* Earned 65 cents per ADS vs Street view 44 cents
* Ad revenue climbs 14 pct
* Shares spike 7 pct
(Recasts with COO's departure; adds executive's comments on
earnings, details on revenue breakdown, market data, bylines)
By Janet Kornblum and Michael Wei
LOS ANGELES/BEIJING, Feb 25 NetEase.com Inc
(NTES.O), China's No. 2 online games operator, beat quarterly
earnings expectations as ad sales and Web gaming held up in a
sputtering economy, and it said on Wednesday a top executive
had quit for personal reasons.
NetEase reported a 48 percent jump in profit in its fourth
quarter, crediting a 14 percent rise in advertising sales and
the roll-out of expansions to its "Tianxia II" franchise.
The firm announced that co-chief operating officer Michael
Tong was leaving the post March 12 but would remain a director
on the board. It said he was resigning for personal reasons,
Shares in NetEase gained 6.7 percent after closing at
$18.70, down 2 percent, on the Nasdaq on Wednesday.
The stock has lost about 30 percent of its value since
hitting a record high of $27.16 last August, but outperformed
the Nasdaq's 43 percent decline .IXIC over the period.
"NetEase will further capitalize on the opportunities
brought about by the continuing shift from traditional
advertising media to online advertising platforms," Chief
Executive William Ding said in a statement.
The firm -- rival to Shanda Interactive Entertainment Ltd
SNDA.O in the booming Chinese online gaming market -- said
its net profit jumped by nearly half to $84.4 million, or 65
cents an American Depositary Share.
That handily surpassed analysts' average forecast of $56.1
million, or 44 cents per ADS, according to Reuters Estimates.
NetEase posted a near-30 percent rise in revenue to $117.5
million from October to December, in line with the $117.8
million estimated by analysts. [ID:nWNAB7070]
Online games such as NetEase's mainstay, "Fantasy Westward
Journey", make up one of the largest Internet segments in
China, linking millions of players who compete in a virtual
role-playing world. China is the world's largest Web market
after the United States.
The online gaming market had 3 million users in 2007 and
will grow by 85 percent annually until 2011 when it is expected
to reach 34.8 million, according to Analysys International, a
Beijing-based research firm.
NetEase's revenue from its online gaming business leaped by
a third to nearly $100 million in the fourth quarter.
Advertising was another bright spot, with ad revenue in the
fourth quarter rising 14 percent to $16.4 million. Though the
recession is walloping ad sales in general as companies cut
back on marketing spending, some online players like Google Inc
(GOOG.O) have outperformed expectations. [ID:nN2247795]
Ding told Reuters late last year that he expected 2009
earnings to maintain their current rate of growth despite the
global recession and slowing growth in its own home base, the
world's third-largest economy.
But, like other Internet operators in the country, it
remains vulnerable to regulatory risks, analysts say.
China launched a renewed crackdown in January to stamp out
what it called vulgar content on the Internet. Officials named
and shamed 19 Internet operators and Web sites, including
NetEase, which later issued apologies on its websites.
(Editing by Edwin Chan; Editing by Gary Hill)