Shanda Profit Falls 21%, Missing Estimates, as Online Game Sales Decline
By Mark Lee - Nov 29, 2010 3:58 PM MT
Shanda Games Ltd., China’s second- biggest operator of online games, said third-quarter profit fell 21 percent after the introduction of new titles and upgrades failed to lift revenue.
Net income dropped to 289 million yuan ($43.1 million), from 366.6 million yuan, a year earlier, Shanda Games said in a statement today. This compares with the 328.3 million yuan average of seven analyst estimates compiled by Bloomberg.
Shanda posted its second-straight drop in quarterly sales as the Shanghai-based company struggled to gain players for older games such as “Mir 2” and “World of Legend.” Chinese rivals including Tencent Holding Ltd. and NetEase.com Inc. are boosting spending to offer new titles in the world’s biggest Internet market.
Sales fell 14 percent to 1.1 billion yuan, Shanda said. This followed a 4 percent drop in second-quarter revenue, according to the company’s earnings report in September.
Shanda’s ADRs rose 0.5 percent to $5.69 in New York trading today before the announcement. The stock has declined 44 percent this year, compared with the 2 percent gain in the Hong Kong- traded shares of Tencent, the biggest online game operator in China.
In July, Shanda rolled out “Dragon Nest,” a multi player role-playing game with three-dimensional graphics, after unveiling expansion packs for “Mir 2” in the second quarter.