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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (39193)	9/9/2010 10:31:37 AM
From: Jurgis Bekepuris	Respond to of 79293

Chinese gaming stocks. There's couple of issues. First, as you can see in yesterday's GAME report, the revenues and earnings are slowing down and dropping. Whether this is a temporary drop or the market is fully saturated is tough to say. The bulls argue that soccer world cup draw gamers from gaming to watching TV. The bears will argue that the market is saturated and more bad news are coming. IMHO it is tough to judge. Second, I think part of the drop is overall negative view of Chinese economy and stocks, i.e. it is a macro drop. GAME is a partial spinoff from SNDA. SNDA still owns majority of GAME stock. SNDA does not really have much of other businesses except for GAME, but they want to become a media company. IMHO SNDA is much riskier play than GAME. CYOU is a partial spinoff from SOHU. SOHU still owns majority of CYOU stock. SOHU does have other media/advertising businesses, so it is somewhat attractive too. Overall, gaming industry is very competitive and driven by hit cycles. Looking at US company results (ATVI, ERTS), they have great results in some years and sucky results in others. Considering this, it might be better to wait for Chinese gaming companies to show losses before buying. On the other hand, if the blip is temporary and more eyeballs/users are coming with the rise of middle class / students / etc., then it might be that current prices are good enough. :) I own smallish positions and would add only on price drops.