China's second-biggest online game operator NetEase.com, Inc. (NTES) said late Wednesday that its second quarter profit rose 22%, beating expectations, but only because they were helped by accounting changes and currency benefits.
The Beijing-based company reported second quarter net income of $68.5 million, or 53 cents per ADR share, up from $64.2 million, or 50 cents per ADR share, in the year-ago period.
Revenue for the quarter was $127.7 million, which beat the average analyst forecast for $120.4 million. However, that figure includes $12.2 million of revenue derived from an accounting change involving ''dormant'' user accounts of its online games.
Ad services revenue grew on a sequential basis, helped by economic stimulus efforts by China's government.
NetEase shares fell $5.37, or -11.5%, in morning trading Thursday.
The Bottom Line
Shares of NTES are off recently-hit 52-week highs of $46 a share. The stock has technical support in the $34-$38 price area. If the shares can rebound, the stock can have a big run once it gets back above the $46 price level. We do not currently rate this non-dividend stock, but we do follow the company closely. The stock has been mentioned frequently on our ''Breakout Stocks'' list, over on ActiveStocks.com.
NetEase.com, Inc. (NTES) does not currently pay a dividend.
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