By
Rick Aristotle Munarriz
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More Articles
June 2, 2011
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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.
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