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Competition drags down Shanda profit 36%
By Zhu Shenshen |
June 2, 2010, Wednesday
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Online Edition
Online Edition
SHANDA Interactive Entertainment posted a first-quarter profit that fell 36 percent year on year, as core game income declined and costs increased on new businesses such as e-books and mobile Internet services, China's No. 2 game firm said today.
Nasdaq-listed Shanda Interactive also announced a US$200 million share repurchase plan yesterday to support the share price, which has declined 20 percent this year.
Shanghai-based Shanda's net profit was US$33.6 million compared with US$52.8 million last year. It also missed analysts' forecast by 27 percent. Revenue was US$193 million in the quarter, 19 percent annual growth.
Shanda Interactive's performance in the quarter was influenced by the flat gaming business, said Shanda chairman Chen Tiaoqiao.
Shanda Games, the game subsidiary of Shanda Interactive, posted only 7 percent rise in the first-quarter net profit because of competition from rivals like Tencent QQ and NetEase.com Inc, analysts said.
In the first quarter, China's online game revenue reached 7.82 billion yuan (US$1.15 billion), 40 percent growth year on year. Tencent led the market with 25 percent market share, followed by Shanda's 21 percent and NetEase's 16 percent, according to Analysys International, a Beijing-based IT consulting firm.
Shanda launched nine new titles in Shanghai, including three 3D games. It also plans to launch games on iPhone and iPad platforms by the end of this year, Tan Qunzhao, president and chief executive of Shanda Games, said during a previous interview.
"Shanda is in the way to transform itself, from a game firm to a multi-media firm with diversified business," Chen Tianqiao, Shanda Interactive's chairman, said today.
Shanda Games contributed more than 87 percent of its parent's first-quarter revenue. But Shanda Interactive is expanding business in mobile Internet, cyber music and e-book reading services.
Shanda Interactive's cost jumped 50 percent year on year to US$67 million in the first quarter.
In a separate agreement announced yesterday, Shanda Interactive agreed to buy the recorded music and wireless value-added services business of Hurray Holding Co for US$36.9 million. Hurray will issue 415.4 million new shares to Shanda to purchase Shanda's online audio business. The transaction is expected to close in the third quarter.
Shanda Interactive now holds 42 percent of Hurray, which owns online video Website Ku6.com.
Nasdaq-listed Shanda Interactive also announced a US$200 million share repurchase plan yesterday to support the share price, which has declined 20 percent this year.
Shanghai-based Shanda's net profit was US$33.6 million compared with US$52.8 million last year. It also missed analysts' forecast by 27 percent. Revenue was US$193 million in the quarter, 19 percent annual growth.
Shanda Interactive's performance in the quarter was influenced by the flat gaming business, said Shanda chairman Chen Tiaoqiao.
Shanda Games, the game subsidiary of Shanda Interactive, posted only 7 percent rise in the first-quarter net profit because of competition from rivals like Tencent QQ and NetEase.com Inc, analysts said.
In the first quarter, China's online game revenue reached 7.82 billion yuan (US$1.15 billion), 40 percent growth year on year. Tencent led the market with 25 percent market share, followed by Shanda's 21 percent and NetEase's 16 percent, according to Analysys International, a Beijing-based IT consulting firm.
Shanda launched nine new titles in Shanghai, including three 3D games. It also plans to launch games on iPhone and iPad platforms by the end of this year, Tan Qunzhao, president and chief executive of Shanda Games, said during a previous interview.
"Shanda is in the way to transform itself, from a game firm to a multi-media firm with diversified business," Chen Tianqiao, Shanda Interactive's chairman, said today.
Shanda Games contributed more than 87 percent of its parent's first-quarter revenue. But Shanda Interactive is expanding business in mobile Internet, cyber music and e-book reading services.
Shanda Interactive's cost jumped 50 percent year on year to US$67 million in the first quarter.
In a separate agreement announced yesterday, Shanda Interactive agreed to buy the recorded music and wireless value-added services business of Hurray Holding Co for US$36.9 million. Hurray will issue 415.4 million new shares to Shanda to purchase Shanda's online audio business. The transaction is expected to close in the third quarter.
Shanda Interactive now holds 42 percent of Hurray, which owns online video Website Ku6.com.
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