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Pre market looks like NTES will take a hit. Down 3.91 (8.38%) right now.
NetEase Rises Even After Revenue Miss
By PETE BARLAS, INVESTOR'S BUSINESS DAILY
Investors still like the promise of NetEase.com (NTES), if not its latest results.
A day after the company released mixed first-quarter results despite being helped by a reduced governmental tax rate, U.S. shares for the China online games provider rose 2% on Thursday. Analysts say investors expect the company will release more games that could spark more growth for the company in the region's fast-growing online-games market.
Investors appear to be looking past the near term and taking a longer view of the company and its position in the market, says Mike Hickey, a Janco Partners analyst.
NetEase CEO William Ding (right) and exec Ye Hang helped launch the firm's "TianXia II" game in 2009. Imaginechina View Enlarged Image
"The results (for Q1) were pretty weak, honestly, but the upside is that they're participating in two compelling growth verticals in China and that's online advertising and online games," he said. "So, investors are balancing their perception of the stock vs. those two ideals."
In the first quarter, NetEase launched "StarCraft II," a game developed by Activision Blizzard (ATVI), a leading games developer best known for its "World of Warcraft" game. NetEase offers WoW in China via a license with Activision, and it's been key to its growth.
The company also said that in April it moved to unlimited, from limited, closed beta testing of an internally developed game called "Ghost." The company says it is planning to debut several expansion packs with new features for existing games in the second and third quarters.
The new games and expansion packs could help NetEase get past its first-quarter seasonal revenue slowdown from the Chinese New Year holiday period, Adam Krejcik, an analyst for Roth Capital Partners, wrote in a research note Thursday.
"While Q1 '11 revenues were a little soft due to seasonal factors, we remain encouraged about the company's growth prospects for both online games and online advertising," he wrote.
For the quarter, NetEase reported per-share profit of 86 cents, up 69% from 51 cents in the year-earlier quarter, but down from 92 cents in the fourth quarter.
That was way over the 71 cents expected by analysts polled by Thomson Reuters. But in the quarter, NetEase's tax rate was reduced to 4.8%, compared with 10.3% in Q4 and 17.4% in the year-ago period. It didn't say how much that boosted its bottom line.
Revenue, minus a $5.8 million tax break, came in at $229 million, up 34% from a year ago but below analyst expectations of $234.6 million. It also is down more than 7% from Q4 sales of $247.5 million, but Q1 is often slower than Q4 in China.
For the current quarter, analysts expect the company to record a per-share profit of 77 cents, up 40%, and revenue of $247 million, up 28%. The company doesn't provide guidance.
NetEase said its Q1 game revenue rose 33% to $211.6 million from $159 million in the year-ago quarter. But that's down from $215.5 million in Q4.
The sequential drop-off in games revenue isn't that surprising, says Atul Bagga, an analyst for ThinkEquity.
"The first quarter is kind of a slow quarter because you have Chinese New Year, so you have a lot of people migrating from the big towns to rural areas and smaller towns where they may not have access to the computers that can play games like World of Warcraft," he said.
Still, some NetEase rivals reported no such drop-off. In the first quarter, Changyou.com (CYOU), a unit of Web portal Sohu.com (SOHU), reported online-games revenue of $94.9 million, up 32% from a year ago and up 3% from Q4.
NetEase also said that its chief operating officer, 12-year company veteran Zhonghui Zhan, had resigned "for personal reasons," effective May 15.
The sequential games revenue decline and COO resignation are both "a concern" worth noting, analyst Hickey says.
Ad revenue rose 45% to $19.4 million. Much of the Q1 ad growth came from auto and international services sectors, the company said.
NetEase.com Reports First Quarter 2011 Unaudited Financial Results
Wednesday, May 18, 2011 18:20ET
http://www.knobias.com/story.htm?eid=3.1.2c8750ba8bd5d667525862a94d8f5e097a5dc07b9805dedf4a2334a27df3a829
BEIJING, May 18, 2011 /PRNewswire-Asia/ -- NetEase.com, Inc. (NASDAQ: NTES), one of China's leading Internet and online game services providers, today announced its unaudited financial results for the first quarter ended March 31, 2011.
William Ding, Chief Executive Officer and Director of NetEase, stated, "For the first quarter, total revenues from online games increased by approximately 28% year-over-year, driven by higher revenue contributions from our self-developed games, namely Heroes of Tang Dynasty, Fantasy Westward Journey, Westward Journey Online II and Tianxia II, along with continued revenue growth from World of Warcraft®, a game licensed from Blizzard Entertainment. Online game revenue decreased by 3% quarter-over-quarter mainly due to seasonality. Fantasy Westward Journey and Westward Journey Online II continued to perform well due to well-received promotional campaigns during the first quarter, along with favorable response to the latest expansion pack for Fantasy Westward Journey released in January 2011. As a game in its eighth year of commercial operation, we were tremendously pleased with Westward Journey Online II's new record quarterly revenue in the current quarter as well as a new record number of peak concurrent users, resulting from players' positive response to the promotional activities held during the recent Labor Day holidays in China. We plan to keep working hard to make the game a continued success. Our newer games Heroes of Tang Dynasty and Tianxia II also continued to show solid growth. Moreover, we concluded the open beta test for Blizzard Entertainment's StarCraft® II in China during the first quarter and commenced commercial operation on April 6, 2011. StarCraft II holds the record for fastest-selling strategy game of all time, and we are delighted to bring this exciting gaming experience to Chinese players.
"A new expansion pack for Tianxia II was released in April 2011, and we plan to launch an advanced version for this game in the third quarter of 2011. In addition, we are currently on schedule to release the next expansion packs for Heroes of Tang Dynasty and Westward Journey Online II during the second quarter of 2011 and the next expansion pack for Legend of Westward Journey and Westward Journey: Genesis during the third quarter of 2011. In view of the outstanding user statistics performance during the limited closed beta testing for Ghost in the first quarter, we started the unlimited closed beta testing for this game in April and also plan to launch its next new expansion pack in the second half of 2011. Next, I would like to talk about our new 2.5D turn-based MMORPG, Legend of Fairy which has just entered limited closed beta testing in early May. In this game, players can enjoy an exciting and adventurous journey in a European-styled fantasyland. Unlike traditional online games, this new game allows players to freely change characters, skills and attributes, allowing for evolving combat experiences as the game progresses. We plan to proceed with its unlimited closed beta in the second half of 2011."
Mr. Ding continued, "Advertising services revenue grew 39% year-over-year due to increasing demand for advertising services, particularly from the automobile and Internet services sectors. The quarter-over-quarter revenue decline of approximately 46% from our strong fourth quarter 2010 reflects typical industry seasonality and the non-recurring impact from our 2010 Asian Games sponsorship. During the first quarter of 2011, we were pleased to launch our newly developed mobile news application software for smart-phones, which instantly became a top app download. We remain committed to addressing advertisers' growing demand by offering unique content innovation, service integration and new product development."
Mr. Ding concluded, "We regret to announce that Mr. Zhonghui Zhan has resigned from his position as the Company's Chief Operating Officer effective May 15, 2011 for personal reasons. Zhonghui has been a valuable member of our management team and has made significant contributions to our business over the years. He first joined NetEase in 1999, holding various positions culminating in Co-Chief Operating Officer in May 2006 and Chief Operating Officer in March 2009. I am personally grateful to him for his leadership, expertise and dedication."
First Quarter 2011 Financial Results
Revenues
Total revenues for the first quarter of 2011 were RMB1.5 billion (US$234.9 million), compared to RMB1.7 billion and RMB1.2 billion for the preceding quarter and the first quarter of 2010, respectively.
Revenues from online games were RMB1.4 billion (US$211.6 million) for the first quarter of 2011, compared to RMB1.4 billion and RMB1.1 billion for the preceding quarter and the first quarter of 2010, respectively.
Revenues from advertising services were RMB126.8 million (US$19.4 million) for the first quarter of 2011, compared to RMB233.7 million and RMB91.5 million for the preceding quarter and the first quarter of 2010, respectively.
Revenues from wireless value-added services and others ("WVAS and others") were RMB25.7 million (US$3.9 million) for the first quarter of 2011, compared to RMB23.3 million and RMB18.1 million for the preceding quarter and the first quarter of 2010, respectively.
Gross Profit
Gross profit for the first quarter of 2011 was RMB985.0 million (US$150.4 million), compared to RMB1.1 billion and RMB772.4 million for the preceding quarter and the first quarter of 2010, respectively. The quarter-over-quarter decrease in gross profit was primarily due to the decrease in revenues from advertising services and online games, partially offset by decreases in information costs and incentive compensation, resulting from decreased advertising services revenue. The quarter-over-quarter decrease in advertising services revenue was primarily due to seasonality and the non-recurring advertising revenue from our 2010 Asian Games sponsorship. The slight quarter-over-quarter decrease in online game revenue was primarily due to reduced revenue from World of Warcraft, a game licensed from Blizzard Entertainment, resulting from seasonality and a reduced level of promotional activities during the first quarter of 2011.
The year-over-year increase in gross profit was primarily attributable to increased revenues from both the online games and advertising businesses, partially offset by increased cost of revenues from the online games business. The year-over-year increase in online games revenue was primarily driven by increased revenues from the Company's various self-developed games as well as increased revenue from World of Warcraft. Revenue from self-developed games increased primarily as a result of various expansion packs and promotional activities in the first quarter of 2011, as well as the commercial launch of Heroes of Tang Dynasty in April 2010. The year-over-year increase in revenue from World of Warcraft was mainly due to the release of the Wrath of the Lich King(TM) expansion pack in August 2010. The year-over-year increase in cost of revenue for the online games business was mainly due to increased royalties and consultancy fees related to World of Warcraft operations and increased staff-related costs, resulting from increased headcount in the current quarter.
The year-over-year increase in advertising services revenue was primarily due to continued rising demand for advertising services, primarily from the automobile and Internet services sectors.
Gross Profit (Loss) Margin
Gross profit margin for the online game business for the first quarter of 2011 was 70.0%, compared to 71.8% and 71.9% for the preceding quarter and the first quarter of 2010, respectively.
Gross profit margin for the advertising business for the first quarter of 2011 was 33.4%, compared to 53.5% and 16.9% for the preceding quarter and the first quarter of 2010, respectively. The quarter-over-quarter decrease in gross profit margin was mainly due to the significant decline in advertising service revenue, partially offset by lower cost of revenue in the current quarter for reasons explained above. The year-over-year increase in gross profit margin was primarily due to increased advertising service revenue, partially offset by increased revenue sharing costs and staff-related costs, resulting from increased headcount during the first quarter of 2011.
Gross loss margin for the WVAS and others business for the first quarter of 2011 was 21.6%, compared to 19.7% and 35.9% for the preceding quarter and the first quarter of 2010, respectively.
Operating Expenses
Total operating expenses for the first quarter of 2011 were RMB292.0 million (US$44.6 million), compared to RMB320.7 million and RMB217.4 million for the preceding quarter and the first quarter of 2010, respectively. The quarter-over-quarter decrease in operating expenses was primarily due to reduced selling and marketing expenses, resulting from reduced marketing promotional activities for certain self-developed games and World of Warcraft. The year-over-year increase in operating expenses was primarily due to increased selling and marketing expenses related to Westward Journey Online II, Heroes of Tang Dynasty and Ghost, and increased staff-related costs, resulting primarily from increased headcount in the general administration and research and development areas. In addition, share-compensation costs grew by RMB20.4 million year-over-year, resulting mainly from restricted share unit awards first granted by the Company in June 2010.
Net Profit
Net profit for the first quarter of 2011 totaled RMB737.4 million (US$112.6 million), compared to RMB712.5 million and RMB452.3 million for the preceding quarter and the first quarter of 2010, respectively. During the first quarter of 2011, the Company reported a net foreign exchange gain of RMB25.3 million (US$3.9 million), compared to net foreign exchange losses of RMB36.4 million and RMB39.5 million for the preceding quarter and the first quarter of 2010, respectively.
The quarter-over-quarter and year-over-year foreign exchange gains/losses were mainly due to the translation gains/losses arising from the Company's Euro-denominated bank deposit balances as of March 31, 2011 as the exchange rate of the Euro against the RMB fluctuated over the periods. NetEase reported basic and diluted earnings per American depositary share ("ADS") of US$0.86 each for the first quarter of 2011. The Company reported basic and diluted earnings per ADS of US$0.84 and US$0.83 for the preceding quarter and US$0.53 each for the first quarter of 2010.
Income Taxes
The Company recorded a net income tax charge of RMB37.2 million (US$5.7 million) for the first quarter of 2011, compared to RMB83.2 million and RMB94.5 million for the preceding quarter and for the first quarter of 2010, respectively. The effective tax rate for the first quarter of 2011 was 4.8% as compared to 10.3% for the preceding quarter and 17.4% for the first quarter of 2010.
The Company's various principal subsidiaries' enjoyed the preferential enterprise income tax rate of 15% as High and New Technology Enterprises from 2008 to 2010. These subsidiaries are currently in the process of applying to renew the New and High Technology Enterprises qualification and expect to be able to retain this qualification for 2011 to 2013 as the qualification criteria remain unchanged. Accordingly, this preferential tax rate has been applied for these subsidiaries in the Company's estimated annual effective tax rate for 2011, though the Company cautions that it cannot be certain such applications will be approved. The quarter-over-quarter decrease in effective tax rate was mainly due to the recognition of a tax benefit of approximately RMB47.1 million (US$7.2 million) related to fiscal year 2010 upon receiving the Key Software Enterprises status during the first quarter of 2011. The year-over-year decrease in effective tax rate was mainly due to the above-mentioned tax benefit. In addition, one of the Company's other subsidiaries was recognized as a Software Enterprise in the fourth quarter of 2010 resulting in tax-exempt status for 2010 and 2011.
Other Information
As of March 31, 2011, the Company's total cash and time deposit balance was RMB10.4 billion (US$1.6 billion), compared to RMB9.5 billion, as of December 31, 2010. Cash flow generated from operating activities was RMB969.3 million (US$148.0 million) for the first quarter of 2011, compared to RMB901.5 million and RMB676.5 million for the preceding quarter and the first quarter of 2010, respectively.
** The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.5483 on March 31, 2011 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on March 31, 2011, or at any other certain date. The percentages stated are calculated based on RMB.
NTES: Q1 Adj EPS 86c vs 51c Beats 71c Est
Thursday , May 19, 2011 08:55ET
QUARTER RESULTS
Netease.com Incorated ADS (NTES) reported Q1 results ended March 2011. Q1 Revenues were $229.10M; +34.29% vs yr-ago; MISSING revenue consensus by -2.28%. Adjusted Q1 EPS was 86c; +68.63% vs yr-ago; BEATING earnings consensus by +21.13%.
Q1 RESULTS Reported Year-Ago Y/Y Chg Estimate SURPRISE
---------- ------------ ------------ ---------- ------------ ----------
Revenues: $229.10M $170.60M +34.29% $234.44M -2.28%
---------- ------------ ------------ ---------- ------------ ----------
Adj EPS: 86c 51c +68.63% 71c +21.13%
China Hosts A Virtual Revolution
On Friday May 6, 2011, 2:53 pm EDT
http://finance.yahoo.com/news/China-Hosts-A-Virtual-ibd-3564941566.html?x=0&.v=1
Video game consoles aren't just for kids anymore. The rapidly evolving gaming realm has become a hot topic among investors. China's exploding online gaming market sits atop the white-hot tip of the flame.
China's largest online gaming operator, by revenue, is Tencent Holdings an Internet portal and content provider. It generated an estimated $1.4 billion in gaming revenue last year.
NetEase.com (NASDAQ:NTES - News) was next in line, drawing $749 million in sales from gaming.
Shanda Games (NASDAQ:GAME - News), Perfect World (NASDAQ:PWRD - News) and Changyou (NASDAQ:CYOU - News) filled out the bill.
Among investors, NetEase.com and Sohu.com (NASDAQ:SOHU - News) have been the hot tickets.
The pair has led the advance of the Computer Software Gaming group to the No. 70 slot among IBD's industry rankings on Friday, up from No. 124 at the beginning of the year.
Both companies develop and market games accessed and played online. More traditional game makers, including Electronic Arts (NASDAQ:ERTS - News), Activision Blizzard (NASDAQ:ATVI - News) and Nintendo (OTCPK:NTDOY), produce packaged games that might be played online, but are store-bought and played over dedicated gaming consoles.
Traditionally, those games have required tens of millions of dollars to develop. The big game makers unveil new creations across video store chains, not unlike the gala opening of a blockbuster film.
But enthusiasm for the newer, Web-based online gaming model is quickly expanding beyond Asia, across the industry, disrupting the older business models.
Such PC-based online games, many of which are free to play, are rapidly amassing devotees. The result: Big game developers are zeroing in on fewer packaged releases and focusing on types of games most likely to draw the broadest audiences possible.
And they are stepping up efforts to boost revenue from their online operations. As John Riccitiello, CEO at Electronic Arts, said on his last quarterly earnings conference call, the company's three strategic objectives are to produce "fewer, better, bigger packaged goods games," boost online sales and control costs.
1. Business
At about $60 per game, the bulk of industry revenue still comes from packaged goods. Groups of buyers can play those games online, but must use consoles like the Microsoft Xbox and Sony PlayStation.
Companies like Sohu, NetEase and Shanda offer online games that are free to play on PCs and handheld units. They earn revenue through advertising and from users who pay fees to upgrade their weapons or acquire new territories to explore. While free online games generate less revenue than packaged products, they often bring higher profits. Some of the games have a pay-to-play model, though the trend is moving to free-to-play.
"The packaged-good companies are struggling with that," said David Cole, an analyst at DFC Intelligence, a market research firm. "Gamers are rapidly adopting the virtual item model, where they purchase individual digital components such as virtual currency, items or characters."
The rise of free-to-play online games dragged game-industry revenue down in 2009 and 2010 vs. the peak in 2008, said Cole.
"The free-to-play model is where the disruption is occurring," he said. "It's been the strongest in terms of steady growth but in the short term, they provide less revenue."
• Name of the game: Games companies need to be lean, mean, flexible and creative to maneuver through a changing landscape that is disrupting older business models.
2. Market
The free-to-play trend is nicking industry revenue, but expanding the overall market. That's especially true in foreign markets, where many can't afford a game console, but already have a personal computer.
"The audience for gaming has increased from niche to mass market," said Billy Pidgeon, an analyst with M2 Research.
Social networking sites like Facebook are accelerating that trend. An estimated 290 million Facebook users now play games like "Mafia Wars," "Pet Society" and "FarmVille" an average of three-and-a-half hours per month. The channel has pulled in demographics who wouldn't otherwise touch a game console.
Social networks are performing similar assists in China through up-and-coming plays like the recent IPO Renren (NYSE:RENN - News) as well as industry leaders like Tencent, which is rapidly plumping its social networking offerings.
Nintendo's easy-to-use Wii, introduced in November 2006, also pulled a nontraditional demographic into the gaming fold.
The Wii console includes simple-to-play games like bowling and tennis, as well as games designed to help people exercise. That reached further into a mainstream audience, and generated sales of more than 86 million Wii consoles.
"All of this has had a huge impact on drawing in more players and fueled the expansion," said Pidgeon.
The online game model has also revived the pulse of the PC sector, where software sales had been in decline.
"Companies are finding new revenue streams for PC gaming," said Pidgeon.
The difference between the market for console-based games and more casual free games is volume. It can take hundreds of casual games to match the revenue of one major hit retail product.
The PC-based online market is biggest in Asia and is projected to grow 32% from 2010 to 2014 to $15 billion, according to DFC.
The industry is also getting a lift from games played on smartphones, a small but fast-growing sector.
3. Climate
Games played on social networking sites are now about a billion-dollar market. Revenue from games played on smartphones is less, but growing fast thanks to Apple (NASDAQ:AAPL - News) with its iTunes distribution platform.
"Apple opened up the floodgates of game applications and other companies are following suit," said Michael Cai, an analyst at research firm Interpret.
Price tags for games on iTunes range from $1 to about $10 each. That attracts a lot of users.
"There are some people who have never played a game before and hear about 'Angry Birds' and pay the $1 to get it," said Cai. "Core gamers are getting in on it as well."
"Angry Birds," by Finland-based Rovio Mobile, cost about $400,000 to develop and has been downloaded 140 million times, he said, and was the No. 1 selling game for both iPhone and iPad in 2010. Rovio has also introduced a line of "Angry Birds" toys and has a movie in the works.
"Five years ago video games were seen as a market for young men," said Cai. "That has finally changed and people understand this is a mass-media market."
4. Technology
It has been several years since the Xbox and PlayStation upgraded to more powerful systems. But both continually expand via the introduction of peripheral devices.
One recent innovation in the sector is Microsoft's Kinect, an external motion detector that connects to the Xbox.
The device includes cameras and software that allow game players to control on-screen action with their body movements and voice commands.
Unlike the Wii, they don't need controllers. More than 10 million units have sold at $150 each since its debut.
"The Kinect has been extremely successful, like Wii," said Cole. "But there is still a question as to if it is a novelty or will it have a viable business model. That is an issue the industry is still struggling with."
Sony had previously introduced its own controller-free motion detection device called Move, which sells for $99.
Nintendo also recently launched its 3DS system, a glasses-free, 3D portable gaming system. Nintendo and game publishers are hoping it will revitalize the portable gaming segment, which has seen business shift to smartphones and tablets. The 3DS is the next-generation version of the company's popular dual-screen DS handheld gaming device, first launched in 2004. The system retails for $250.
5. Outlook:
New platforms, new markets and new business models are shaking up the existing power structure, as the market for packaged goods has become less profitable, said Cole. Established players are underserving many of the growing niches, though they are moving in that direction. Consumer spending is growing, but is increasingly spread out among many niche markets.
• Upside: Overall, the market will show fairly steady growth and there is a lot of potential in emerging markets, said Cole. "You'll still have blockbuster games and then all these little niches, but they're not easy to understand."
• Risks: Databases cataloging information for millions of online users lure hackers who like to phish in large schools. The recent attack by a yet-unknown group on Sony's (NYSE:SNE - News) PlayStation network gleaned names, email addresses and possibly credit-card information from a reported 100 million user accounts.
The breach straightened the gaming heavyweight's defensive posture and sent a warning to other providers of online games to crank up security on their networks.
NTES 1Q earnings May 18th, 2011 AMC
NetEase.com to Report First Quarter 2011 Financial Results on May 18, 2011
Wednesday, May 04, 2011 07:00ET
BEIJING, May 4, 2011 /PRNewswire-Asia-FirstCall/ -- NetEase.com, Inc. (Nasdaq: NTES) announced today that it will report its financial results for the first quarter 2011 on Wednesday, May 18, 2011, after the close of the U.S. markets.
The earnings teleconference call with simultaneous webcast will take place at 9:00 p.m. Eastern Time on Wednesday, May 18, 2011 (Beijing/Hong Kong Time: 9:00 a.m., Thursday, May 19, 2011). NetEase's management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 1-877-941-1427 (international: 1-480-629-9664), 10-15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 800-406-7325 (international 303-590-3030), and entering passcode 4435523#. The replay will be available through June 1, 2011.
This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase's corporate web site at http://corp.netease.com, Investor Info: Earnings Call.
About NetEase
NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. NetEase's online communities and personalized premium services have established a large and stable user base for the NetEase websites which are operated by its affiliates. In particular, NetEase provides online game services to Internet users through its in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II and III, Tianxia II, Heroes of Tang Dynasty and Datang, as well as the licensed game, Blizzard Entertainment's World of Warcraft and StarCraft II.
NetEase also offers online advertising on its websites which enables advertisers to reach its substantial user base. In addition, NetEase has paid listings on its search engine and web directory and classified advertising services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content, matchmaking services, music and photos from the Web which are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.
Other community services which the NetEase websites offer include instant messaging, online personal advertisements, matchmaking, alumni clubs and community forums. NetEase is also the largest provider of free email services in China. Furthermore, the NetEase websites provide various channels of content. NetEase aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content such as cartoons, games, astrology and jokes, from over one hundred international and domestic content providers.
NetEase, Sohu Unfazed By Market Tumble
By ALAN R. ELLIOTT, INVESTOR'S BUSINESS DAILY
Posted 04/18/2011 07:02 PM ET
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=569506&ven=yahoo
China's online gaming industry proved resilient amid a tough market Monday, with both NetEase.com (NTES) and Sohu.com (SOHU) posting gains.
IBD's Computer Software-Gaming industry group rose sharply over the past two weeks to No. 47 in Monday's IBD, up from No. 124 in early January.
The largest company in the group is Japan-based Nintendo (NTDOY), with more than $15 billion in revenue last year. Next in line is Activision Blizzard (ATVI), based in Santa Monica, Calif., with revenue of $4.4 billion.
Both hold weak Composite Ratings and fell Monday.
NetEase.com added more than 1% Monday; Sohu.com rose a fraction. Both are based in China, tapping the country's insatiable urge for online gaming and social networking.
NetEase.com saw more than 90% of its $820 million in revenue last year from online gaming services, charging users fees to play. Advertising sales accounted for most of the remainder.
NetEase's focus is on what it calls massively multiplayer online and role-playing games, or MMORPG. The games take place in virtual worlds and can involve many thousands of simultaneous players.
The newest addition to this market was the 3-D StarCraft II game, introduced in late March. The game was developed and is owned by Activision Blizzard.
NetEase.com found support at its 10-week moving average as StarCraft was introduced in late March. Shares are now extended above that buy range.
NetEase.com holds a solid 98 Composite Rating from IBD.
Sohu.com also operates MMORPGs. It gets just over half its revenue from online gaming revenue. The games are developed and operated by Sohu.com's majority-owned subsidiary, Changyou.com (CYOU), which debuted on the Nasdaq in 2009.
The stock cleared a short cup base March 29. It's now 6% above the 90.58 buy point. Sohu.com carries a best-possible Composite Rating of 99.
The company announced Monday that it would report first-quarter results before the market opens April 25.
Netease.com: Dominant Player in Chinese Gaming at an Excellent Value
by: Nicholas Pardini March 31, 2011
http://seekingalpha.com/article/261094-netease-com-dominant-player-in-chinese-gaming-at-an-excellent-value?source=yahoo
There are many high growth investment opportunities in the Chinese tech sector. However, I believe that Netease.com (NTES) is the best investment in the Chinese technology sector because it has several economic moats through exclusive popular game titles. Unlike many Chinese tech counterparts (most notably Baidu (BIDU), Sohu.com (SOHU), and VMware (VMW)), Netease is still trading at low fundamental valuation measures.
The primary growth catalysts for Netease are its content distribution model and exclusive rights to a strong lineup of popular domestic and American imported video games. Traditional gaming companies such as Nintendo (NTDOY.PK), Activision (ATVI), or Electronic Arts (ERTS) either avoid China or limit Chinese exposure because of the risk of game piracy and China’s lax enforcement of copyright laws. Netease avoids this problem by skipping retail and selling its games through online downloads.
The specific types of games Netease sells are massively multiplayer online role playing games (MMORPGs) that charge a monthly fee versus a single sale. These games develop an addictive and loyal fan base that plays consistently longer than the four months needed to surpass the retail price of purchasing a store bought video game. Consumers directly download MMORPGs from the internet, which increase margins by eliminating retail costs. Using Chinese development teams for in house projects and licensing American made games keeps costs down compared to Japanese and American competition.
Having low cost distribution only matters if the company offers products in demand. Netease has several locally popular MMORPG franchises. However, what separates Netease from competitors is its partnership with Activision to exclusively sell the globally popular World of Warcraft to the Chinese. They are also working together to launch the popular Activision game Starcraft II to the Chinese market. World of Warcraft and Starcraft II are two the top PC games in the United States, South Korea, and Europe, and have some of the most loyal followings in gaming. Based on the fact that World of Warcraft is the third in total game subscriptions in China, the popularity of Blizzard's games seems to transfer overseas. Netease sells three of the top six best selling online games in China. Since online gaming consists of 83.7% of Netease’s revenues, this sector will drive the growth of the company.
Due to the sales of its popular gaming franchises and continued partnership with Activision, Netease’s current growth rate is at 20.35%. The company is projected to continue to grow at 19% for the next five years. Nevertheless, Netease still trades at an excellent value. It has a P/E of 18.56 and forward expected P/E of 13.15, while the industry average P/E remains high at 41. When factoring this versus growth, a 0.97 PEG provides a bargain price for future growth.
The financials for Netease are also incredibly strong. Notably, the company has absolutely no debt and holds $11.16 of cash per share.The company also effectively manages its capital with an ROI of 25.9%. In terms of technical analysis, the MACD and chart pattern for the stock are strongly bullish as well. With cheap valuations, healthy financials, and a solid economic moat through its lineup of popular and pirate-protected games, Netease should continue to flourish as China’s leading gaming company.
Disclosure: I am long NTES.
Did it last night and the answer would be YES.
I liked that. Thanks for the idea.
NTES was mentioned in IBD (Investors business Daily)
That's always a good thing.
was the pork yummy? thanks for the profits post
Okay. I can't get this post out of my mind.
Thank you for that. ;)
It's gonna be Pork for dinner.
J
LOL. You never know.
I swear there's a game in all this somewhere.
HEY! Come over for dinner. I'm doing johnsyn's pork recipe.
LOL!!!
I have often been known to chomp on a pork chop while playing World of Warcraft.
Look ya little squeeler - this here is serious stuff.
I'm going to have to update this for them:
NetEase.com, Inc., an Internet technology company, engages in the development of applications, services, and other technologies for the Internet in China. It provides online game services to Internet users through the in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia II, Heroes of Tang Dynasty, and Datang, as well as the licensed game, Blizzard Entertainment's World of Warcraft.
The company also offers online advertising on its Web sites. In addition, NetEase has paid listings on its search engine and Web directory, and classified advertising services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet.
Further, it provides wireless value-added services, such as news and information content, matchmaking services, music, and photos from the Web over SMS, MMS, WAP, IVR, and Color Ring-back Tone technologies. Additionally, the company offers community services, including instant messaging, online personal advertisements, matchmaking, alumni clubs, and community forums; and aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content, such as cartoons, games, astrology, and jokes from over 100 international and domestic content providers.
(my update suggestion:)
Further, the company also owns a pig farm in Anji county of eastern China's Zhejiang province. The first phase of the pig farm's construction is underway after the Chinese Internet company NetEase.com proposed a science-based production of safe, healthy meat. The method could completely revolutionize the pig breeding industry and the meat may be available on the market by the beginning of next year. The company will invest in other environmentally friendly projects after the first phase of pig breeding project is complete.
Note to self... Stay tuned for future information on breeding cattle, growing Chinese gooseberry, and the new MMORPG Westword Pig Soldiers.
article states that it doesn't seem to be unusual for chinese stocks to sidesell agricultural products.
I LOVE PORK. Just had boneless pork wrapped in pricutto (sp) with wilted spinach w/capers last night. YUM
Don't know about Japan- but I can guess that'll be another need.
I like Pork!
Does Japan like pork? Is Japan’s pork industry in jeopardy and needing Pork Support?
[Suppressed Sound Link]
It has been a very good company and a great stock. Just seems so odd to venture into pork. ;)
not kidding. must be doing really well to start 10,000 pig farm to employ the poor
LOL - You're kidding? That just seems way out of the BOX to me - but I'll have to read more up on it!
Crazy, Don't you think?
over 300 million yuan investment-http://cnbusinessnews.com/netease-launches-pig-breeding-project/
wonder how many chinese are using the free test
Open Beta Testing of StarCraft ® II in Mainland China Starts on March 29, 2011
Thursday , March 17, 2011 21:00ET
SHANGHAI, March 17, 2011 /PRNewswire-Asia/ -- Blizzard Entertainment, Inc. and NetEase.com, Inc. (NASDAQ: NTES) announced today that open beta testing for StarCraft(®) II in mainland China will begin on March 29, 2011. During the open beta test, players will be able to access the multiplayer modes of StarCraft II for free. Players interested in participating can now visit the official Battle.net(®) website (http://www.battlenet.com.cn), log in to an existing Battle.net account or create a new one, and download the game client in advance.
Following the end of the open beta test period, StarCraft II will be launched commercially in China, at which time players will be able to purchase game time in 30-day increments for a suggested retail price of RMB20, granting access to both multiplayer play and the epic single-player campaign. The commercial launch date for StarCraft II will be announced in the near future.
"We're excited that players across mainland China will soon be able to experience the intense strategic gameplay and cinematic storytelling of StarCraft II," said Mike Morhaime, CEO and cofounder of Blizzard Entertainment. "We've been continuing to balance and make improvements to the game since its global release last July, and we think Chinese players will agree that StarCraft II has been worth the wait."
William Ding, chief executive officer of NetEase said, "The original StarCraft is considered to be one of the classic real-time strategy games, which are highly popular among Chinese players, and we believe that StarCraft II will bring even more exciting competitive action to the Chinese gaming community. We are currently focusing all of our efforts on the final phase of preparation for the launch of the open beta, and we look forward to welcoming Chinese players into the game and onto Battle.net soon."
StarCraft II is the sequel to Blizzard Entertainment's 1998 blockbuster hit StarCraft, which has been hailed by players and critics worldwide as one of the top real-time strategy games of all time. Sporting a vibrant 3D-graphics engine, StarCraft II once again centers on the clash between the protoss, terrans, and zerg, with each side deploying legions of veteran, upgraded and new unit types. StarCraft II also features a powerful map editor that allows players to create and share custom maps. Unparalleled online play for StarCraft II is available through a new version of Battle.net, Blizzard Entertainment's world-renowned gaming service. Battle.net has been redesigned from the ground up to be the premier online gaming destination for players of Blizzard games, with several enhancements and new features, such as voice communication, leagues and ladders, achievements, stat-tracking, and much more.
The solo campaign for StarCraft II picks up the saga where it left off in StarCraft: Brood War(®). The story line chronicles the exploits of marshal-turned-rebel leader Jim Raynor and features both familiar faces and new heroes. Players will be able to tailor the experience, choosing their own mission path and selecting technology and research upgrades to suit their playing style throughout the 29-mission campaign. Several challenge-mode mini-games are included, with focused goals designed to ease players into the basics of multiplayer strategies.
StarCraft II was released simultaneously in North America, Europe, South Korea, Australia, New Zealand, Russia, Brazil, Chile, Argentina, Singapore, Indonesia, Malaysia, Thailand, the Philippines, and the regions of Taiwan, Hong Kong, and Macau on July 27, 2010. Following its release, StarCraft II sold more than 1.5 million copies in its first 48 hours of availability, making it the fastest-selling strategy game of all time. The game has gone on to sell more than 4.5 million copies worldwide.(*)
For more information on StarCraft II, please visit the official Chinese website at www.starcraft2.com.cn.
*Based on Blizzard Entertainment internal company records, public data, and/or reports from key distribution partners.
About Blizzard Entertainment, Inc.
Best known for blockbuster hits including World of Warcraft(®) and the Warcraft(®), StarCraft(®), and Diablo(®) franchises, Blizzard Entertainment, Inc. (www.blizzard.com), a division of Activision Blizzard (NASDAQ: ATVI), is a premier developer and publisher of entertainment software renowned for creating some of the industry's most critically acclaimed games. Blizzard Entertainment's track record includes thirteen #1-selling games and multiple Game of the Year awards. The company's online-gaming service, Battle.net(®), is one of the largest in the world, with millions of active players.
About NetEase.com, Inc.
NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. NetEase's online communities and personalized premium services have established a large and stable user base for the NetEase websites which are operated by its affiliates. In particular, NetEase provides online game services to Internet users through its in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II and III, Tianxia II, Heroes of Tang Dynasty and Datang, as well as the licensed game, Blizzard Entertainment's World of Warcraft and StarCraft II.
Credit Suisse Upgrades NetEase.com (NTES) to Outperform
9:34 am ET 02/24/2011-
Credit Suisse upgraded shares of NetEase.com (NASDAQ: NTES) from Neutral to Outperform this morning following last night's better-than-expected Q4 results.
Brean Murray Carret & Co. Upgrades NetEase.com (NTES) to Buy; Strong Finish to 2010
7:52 am ET 02/24/2011- Brean Murray Carret & Co. upgraded NetEase.com (NASDAQ: NTES) from Hold to Buy. PT $54.
Brean analyst says, "NTES significantly outperformed Q4 expectations with an impressive 18% sequential revenue growth and a $0.83 EPS, exceeding the consensus by $0.13. The games portfolio performed very well in the qtr on the back of the stable performance from FWJ..." (Raises FY11 EPS estimate from $2.98 to $3.20) For more ratings news on NetEase.com click here and for the rating history of NetEase.com click here. Shares of NetEase.com closed at $42.88 yesterday, with a 52 week range of $26.16-$46.88.
Auriga Raises Price Target on NetEase.com (NTES), Maintains Buy Rating
7:36 am ET 02/24/2011-
Auriga is maintaining their Buy rating on shares of NetEase.com (NASDAQ: NTES) as the company posted 4Q10 results well above what the street was estimating. The company reported a 4Q EPS and revenue of $0.83 and $247.5 million when the street was anticipating $0.70 and $$220.9 million. The firm reports that a large part of the upside is due to Wrath of the Lich King (WLK) expansion pack that was launched on 8/31/10. Due to the firm strong 4Q earnings and solid pipeline of games coming out in 2011, Auriga is raising their price target on the company to $55 from $52. Their FY11 EPS and revenue estimates increased to $$3.22 and $1.1 billion from $2.88 and $957.5 million. They are predicting that NTES will experience 30% y/y growth.
The firm comments that, "NTES has a good line up of high quality games, which makes 2011 an exciting year for the company. We believe NTES is set in terms of game content as it has two good sources " Blizzard with its proven titles and the company s own inhouse developed games. 2011 s game pipeline includes: 1) in 1Q11 " A new expansion pack for FWWJ; 2) in March " testing of Westward Journey Genesis game; 3) in April " testing for Ghost. NTES is currently undergoing preparations for the hardware required for installation; 4) StarCraft II in 2H11. We believe StarCraft II could be launched in late 2Q11 or beginning of 3Q11. NTES has already submitted it for government approval; and 5) in 4Q11 - Cataclysm launch, we believe, could hit the market toward the end of 4Q11."
For more ratings news on NetEase.com click here and for the rating history of NetEase.com click here.
Shares of NetEase.com closed at $42.88 yesterday, with a 52 week range of $26.16-$46.88.
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NetEase.com Reports Fourth Quarter and Fiscal Year 2010 Unaudited Financial Results
Wednesday, February 23, 2011 18:00ET
BEIJING, Feb. 23, 2011 /PRNewswire-Asia/ -- NetEase.com, Inc. (Nasdaq: NTES), one of China's leading Internet and online game services providers, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2010.
William Ding, Chief Executive Officer and Director of NetEase, stated, "We ended 2010 with strong fourth quarter results in both online games and advertising services, delivering solid sequential and year-over-year revenue growth. Fourth quarter online game revenues increased 13% quarter-over-quarter and 31% year-over-year, driven primarily by the Wrath of the Lich King(TM) expansion pack launched on August 31, 2010 for World of Warcraft(R), a game licensed from Blizzard Entertainment, and the outstanding performances from our fastest growing self-developed games, Tianxia II, Heroes of Tang Dynasty and Westward Journey Online II. The combination of the first full year of operation of World of Warcraft and the impact of successful large scale promotions for Fantasy Westward Journey, Tianxia II and Westward Journey Online II, as well as the launch of Heroes of Tang Dynasty in April 2010 and its first expansion pack in August 2010, drove annual online game services revenue growth up by 47% for 2010. During the fourth quarter of 2010, we were pleased to see that revenue from Westward Journey Online II reached a new high.
"Game expansion and pipeline development is proceeding well in the new year beginning with the release of the tenth expansion pack for Fantasy Westward Journey in January 2011. The latest expansion features a new story line and setting and adds new characters that enhance the game's visual appeal and challenge for players. We have on schedule numerous other expansion packs in process for release in 2011. These will include updates for Tianxia II, Heroes of Tang Dynasty, Westward Journey Online II and III, Legend of Westward Journey, Ghost and Westward Journey: Genesis, among others. Overall, our top strategic priorities in online games this year include accelerating our product development time-to-market and further enhancing our highly competitive and innovative technology and commercial appeal.
"In advertising services, revenue growth was consistently strong throughout 2010, underscored by quarter-over-quarter and year-over-year increases of 44% and 27% for the fourth quarter, respectively, and an increase of 65% for the full year," Mr. Ding continued. "Our improved internal organizational structure supported excellent sales execution and customer relationship development in 2010. We integrated a number of new products, services and channels into our portal that have drawn a substantial number of new users and improved user traffic statistics. In 2010, our large investments in promotional activities through sponsorship and support of major Chinese national events and programs paid off well, which we believe successfully raised our portal's standing and delivered outstanding value-for-money advertising services to our advertisers."
Mr. Ding concluded, "In conjunction with our online games strategy for 2011, for our portal business, we will focus on new product applications in mobile phones and will explore new advertising formats and marketing models to attract premier advertisers and stimulate ad spending. We are working to achieve healthy growth across our business in 2011 in line with anticipated market expansion in order to maintain our leading position in China's burgeoning Internet community."
Fourth Quarter 2010 Financial Results
Revenues
Total revenues for the fourth quarter of 2010 were RMB1.7 billion (US$254.5 million), compared to RMB1.4 billion and RMB1.3 billion for the preceding quarter and the fourth quarter of 2009, respectively.
Revenues from online games were RMB1.4 billion (US$215.5 million) for the fourth quarter of 2010, compared to RMB1.3 billion and RMB1.1 billion for the preceding quarter and the fourth quarter of 2009, respectively.
Revenues from advertising services were RMB233.7 million (US$35.4 million) for the fourth quarter of 2010, compared to RMB162.0 million and RMB183.7 million for the preceding quarter and the fourth quarter of 2009, respectively.
Revenues from wireless value-added services and others ("WVAS and others") were RMB23.3 million (US$3.5 million) for the fourth quarter of 2010, compared to RMB20.9 million and RMB18.5 million for the preceding quarter and the fourth quarter of 2009, respectively.
Gross Profit
Gross profit for the fourth quarter of 2010 was RMB1.1 billion (US$168.7 million), compared to RMB952.0 million and RMB838.4 million for the preceding quarter and the fourth quarter of 2009, respectively. The quarter-over-quarter and year-over-year increases in gross profit were primarily attributable to increased revenues from both the online games and advertising businesses, partially offset by increased cost of revenues, such as royalties and consultancy fees related to World of Warcraft operations and increased staff-related costs, resulting from increased headcount in the current quarter.
The quarter-over-quarter and year-over-year increases in game revenue were primarily attributable to World of Warcraft, Tianxia II and Heroes of Tang Dynasty, as a result of the launch of expansion packs for these games, and Westward Journey Online II, which benefited from large scale promotional activities in the third quarter and improved game designs implemented in the fourth quarter of 2010. In addition, Fantasy Westward Journey contributed to the year-over-year revenue increase, resulting mainly from increased promotional activities held in the second quarter of 2010.
The quarter-over-quarter and year-over-year increases in advertising services revenue were attributable to a combination of factors, including primarily increased advertising related to the 2010 Asian Games and improved portal and search traffic on the NetEase websites. In addition, seasonality contributed to the quarter-over-quarter increase in advertising services revenue in the fourth quarter of 2010.
Gross Profit (Loss) Margin
Gross profit margin for the online game business for the fourth quarter of 2010 was 71.8%, compared to 71.8% and 70.5% for the preceding quarter and the fourth quarter of 2009, respectively.
Gross profit margin for the advertising business for the fourth quarter of 2010 was 53.5%, compared to 51.5% and 56.6% for the preceding quarter and the fourth quarter of 2009, respectively. The quarter-over-quarter gross profit margin remained relatively stable. The year-over-year decrease in gross profit margin was primarily due to increased staff-related costs and content costs in the fourth quarter of 2010.
Gross loss margin for the WVAS and others business for the fourth quarter of 2010 was 19.7%, compared to 42.4% and 40.4% for the preceding quarter and the fourth quarter of 2009, respectively.
Operating Expenses
Total operating expenses for the fourth quarter of 2010 were RMB320.7 million (US$48.6 million), compared to RMB365.0 million and RMB231.3 million for the preceding quarter and the fourth quarter of 2009, respectively. The quarter-over-quarter decrease in operating expenses was primarily due to reduced selling and marketing expenses, partially offset by a change in bad debt provision. The decrease in selling and marketing expenses was primarily due to the non-recurrence of marketing promotional expenses associated with the celebration of the first anniversary of Tianxia II in the preceding quarter. The year-over-year increase in operating expenses was mainly due to increased selling and marketing expenses, mainly comprising the amortization of certain contractual costs for product spokespersons related to Fantasy Westward Journey, Heroes of Tang Dynasty and Tianxia II launched in the third quarter of 2010. In addition, increases in staff-related costs in the current quarter, resulting from headcount increases in the areas of general and administration and research and development, also contributed to the year-over-year increase in operating expenses.
Net Profit
Net profit for the fourth quarter of 2010 totaled RMB712.5 million (US$108.0 million), compared to RMB585.3 million and RMB571.8 million for the preceding quarter and the fourth quarter of 2009, respectively. During the fourth quarter of 2010, the Company reported a net foreign exchange loss of RMB36.4 million (US$5.5 million) under Other, net, compared to a net foreign exchange gain of RMB54.3 million for the preceding quarter, and a net foreign exchange loss of RMB15.3 million for the fourth quarter of 2009. The quarter-over-quarter and year-over-year foreign exchange gains/losses were mainly due to the translation gains/losses arising from the Company's Euro-denominated bank deposit balances as of December 31, 2010 as the exchange rate of the Euro against the RMB fluctuated over the periods. NetEase reported basic and diluted earnings per American depositary share ("ADS") of US$0.83 each for the fourth quarter of 2010. The Company reported basic and diluted earnings per ADS of US$0.68 each and US$0.67 each for the preceding quarter and the fourth quarter of 2009, respectively.
Income Taxes
The Company recorded a net income tax charge of RMB83.2 million (US$12.6 million) for the fourth quarter of 2010, compared to RMB91.3 million and RMB71.2 million for the preceding quarter and for the fourth quarter of 2009, respectively. The effective tax rate for the fourth quarter of 2010 was 10.3% as compared to 13.7% for the preceding quarter and 11.3% for the fourth quarter of 2009. The quarter-over-quarter effective tax rate decreased mainly due to a reversal of tax provision for the first three quarters of 2010 by a certain subsidiary of the Company when it became tax-exempted for fiscal year 2010 during the fourth quarter of 2010. The year-over-year effective tax rate remained relatively stable.
Fiscal Year 2010 Financial Results
Revenues
Total revenues for fiscal year 2010 were RMB5.7 billion (US$857.5 million), compared to RMB3.8 billion for the preceding fiscal year. Revenues from online games were RMB4.9 billion (US$749.2 million) for fiscal year 2010, compared to RMB3.4 billion for the preceding fiscal year. Revenues from advertising services were RMB633.2 million (US$95.9 million) for fiscal year 2010, compared to RMB383.6 million for the preceding fiscal year. Revenues from WVAS and others were RMB82.1 million (US$12.4 million) for fiscal year 2010, compared to RMB71.2 million for the preceding fiscal year.
Gross Profit
Gross profit for fiscal year 2010 was RMB3.7 billion (US$561.9 million), compared to RMB2.8 billion for the preceding fiscal year. The increase in gross profit for fiscal year 2010 was primarily driven by increased revenue partially offset by increased cost of revenue from the online game and advertising service businesses.
The significant increase in online game revenue in 2010 was principally attributable to the full year operation of World of Warcraft as well as the Company's self-developed flagship games such as Tianxia II, Heroes of Tang Dynasty, Westward Journey Online II and Fantasy Westward Journey for the reasons explained above. Furthermore, the Company also recognized approximately RMB42.1 million (US$6.4 million) of revenue from dormant accounts of online games for fiscal year 2010, as compared with RMB101.6 million in 2009. The increase in revenue was partially offset by increased cost of revenues, principally due to royalties, technical consultancy service fees, custody fees and depreciation charges related to servers and amortization of license fees associated with the operation of World of Warcraft, as well as increased staff-related costs, mainly driven by increases in headcount and performance-based compensation relating to the operation of the Company's self-developed games.
The increase in advertising services revenue in 2010 was attributable to a combination of factors, including primarily improved Chinese economy, increased advertising related to major events such as the 2010 FIFA World Cup, Expo 2010 in Shanghai, the 2010 Asian Games and improved portal and search traffic on the NetEase websites, partially offset by increased staff-related costs resulting from increased headcount and performance-based compensation, as well as increased content costs related to the World Cup, Asian Games and the Shanghai Expo in 2010.
Operating Expenses
Total operating expenses for fiscal year 2010 were RMB1.2 billion (US$176.4 million), compared to RMB761.1 million for the preceding fiscal year. The increase in operating expenses in 2010 was primarily due to increased sales and marketing expenses comprising marketing and promotional activities for Fantasy Westward Journey, Tianxia II and Heroes of Tang Dynasty, and increased commission and other performance-based compensation, as well as increased staff-related costs resulting from increased headcount in general and administration and research and development areas.
Net Profit
Net profit for fiscal year 2010 totaled RMB2.2 billion (US$338.8 million), compared to RMB1.9 billion for the preceding fiscal year. For fiscal year 2010, the Company reported a net foreign exchange loss of RMB89.5 million (US$13.6 million) under Other, net, compared to a net foreign exchange gain of RMB9.6 million for the preceding fiscal year. The change to a net foreign exchange loss for 2010 as compared to 2009 was mainly due to the translation loss arising from the Company's Euro-denominated bank deposit balances as of December 31, 2010 as the exchange rate of the Euro against the RMB fluctuated over the periods. NetEase reported basic and diluted earnings per ADS of US$2.61 and US$2.60 for fiscal year 2010, respectively. The Company reported basic and diluted earnings per ADS of US$2.17 and US$2.16 for the preceding fiscal year, respectively.
Income Taxes
The Company recorded a net income tax charge of RMB344.4 million (US$52.2 million) and RMB313.9 million at an effective tax rate of 13.4% and 14.6% for fiscal years 2010 and 2009, respectively.
Other Information
As of December 31, 2010, the Company's total cash and time deposit balance was RMB9.5 billion (US$1.4 billion), compared to RMB7.0 billion, as of December 31, 2009. Cash flow generated from operating activities was RMB901.5 million (US$136.6 million) for the fourth quarter of 2010, compared to RMB532.6 million and RMB712.4 million for the preceding quarter and the fourth quarter of 2009, respectively.
** The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.6000 on December 31, 2010 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2010, or at any other certain date. The percentages stated are calculated based on RMB.
Financials continued at :
http://www.knobias.com/story.htm?eid=3.1.339a21fc07cbf673c5674396fe20ddad7c494eb7220c75f12bdf35886d9e08ed
Netease.com beats by $0.13, beats on revs
6:02 pm ET 02/23/2011- Briefing.com
Reports Q4 (Dec) earnings of $0.83 per share, $0.13 better than the Thomson Reuters consensus of $0.70; revenues rose 30.2% year/year to $254.5 mln vs the $220.9 mln consensus..
NTES: Raising Target - JAGNote by Auriga U.S.A.
7:40 am ET 02/23/2011- JAG Media
NTES: Raising Target - The firm has a Buy rating and increased its price target on the shares from $48 to $52.
NTES: 4Q/full year earnings 2-23-11 AMC
NetEase.com to Report Fourth Quarter and Full Year 2010 Financial Results on February 23, 2011
Wednesday, February 09, 2011 07:00ET
BEIJING, Feb. 9, 2011 /PRNewswire-Asia-FirstCall/ -- NetEase.com, Inc. (Nasdaq: NTES) announced today that it will report its financial results for the fourth quarter and full year 2010 on Wednesday, February 23, 2011, after the close of the U.S. markets.
The earnings teleconference call with simultaneous webcast will take place at 8:00 p.m. Eastern Time on Wednesday, February 23, 2011 (Beijing/Hong Kong Time: 9:00 a.m., Thursday, February 24, 2011). NetEase's management will be on the call to discuss the quarterly and full year results and answer questions.
Interested parties may participate in the conference call by dialing 1-877-941-2069 (international: 1-480-629-9713), 10-15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 800-406-7325 (international 303-590-3030), and entering passcode 4406810#. The replay will be available through March 9, 2011.
This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase's corporate web site at http://corp.netease.com, Investor Info: Earnings Call.
About NetEase
NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. NetEase's online communities and personalized premium services have established a large and stable user base for the NetEase websites which are operated by its affiliates. In particular, NetEase provides online game services to Internet users through the in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia II, Heroes of Tang Dynasty and Datang, as well as the licensed game, Blizzard Entertainment's World of Warcraft.
NetEase also offers online advertising on its websites which enables advertisers to reach its substantial user base. In addition, NetEase has paid listings on its search engine and web directory and classified advertising services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content, matchmaking services, music and photos from the Web which are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.
Other community services which the NetEase websites offer include instant messaging, online personal advertisements, matchmaking, alumni clubs and community forums. NetEase is also the largest provider of free email services in China. Furthermore, the NetEase websites provide various channels of content. NetEase aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content such as cartoons, games, astrology and jokes, from over one hundred international and domestic content providers.
New Movie of Chinese Online Game Tianxia II hits overseas audience
Press Release Source: NetEase.com, Inc. On Tuesday January 11, 2011, 8:00 am EST
BEIJING, Jan. 11, 2011 /PRNewswire-Asia/ -- Tianxia II, the first 3D online game by Chinese Online game producer NetEase (Nasdaq:NTES - News) released a brand-new annual movie The Transformation of Tai Ji, telling the story of the game's final boss, known as the dark hero, Yu Ji Zi fetching secret powers and trying to rebuild the rotten world.
The movie was released in Chinese video media and game informedia, but soon it was uploaded to YouTube by loyal Tianxia II fans. The movie proved itself welcomed by overseas audience too.
Tianxia II is developed with the same game engine, the BigWorld, as another world famous online game World of Warcraft. The movie release also drew the attention of BigWolrd's parent company in Canberra, Australia, who issued and highly praised the movie on its official website. BigWorld officials said "this is a very, very, very good news" for BigWorld.
Tianxia II is one of the most popular 3D online game in China. Last year, in a blind test survey towards Chinese gaming market by world-famous investigation institution IPSOS, Tianxia II was recognised by interviewees as "the most beautiful scenery in 3D games", defeating famous overseas online games like AION and WOW. The newly-release movie was welcomed worldwide, proving again that Chinese online game companies are picking up and getting approved worldwide.
For more information, please contact:
Yu Danli, PR Specialist
Email: yudanli@corp.netease.com
Tel: +86-20-8510-6076
NetEase.com Reports Third Quarter 2010 Unaudited Financial Results
Wednesday, November 17, 2010 18:00ET
BEIJING, Nov. 17, 2010 /PRNewswire-Asia/ -- NetEase.com, Inc. (Nasdaq: NTES), one of China's leading Internet and online game services providers, today announced its unaudited financial results for the third quarter ended September 30, 2010.
William Ding, Chief Executive Officer and Director of NetEase, stated, "As a result of large-scale sales promotional and branding activities starting since the second quarter of 2010, Fantasy Westward Journey broke another record for peak concurrent users on July 4?2010. Fantasy Westward Journey's strong performance was the leading catalyst for our third quarter online game revenue growth of 6% quarter-over-quarter. This game continues to rank as one of the most popular massively multiplayer online games ever in the Chinese market. In addition to Fantasy Westward Journey, our year-over-year online games revenue growth of over 60% was primarily driven by World of Warcraft(®), a game licensed from Blizzard Entertainment, Heroes of Tang Dynasty and Tianxia II."
"Turning to our game expansion and development pipeline during the third quarter of 2010, expansion packs for Westward Journey Online II and III were released in August and September, respectively, and Secret of Dream Dragon, an expansion pack for Tianxia II, was launched in conjunction with the game's one year commercial anniversary on September 28. As a follow up to the success of Heroes of Tang Dynasty, we are working on expanding our 2.5D game market share with new games under development including Ghost which entered closed beta testing on July 22, 2010 and started to generate revenue during the third quarter. At the moment, we expect that the next expansion pack for Fantasy Westward Journey will be released in the first quarter of 2011."
"The World of Warcraft expansion pack Wrath of the Lich King(TM) was released in China on August 31, 2010 to tremendous player enthusiasm. World of Warcraft is a world-renowned massively-multiplayer online role-playing game, and with NetEase's strong regional promotional and sales support, we are optimistic about its continued growth opportunity throughout China."
"Advertising services revenue increased 11% quarter-over-quarter and 88% year-over-year for the third quarter of 2010," Mr. Ding continued. "These strong growth rates reflected our sponsorship and promotional activities supporting The 16th Asian Games in Guangzhou along with a seasonal upturn in advertising activity in the third quarter of 2010. Our continued investment and integration of technology, channels and products has brought about further improvement in our user traffic statistics, which we believe has attracted advertisers' attention and has been driving increasing demand for our advertising services. Email and mobile internet services each performed well during the third quarter, and we added important functionality to our micro-blog service. We are pleased to report a 40% increase in portal traffic year-to-date which has bolstered both our portal ranking and advertising returns on investment. Overall, the third quarter of 2010 marked another consecutively strong quarter of growth and innovation in our portal business."
Third Quarter 2010 Financial Results
Revenues
Total revenues for the third quarter of 2010 were RMB1.4 billion (US$215.1 million), compared to RMB1.3 billion and RMB879.4 million for the preceding quarter and the third quarter of 2009, respectively.
Revenues from online games were RMB1.3 billion (US$187.7 million) for the third quarter of 2010, compared to RMB1.2 billion and RMB775.1 million for the preceding quarter and the third quarter of 2009, respectively.
Revenues from advertising services were RMB162.0 million (US$24.2 million) for the third quarter of 2010, compared to RMB145.9 million and RMB86.0 million for the preceding quarter and the third quarter of 2009, respectively.
Revenues from wireless value-added services and others ("WVAS and others") were RMB20.9 million (US$3.1 million) for the third quarter of 2010, compared to RMB19.9 million and RMB18.3 million for the preceding quarter and the third quarter of 2009, respectively.
Gross Profit
Gross profit for the third quarter of 2010 was RMB959.2 million (US$143.4 million), compared to RMB878.4 million and RMB627.0 million for the preceding quarter and the third quarter of 2009, respectively. The quarter-over-quarter increase in gross profit was primarily attributable to increased game revenues from Fantasy Westward Journey during the third quarter of 2010, as well as increased advertising services revenue and non-recurrence of certain event-based information costs incurred in the prior quarter. Fantasy Westward Journey performed well during the current quarter resulting from the success in the Company's overall sales promotional program. The increase in advertising services revenue was attributable to a combination of factors, including primarily Asian-Games theme related advertising, seasonality and improved portal traffic.
The year-over-year increase in gross profit was primarily attributable to increased revenues from online games and advertising services. Increased online game revenue was primarily attributable to World of Warcraft, Heroes of Tang Dynasty and Tianxia II. Increased advertising services revenue was attributable to a combination of factors as described above. The foregoing revenue increases were partially offset by increased cost of revenues such as royalties and consultancy fees, server depreciation charges and other fees related to World of Warcraft operations and an increase in headcount-related costs for online game and advertising services businesses during the third quarter of 2010.
Gross Profit (Loss) Margin
Gross profit margin for the online game business for the third quarter of 2010 was 72.0%, compared to 71.3% and 79.9% for the preceding quarter and the third quarter of 2009, respectively. Quarter-over-quarter gross profit margin remained relatively stable during the third quarter of 2010. The year-over-year decrease in gross profit margin was primarily due to the reporting of a full-quarter result for World of Warcraft in the current quarter as the game was officially re-launched at the end of September 2009. Lower profit margin was reported for World of Warcraft operations compared to the Company's self-developed games primarily because of royalties, amortization of license fees, technical consultancy service fees and hardware depreciation associated with the licensing and operation of this game.
Gross profit margin for the advertising services business for the third quarter of 2010 was 54.2%, compared to 46.4% and 23.1% for the preceding quarter and the third quarter of 2009, respectively. The quarter-over-quarter and year-over-year increases in gross profit margin were primarily due to the significant increase in advertising services revenues during the third quarter of 2010 as well as the non-recurrence of certain event-based information cost incurred in the prior quarter.
Gross loss margin for the WVAS and others business for the third quarter of 2010 was 41.3%, compared to 38.7% and 45.0% for the preceding quarter and the third quarter of 2009, respectively.
Operating Expenses
Total operating expenses for the third quarter of 2010 were RMB372.2 million (US$55.6 million), compared to RMB268.7 million and RMB218.9 million for the preceding quarter and the third quarter of 2009, respectively. The quarter-over-quarter increase in operating expenses was primarily due to marketing and promotional costs incurred for Fantasy Westward Journey, Heroes of Tang Dynasty, World of Warcraft and Tianxia II, and increased staff-related costs resulting from new research and development headcount in the areas of search and online game businesses, partially offset by decreased bad debt provision as a result of improved control over long-outstanding accounts receivable and satisfactory legal settlement of a long-outstanding accounts receivable balance during the current quarter. The year-over-year increase in operating expenses was primarily due to increased marketing promotional costs and increased staff-related costs in the current quarter as explained above.
Net Profit
Net profit for the third quarter of 2010 totaled RMB585.3 million (US$87.5 million), compared to RMB485.7 million and RMB393.8 million for the preceding quarter and the third quarter of 2009, respectively. During the third quarter of 2010, the Company reported a net foreign exchange gain of RMB54.3 million (US$8.1 million), compared to a net foreign exchange loss of RMB67.8 million in the preceding quarter and a net foreign exchange gain of RMB25.3 million in the third quarter of 2009. The quarter-over-quarter and year-over-year changes in foreign exchange gains/losses were mainly due to the translation changes arising from the Company's Euro-denominated bank deposit balances as of September 30, 2010, as the exchange rate of the Euro against the RMB fluctuated over the periods. NetEase reported basic and diluted earnings per ADS of US$0.67 each for the third quarter of 2010. The Company reported basic and diluted earnings per ADS of US$0.56 each and US$0.45 each for the preceding quarter and the third quarter of 2009, respectively.
Income Taxes
The Company recorded a net income tax charge of RMB91.3 million (US$13.6 million) for the third quarter of 2010, compared with RMB75.5 million and RMB65.5 million for the preceding quarter and the third quarter of 2009, respectively. The effective tax rate for the third quarter of 2010 was 13.7% as compared to 13.4% and 14.3% for the preceding quarter and the third quarter of 2009, respectively.
Other Information
As of September 30, 2010, the Company's total cash and time deposit balance was RMB8.8 billion (US$1.3 billion), compared to RMB7.0 billion as of December 31, 2009.
Cash flows generated from operating activities were RMB532.6 million (US$79.6 million) for the third quarter of 2010, compared to RMB744.3 million and RMB270.0 million for the preceding quarter and the third quarter of 2009, respectively.
** The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.6905 on September 30, 2010 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on September 30, 2010, or at any other certain date. The percentages stated are calculated based on RMB.
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http://www.knobias.com/story.htm?eid=3.1.d87da4af9b3a2c86d0e1b5f2b6e6b8a1566f1ebfe3a4154e63a343f108fce393
NetEase.com Inc. (NTES)
November 05, 2010
By Mike McDermott/Seeking Alpha
http://seekingalpha.com/article/235118-expanding-potential-in-chinese-media-stocks?source=yahoo
The primary draw for NetEase is the company’s ability to leverage a number of different online businesses and cross-sell services to its broad client base. The company’s product offerings include:
•Established multi-player and casual game platforms
•Internet portal
•Advertising services
•Email and blog services
•Search engine
•Wireless offerings
While the online game services represent the lion’s share of the company’s revenue, the additional emerging businesses should serve to augment and diversify gaming revenues. A secondary objective for these businesses is to funnel users to its profitable game platform once they become established customers.
Strong Suite of Game Titles
NetEase has been very successful in building its gaming business. Its flagship "Fantasy Westward Journey" franchise has been a huge hit. The original game was launched in 2004, and before the end of 2010 developers will implement the game’s 10th expansion pack. Longevity speaks to the quality of this profitable asset, and the company has been able to launch two additional games within the “Westward Journey” series.
The company has developed several additional games, of the MMORPG type as well as casual games that are geared more towards individuals with busy daily routines and smaller time windows for online gaming. Looking forward, NetEase has a pipeline of both new game launches and expansion packs, which should continue to add value to the company’s gaming business. Several expansion packs were expected to be released in the third quarter, and investors should receive important information on their effectiveness in both the Q3 and Q4 earnings reports.
Perhaps the strongest gaming asset for the company is its license to distribute "World of Warcraft" in China. This game has become a huge success in other parts of the world, with an impressively active user base and strong revenue. NTES’ ability to capture Chinese revenue from this global title should continue to support the robust growth in gaming revenue.
Strong Financial Position
NetEase is in the enviable position of having both a strong growth platform and a stable financial position. The company has cash of roughly $9.40 per ADS outstanding, and is able to use that cash to develop new products, expand into ancillary businesses, and acquire new licensing agreements.
Analysts expect the company to grow earnings by 25% next year, reaching $3.04 per ADS. Despite the strong growth engine and the company’s proven ability to reach its target market, investors are able to buy the stock for an earnings multiple just above 13.
The price discount is likely due to uncertainty for the broad economic climate in China. However, with such a large portion of the country’s population moving to urban cities, NTES should continue to see a dramatic expansion in its client base. Chinese internet cafes are more likely to have NTES games pre-loaded on machines due to their popularity, and NTES should also gain significant ground in its wireless business as smart cell phone usage increases.
A breakout above the $42 / $43 area could signal a new wave of buyers stepping up to the plate, and the trading opportunities will be especially attractive during periods of increased speculation on China growth.
Expanding Potential in Chinese Media Stocks
by: Mercenary Trader November 05, 2010
http://seekingalpha.com/article/235118-expanding-potential-in-chinese-media-stocks?source=yahoo
Two years ago, it was hard to miss the opportunity in the Chinese gaming and online information industry. Revenue growth rates for most industry participants were measured in triple digits. Analysts expected Chinese internet usage to continue to increase at a torrid pace, due to a large portion of the population moving to more urban cities.
The expectations weren’t necessarily wrong, but as is often the case with exciting investment themes, equity valuations got a bit ahead of the actual fundamental growth. Stock prices began to reflect long-term expectations for unsustainable growth, and the sector became vulnerable to disappointment and decline in the face of any less-than-stellar developments.
Eventually, uncertainty surrounding China’s regulation of the industry began to raise concern and eat into premium stock price valuations. Fierce competition also played a role, as too many gaming and “infotainment” content providers chased a finite pool of internet users. Investors also worried that tighter economic policy decisions could crimp the amount of discretionary spending available for the industry.
As a result, many stocks in this sector have suffered significant declines. A number of promising companies have actually gone out of business, or become so small they no longer represent legitimate investing or trading vehicles. But the remaining stronger players may actually offer compelling values – and a timely trading opportunity in today’s turbulent market.
The Nature of China’s Online Content Industry
There are primarily two different business models employed by the online infotainment industry:
1.Free content with revenue from advertisements.
2.Premium content with revenues from usage fees.
The two approaches are often used in tandem. Many companies have found it beneficial to leverage both the information side and the entertainment side of the business model.
On the information side, Companies like Netease.com Inc. (NTES), Sina Corp. (SINA), and Sohu.com Inc. (SOHU) (Edit: I like to call them "The three ships of Columbus: The SINA, The SOHU and The NTES"~ JEN ;) provide internet portals which include search and directory functions along with original or licensed content. Much like Google (GOOG) or Yahoo (YHOO), these companies are able to sell a significant amount of ad space because of the high level of traffic their sites receive.
In contrast, the entertainment side of the industry is dominated by Massively Multiplayer Online Role-Playing Games, or MMORPGs. Typically, these games are initially free to play, but have some strings attached. Certain games may charge hourly fees after a certain amount of time, or they may charge for certain in-game weapons or other functionalities. Almost universally, the approach is to first hook players into the game action, and then charge them to advance or continue playing.
Ironically, small (and not-so-small) digital economies have developed around these games, where users trade individual game trinkets or game currency for real world dollars or yuan. During the height of popularity, some of the implied valuations for assets in the games exceeded various small countries’ total GDP! It’s no wonder investors became overly-enthusiastic about the market potential for this dynamic industry.
Attractive “Risk-ON” Trading Vehicles
Today’s global equity markets are increasingly uncertain, as governments deal with the aftermath of a worldwide financial crisis, simmering trade tensions, and a currency war that could very well morph into a “beggar thy neighbor” environment.
With this volatile backdrop, traders need to have an arsenal of appropriate weapons at their disposal to handle the different market gyrations. There are times when the best approach will be to reduce exposure and wait for better risk/reward opportunities. But there will also be times when the proper play is to dramatically increase exposure to take advantage of key inflection points. When markets set up for a “risk-on” environment, trading vehicles with significant velocity can offer the best opportunity for capturing profits.
The following Chinese online content stocks are exceptional “risk-on” vehicles for when traders need to quickly increase their exposure to emerging markets (and specifically bullish China trends). Rather than a “buy and hold” opportunity set, these names are likely to experience volatile swings, and if traded correctly, could offer outsized returns with a modest amount of speculative capital at risk
So without further ado, let’s dig into the three Chinese online stocks that offer significant potential for “risk-on” trading gains...
(OR Not. Since we are a stock specific board use link for the list and see next post for NTES specifically)
3Q earnings 11-17-10 AMC
NetEase.com to Report Third Quarter 2010 Financial Results on November 17, 2010
Wednesday, November 03, 2010 07:00ET
BEIJING, Nov. 3 /PRNewswire-Asia/ -- NetEase.com, Inc. (Nasdaq: NTES) announced today that it will report its financial results for the third quarter 2010 on Wednesday, November 17, 2010, after the close of the U.S. markets.
The earnings teleconference call with simultaneous webcast will take place at 8:00 p.m. Eastern Time on Wednesday, November 17, 2010 (Beijing/Hong Kong Time: 9:00 a.m., Thursday, November 18, 2010). NetEase's management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 1-877-941-2069 (international: 1-480-629-9713), 10-15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 800-406-7325 (international 303-590-3030), and entering passcode 4375443#. The replay will be available through December 2, 2010.
This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase's corporate web site at http://corp.netease.com, Investor Info: Earnings Call.
About NetEase
NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. NetEase's online communities and personalized premium services have established a large and stable user base for the NetEase websites which are operated by its affiliates. In particular, NetEase provides online game services to Internet users through the in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia II, Heroes of Tang Dynasty and Datang, as well as the licensed game, Blizzard Entertainment's World of Warcraft.
NetEase also offers online advertising on its websites which enables advertisers to reach its substantial user base. In addition, NetEase has paid listings on its search engine and web directory and classified advertising services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content, matchmaking services, music and photos from the Web which are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.
Other community services which the NetEase websites offer include instant messaging, online personal advertisements, matchmaking, alumni clubs and community forums. NetEase is also the largest provider of free email services in China. Furthermore, the NetEase websites provide various channels of content. NetEase aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content such as cartoons, games, astrology and jokes, from over one hundred international and domestic content providers.
Contact for Media and Investors:
Brandi Piacente
Investor Relations
brandi@corp.netease.com
Tel: (+1) 212-481-2050
Li Jia
NetEase.com, Inc.
liddyli@corp.netease.com
Tel: (+8610) 8255-8208
SOURCE NetEase.com, Inc.
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NetEase, Inc. (NASDAQ: NTES) is a leading Internet technology company in China. Dedicated to providing online services
centered around content, community, communication and commerce, NetEase develops and operates some of China's most
popular online games, e-mail services, advertising services and web portals. In partnership with Blizzard Entertainment, NetEase
also operates one of the most popular international online games in China, World of Warcraft®.
For more information, please visit: http://ir.netease.com/.
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