Feb. 21 (Bloomberg) -- NetEase.com Inc. and Sina Corp. rose in early U.S. trading as surging Internet use in China boosted their profits and spurred sales of online games and advertising in the world's second-biggest Web market by users.

NetEase's American depositary receipts rose 7.9 percent to $20.40 after China's second-biggest online-games provider posted fourth-quarter profit that beat analysts' predictions. Sina climbed 3 percent to $44.25 after forecasting first-quarter sales that exceeded some estimates.

NetEase and Sina benefited as Nike Inc., Sony Corp. and other companies boosted spending on Internet marketing in China, home to 210 million Web users, in the run-up to the Beijing Olympics starting Aug. 8. NetEase also attracted record users to its most popular game, ``Fantasy Westward Journey,'' by offering expansion packs that added gaming levels, weapons and monsters.

NetEase's fourth-quarter earnings were ``great,'' said Ming Zhao, an analyst with Susquehanna Financial Group in Bala Cynwyd, Pennsylvania. ``People doubted they could keep players interested as their games got older, and NetEase has shown they can,'' said Zhao, who rates NetEase ``positive.''

Net income rose 22 percent to 389.8 million yuan ($54.6 million), Beijing-based NetEase said, exceeding the 272.3 million yuan average of four analysts' estimates compiled by Bloomberg. Sales climbed 15 percent to 622.1 million yuan, beating the 541.4 million yuan average of nine estimates.

Profit Gains

Sina, China's biggest Web portal, said fourth-quarter profit rose 49 percent to $17.5 million as it sold more ads on its Internet site. Sales rose 25 percent to $70.7 million. Analysts had expected Sina to report profit of $17.86 million, according to the average of eight estimates. Sales were projected to be $69.2 million, based on 10 estimates.

The Shanghai-based Web portal forecast first-quarter sales of $66 million to $68 million, compared with the $66.1 million average estimate of seven analysts.

Sina said fourth-quarter Web ad sales rose 40 percent to $50.1 million. Revenue from online advertising for NetEase gained 36 percent to 98.1 million yuan, the games provider said.

``We've already begun to see a ramp-up in spending for online advertising because of the Olympics, and that effect will only grow more pronounced as we approach the games,'' said Liu Keyu, an analyst at research company Analysys International.

Game Sales

NetEase said fourth-quarter online game revenue gained 12 percent from a year earlier to 507 million yuan, after sales rose less than 1 percent in the third quarter and fell 2 percent in the second. Susquehanna's Zhao expected 485 million yuan of game sales in the fourth quarter.

Non-advertising revenue for Sina, mostly sales of ring tones, games and other content for mobile phones, fell 1 percent to $20.6 million, the company said.

Sina named Hong Du as the company's chief operating officer, replacing Hurst Lin, who resigned last year. Du has worked at Sina since 1999 and most recently served as senior vice president for sales and marketing.

China added 73 million Web users in 2007 and trails only the U.S. in the total number of people who go online, according to the government-backed China Network Information Center.

Total spending in China for online advertising rose to 2.12 billion yuan in the fourth quarter, a gain of 9.2 percent from the third, Analysys International said.

Boosted Share

NetEase's share of the Chinese online gaming market fell to 14.3 percent in the fourth quarter, from 17.1 percent in the third, according to Analysys.

Shanda Interactive Entertainment Ltd., China's biggest online-games provider, boosted its share to 19.9 percent from 19.3 percent, while The9 Ltd. controlled 12.2 percent of the market, compared with 10.1 percent in the third quarter, the Beijing-based researcher said.

Shanda is scheduled to release fourth-quarter earnings after the end of Nasdaq stock exchange trading on Feb. 25. The9, part owned by Electronic Arts Inc., will report after the end of Nasdaq trading today.

To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net

Last Updated: February 21, 2008 08:38 EST