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Linktone, the Nasdaq-listed Chinese wireless media company, has replaced chief executive Raymond Yang less than a month after cutting its earnings forecast for the last quarter of 2005.

Colin Sung, chief financial officer, said in an announcement to staff on Friday that he would be taking over as acting CEO until the appointment of a permanent replacement for Mr Yang, who joined Linktone in 2003.

Linktone, which was established in 1999 and offers a range of services such as ringtones, short message services and games for China’s huge market in mobile phone subscribers, did not make public any reasons for Mr Yang’s replacement.

However, Linktone said in early February that its fourth quarter results, to be released next week, would not meet expectations because of higher costs and increased expenditure.

The Shanghai-based company said it expected to report net income of 3-4 US cents per American Depositary Share for the fourth quarter, down from its previous estimate of 15 US cents and far below the 17 US cents forecast by analysts polled by Reuters.

“Company management need to achieve more profit and do more to strengthen controls on operations and costs,” one Linktone official said.

Linktone’s shares have slumped from over US$10 at the start of 2006 to close at just US$7.01 on Thursday.

Demand for wireless “value-added services” services such as those provided by Linktone has soared in recent years and the company has been trying to widen its reach by acquiring games providers and digital music providers.

It won widespread publicity by supplying text message voting services and music downloads for China’s hugely popular Super Girl pop music reality television series.

However, competition among suppliers of messaging-based services and other wireless offerings has also grown increasingly fierce, while providers’ freedom of action has been squeezed by dominant wireless telephone operator China Mobile.

Mr Yang had hoped to turn Linktone into a major supplier of legitimate music downloads for Chinese internet users, who currently mostly rely on websites supplying pirated content.

That goal may now be put into doubt. In his announcement to staff, Mr Sung gave no details of the company’s future direction but stressed the need for “more effective cost control” - its Beijing office recently stopped supplying free coffee, tea and disposable cups to staff - and integration of recent acquisitions.

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