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NetEase (ticker: NTES), a Chinese Internet, online game and wireless
value-added services provider, beat Q4 earnings numbers by $0.02. Details:


Q4 Results
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Net revenues of $31.6 million were up 55% (and 9.7% sequentially).
  • Revenue mix: online game services rose by
    22.6% sequentially to $23.8 million; advertising revenue fell by 12.4% to $4.9 million; wireless value-added and fee-based premium service revenue fell 23.5% sequentially to $2.9 million.
  • Key drivers for online gaming: Westward Journey Online
    Version 2.0 and Fantasy Westward Journey Online generated sequential revenue growth of 15.2% and
    33.2% due to the launch of
    new expansion packs and the seasonal effect of national holidays. Peak concurrent users for
    Westward Journey Online Version 2.0 and Fantasy Westward Journey reached
    approximately 349,000 and 356,000, respectively.
  • Key drivers for decline in advertising revenue: seasonal, and "the fact that certain of the Company's major advertisers spent a
    major portion of their annual marketing budget in Q3
    during the summer holiday and the Olympics period and, accordingly, their
    advertising spending decreased in Q4".
  • Key drivers for the decline in wireless revenue: competition, "general decrease in
    popularity of pure SMS products", and mobile operators' implementation of new billing platforms.
  • Net profit grew 19.3% sequentially to
    $15.7 million, or $0.45 in earnings
    per ADS.
  • Concurrent users for Westward Journey Online Version 2.0 and
    Fantasy Westward Journey Online were 159,000 and 146,000,
    respectively.
  • The number of accumulated registered Web site accounts rose by 78% (and 13% sequentially).

Q1 Guidance

  • 17% sequential revenue growth.
  • Profit of $15.7-16.5 million.

NTES chart below.

Ntes_3

From The China Stock Blog (full permission granted).

Source: NetEase beats estimates on strong gaming revs (4Q04 earnings)