There's never a good time to mix stocks with nostalgia.
Investors who remember when Shanda Interactive (Nasdaq: SNDA) was the speedy trailblazer of online gaming in China have to realize that the company no longer laces up its running shoes.
Net revenue for the quarter did climb 25% to $248.7 million, but it's not the once-promising Shanda Games (Nasdaq: GAME) division that's driving the growth. Online gaming revenue climbed just 10% during the period, though it still represents nearly 77% of Shana Interactive's net revenue.
The real growth at Shanda these days is coming from its Cloudary Web-based literature platform, its stake in the Ku6 (Nasdaq: KUTV) video-sharing site, and other online initiatives.
The bottom line isn't pretty. Profitability was more than cut in half to $0.22 a share. Analysts were holding out for a chunkier profit, but what else is new?
|
Quarter |
EPS est. |
Actual |
Diff. |
|---|---|---|---|
| Q2 2010 | $0.53 | $0.40 | (25%) |
| Q3 2010 | $0.50 | $0.26 | (48%) |
| Q4 2010 | $0.39 | $0.34 | (13%) |
| Q1 2011 | $0.26 | $0.22 | (15%) |
Source: Yahoo! Finance.
The sad contrast to another Shanda letdown is that its four publicly traded rivals in Chinese online gaming -- NetEase.com (Nasdaq: NTES), Perfect World (Nasdaq: PWRD), Giant Interactive (NYSE: GA), and Changyou.com (Nasdaq: CYOU) -- all posted better-than-expected quarterly earnings.
Shanda may have some interesting things going on, but it's going to be hard to move the needle if it remains a laggard in online gaming.
Are you worried about the future of online gaming in China? Share your thoughts in the comment box below.
