By Kim Tae-gyu
Staff Reporter
The gravity-defying rise of NHN, Korea's foremost Internet outfit by any measure, appears to have ``returned to earth,'' with its growth rate showing signs of slowing down.
Market observers projected Wednesday that NHN's progress in the second quarter will fall into the single-digit territory to bring an end to its impressive expansion.
NHN, which operates the country's No. 1 Web portal site Naver, has typically chalked up double-digit sales gains over the past few years.
``The market consensus is that NHN's second-quarter turnover is around 211 billion won, up just 6 percent from the previous quarter,'' said Kang Rok-hee, an analyst at Daishin Securities.
``Its operating profit is also likely to be in the neighborhood of 90 billion won, indicating a less than 5 percent rise quarter-to-quarter,'' he said.
Mirae Asset concurred as the brokerage predicted the growth rates for sales and operating profit in the three months, ending June 30, should stand at 5.9 percent and 4.5 percent, respectively.
If true, the envisaged 6-percent growth rate of sales would be the lowest since the third quarter of 2003 when the Bundang based firm posted a mere 0.9 percent.
``Down the road, NHN is not likely to rack up double-digit growth because its size becomes considerably big,'' said Jeong Woo-cheol, an economist at Mirae Asset.
However, experts did not foretell abrupt collapses of NHN this year in negation of the three-year jinx.
Within a decade the position of frontrunner has fluctuated between Yahoo! Korea, Daum Communications and NHN within a three-year margin.
Yahoo! Korea's long-standing march ruled the local Internet landscape from 1997 through 2000 before being dethroned by Daum, which remained atop the competition from 2001 to 2004.
Then, NHN toppled Daum in late 2004, due to its competitive edge in Internet browsing and this is the third year for the outfit at the top.
``To be sure, the growth will be slower than the past. But that does not mean NHN loses its momentum. As long as it has a cash cow of keyword ads, it will take the driver's seat for the foreseeable future,'' said Kang at Daishin Securities.
Keyword ads refer to a new concept of online promotion for selling ads associated with query keywords in a way of producing results favorable to marketers who pay the search engine.
The keyword ads market is expected to reach 700 billion won this year and upside of 1 trillion won by 2010. More than half of NHN sales come from the lucrative keyword ads, which generate big profits with minimal costs.