Total Revenues Climb For Netease.com In China--Fexon Technology Ltd

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Total Revenues Climb For Netease.com In China--Fexon Technology Ltd


February 21, 2008 (Fexon Technology Ltd)

Chinese Internet company Netease.com (NTES) has posted its unaudited financial results for the quarter and fiscal year ended December 31, 2007.

Total revenues for the fourth quarter of 2007 were RMB622.1 million, compared to RMB571.1 million and RMB540.3 million for the preceding quarter and the fourth quarter of 2006, respectively.

Revenues from online games were RMB507.0 million for the fourth quarter of 2007, compared to RMB468.7 million and RMB451.6 million for the preceding quarter and the fourth quarter of 2006, respectively. Revenues from advertising services were RMB98.1 million for the fourth quarter of 2007, compared to RMB85.5 million and RMB72.1 million for the preceding quarter and the fourth quarter of 2006, respectively. Revenues from wireless value-added services and others were RMB17.0 million for the fourth quarter of 2007, compared to RMB16.9 million and RMB16.6 million for the preceding quarter and the fourth quarter of 2006, respectively.

"We are pleased with our improved content and successful integration of our email and blog services, allowing us to retain and grow traffic on the Netease websites, while providing a solid platform to enhance our advertising revenues," said William Ding, CEO of Netease.

Gross profit for the fourth quarter of 2007 was RMB488.0 million, compared to RMB441.9 million and RMB456.7 million for the preceding quarter and the fourth quarter of 2006, respectively. Gross margin for the online game business for the fourth quarter of 2007 was 90.7%, compared to 89.4% and 90.3% for the preceding quarter and the fourth quarter of 2006, respectively. The quarter-over-quarter increase was primarily due to higher game revenues reported for the fourth quarter of 2007, while related costs were stable. The year-over-year gross margin ratios remained relatively stable.
Gross margin for the advertising business for the fourth quarter of 2007 was 52.0%, compared to 54.0% and 50.5% for the preceding quarter and the fourth quarter of 2006, respectively. Gross loss margin for the wireless value-added services and others business for the fourth quarter of 2007 was 19.5%, compared to 33.3% and 18.9% for the preceding quarter and the fourth quarter of 2006, respectively.

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