Pacific Growth keeps its overweight rating on Netease.com (NTES).
Analyst Jason Brueschke says Netease.com received a Wells Notice indicating that the Securities and Exchange Commission plans to bring civil action involving a restatement of the company's 2000 results. He notes Netease restated its 2000 results after its board found the company had improperly booked $3.3 million in revenues from ad and barter deals.
Brueschke thinks the SEC's civil action will have a minimal-to-no impact on current or future business prospects. He notes, since 2000, the company has taken steps to prevent this problem from recurring, including adopting new management, new financial processes, and new auditors. He's keeping his $1.72 2004 earnings per share estimate.