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NetEase.com Q4 Results Top Estimates

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NetEase.com, Inc. (NTES: Quote), a China-based provider of online game and web advertising services, reported Wednesday a profit for the fourth quarter that increased from last year, reflecting revenue growth and lower foreign exchange losses. Both earnings per share and quarterly revenues topped analysts' expectations.

"We finished the year with a solid fourth quarter, growing our total revenues by 8.3% year-over-year and 13.8% quarter-over-quarter, as well as year-over-year and quarter-over-quarter growth in revenue from our online games business," CEO William Ding said is a statement.

The Beijing, China-based company reported net income of 1.01 billion yuan or $161.88 million for the fourth quarter, higher than 898.63 million yuan in the prior-year quarter.

On a per share basis, earnings per share grew to 0.31 yuan or $0.05 from last year's 0.27 yuan. Earnings per American depositary share increased to 7.68 yuan or $1.23 from last year's $6.85.

On average, eight analysts polled by Thomson Reuters expected the company to earn $1.04 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results include a net foreign exchange loss of 5.8 million yuan, compared to foreign exchange loss of 36.4 million yuan in the same period last year.

The year-over-year foreign exchange gain/losses were mainly due to the exchange gain/losses arising from the Company's foreign currency denominated bank deposit balances as of December 31, 2012, as the exchange rate of the Euro and US dollar against the RMB fluctuated over the periods.

Total revenues for the quarter increased 8.4 percent to 2.33 billion yuan or $373.46 million from 2.15 billion yuan in the same quarter last year. Ten Wall Street analysts had a consensus revenue estimate of $348.11 million for the quarter.

Online games revenue grew 8.2 percent from last year to 1.98 billion yuan, while advertising services revenue decreased 6.8 percent to 259.50 million yuan, and wireless value-added service revenues more than doubled to 89.80 million yuan.

Gross profit for the quarter increased to 1.61 billion yuan or $258.15 million from 1.45 billion yuan, reflecting increased revenues from both the online games and advertising services businesses.

"2012 marked another strong year for NetEase as we continued to enhance our games and services, as well as introduce new products and services throughout the year. Our 12.1% growth in total revenues was primarily due to an 11.2% increase in our online games business and a 6.9% increase in our advertising services business," Ding added.

For fiscal 2012, the company reported net income of 3.64 billion yuan or $583.85 million, higher than 3.23 billion yuan in the prior year. On a per share basis, earnings per share grew to 1.11 yuan or $0.18 from last year's 0.99 yuan. Earnings per American depositary share increased to 27.65 yuan or $4.44 from last year's $24.68. Total revenues for the full year increased to 8.38 billion yuan or $1.35 billion from 7.47 billion yuan in the previous year.

Street was looking for full-year 2012 earnings of $4.23 per share on annual revenues of $1.31 billion.

NTES closed Wednesday's regular trading session at $45.63, down $0.07 or 0.15% on a volume of 1.07 million shares. However, the stock gained $1.43 or 3.13% in after-hours trading.

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by RTT Staff Writer

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