The way that Chinese stocks have been lighting up the scoreboard with better-than-expected third-quarter results, it wasn't much of a stretch to expect a good report out of the company that bears the ticker symbol C-H-I-N-A.
CDC (Nasdaq: CHINA), the company that has been paddling several revenue streams in enterprise software, online gaming, and its 77% stake in China.com, saw adjusted earnings per share triple to $0.09 a share, as revenues inched 26% higher to hit $78.2 million. Analysts missed on both fronts, expecting the company to earn $0.06 per share in profits on $79.5 million in top-line production.
As we have seen lately, the company's collection of new-economy endeavors like online gaming, mobile applications, and its portal grew the fastest, collectively muscling 43% higher. Yet all of this still accounts for just 22% of the revenue mix at CDC.
This doesn't mean that the company isn't growing in its bread-and-butter enterprise-software space. CDC keeps winning over new clients, and that division showed respectable 23% growth for the period. On a grander scale, CDC may be a small global player here, but the way Oracle (Nasdaq: ORCL) keeps snapping up growing enterprise-software entities, who knows whether CDC will one day become buyout bait, or the last remaining company not under Larry Ellison's rule.
I wrote about CDC last month in exploring the popularity of its Yulgang online game. With more than 200,000 gamers playing simultaneously, CDC shouldn't be spoken of in the same breath as titans like NetEase (Nasdaq: NTES), The9 (Nasdaq: NCTY), and Shanda Interactive (Nasdaq: SNDA). Still, it's an area worth watching, given its ridiculously juicy profit margins.
With a rich gaming pipeline that will include introductions next year of Special Force (a game that has been huge in Korea's Internet-cafe community), Stone Age 2, and The Lord of the Rings Online: Shadows of Angmar, it may take another hit or two before wondering whether Ellison will be CDC's ultimate acquirer, or whether that honor will go to Electronic Arts (Nasdaq: ERTS).
Okay, so maybe I'm reaching a bit on that front. It's nonetheless nice to see CDC growing successfully in so many areas.
Shanda -- like NetEase -- was recommended toRule Breakerssubscribers nearly two years ago. Want to learn more about how to get in early on the next hot trends? Go for a free trial subscription to explore the newsletter service for the next 30 days. The next issue comes out later today, actually, so your timing couldn't be better. Electronic Arts is a Stock Advisor pick.
Longtime Fool contributor Rick Munarriz believes in the sector, but he does not own any of the companies mentioned in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.
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