Software

The9 Quarterly Net Earnings Slump

Chinese online gaming company The9 (NCTY) has announced its unaudited financial results for the second quarter ended June 30, 2007.

For the second quarter of 2007, net income was CNY50.6 million, which decreased by 23% from CNY66.1 million in the first quarter of 2007 and by 40% compared to CNY84.3 million in the second quarter of 2006.

The9 reported total gross revenues of CNY284.6 million, which remained stable compared to CNY284.7 million in the first quarter of 2007 and represented a 5% increase from CNY271.3 million in the second quarter of 2006.

Gross profit for the second quarter of 2007 decreased by 12% quarter-over- quarter and 8% year-over-year to CNY114.6 million. The company says sequential decrease of gross profit was mainly because net revenues remained stable while cost of services increased during the quarter primarily due to the increased depreciation relating to the upgraded servers and enhanced broadband infrastructure costs incurred subsequent to the upgrades and mergers of World of Warcraft servers during the quarter and other costs.

As at June 30, 2007, the company's total cash and cash equivalents balance was CNY2.09 billion.

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