PEKING (dpa-AFX) - Chinese entertainment media company Shanda Interactive Entertainment Ltd. (SNDA) reported Thursday a profit for the third quarter that plunged from last year, despite a 28 percent revenue growth, hurt by sharply lower margins and higher operating expenses.
Shanda agreed on November 22 to be taken private by a consortium led by its President, Chairman and CEO Tianqiao Chen for $41.35 per American depositary share, each representing two ordinary shares, or $2.3 billion. The buyer group collectively beneficially owns about 69.7 percent of the company's outstanding shares.
'We continued to expand the scope of our business segments in the third quarter of 2011 as we integrated our diverse content portfolio and invested in our future growth,' Chen said in a statement.
The Shanghai, China-based company reported net income attributable to Shanda of RMB9.7 million or $1.5 million for the third quarter, sharply down from RMB96.7 million in the year-ago quarter. Earnings per ADS plunged to RMB0.18 or $0.02 from RMB1.64 in the prior-year quarter.
Excluding items, adjusted net income for the quarter plunged to RMB65.9 million or $10.3 million from RMB264.7 million in the same period last year. Adjusted earnings per ADS were RMB1.18 or $0.18, sharply down from RMB2.38 in the corresponding period of the previous year.
On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $1.53 per share for the third quarter. Analysts' estimates typically exclude special items.
Consolidated net revenues for the quarter increased 28 percent to RMB1.77 billion or $279.0 million from RMB1.39 billion in the same quarter last year. Seven Wall Street analysts had a consensus revenue estimate of $1.78 billion for the quarter.
Shanda Games revenues, including MMORPGs and advanced casual games, were RMB1.35 billion or $212.9 million, a 23.4 percent increase from RMB1.10 billion a year earlier, and Shanda Online revenues grew 35.2 percent to RMB344.1 million or $54.1 million from RMB254.4 million a year ago.
Other revenues surged 44 percent year-over-year to RMB438.8 million or $69.1 million from RMB304.8 million last year. These include revenues from Ku6 (formerly named Hurray! Holding Co., Ltd.), Cloudary (formerly known as Shanda Literature Corp.), social network games, and other businesses. Cloudary filed in late-May for an initial public offering of up to $200 million of its ADS, proposing to be listed on the New York Stock Exchange.
Adjusted operating income was RMB145.1 million or $22.8 million, down from RMB191.1 million in the same period of the previous year. Adjusted operating margin was 8.2 percent, compared to last year's 13.8 percent.
Consolidated gross margin percentage plunged 460 basis points to 54.9 percent from last year's 59.5 percent. Total operating expenses surged to RMB883.9 million or $139.1 million from RMB676.8 million in the year-ago quarter.
SNDA closed Wednesday's regular trading session at $40.22, up $0.15 or 0.37 percent on a volume of 0.11 million shares.
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© 2011 AFX News
