Business, Internet

Netease.com Posts Lackluster Internet Results For A Difficult Quarter In China

In a quarter that saw its gaming aspirations come to a halt because of Chinese government sanctions, Chinese Web portal Netease.com has posted lackluster quarterly results.

NetEase.com Inc. announced its unaudited financial results for the quarter ended September 30, 2009, and stated total revenues for the third quarter of 2009 were CNY879.4 million, compared to CNY872.1 million and CNY806.6 million for the preceding quarter and the third quarter of 2008, respectively. Yet these results have failed to impress investors, who have caused the company's stock to tumble in after-hours trading. The share price ended at USD37.10, down almost 9%.

Posted during the quarter on the website of China's General Administration of Press and Publication, the agency responsible for licensing and administering online games in China, was an official statement that asked Shanghai EaseNet Network Technology Limited, NetEase.com's affiliate, to stop charging fees to World of Warcraft game players. The game is allegedly not being operated with proper approval, and GAPP is evaluating whether to impose administrative penalties on Shanghai EaseNet.

In a company statement at the time, NetEase.com professeed that neither it nor Shanghai EaseNet had been officially notified of GAPP's determination of any penalties. The company stated it believed it and EaseNet were in full compliance with Chinese laws and they were seeking clarification from Chinese authorities regarding this statement by GAPP.

Revenues for Netease.com during the quarter from online games were CNY775.1 million, compared to CNY781.5 million and CNY675.1 million for the preceding quarter and the third quarter of 2008, respectively. Revenues from advertising services were CNY86.0 million for the third quarter of 2009, compared to CNY72.8 million and CNY113.0 million for the preceding quarter and the third quarter of 2008, respectively. Revenues from wireless value-added services and others, or WVAS and others, were CNY18.3 million for the third quarter of 2009, compared to CNY17.8 million and CNY18.5 million for the preceding quarter and the third quarter of 2008, respectively.

Net profit for the third quarter of 2009 totaled CNY393.8 million, compared to CNY468.1 million and CNY313.3 million for the preceding quarter and the third quarter of 2008, respectively.

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