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The financial reports Bezeq published yesterday were not good, and the management made no effort to make them prettier. Operational profits plummeted to NIS 161 million, compared with profits of NIS 264 million in the first quarter of 2001 and NIS 267 million for the second quarter of 2000.

Consolidated earnings for the second quarter of 2001 were NIS 84 million, down 23 percent from the second quarter of 2000. Consolidated revenues for the period were NIS 2.018 billion, compared with NIS 2.010 billion for the second quarter of the previous year. Net profits totaled NIS 84 million, representing a 16 percent increase from the previous quarter but a 23 percent drop in comparison to the second quarter of 2000.

The fall in operating profits stemmed mainly from one-time effects of its charging agreement with Pelephone. However not all Bezeq customers charged for their mobile calls are not quick in paying up.

The management survey appended to the financial report warned that opening the market to competition and issuing licenses for domestic communications "are expected to cause a significant worsening of the company's business results that cannot be assessed at this stage."

Walla weighs in

The second-quarter results of the Internet company Walla, which is controlled by the Ha'aretz Group (28 percent) and Bezeq International (25 percent), were affected by the merger with IOL due to losses incurred by a goodwill write-off amounting to about NIS 25 million.

Walla CEO Ofer Levy said that advertising revenues have reached about NIS 1 million per month. Levy said that one million people enter Walla's portal every month, but advertisers still have not realized the power of the Internet. He noted that the Internet accounts for 4.5 percent of total advertising spending in the United States and 3 percent in Europe, while in Israel only 0.5 percent of advertising campaign budgets are spent on Internet advertising.