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It's Shanda's Game: Fool by Numbers

By Motley Fool Contributors May 23, 2007 Comments (0)

8 Recommendations

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 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.

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Shanda Interactive Entertainment Ltd ADR

SNDA Down! $24.64 -0.50 (-1.99%) 2:36 PM
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25 Underperforms
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