Leave it to NetEase.com
The Chinese Web-based gaming pioneer came through with another monster quarter last night. Net revenue soared 61% to $209.3 million, with net income climbing 49% to $0.67 per ADS. Analysts were only banking on a profit of $0.63 for each depositary share with a top line of $202.7 million.
It's easy to see why the pros undershot reality. This hasn't been a scintillating sector outside of NetEase. Earlier this week, Giant Interactive
NetEase has a big advantage. It recently became the licensee of Activision Blizzard's
Somebody's going to do it -- so why not NetEase?
However, NetEase is rocking along nicely regardless of Activision Blizzard's fantasy role-playing juggernaut. Despite being several years old, its flagship Fantasy Westward Journey online game is as popular as ever. There's also some healthy online advertising sizzle here.
Before it became a major player in China's online gaming realm, NetEase was best known for its mainstream online portal. It's doing quite well, with online advertising revenue growing 88% over last year's third quarter. It only represents 11% of NetEase's total revenue, but it clearly outpaced the 62% top-line growth from its bread-and-butter online gaming business.
NetEase closed out the quarter with $1.3 billion in cash on its balance sheet, or roughly $10 per ADS.
One has to wonder why NetEase is stockpiling so much money. It would be nearly enough for it to buy its choice of Giant Interactive, Shanda Games
Then again, when you're already the best, what's the point in acquiring the best? It's hard to fault NetEase. No one in China plays the gaming game any better.
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