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NetEase profits jump 48% in last quarter of 2008

NETEASE.COM reported a 48-percent leap in its fourth quarter profit, mainly due to a surge in its online game services.

Net profit in the last quarter of 2008 reached 575.9 million yuan (US$84.4 million), or 65 US cents per share, up 48 percent from the same period in 2007. Revenue for the same period jumped 29 percent from a year before, reaching 801.7 million yuan. Online games contributed nearly 84 percent of the total revenue while advertising brought in 14 percent. The firm's shares rose 6.68 percent in after-hours trading on the NASDAQ on Wednesday.

"Our 'Fantasy Westward Journey' continued to demonstrate robust popularity and an extensive community of users among time-based online games in China," said William Ding, CEO and director of NetEase. "Tianxia II, our 3D item-based game also achieved positive growth in the last quarter."

Ding told analysts during a conference call after the financial statistics were released that his plans to set up a pig farm was only a charity project instead of an investment and that it wouldn't affect the core business of NetEase. He told reporters earlier this month he would invest over 10 million yuan to raise pigs in Zhejiang Province.

Total revenues for the fiscal year 2008 jumped 31 percent from the previous year to reach 3 billion yuan while revenues from online games added 32 percent, reaching 2.5 billion yuan. Advertising contributed 405.9 million yuan, up 33 percent from the preceding fiscal year.

Ding said NetEase would capitalize on the continuing shift from traditional media to online advertising by strengthening content quality on its portal in order to attract new users and advertisers.

The domestic online games market was worth 20 billion yuan in 2008, up 52 percent from the previous year, according to the latest statistics from iResearch Inc.

The growth was 77 percent in 2007 and 60 percent in 2006. iResearch said the market was unlikely to maintain such robust growth in coming years.



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