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Line Chat App May Expand E-Commerce Beyond Secret-Sale Underwear

NHN Japan Corp., whose Line mobile messenger application drew 100 million users about three times as fast as Facebook Inc. (FB), may expand e-commerce offerings to boost sales from the service.

“We need to give it a try,” President Akira Morikawa said in an interview. The expansion of e-commerce may take time, he said March 22 in Tokyo, without giving additional details.

Known for its cartoon characters and other “stickers” that users can include in chat messages, Line already offers items including underwear and stuffed animals that are available only to users of the application through its “secret sale” service. With 38 percent of Line accounts in Japan, NHN is targeting overseas growth and has set up a U.S. marketing team.

Making a profit still isn’t an immediate priority for Line, Morikawa said.

“If we think only about profits first, we may stop evolving and and start to lose customers,” he said.

The company, a unit of South Korean search engine operator NHN Corp. (035420), is spending 250 billion won ($223 million) marketing the app this year, more than double last year’s amount, Jay Park, a Seoul-based analyst at Samsung Securities Co., said in a Feb. 25 report.

While NHN hasn’t set an official target, it would like Line to grow to as many as 1 billion users, Jun Masuda, the company’s chief strategy and marketing officer, said earlier this month.

NHN Japan doesn’t disclose sales or profit. Parent NHN Corp., the biggest provider of Internet searches in South Korea, has gained 42 percent in Seoul trading since June 1, 2011, against a 9 percent drop in the benchmark Kospi index.

Nokia Partnership

Line is available to users of the Android, iPhone, Windows Phone and BlackBerry operating systems as well as personal computers. The app has topped Apple Inc. (AAPL)’s rankings of free downloads in 41 countries, according to NHN.

Of Line’s 120 million users as of March 9, about 45 million were in Japan while Taiwan and Thailand accounted for 15 million each, according to NHN, which doesn’t disclose numbers for other markets.

Line reached the 100 million-user mark 19 months after its June 2011 debut, compared with 49 months for Twitter and 54 months for Facebook, according to NHN Japan.

The company said Feb. 26 it teamed up with Nokia Oyj (NOK1V) to make Line available on the Espoo, Finland-based company’s Asha mobile devices. The release is scheduled for this month in China, Malaysia, Indonesia, Thailand, Vietnam, the Philippines, Cambodia, Taiwan, Hong Kong, Singapore, Australia and New Zealand, Line said in a statement on its website.

To contact the reporters on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Robert Fenner at rfenner@bloomberg.net

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