Baby steps, Giant Interactive
One of the hottest online gaming companies in China put out pedestrian numbers in last night's quarterly report.
Don't get me wrong. They're good. When revenue climbs 36% to $73.6 million and earnings soar 33% to the post-IPO equivalent of $0.21 a share, you're not a slacker. When you consider that Giant -- like all of its Chinese peers -- shut down for three days in observance of the Sichuan earthquake's mourning period, the already solid performance gets a shinier coat.
However, the results barely topped market expectations of $0.20 a share in net income on $72.2 million in revenue. Giant had humbled the pros by chunkier margins in its two most recent periods.
The company is also refraining from providing guidance for the current quarter, given a pricing strategy tweak to its flagship ZT Online game. In order to attract more long-term paying accounts -- which have risen by 41% to nearly 1.8 million over the past year -- Giant is scaling back some of the in-game monetization. Near-term hit for a long-term gain? Perhaps, but Mr. Market doesn't like to play by those rules.
Giant's peers have mostly scored passing grades during the challenging second quarter. Perfect World
China's online gaming market is one to watch, and not just because South Korea's Webzen
Sure, there are greater risks in a nascent gaming market like China, but the same goes for the opportunities. Giant risks. Giant opportunities. Giant Interactive.
Three more ways to play in China:
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Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin gaming stocks for a long time. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.