Chinese Internet portal NetEase.com (NTES) has announced its unaudited financial results for the quarter ended September 30, 2007.

Net profit for the third quarter of 2007 totaled CNY260.2 million, compared to CNY312.6 million and CNY314.8 million for the preceding quarter and the third quarter of 2006, respectively. Total revenues for the third quarter of 2007 were CNY571.1 million, compared to CNY558.0 million and CNY571.9 million for the preceding quarter and the third quarter of 2006, respectively.

Revenues from online games were CNY468.7 million for the third quarter of 2007, compared to CNY475.1 million and CNY467.9 million for the preceding quarter and the third quarter of 2006, respectively. Revenues from advertising services were CNY85.5 million for the third quarter of 2007, compared to CNY65.3 million and CNY83.4 million for the preceding quarter and the third quarter of 2006, respectively. Revenues from wireless value-added services and others were CNY16.9 million for the third quarter of 2007, compared to CNY17.5 million and CNY20.6 million for the preceding quarter and the third quarter of 2006, respectively.

Gross profit for the third quarter of 2007 was CNY441.9 million, compared to CNY437.8 million and CNY448.1 million for the preceding quarter and the third quarter of 2006, respectively. The quarter-over-quarter increase in gross profit was primarily due to higher advertising services revenue in the third quarter of 2007. The year-over-year decrease in gross profit was mainly due to the decrease in wireless value-added services revenue.

Total operating expenses for the third quarter of 2007 were CNY179.0 million, compared to CNY142.8 million and CNY131.5 million for the preceding quarter and the third quarter of 2006, respectively. Both the quarter-over-quarter and year-over- year increase was primarily driven by increased spending on the advertising and marketing promotion of Westward Journey Online III and Fantasy Westward Journey, and higher staff-related cost as a result of an increase in research and development headcount.

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