DeNA targets double digit profit growth in 10/11

By Sachi Izumi

TOKYO (Reuters) - DeNA Co (2432.T), Japan's No. 2 social networking service operator, aims to return to double-digit profit growth next financial year as it improves its offering of games and other contents.

Speaking at the Reuters Global Technology Summit in Tokyo, Chief Executive Tomoko Namba also said it was looking for a local partner and may invest in it to boost its two-year-old Chinese business, aiming to make its overseas operations one of its main earnings pillars in three years.

It also operates an English social networking site.

"Mobile phones are still mainly used for short messaging in China, but the market is so huge and usage of cell phones as Internet devices is becoming popular very fast," she said.

"Kakajo (DeNA's Chinese social networking site) has not been very successful, and we have to reconsider our strategy."

DeNA operates a mobile game community called Mobage-town in Japan, which has nearly 14 million users and is popular among young mobile phone users as it offers games as well as other content found on social networking sites such as blogs.

DeNA's operating profit jumped 25 percent in the financial year ended March 2009, but it expects growth to slow to 1 percent this year.

"We will focus on activating communities as much as we can this year rather than on earnings," Namba said. "We plan to build the foundation so that we can keep growing healthily from next financial year."

DeNA, which also operates e-commerce and auction sites, is facing increasing competition from smaller rival Gree Inc (3632.T), whose earnings are thriving on the back of growth in the number of users and revenue from paid content.

DeNA has been trying to expand its customer base and has started offering games such as casino and mah-jong targeting older users. Mixi Inc (2121.T) is its bigger rival.

(For summit blog: blogs.reuters.com/summits/)

(Editing by Anshuman Daga)