      “As a result of our proactive strategy, we 
      believe we have built a strong financial foundation that will contribute 
      to a healthy outlook for the second half of 2008, even if the economy 
      further declines. With our renewed business focus which even if we 
      assume a flat license revenue run rate similar to what we achieved in 
      the first quarter of 2008, we feel confident we will improve upon our 
      first half of 2008 profitability performance by a significant percentage 
      during the second half of 2008. With all of these positive indicators, I 
      feel very comfortable in providing this general guidance for the second 
      half of 2008. We plan to provide a formal guidance range for revenues 
      and adjusted EBITDA for the second half of 2008 when we formally 
      announce Q2 results in August.”
    
    
      About CDC Corporation
    
    
      The CDC family of companies includes CDC Software focused on enterprise 
      software applications and services, CDC Games focused on online games, 
      and China.com focused on portals for the greater China markets. For more 
      information about CDC Corporation (NASDAQ: CHINA), please visit www.cdccorporation.net.
    
    
      About CDC Software
    
    
      CDC Software, The Customer-Driven Company™, 
      is a provider of enterprise software applications designed to help 
      organizations deliver a superior customer experience while increasing 
      efficiencies and profitability. CDC Software's product suite includes: 
      CDC Factory (manufacturing operations management), Ross ERP (enterprise 
      resource planning) and SCM (supply chain management), CDC Supply Chain 
      (supply chain management, warehouse management and order management), 
      Pivotal CRM and Saratoga CRM (customer relationship management), CDC 
      MarketFirst (marketing automation and lead management), Respond 
      (customer complaint and feedback management), c360 CRM add-on products, 
      industry solutions and development tools for the Microsoft Dynamics CRM 
      platform, Platinum HRM (human resources) and business analytics 
      solutions.
    
    
      These industry-specific solutions are used by more than 6,000 customers 
      worldwide within the manufacturing, financial services, health care, 
      home building, real estate, wholesale and retail distribution 
      industries. The company completes its offerings with a full continuum of 
      services that span the life cycle of technology and software 
      applications, including implementation, project consulting, outsourced 
      business services, application management and offshore development. CDC 
      Software is the enterprise software unit of CDC Corporation (NASDAQ: 
      CHINA) and is ranked number 12 on the MBT 2007 Global 100 List of 
      Enterprise and Supply Chain Management Application vendors. For more 
      information, please visit www.cdcsoftware.com.
    
    
      About China.com Inc.
    
    
      China.com is a leading operator of Internet portals, serving a broad 
      range of audiences in China. In 2006, it was chosen as the first company 
      to host Google's Video Adsense which serves video ads targeted at 
      China's English-speaking audience. China.com also was appointed by the 
      Jilin government as the exclusive web sponsor of the 2007 Asian Winter 
      Games. China.com was listed on the GEM of the Stock Exchange of Hong 
      Kong Limited on March 9, 2000. In December 2000, China.com Inc. was 
      admitted as a constituent stock of the Hang Seng IT and IT Portfolio 
      Indices.
    
    
      About CDC Games
    
    
      CDC Games is one of the market leaders of online and mobile games in 
      China with more than 140 million registered users. The company pioneered 
      the "free-to-play, pay-for-merchandise" online games model in China with 
      Yulgang and launched the first free-to-play, pay for merchandise FPS 
      (first person shooter) game in China with Special Force. Launched in 
      July 2007, Special Force has consistently ranked in the Top 10 
      downloaded games in China and becoming the top revenue producer for CDC 
      Games. Currently, CDC Games offers six popular MMO online games in China 
      that include: Special Force, Yulgang, Shaiya, Mir III, Shine and Eve 
      Online. In March 2007, the company announced the formation of CDC Games 
      Studio to establish strategic relationships with selected games 
      development partners to accelerate the development of new, original 
      online games for China and other targeted global geographies. Through 
      its CDC Games International (CGI) subsidiary, the company launched a 
      long-term strategy to be a global publisher of MMO games. As part of 
      this long term strategy, CDC Games launched the www.12FootTall.com 
      portal to showcase online games and related content in North America. 
      For more information on CDC Games, visit: www.cdcgames.net.
    
    
      Cautionary Note Regarding Forward-Looking Statements
    
    
      This press release includes "forward-looking statements" within the 
      meaning of the United States Private Securities Litigation Reform Act of 
      1995. These forward-looking statements include statements regarding our 
      expectations regarding the achievement of a substantial increase in 
      adjusted ANI and adjusted EBITDA during the second half of 2008, our 
      beliefs and expectations relating to the underlying factors that may 
      cause such increases in financial performance, our expectations 
      regarding the current and annualized savings yielded by our cost savings 
      measures and our ability to continue to recognize and enjoy the benefits 
      thereof, our beliefs regarding our establishment of a strong financial 
      foundation for our businesses, our expectations regarding the amount of 
      our increase in profitability performance, if any, in the second half of 
      2008 over the first half of 2008, our beliefs regarding the scalability 
      of our business model and the predictability of our revenues, our 
      expectations regarding the launch of new online games, our beliefs 
      regarding our future profit margins, our beliefs regarding the sources 
      of our revenue for the second half of 2008, our beliefs regarding the 
      general terms of engagements for our global services customers, our 
      beliefs regarding the continuation of improvements in our operating 
      metrics, our beliefs regarding our pipeline and strategies with respect 
      thereto, and other statements that are not historical fact, the 
      achievement of which involve risks, uncertainties and assumptions. If 
      any such risks or uncertainties materialize or if any of the assumptions 
      proves incorrect, our results could differ materially from the results 
      expressed or implied by the forward-looking statements we make. These 
      statements are based on management's current expectations and are 
      subject to risks and uncertainties and changes in circumstances. There 
      are important factors that could cause actual results to differ 
      materially from those anticipated in the forward looking statements, 
      including the following: (a) the ability to realize strategic objectives 
      by taking advantage of market opportunities in targeted geographic 
      markets; (b) the ability to make changes in business strategy, 
      development plans and product offerings to respond to the needs of 
      current, new and potential customers, suppliers and strategic partners; 
      (c) the effects of restructurings and rationalization of operations; (d) 
      the ability to address technological changes and developments including 
      the development and enhancement of products; (e) the entry of new 
      competitors and their technological advances; (f) the need to develop, 
      integrate and deploy enterprise software applications to meet customer's 
      requirements; (g) the possibility of development or deployment 
      difficulties or delays; (h) the dependence on customer satisfaction with 
      the company's software products and services; (i) continued commitment 
      to the deployment of the enterprise software solutions; (j) risks 
      involved in developing software solutions and integrating them with 
      third-party software and services; (k) the continued ability of the 
      company's enterprise software solutions to address client-specific 
      requirements; (l) demand for and market acceptance of new and existing 
      enterprise software and services and the positioning of the company's 
      solutions; (m) the ability of staff to operate the enterprise software 
      and extract and utilize information from the company's enterprise 
      software solutions; (n) the continued cooperation of our strategic and 
      business partners; (o) risks relating to economic conditions and other 
      matters beyond our control; (p) the risk that the preliminary financial 
      results provided herein could differ from our actual results of 
      operations and financial condition; and (q) the continued strength of 
      revenues from our installed base customers. Further information on risks 
      or other factors that could cause results to differ is detailed in 
      filings or submissions with the United States Securities and Exchange 
      Commission made by CDC Corporation in its Annual Report for the year 
      ended December 31, 2007 on Form 20-F filed on June 30, 2008. All 
      forward-looking statements included in this press release are based upon 
      information available to management as of the date of the press release, 
      and you are cautioned not to place undue reliance on any forward looking 
      statements which speak only as of the date of this press release. The 
      company assumes no obligation to update or alter the forward looking 
      statements whether as a result of new information, future events or 
      otherwise.