Chinese online gaming company Shanda (SNDA) announced its unaudited financial results for the fourth quarter and full year ended December 31, 2006, and posted a total net revenues increase of 7.7% quarter-over-quarter.

In the fourth quarter of 2006, Shanda reported net revenues of CNY470.6 million, representing a 7.7% increase compared to CNY436.8 million in the third quarter of 2006 and a 30.5% increase from CNY360.5 million in the fourth quarter of 2005. For the full year 2006, net revenues were CNY1,654.5 million, a 12.8% decrease from the full year 2005.

Online game revenues in the fourth quarter of 2006 increased 10.0% quarter-over-quarter and 44.3% year-over-year to CNY450.0 million.

Revenues from MMORPGs in the fourth quarter of 2006 increased 13.8% quarter-over-quarter and increased 63.9% year-over-year to CNY378.0 million, accounting for 80.3% of total revenues. The sequential growth in MMORPG revenues was primarily due to increased revenues from Mir II and Woool as a result of releasing new expansion packs. For the full year 2006, revenues from MMORPGs were CNY1,240.1 million, a 1.2% decrease from the full year 2005.

The number of active paying accounts for MMORPGs was 2.29 million in the fourth quarter of 2006, compared to 2.14 million in the third quarter of 2006, as the expansion packs to Woool and Mir II attracted more paying users. Average monthly revenue per active paying account for MMORPGs increased to CNY55.1 in the fourth quarter of 2006 from CNY51.6 in the third quarter of 2006, due to increased consumption of in-game premium features.

Revenues from casual games in the fourth quarter of 2006 decreased 6.2% quarter-over-quarter and decreased 11.4% year-over-year to CNY72.0 million. The sequential decline in revenues from casual games was primarily due to seasonality following the summer holiday in the third quarter of 2006. For the full year 2006, revenues from casual games were CNY302.8 million, a decrease of 24.9% from the full year 2005.

Shanda's other revenues in the fourth quarter of 2006 decreased 25.6% quarter-over-quarter and decreased 57.7% year-over-year to CNY20.6 million. The sequential decrease was primarily due to a decline in EZ Products sales. For the full year 2006, other revenues were CNY111.6 million, a decrease of 53.2% from the full year 2005.

Gross profit for the fourth quarter of 2006 was CNY296.2 million, representing a 20.7% increase compared to CNY245.5 million in the third quarter of 2006 and a 37.1% increase from CNY216.1 million in the fourth quarter of 2005. Operating income for the fourth quarter of 2006 was CNY155.2 million, representing a 37.7% increase compared to CNY112.7 million in the third quarter of 2006 and up from an operating loss of CNY27.6 million in the fourth quarter of 2005.

In the fourth quarter of 2006, Shanda had net income of CNY240.3 million, compared to net income of CNY143.5 million in the third quarter of 2006 and a net loss of CNY538.9 million in the fourth quarter of 2005. Earnings per diluted ADS was CNY3.32, compared to earnings per diluted ADS of CNY1.98 in the third quarter of 2006 and a loss per diluted ADS of CNY7.58 in the fourth quarter of 2005.

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