Drop in game income erodes Q1 profit
By Zhu Shenshen |
June 3, 2010, Thursday
|
Print Edition
Print Edition
SHANDA Interactive Entertainment's first-quarter profit tumbled by an annual 36 percent because income from its core game business declined and also due to higher costs incurred on new business such as e-book reading and mobile Internet services, the firm said yesterday.
Nasdaq-listed Shanda Interactive also announced a US$200 million share repurchase plan to support its share price which has declined 20 percent so far this year.
Shanghai-based Shanda's net profit was US$33.6 million against US$52.8 million last year, missing analysts' forecast by 27 percent. Revenue totaled US$193 million in the quarter, up an annual 19 percent.
The flat game business obviously affected Shanda Interactive's results in the quarter, said Chen Tiaoqiao, Shanda's chairman.
Shanda Games, the game subsidiary of Shanda Interactive, grew only 7 percent in first-quarter net profit because the company faces competition from rivals like Tencent QQ and NetEase.com Inc, analysts said.
In the first quarter, China's online game revenue hit 7.82 billion yuan (US$1.15 billion), up 40 percent. Tencent led the market with a 25 percent share, followed by Shanda's 21 percent and NetEase's 16 percent, according to Analysys International, a Beijing-based IT consulting firm.
"Shanda is on the way to transform itself from a game firm to a multi-media firm with diversified business," Chen said in a statement yesterday. Shanda Interactive is expanding in mobile Internet, cyber music and e-book reading services.
To back the expansion, the firm's costs rose 50 percent annually to US$67 million in the first quarter.
In a separate agreement announced on Tuesday, 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, owner of online video Website Ku6.com.
Nasdaq-listed Shanda Interactive also announced a US$200 million share repurchase plan to support its share price which has declined 20 percent so far this year.
Shanghai-based Shanda's net profit was US$33.6 million against US$52.8 million last year, missing analysts' forecast by 27 percent. Revenue totaled US$193 million in the quarter, up an annual 19 percent.
The flat game business obviously affected Shanda Interactive's results in the quarter, said Chen Tiaoqiao, Shanda's chairman.
Shanda Games, the game subsidiary of Shanda Interactive, grew only 7 percent in first-quarter net profit because the company faces competition from rivals like Tencent QQ and NetEase.com Inc, analysts said.
In the first quarter, China's online game revenue hit 7.82 billion yuan (US$1.15 billion), up 40 percent. Tencent led the market with a 25 percent share, followed by Shanda's 21 percent and NetEase's 16 percent, according to Analysys International, a Beijing-based IT consulting firm.
"Shanda is on the way to transform itself from a game firm to a multi-media firm with diversified business," Chen said in a statement yesterday. Shanda Interactive is expanding in mobile Internet, cyber music and e-book reading services.
To back the expansion, the firm's costs rose 50 percent annually to US$67 million in the first quarter.
In a separate agreement announced on Tuesday, 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, owner of online video Website Ku6.com.
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