Nov. 21, 2009 - (Junqiang Zhang) NetEase.com Inc. (NASDAQ:NTES) has released its financial result of third quarter 2009. It announced US$128.8 million of revenues and US$57.7 million of net income. Compared to the previous quarter, total revenues stay still but net income suffers from a sharp decrease.
NetEase.com Inc. (NASAQ:NTES) 2009 First Three Quarters
The revenues from online games do not meet us expectation that is US$128 million. Compared to previous quarter, the revenue from online games in third quarter does not show a seasonal increase. The reasons might be the lack of new expansion pacts and new games were still at ramp-up stage. Also, the reputation of NetEase.com Inc. (NASDAQ:NTES) has been adversely impacted in WOW event. Therefore, the revenues from online games are slightly lower than that of second quarter 2009.
In terms of net income for NetEase.com Inc. (NASDAQ:NTES), the decrease of US$10.8 million was the result of US$10.2 million increase in cost of revenues. WOW was operated for open beta in July. It was totally free to play for around 2 months, until 19th September. This indicates that WOW brought in no revenues only operation cost to NetEase during the period. Thus the cost increases while revenues do not, resulting in decrease of net income. However, this situation is not expected to recur in the future because WOW is commercially operated currently. Even if it is order to shut down, the operational cost would be zero, accompanying with zero revenues.
Since the new expansion pacts of several major games will be released in the fourth quarter and improvement of new games such as New Fly for Fun, we believe the profitability of NetEase.com Inc. (NASDAQ:NTES) will recover to high level.
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