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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.