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November 1, 2007 Stock Pick: Linktone Ltd. (LTON)

Stock Price: $3.46

Linktone Ltd. is a leading provider of wireless interactive entertainment services to consumers and advertising services to enterprises in China. Linktone provides a diverse portfolio of services to wireless consumers and corporate customers, with a particular focus on media, entertainment and communications.

LTON has grown revenue the last three fiscal years from $48.08 million in 2004 to $70.48 million in 2005 to $76.53 million in 2006. Profits and cash flow from operating activities have both been strong over the same period.

We believe LTON is undervalued at a market cap of only around $90 million. LTON has a book value of $3.23 based on the company's June 30th balance sheet. LTON has $51.44 million in cash and cash equivalents on the balance sheet, with total assets exceeding total liabilities by over a ratio of 9 to 1.

China stocks have been hot in waves lately. LTON has heavy exposure to China and is well positioned to take advantage of growth.

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