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Shanda Games Profit Down - Update

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11/26/2012 6:17 PM ET

Shanda Games Ltd (GAME: Quote) Monday said its third-quarter profit dropped 26 percent, hurt mainly by lower revenues and higher costs as the company increased expenses on game developments and marketing.

The Hong Kong-based company's net income for the quarter dropped to 253.9 million yuan or $40.0 million, from 342.6 million or $53.9 million last year. Earnings per American depositary share declined to 0.92 yuan or $0.15, from 1.20 or $0.19 last year.

On an adjusted basis, earnings per ADS were 1.04 yuan or $0.17, down from 1.42 or $0.22 last year.

Analysts polled by Thomson Reuters expected earnings of $0.16 per share for the quarter. Analysts' estimates typically exclude special items.

The online game developer's revenue for the third quarter dropped to 1.081 billion yuan or $170.4 million, from 1.353 billion yuan or $212.9 million last year. Analysts estimated revenues of $171.18 million for the quarter.

Net revenues from online games operated in China slipped 20.7 percent to 1.015 billion yuan or $160.1 million, due mainly to a decline in revenue from "AION" and "Woool.

Other revenues, which primarily represent overseas revenues generated from game licensing, game operations, and advertising, decreased to 65.4 million yuan or $10.3 million from, 72.1 million yuan or $11.4 million last year.

Online game revenues generated in China contributed 93.9 percent of total revenues, while other revenues accounted for 6.1 percent.

Gross margin for the period improved to 63.4 percent from 61.3 percent last year. Operating margin dropped to 26.0 percent from 26.7 percent last year, as product development and marketing costs rose.

Product development expenses represented 14.9 percent of revenues, up from 13.7 percent last year. Sales and marketing costs, as a percent of revenues, rose to 14.1 percent from 12.0 percent last year.

GAME closed Monday's trading at $3.20, down $0.07 or 2.14%, on the Nasdaq.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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