Game Dispute Hits Results

Chinese online gaming company  said its fourth-quarter net profit was near flat as a just-resolved dispute over its popular "World to Warcraft" game in China had cut into its margins. http://www.biggainsnopains.co.uk Netease said on Feb. 12 that the General Administration of Press and Publication, had finally given its approval for the company to operate "World of Warcraft" in China. Nasdaq-listed Netease's American depositary shares jumped 7.6% on the news at the time. The approval for the online game, which is massively popular in China, ends a drawn-out turf battle between the Ministry of Culture and GAPP, which slowed the roll-out of the latest "World of Warcraft" game licensed from Inc. The game made its debut in China Sept. 19, but GAPP's announcement in November that the company should stop charging players had left its fate uncertain. http://www.biggainsnopains.co.uk/casinos-jackpot-city.html Despite being unable to charge players, Netease still had to pay licensing fees for the game to Activision Blizzard, which impacted its margins and profit. With regulatory approval now in hand, the financial picture is likely to improve, but the company didn't offer specific guidance on results going forward. Fourth-quarter results were still better than Wall Street had expected due to an upswing in Netease's advertising revenue. http://www.biggainsnopains.co.uk/casinos-william-hill.html After Netease's earnings announcement, which came after the close of regular U.S. trading Wednesday, its ADSs rose slightly to $38.30 in after-hours trading, from $38.24 at the close of trading, as its results topped Wall Street's expectations. The ADSs are still down from September's high of $48.50 but are worth twice as much as a year ago. Netease gets most of its revenue from games but also operates an online portal and a popular email service. That helped it weather the global economic downturn, even as the dispute over the "World or Warcraft" game roiled its business. Chief Executive William Ding pointed to a strong sequential increase in advertising revenue "as our strategy to restructure our portal business operations and our other new marketing strategies launched in the beginning of the year began to deliver positive results." "Looking ahead, we remain cautiously optimistic about the course of our advertising business in 2010," he added. For the latest quarter, Netease.com reported net profit of 571.8 million yuan ($83.8 million), or 4.39 yuan (64 cents) per ADS, down from 575.9 million yuan, or 4.46 yuan per ADS, a year earlier. The latest results included a net foreign exchange loss of 15.3 million yuan compared with a year-earlier loss of 22 million yuan. Revenue jumped 58% to 1.25 billion yuan. Analysts estimated earnings of 59 cents per ADS on revenue of $179.3 million, according to a poll. Revenue from online games, which provides the bulk of the total, climbed 62%, while advertising revenue increased 64%. Gross margin for the fourth quarter fell to 67.5% from 80.8%.