Shanda Games (fka GAME)

[Monksdream]

GAME new 52 week low

The company this past week acquired FaZe a competitor in all stock deal
FAZE new 52 week low

Maybe the merged company can figure out how to control costs because both are money burning dilution machines
This is an ease of entry sector with lots of competition
I’m not certain how long VC money can continue funding businesses like this that cater to the so-called next generation computer user

[Samello]

Sorry again, I did not expect 6 year old posts

[Samello]

Sorry, I see the posts are out of order.

[Samello]

Why doesn’t your chart go past July ?

[Monksdream]

GAME

[Gnojek]

Huge volume! Big movement! $GAME

[Gnojek]

Huge volume! Big movement! $GAME

[Gnojek]

Gotta load em up!!

[MBane27]

Yes, lots of potential IMO

[Gnojek]

Hellloooooooo

[Gnojek]

Anyone else in this Millenial Esports stock???

[eastunder]

Shanda Games Announces Retention of Special Committee Financial Advisor


Today : Thursday 6 March 2014

Shanda Games Limited (NASDAQ: GAME, "Shanda Games" or the "Company"), a leading online game developer, operator and publisher in China, today announced that in response to the preliminary non-binding proposal dated January 27, 2014 (the "Proposal") to acquire the Company in a "going private" transaction, the special committee of independent directors (the "Special Committee") has selected Bank of America Merrill Lynch as its financial advisor.

As previously announced, the Proposal contemplates Shanda Interactive Entertainment Limited, the controlling shareholder of the Company, and an affiliate of Primavera Capital Limited (together, the "Consortium") and other persons which may join the Consortium, acquiring the Company for US$3.45 per class A or class B ordinary share, or US$6.90 per American depositary share (each representing two class A ordinary shares) (each an "ADS").

The Special Committee has not set a definitive timetable for the completion of its evaluation of the proposed transaction or any other alternative transaction (if any) and does not currently intend to announce developments unless and until an agreement has been reached.

There can be no assurance that any definitive offer will be made by the Consortium or any other person, that any definitive agreement will be executed relating to the proposed transaction, or that the proposed transaction or any other transaction will be approved or consummated.

[protagonist12]

Shanda Games already trading way way above book value of .1425 a share. Wall street likely views this news with a healthy skepticism. Of course the IP of the company is not factored in and is an intangible asset.

[Nistel]

Apparently this news did not really reach the general public yet..

Well, would be a matter of time.

[tbirdman]

Buyout includes KUTV of which GAME owns a 70% stake in

[Nistel]

$8.50 in premarket!

[Nistel]

$7 on bid already.

Strange how under the radar this stock is. Hardly any comments here or on Yahoo. However this was a no brainer since PPS was around $3, when I bought in. Big profits, no debt, lots of cash, management buying back shares, always the smell of a buyout around.

[Nistel]

Interesting. However I think you meant 3.2 bill
No clue about valuations of the other 2 subsidiaries, who should be included in this deal. You have to deduct these valuations from GAME to get the offer price for GAME solely. Still this would be a nice mover today.

Link here: http://seekingalpha.com/news/1585653-shanda-to-sell-main-businesses-to-alibaba-brightwire

Acquisition price ranged between USD 3.2 billion and USD 3.5 billion.

Thus, Alibaba and Tencent Holdings Limited (SEHK: 0700), two Chinese Internet titans, will compete face to face in online gaming market.

Insiders believed that the reported acquisition price is rather cheap.

http://www.4-traders.com/SHANDA-GAMES-LIMITEDADR-5610376/news/Alibaba-Said-to-Wholly-Acquire-Shanda-17989821/

[mackandy]

Shanda bought by alibaba for 3.2 mill on seeking alpha. Lucky I bought in yesterday on price action. So stock should rise approx 60 to 70% I suppose the question is - how much are the business units not in the deal worth ? Is there debt to be paid off?

[eastunder]

Exhibit A

Preliminary Proposal

January 27, 2014

http://www.streetinsider.com/Press+Releases/Shanda+Games+Announces+Receipt+of+Non-Binding+Proposal+to+Acquire+the+Company/9089224.html

The Board of DirectorsShanda Games LimitedNo. 1 Office Building, No. 690 Bibo RoadPudong New Area, Shanghai 201203People's Republic of China

Dear Sirs:

Shanda Interactive Entertainment Limited ("Shanda Interactive") and Primavera Capital (Cayman) Fund I L.P. (the "Sponsor") are pleased to submit this preliminary non-binding proposal to acquire Shanda Games Limited (the "Company") in a going private transaction (the "Acquisition").

We believe that our proposal provides a very attractive opportunity to the Company's shareholders. Our proposal represents a premium of 21.3% to the Company's volume-weighted average price on January 24, 2014 and a premium of 44.4% to the volume-weighted average price during the last 30 trading days.

1.Consortium.

Shanda Interactive and the Sponsor (collectively, the "Consortium Members", and the consortium so formed, the "Consortium") have entered into a consortium agreement (the "Consortium Agreement") dated as of the date hereof, pursuant to which we will form an acquisition company for the purpose of implementing the Acquisition, and have agreed to work with each other exclusively in pursuing the Acquisition. The Consortium Agreement also obligates the Consortium Members to (i) vote for the proposed Acquisition and not take any action inconsistent with it, (ii) not transfer any of their respective shares in the Company unless as otherwise permitted under the Consortium Agreement, and (iii) vote against any competing proposal or matter that would facilitate a competing proposal.

2.Purchase Price.

The consideration payable for each American Depositary Share of the Company ("ADS", each representing two Class A ordinary shares of the Company) will be $6.90 in cash, or $3.45 in cash per Class A or Class B ordinary share (in each case other than those ADSs or shares held by the Consortium Members that may be rolled over in connection with the Acquisition pursuant to the Consortium Agreement).

3.Funding.

We intend to finance the Acquisition with a combination of debt and equity capital. Equity financing would be provided from the Consortium Members and any additional members we accept into the Consortium.

4.Due Diligence.

We believe that we will be in a position to complete customary legal, financial and accounting due diligence for the Acquisition in a timely manner and in parallel with discussions on the definitive agreements. Wilson Sonsini Goodrich & Rosati P.C. has been retained as international legal counsel to Shanda Interactive and the Consortium and Latham & Watkins as international legal counsel to the Sponsor.

5.Definitive Agreements.

We are prepared to promptly negotiate and finalize definitive agreements (the "Definitive Agreements") providing for the Acquisition and related transactions. These documents will provide for representations, warranties, covenants and conditions which are typical, customary and appropriate for transactions of this type.

6.Process.

We believe that the Acquisition will provide superior value to the Company's shareholders. We recognize that the Company's Board of Directors (the "Board") will evaluate the Acquisition independently before it can make its determination to endorse it. Given the involvement of Shanda Interactive in the Acquisition, we appreciate that the independent members of the Board will proceed to consider the proposed Acquisition.In considering our offer, you should be aware that the Consortium Members are interested only in acquiring the outstanding shares of the Company that the Consortium Members do not already own, and that the Consortium Members do not intend to sell their stake in the Company to any third party.

7.Confidentiality.

Shanda Interactive will, as required by law, promptly make a Schedule 13D filing to disclose this letter and its agreement with the Sponsor. However, we are sure you will agree with us that it is in all of our interests to ensure that we proceed in a strictly confidential manner, unless otherwise required by law, until we have executed Definitive Agreements or terminated our discussions.
8.About Primavera. Primavera Capital, established in 2010, is a China-based private investment firm focusing on investments in buy-out, control-oriented, and growth capital investments.

9.No Binding Commitment.

This letter constitutes only a preliminary indication of our interest, and does not constitute any binding commitment with respect to the Acquisition. A binding commitment will result only from the execution of Definitive Agreements, and then will be on terms and conditions provided in such documentation.

In closing, we would like to express our commitment to working together to bring this Acquisition to a successful and timely conclusion. Should you have any questions regarding this proposal, please do not hesitate to contact us. We look forward to hearing from you.

[eastunder]

Well That certainly explains the last few days: I was really confused with the move and no news. :)

[eastunder]

Shanda Games Announces Receipt of Non-Binding Proposal to Acquire the Company
Date : 01/27/2014 @ 9:01AM
Source : PR Newswire (US)

Shanda Games Limited (NASDAQ: GAME, "Shanda Games" or the "Company"), a leading online game developer, operator and publisher in China, today announced that its Board of Directors (the "Board") has received a preliminary non-binding proposal letter dated January 27th, 2014 (the "Proposal") from Shanda Interactive Entertainment Limited, the controlling shareholder of the Company, and an affiliate of Primavera Capital Limited (together, the "Consortium").

According to the Proposal, the Consortium proposed to acquire the Company in a "going private" transaction for US$3.45 per class A or class B ordinary share, or US$6.90 per American depositary shares (each representing two class A ordinary shares) (each an "ADS"). Based on the offer price, the Proposal values the Company at approximately US$1.9 billion in fully enlarged equity value. According to the Proposal, the offer price represents a premium of 21.3% to the Company's volume-weighted average price of its ADSs on January 24, 2014 and a premium of 44.4% to the volume-weighted average price of its ADSs during the last 30 trading days.
As of January 27, 2014, the Consortium members beneficially owned, in the aggregate, approximately 76.2% of the Company's outstanding shares.

According to the Proposal, the proposed transaction is intended to be financed with a combination of equity capital funded by the Consortium members and third-party debt. The Consortium's proposal letter states that its proposal constitutes only a preliminary indication of its interest and is subject to negotiation and execution of definitive agreements relating to the proposed transaction. A copy of the proposal letter is attached hereto as Exhibit A.

The Board is reviewing and evaluating the Consortium's Proposal, and the Company expects that the Board will form a special committee consisting of independent directors to evaluate and, if appropriate, negotiate the Proposal and to consider other strategic options available to the Company.

The Company cautions its shareholders and others considering trading its securities that the Board has just received the proposal letter and has not made any decision with respect to the Company's response to the Proposal. There can be no assurance that any definitive offer will be made by the Consortium or any other person, that any definitive agreement will be executed relating to the proposed transaction, or that the proposed transaction or any other transaction will be approved or consummated.

According to the proposal letter, Wilson Sonsini Goodrich & Rosati, P.C. is acting as U.S. counsel to Shanda Interactive Entertainment Limited and the Consortium as a whole, and Latham & Watkins is serving as U.S. counsel to Primavera Capital Limited. Davis Polk & Wardwell LLP is the Company's U.S. counsel.

[dgarrid]

GAME OVER !

[Big_Money_Upward]

1.30pm kick off time? :)

[Big_Money_Upward]

here comes the $6 ramp to break it. 52wk high 6.42

[Big_Money_Upward]

bought some here

[Nistel]

Great run since last week. Company still buying back shares?

[Gratefullife]

GAME named by R. Perdone, Stock picker/Editor at Street.com as Breakout Candidate....

[naturalborninvestor]

GAME my new favorite swing trading stock

[naturalborninvestor]

just got back in for a 2nd round at $4.33. Looking for another move to $5.

uptrend intact, 8/37 cross about to happen

[TheFinalCD]

lookin good here

GAME looking great today! Let's see if it can break the 4.85 resistance level. Blue sky thereafter

.

[TheFinalCD]

GAME on!

[naturalborninvestor]

GAME looking great today! Let's see if it can break the 4.85 resistance level. Blue sky thereafter.

[Penny Roger$]

GAME middle bollie pierce!

[ManicTrader]

$GAME 4.51 BREAKOUT, We alerted this reversal watch at our message board at 3.85 and again mid week. We are looking for GAME to retest previous highs

ManicTrader Member Level

Monday, August 12, 2013 11:34:39 PM
Re: None
Post # of 13058
$GAME 3.86 Reversal Watch If she can't hold her 100ma here, she goes lower to the 200ma support where imo she will bounce. Slow churn. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=91144380

[Penny Roger$]

~ $GAME ~ Daily Par Sar Buy Signal ~ Criteria alert triggered during a recent trading session!

$GAME has just triggered the "Parabolic SAR Buy Signals" scan criteria at Stockcharts.com
~ http://tinyurl.com/SAR-BUY ~







For a more in Depth study and DD profile, similar to the one contained in this link: ~ http://tinyurl.com/DDexample ~
Click the following link and type ticker or brief message asking me about the DD: ~ http://tinyurl.com/GET-THE-DD ~

What does the scan "Parabolic SAR Buy Signals" mean? Below is an image example and study link.
~ http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:parabolic_sar ~


To find other similar posts of "GAME" utilize the links that follow.
Search MACDgyver's "Parabolic SAR Buy Signals" posts: ~ http://investorshub.advfn.com/boards/msgsearchbymember.aspx?searchID=251916&srchyr=2013&SearchStr=ParSarBuyScan ~
Search MACDgyver's posts for symbol "GAME": ~ http://investorshub.advfn.com/boards/msgsearchbymember.aspx?searchID=251916&srchyr=2013&SearchStr=GAME ~
Search Ihub for "GAME" posts: ~ http://investorshub.advfn.com/boards/msgsearch.aspx?SearchStr=GAME ~


For more in depth training and information visit Chartschool on the Stockcharts page.
~ http://stockcharts.com/school/doku.php?id=chart_school ~


Also don't forget the Ihub Edu Channel.
~ http://investorshub.advfn.com/boards/education.aspx ~


c

[TapeTrades]

$GAME ripping today let it ride!!!

[TapeTrades]

$GAME got GAME ? So far so good

[TapeTrades]

Back in $GAME here @ 3.85

[TapeTrades]

Out GAME for .15c looking for another long setup

[eastunder]

GAME

Support/Resistance

Type Value Conf.  
 resist. 6.36 1  
 resist. 5.29 2  
 resist. 5.00 2  
 resist. 4.87 2  
 supp    4.07 11  
 supp    3.74 2  
 supp    3.04 29  
 supp    2.72 2 

Read more at http://www.stockta.com/cgi-bin/analysis.pl?symb=game&num1=1&cobrand=&mode=stock#AtPyyeV0GUjQBKUq.99



50d tag

[eastunder]

Shanda Games (GAME) to Enhance Mobile Offerings with $881.5M Acquisition

http://www.streetinsider.com/Corporate+News/Shanda+Games+%28GAME%29+to+Enhance+Mobile+Offerings+with+%24881.5M+Acquisition/8539208.html

Shanda Games Limited (Nasdaq: GAME) has entered into definitive agreements to acquire affiliates providing user and payment platform services from its parent company Shanda Interactive Entertainment Limited.

Shengzhan owns the Shanda Pass database which contains account information, including registration, payment and other user-behavior data that gamers use to access games operated by Shanda Games and an experienced customer service team which handles approximately nine million interactions with game users on average per month. The customer service team was awarded the Best Call Center in China for eight consecutive years from 2005 to 2012 by the China Federation of IT Promotion under the auspices of the Ministry of Industry and Information Technology and has received a five-star certification from the International Customer Management Institute. Shengjing owns approximately 180,000 prepaid card distribution channels nationwide, through which over two million real and virtual prepaid cards were sold monthly on average.

Shanda Games' board of directors formed a special committee of independent directors consisting of Mr. Andy Lin (chair), Mr. Heng Wing Chan and Mr. Yong Gui ("Special Committee"), to consider, evaluate and negotiate the transaction. The Special Committee was advised by outside legal counsel Davis Polk & Wardwell LLP and financial advisor Ernst & Young which delivered a fairness opinion as to the consideration payable by Shanda Games in the transaction. Shanda Games' board of directors, acting upon the unanimous recommendation of the Special Committee, approved the transaction.

The aggregate consideration for the transaction is US$811.5 million, subject to closing adjustments and payable in a combination of cash, deferred payments and settlement of an outstanding loan receivable from Shanda Interactive. Shanda Games' cash, cash equivalents, short-term investments, and restricted cash, net of loans and dividend payable, totaled US$556 million as of March 31, 2013.

[TapeTrades]

Picked this up @ 4.29 don't know much about it see what happens I guess

[Capt_Smith77]

Up another 9%+ the day after the news. Good momentum going for GAME.

[eastunder]

Among Top Grossing Apps on Apple's App Store in China within 8 Hours
PR NewswirePress Release: Shanda Games Limited – 6 hours ago...

http://finance.yahoo.com/news/mobile-game-million-arthur-becomes-125100993.html


HONG KONG, July 18, 2013 /PRNewswire/ -- Shanda Games Limited (NASDAQ: GAME, "Shanda Games"), a leading online game developer, operator and publisher in China, announced today that the iOS version of Million Arthur, a mobile game publishded by Shanda Games' subsidiary Actoz Soft (KOSDAQ: 052790.KQ, "Actoz"), has become the 3rd Top Grossing App across all categories on Apple's App Store in China following its official open beta test launch on July 18, 2013.

"We are delighted with overwhelmingly enthusiastic response this game has received from gamers in China. Through our extensive marketing effort and the strength of our operating plaform, we were able to reach our target audience of advanced casual gamers, students, and young professionals. We launched Million Arthur at 10:30 am this morning and within 8 hours the game became the 3rd Top Grossing App and is likely to continue to ascend before the day is over. First-day daily active users (DAU) for China have exceeded Million Arthur's combined DAUs following its first day in Japan, Korea, and Taiwan," commented Mr. Tunghai Chien, President of Shanda Games.

"With a strong portfolio of games in the pipeline, we will continue to explore new opportunities in China's burgeoning mobile games market through in-house development, licensing, investment and partnerships. We expect to publish these new titles in China as well as abroad in the near future."

Actoz shares closed at a record high on the Korean Stock Exchange.

[eastunder]

Shanda Surges on New Mobile Game as Sohu Rises: Overnight

http://www.bloomberg.com/news/2013-07-18/shanda-surges-on-new-mobile-game-as-sohu-rises-overnight.html?cmpid=yhoo

By Belinda Cao - Jul 18, 2013 12:23 PM

Most Chinese equities rose in New York as Shanda Games Ltd. (GAME) surged after the successful start of a new mobile game. Sohu.com Inc. climbed on speculation its search engine unit will be acquired.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. was little changed at 89.69 as of 1:40 p.m., with 34 stocks gaining and 21 declining. Shanda soared 17 percent, while Sohu advanced to the highest level since October 2011. LDK Solar Co. led a rally in renewable-energy companies after China imposed duties on imports of polysilicon from the U.S. and South Korea.

Million Arthur, the mobile game from Shanda’s South Korean unit Actoz Soft Co. that debuted in China yesterday, was No.3 by sales on Apple Inc.’s store, the Shanghai-based company said in a statement. Sogou, the online search unit of web-portal operator Sohu (SOHU), will be valued at as much as $1.2 billion in a possible sale, according to ABR Investment Strategy LLC.

“Shanda’s stock is up strongly due to the high ranking of this mobile game,” Nick Ning, a Shanghai-based analyst at 86Research Ltd., said by e-mail. “Investors take this high ranking as an indicator of strong revenue and earnings growth for the short term. They want exposure to China’s rapidly growing mobile game market.”

The iShares China large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., dropped 0.5 percent to $33.66, sliding for the first time this week. The Standard & Poor’s 500 Index gained 0.5 percent as earnings from Morgan Stanley and UnitedHealth Group Inc. (UNH) beat estimates and jobless claims fell amid testimony from Federal Reserve Chairman Ben S. Bernanke.

Active Users
Shanda’s American depositary receipts surged to $5.23, the highest price since May 2012.

First-day active users for Million Arthur’s China edition have exceeded the combined first-day numbers in Japan, Korea and Taiwan, Shanda said in the statement.

It will take time to see how sustainable the game’s success will be and to assess Shanda’s position in mobile gaming, according to Ning at 86Research. The company is the third-largest Chinese online game company based on first-quarter sales, Ning said.

[eastunder]

GAME

7-18-13

up 18.53% on abv ave volume at time of posting

[eastunder]

Unusual 11 Mid-Day Movers 07/18:

http://www.streetinsider.com/Special+Reports/Unusual+11+Mid-Day+Movers+0718%3A+%28OCRX%29+%28ZHNE%29+%28TTHI%29+Higher%3B+%28SRC%29+%28JAKK%29+%28GILT%29+Lower/8512654.html

Shanda Games Limited (Nasdaq: GAME) 18.3% HIGHER; announced that the iOS version of Million Arthur, a mobile game published by Shanda Games' subsidiary Actoz Soft, has become the 3rd Top Grossing App across all categories on Apple's App Store in China following its official open beta test launch on July 18, 2013.

[Capt_Smith77]

Here's a good Seeking Alpha article worth the read.

**********
I have been very bullish on China's online video game companies for quite a while. In February, I wrote an article (here) recommending buying Perfect World Co., Ltd (PWRD). Then in April, I wrote another article (here) about Shanda Games Limited (GAME), a Chinese video game pioneer, when it hit a 52- week low of $2.68.

I've put my money where my mouth was and invested heavily into these two companies. In addition, I also bought NetEase, Inc (NTES), Changyou.com Limited (CYOU) and Giant Interactive Group, Inc. (GA) during recent pullbacks. After everything was said and done, 75% of my personal stock funds were invested in China's online video game sector.

In order to take advantage of this tremendous opportunity, I had to sell all my positions in Xunyuan Real Estate Co. (XIN) at about $5 and SoFun Holding Limited (SFUN) at about $26.

Cheap Cheap Cheap

Even after the recent run up, the valuation of China's online video game companies is still extremely attractive. This low valuation offers investors with a wide safety margin. The following table highlights some valuation metrics I used to pick attractive stocks in this sector:



The adjusted P/E ratio is calculated by taking the liquidation value out of the market cap and then dividing by the estimated 2013 earnings. You can see how under valued all three stocks are, especially GAME and PWRD. That's why GAME and PWRD are my No.1 and No.2 positions in my personal stock portfolio, followed by CYOU, NTES and GA.

Catalysts

Because the valuation of China's video game companies was so depressed, even a small piece of good news can send their stock prices soaring. That's exactly what happened to PWRD and GAME. PWRD went from $11 to $19 simply because the testing result of one of its new MMO games "Swordsman Online" was much better than expected. I think the stock will go even higher once investors fully realize the potential of "Dota 2", another new game PWRD will launch later this year.

Similarly, GAME soared from $2.68 to $4.1 in just two months, thanks to the strong performance of its mobile games. In Q1 2013, GAME successfully launched its flagship mobile game "Million Arthur" in Korea and now revenue contribution from mobile games is close to 10% of the company's total revenue. GAME is planning to launch "Million Arthur" in China later this month and this launch will further boost its mobile game revenues.

Government Support

We all know that in China, the government is extremely powerful. Its attitude toward a certain business can make or break that entire sector. In the U.S., we have "Don't fight the Fed" and in China we have "Don't fight the government."

The Chinese economy is undergoing a structural change from an investment driven economy to a more knowledge and innovation driven economy. The Chinese government realized that the online video game business could be used as a platform to achieve such a goal. Its attitude toward the business has made a 180° turn from suppression to encouragement.

Recently, the government has undertaken several favorable actions to facilitate growth in this business. For example, it streamlined the governing bodies of the industry to eliminate regulatory ambiguity; it also offers financial subsidies to incentivize companies to produce original video games based on popular Chinese literature. In the last several quarters, many video game companies have received financial subsidies from the government. In addition, news and media have become favorable to the business. PWRD's ex-CEO was put on China's Central TV to tout the merits and potential of the online video game business.

Safe Haven

Recently the news out of China on the economic front is not that encouraging. This week's news about China's imports and exports confirmed that China's economy is struggling. This is not surprising at all when an economy is undergoing a substantial structural change. I believe that in the near future China's economy may remain in the doghouse.

But, this will not affect the online video game companies much because the business is somewhat recession-proof. Its main customers are young people aged 18 to 24 and with incomes less than $480 per month. This group of people is not that sensitive to the economy's ups and downs. In addition, online video games are the cheapest form of entertainment in China. Right now 90% of games adopt a free-to-play model and only charge for in-game items. Thus, the majority of players can play for free. For the small portion of players who do pay, their monthly expense is only about $15 on average.

Some people even argue that poor economic conditions may in fact help the industry. As more people become jobless, they will have more time to kill. And as their income declines, they may have to ditch more expensive forms of entertainment and take up the very affordable video game.

In summary, for investors with high-risk tolerance, I recommend they take a look at China's online video game companies. With the government's blessing, the industry will continue to grow regardless of China's economic conditions. Attractive valuation can provide investors with a wide safety margin.

http://seekingalpha.com/article/1547822-china-s-online-video-game-companies-safe-haven-in-stormy-times?source=yahoo
**********

[ThePennyDoctor]

No one here despite the run? Chart looks great - I will play next week as long as the momentum continues. We lose the momentum, I am out.

---


Shanda Games Limited (ADR) (GAME): Is This Cheap Stock Finally Going to Fly?
By The Motley Fool in News
Published: May 28, 2013 at 2:14 pm
0 0 0 Share2
Page 1 of 2
Next >>
See All

Shanda Games Limited(ADR) (NASDAQ:GAME)Given the booming nature of the Chinese online gaming industry, it won’t be wrong to expect the third biggest player in the arena to be doing well -- growing its revenue, increasing earnings, upstaging analyst expectations -- basically doing all that stuff that would indicate that the company is making the most of the opportunity in front of it.

However, Shanda Games Limited(ADR) (NASDAQ:GAME) has done its best to disappoint on all those fronts over the past one year, and it’s not surprising that the stock is down almost 20% from where it was a year ago. However, shares of the company recently received a shot in the arm, rising 15% in a day after it reported better than expected first-quarter results recently.

Hunting for positives

Don’t get too excited over the “better than expected” part, as revenue was down 22% from last year to $173 million and earnings declined 28% from last year to $43.9 million, or $0.16 per share. Nevertheless, these results were in line with what analysts expected, giving shareholders a much needed reason to bid up the stock after what seemed literally ages.

But then, was the pop really justified? Were there some positive cues in the report that led to optimism about Shanda Games Limited(ADR) (NASDAQ:GAME)’s future? Well, there were some, which sent investors on a buying spree as they didn’t want to miss out on a stock trading at just 5.5 times trailing earnings and 4.9 times forward earnings.

Will mobile be a savior?

For instance, Shanda Games Limited(ADR) (NASDAQ:GAME) has been making rapid progress in mobile games, revenue from which was $17 million in the quarter as compared to none in the year-ago period. This is certainly an impressive rate of growth as mobile gaming could be one of the primary drivers of Shanda’s growth at this pace. Most importantly, its mobile games have been accepted well as Million Arthur, one of its games, was among the top grossers (ranked fifth) on Google Play in March.

An important point which shouldn’t be missed is that Shanda will launch this game in China next month, which means that there’s scope for a lot of revenue growth given the size of the Middle Kingdom. The company has lined up a number of mobile games going forward, including the mobile version of the popular Dragon Nest and has penned a partnership with well-known game publisher Square Enix.

MMO needs to improve

Shanda Games Limited(ADR) (NASDAQ:GAME)’s mobile advancements seem quite impressive, but it needs to arrest the slide in its massively multiplayer online (MMO) games that are its primary bread and butter right now. MMO revenue has been declining, and the story was no different in the previous quarter. The drop was led by declines in the number of active and paying users.

However, things might get better going forward as the drop was a result of Chinese New Year holidays and the anticipated launch of an expansion pack for one of its games, which was released in April. In addition, Shanda would be looking to use its mobile growth to promote MMO games and increase the user base. Shanda is expected to release more content for its top games in an effort to salvage its free-falling MMO business and is looking at the international markets for growth as well.

Revenue from new games, such as AION version 4.0, which was launched recently, is expected to pick up going forward. It looks like all these positives provided fodder to the bulls and shares spiked. However, Shanda Games Limited(ADR) (NASDAQ:GAME) needs to overcome competition from the likes of Giant Interactive Group Inc (ADR) (NYSE:GA) and make sure that its mobile business does not go the way of Glu Mobile Inc. (NASDAQ:GLUU).