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Strategies & Market Trends : sina ntes sohu and other Chinese internet companies -- Ignore unavailable to you. Want to Upgrade?

To: Rich1 who wrote (5)	10/31/2003 2:36:34 AM
From: Brian	Read Replies (1) \| Respond to of 14

Oops. This could be a real problem for NTES as its revenue for services such as computer-to-phone text messages and downloads of pictures FELL 21 percent in the third quarter compared with the second quarter. I thought they said that the growth had slowed (huge difference!!!) Rivals Sina and Sohu in their own quarterly reports over the past week have said that the Chinese mobile phone text-message craze is booming, suggesting that NetEase is losing share even in an explosively growing market. Sina had said fee-based services such as text messaging and mobile phone ringtones grew 28 percent between June and September and 431 percent for the year. Meanwhile similar services from Sohu grew 9 percent over the same period, according to U.S.-based financial analyst Chang-hua Qiu. Qiu, an analyst with Forun Technologies Inc. in Princeton, New Jersey, had rated the stock an outperform relative to other U.S.-listed stocks but said he may re-evaluate his rating unless NetEase officials can convince him the worst was over. I own some ntes, sina, sohu and china, so it doesn't really matter to me who wins the market share and will continue to hold my ntes but I wish I hadn't picked up a more back at $60. biz.yahoo.com UPDATE - NetEase net rises, but weak phone sales hit stock Tuesday October 28, 6:36 pm ET By Eric Auchard (Adds details, analyst comment, byline) NEW YORK, Oct 28 (Reuters) - Chinese Internet media company NetEase.com (NasdaqNM:NTES - News) on Tuesday posted a quarterly net profit as revenues almost doubled, but softer-than-expected sales of mobile text-message services sent shares tumbling 16 percent. The Beijing-based company said that while third-quarter revenue grew 96 percent to $17.7 million, sales of text-message services declined 20.7 percent to $7.6 million from the $9.6 million it had reported for the second quarter. Traders blamed the decline in mobile phone services for a plunge in NetEase shares following the results. After the announcement, the stock fell to $54.90 in after-hours trading on the Nasdaq from $65.85 at the end of the regular session. NetEase reported a third-quarter net profit of $10.2 million, or 30 cents per diluted share, compared with a loss of $1.1 million a year earlier. Two analysts polled by Thomson First Call (News - Websites) had forecast average earnings of 32 cents per share in the latest quarter. In a statement, Ted Sun, the company's acting chief executive, said that both advertising and online games sales were "robust" but that mobile phone text messaging service revenue growth had slowed. "While our revenues from SMS and other e-commerce services were slower for the quarter, we are confident that our investments in our new free-of-charge offerings will provide long-term benefits," Sun said. LOSING WIRELESS MARKET SHARE Rivals Sina (NasdaqNM:SINA - News) and Sohu.com (NasdaqNM:SOHU - News) in their own quarterly reports over the past week have said that the Chinese mobile phone text-message craze is booming, suggesting that NetEase is losing share even in an explosively growing market. In its quarterly report, NetEase tied the drop to stiffer competition and cutbacks in promotion of its wireless services through other Web sites. It also blamed a long-signaled move by China's major mobile operators to at least temporarily restrict fee-based services that NetEase and its rivals can offer. Sina had said fee-based services such as text messaging and mobile phone ringtones grew 28 percent between June and September and 431 percent for the year. Meanwhile similar services from Sohu grew 9 percent over the same period, according to U.S.-based financial analyst Chang-hua Qiu. Qiu, an analyst with Forun Technologies Inc. in Princeton, New Jersey, had rated the stock an outperform relative to other U.S.-listed stocks but said he may re-evaluate his rating unless NetEase officials can convince him the worst was over. "We want to know if the restriction on paid SMS (short-message services) is temporary or ongoing," Qiu said. On a brighter note, NetEase online game service revenues for the quarter grew 367 percent to $6.8 million over the year-earlier period, due largely to the popularity of the company's self-developed Westward Journey Online Version 2 game, which boasts around 1.2 million unique paying users. Advertising revenues rose 169 percent to $3.3 million. Shares for NetEase, Sohu.com and Sina have soared over the last year as the trio became profitable following years of losses. NetEase shares had risen nearly 500 percent since the beginning of 2003 amid bullishness about the company's prospects in the fast-growing China market.