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Finance

Shanda revenues up 7% to $846 million

Wed 02 Mar 2011 4:32pm GMT / 11:32am EST / 8:32am PST
Online

But profits dropped 53% as Chinese interactive entertainment media company regroups

Shanda Interactive Entertainment has reported its calendar 2010 financial results, noting a headline revenue increase over 2009 of 7 per cent, to $846 million.

In the same time frame, however, profits fell by 53 per cent to $124.7 million as the Shanghai-based company went about repositioning its business as an overarching interactive entertainment media company.

The company's Games division saw revenues fall year-on-year by 6 per cent to $680 million, whil Shanda Online's sales numbers were down by 4 per cent to $155 million.

"2010 was an important year for Shanda as we worked to strategically transform our company into a leading interactive entertainment and media group," said Tianqiao Chen, chairman, CEO and president of Shanda. "Our efforts to cultivate content, expand distribution platforms, and expand into new markets are beginning to pay off as all of our major businesses showed incremental growth compared with the prior quarter.

"We are pleased with the Company's continued progress and believe that this critical period of transformation that we are currently in is laying a solid foundation to drive sustainable growth over the long term."

Cowen analyst Doug Cruetz was cautious on the results, stating his belief that the company's shares would perform in-line with the market through 2011, and maintained a Neutral rating.

"We expect the company to have some success with new titles such as 2010's Dragon's Nest, but we believe the company will be challenged to achieve organic growth for the next several years as its business transitions away from dependency on its legacy games to a more diversified platform," he wrote in a note to investors.

"We also believe that an increasingly competitive overall environment is driving product development and sales and marketing expenses higher, which is likely to pressure margins."

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