It's Shanda's Game: Fool by Numbers

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On May 22, Shanda Interactive Entertainment (Nasdaq: SNDA) released first-quarter earnings for the period ended March 31.

• To find out what's in store for Shanda, read our earnings walkthrough.
• Total revenues increased by 61.6% to $68.8 million, thanks to a record $65.3 million contribution in revenue from the online game segment.
• The company secured an exclusive agreement to operate Changchun Online in China, a 3-D MMORPG (Massively Multiplayer Online Role-Playing Game) by Korean developer Wemade Entertainment.
• Shanda shines with a four-star rating (as of this writing) in Motley Fool CAPS, our free interactive stock database. The other main Chinese gamers -- NetEase (Nasdaq: NTES) and The9 (Nasdaq: NCTY) -- hold four and five stars, respectively.

(Figures in thousands, except per-share data.)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$68,828	$42,588	61.6%
Net Profit	$58,031	$1,471	3,845%
Earnings per ADS	$0.80	$0.02	3,900%
Diluted ADS	73,013.7	72,125.4	1.2%

Get back to basics with the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Gross Margin	65.2%	56.8%	8.4
Operating Margin	42.2%	5.4%	36.8
Net Margin	84.3%	3.5%	80.9

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$462,513	$386,325	19.7%
Accounts Rec.	$4,517	$7,703	(41.4%)
Inventory	$600	$4,915	(87.8%)

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$5,668	$6,952	(18.5%)
Total Debt	$275,000	$275,000	0%

The balance sheet reflects the company's health.

Cash Flow Highlights
Since Shanda Interactive is playing its latest MMORPG, it forgot to include a cash flow statement in the press release.

Free cash flow is a Fool's best friend.

Related Foolishness:

• Shanda in Demand-a
• Shanda's Back, People
• Everyone's Playing Shanda: Fool by Numbers
• Fun: China's Endangered Species

Shanda Interactive and NetEase are Rule Breakers recommendations. For more innovative investments in high-growth sectors, try a free 30-day trial of the newsletter.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.