Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AsiaInfo-Linkage (Nasdaq: ASIA) are flying 12% higher this morning in response to a fourth-quarter 2010 earnings report that came out Sunday. AsiaInfo reported 90% net revenue growth in Q4, largely as a result of last year's merger with Linkage. Adding fuel to the fire, management announced a $60 million share buyback program.

So what: The "90% growth" number is sure to catch a few eyeballs, but Foolish investors might want to scroll a bit further down the press release to the bits where AsiaInfo admitted that its gross, operating, and net margins all plummeted (also because of the merger). Revenue growth notwithstanding, AsiaInfo ended Q4 with per-share profits 28% lower than it earned the previous year. Free cash flow also looks to be lower, based on lower reported operating cash flow, and AsiaInfo's keeping mum on capital expenditures.

Now what: Put it all together, and my very rough guesstimate shows AsiaInfo generating something like $45 million in free cash flow for the year, and selling for roughly 34 times free cash flow in consequence. Maybe that would be a fair price to pay if AsiaInfo was able to translate 90% revenue growth into 90% free cash flow growth, but so far it isn't doing that. Free cash flow and profits are both heading down.

Larger, better-capitalized shops like Cisco (Nasdaq: CSCO) and IBM (Nasdaq: IBM) -- both of which compete with AsiaInfo in the Chinese telecom market -- can be bought for as little as 12.5 and 12.1 times free cash flow, respectively. They aren't growing as fast as AsiaInfo, but at least they're making money from the growth they do accomplish.

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