NetEase Profit Rises on China Online Games, Advertising Sales
NetEase.com Inc., China’s third- biggest online games operator, said third-quarter profit rose 49 percent, more than analysts estimated, after the company boosted sales by upgrading some of its titles.
Net income increased to 585.3 million yuan ($88 million), or 4.48 yuan per American depositary receipt, from 393.8 million yuan, or 3.02 yuan, a year earlier, NetEase said in a statement. Profit was expected to be 531.4 million yuan, the average of eight analysts’ estimates compiled by Bloomberg. Sales rose 59 percent to 1.4 billion yuan from 879.4 million yuan.
NetEase’s stock has outperformed those of bigger rivals Tencent Holdings Ltd. and Shanda Games Ltd. this year as the Beijing-based company unveiled expansion packs for games including “World of Warcraft” and “Fantasy Westward Journey.” Online advertising sales also rose as NetEase drew more users to its web portal, the fifth-most popular in China.
Revenue from online games rose 62 percent to 1.26 billion yuan in the quarter, NetEase said. Sales of online advertising rose 88 percent to 162 million yuan.
NetEase ADRs rose 3.3 percent to $40.92 in Nasdaq Stock Market trading yesterday. The shares have gained 8.8 percent this year, compared with the 1.1 percent decline in the Hong Kong-traded shares of Tencent, China’s biggest Internet company by market value.
In August, NetEase started offering “Wrath of the Lich King,” an upgrade to “World of Warcraft,” the multiplayer role-playing game developed by Activision Blizzard Inc.
Online game sales in China, the world’s biggest Internet market by users, rose 30 percent to 27 billion yuan last year, according to iResearch, a Shanghai-based research company.
NetEase’s Web portal trails sites run by Baidu Inc., operator of China’s biggest search-engine, and Tencent, Sina Corp. and Sohu.com Inc. in user traffic in China, according to China Websites Ranking, a site run by the Internet Society of China that compiles Web traffic information.
To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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