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China blogger Bill Bishop posted a comprehensive piece on online game operator and developer The9 (ticker: NCTY) earlier today. Key extracts (full article here):

The9 may have the strongest 3D MMORPG pipeline of all the Chinese game operators. Right now, however, it is a one game company, but that game--World of Warcraft--is a global blockbuster that may be strong enough to keep their stock up until the launch of their next games. The9 has licensed two highly anticipated Korean 3D MMORPGs, but investors should not expect them to launch in 2006.

The9’s stock is up over 40% from its 52-week low on 12.1.05. I think the only reason to own it right now is if you believe that WOW continues to gain share and grow revenue through The9’s expanding marketing (see recent Joystiq interview) efforts in 2nd tier Chinese cities. If WOW’s growth is accelerating (we will find out on February 22 when The9 releases earnings), I think this stock could hit 25 or more. But if WOW’s growth has faltered at all, there are no games to save The9 between now and Q1 2007, unless The9 can find an overseas blockbuster that can actually be launched commercially in China early in the second half of 2006.

Comment: Bishop has no position in The9.

NCTY 1-Yr Price Performance:

Source: What's in Store for The9 and World of Warcraft? (NCTY)