You know it's been a great quarter in China when even companies that have been pulling up lame come out smelling like roses. ShandaInteractive
Yes, the showing was well off last year's third-quarter performance. Revenue fell 13% to $55.2 million and earnings fell 45% to hit $0.26 per share. Wall Street was betting on the company earning $0.18 a share on $53.9 million in revenue.
Shanda's core of multiplayer online fantasy games is holding up better than its casual game business. The company has been cracking down on automated cheating practices -- some near-term pain for long-term gains in restoring the integrity of its more popular titles.
Shanda has come under fire since it moved to make some of its older games free of charge. Ad revenue and an in-game marketplace selling virtual items have replaced the original model, where gamers pay for time spent in the online realms.
It was a gutsy move, as many of its titles were peaking or past their prime. Growing rivals like NetEase
Shanda may be cutting against the grain, but it isn't doing so alone. Although it recently moved to unload a minority of its stake in SINA
China remains worthy of your international investing attention. In our latest issue of the Rule Breakers newsletter service, I take a look at an entirely different promising Chinese company. The new selection joins Shanda and NetEase as official picks.
As for Shanda itself, this sequential improvement is hopefully a step back toward steady year-over-year growth. If you don't want to wait that long, take the improved numbers as a good sign of validation for the company's move to demolishing tollbooths in some of its older titles.
Shanda -- like NetEase -- is a Rule Breakers recommendation. Disney and SINA are Stock Advisor picks. Want to learn more about NetEase, Shanda, and other promising growth stock picks that the newsletter has been recommending? Go for a free trial subscription to explore the newsletter service for the next 30 days.
Longtime Fool contributor Rick Munarriz believes in the sector, but he does not own any of the Chinese companies mentioned in this story. He does own shares in Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.