NetEase Inc. (NASDAQ: NTES) has focused on developing its e-commerce and music streaming businesses for long. Of late, the China-based internet technology firm has been showing a great deal of interest in the gaming segment, and the efforts are yielding the desired results.
It is widely expected that the company would report earnings of $3.12 per share for the third quarter when it releases the results on Wednesday evening. Revenues are expected to drop by 2% 2.45 billion.
Game for Growth
After ramping up the video game portfolio, NetEase is currently looking at the international market. In the third quarter, a key growth driver would be the new games released towards the end of the first half. Some of the new releases were well-received in the overseas market, like Cyber Hunter and Knives Out and Identity V that found many takers in Japan.
The company’s ongoing efforts to bring innovation in content and to enhance user experience continue to pay off. The recent progress in the trade talks between Washington and Beijing will likely reflect in the third-quarter performance.
Strong e-commerce and gaming growth pushed up revenues in the second quarter to $2.73 billion. Consequently, earnings rose 35% to $4.09 per ADS and topped the Street view.
Recently, the company announced plans to take its cloud music unit public. Plans are also afoot to expand the research and development center in Montreal, its first such facility outside China, by appointing several skilled industry veterans. The management is also exploring the prospects of China’s thriving online education market for growth.
Baidu (BIDU), which competes with NetEase in certain areas of the business, reported a loss of $1.76 per ADS for the third quarter, despite an increase in revenues to $3.9 billion. The bottom-line was hurt by one-time items.
After starting the year on a positive note, NetEase shares witnessed significant volatility. The stock gained 21% so far this year and 29% in the past twelve months.
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