Shanda (SNDA) announced its unaudited financial results for the first quarter ended March 31, 2006, and its total net revenues dropped 31.3% year-over-year and 5.3% quarter-over-quarter to CNY341.4 million.

Online game revenues, including MMORPGs and casual games, sunk 29.9% year-over-year and 0.7% quarter-over-quarter to CNY309.6 million.

"Our first quarter financial results reflect stabilized online game performance as well as the continued development of our home strategy," said Tianqiao Chen, Shanda's chief executive officer.

Total average concurrent users for all Shanda's games in commercial service increased to 1.35 million in the first quarter of 2006 from 1.30 million in the fourth quarter of 2005, while average concurrent users for Shanda's MMORPGs in commercial service increased to 706,000 in the first quarter of 2006 from 548,000 in the fourth quarter of 2005.

Revenues from casual games in the first quarter of 2006 decreased 23.4% year-over-year and increased 3.9% quarter-over-quarter to CNY84.4 million.

Shanda's other revenues in the first quarter of 2006 decreased 42.6% year-over-year and 34.5% quarter-over-quarter to CNY31.8 million. The company says the sequential decrease was primarily due to the decline in sales of the EZ Pod in the first quarter of 2006.

Gross Profit. Gross margin was 56.8% in the first quarter of 2006, down from 71.0% in the first quarter of 2005 and from 59.9% in the fourth quarter of 2005. The decrease was mainly due to the decline in revenues and the increase in ongoing license fees as a result of increased revenue from licensed games.

Shanda reported income from operations of CNY18.4 million in the first quarter of 2006 compared to income from operations of CNY253.9 million in the first quarter of 2005 and a loss from operations of CNY27.6 million in the fourth quarter of 2005.

In the first quarter of 2006, Shanda had net income of CNY11.8 million, compared to net income of CNY220.1 million in the first quarter of 2005 and a net loss of CNY538.9 million in the fourth quarter of 2005.

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