* Core earnings down 2 pct
* Spends $719 mln on development
* Shares fall nearly 4 pct Monday, up 11 pct this year
(Adds details, CEO & analysts' comments)
By Helen Nyambura-Mwaura
JOHANNESBURG, June 23 South African e-commerce
and media firm Naspers, the continent's biggest
company by market value, posted a surprise 2 percent drop in
full-year earnings on Monday after ratcheting up expansion
spending, sending its shares lower.
Naspers used 7.7 billion rand ($719 million) on development
spend, a 79 percent jump from a year ago. It also holds $1.6
billion offshore that can be used partially for acquisitions and
further expansion, its chief executive said.
Analysts polled by Reuters had forecast core headline
earnings, which exclude some one-off items and considered the
main measure of profit, would rise by as much as 15 percent.
They instead shrunk 2 percent to 2,181 cents per share.
"I am a little disappointed with the results," said Reuben
Beelders, portfolio manager at Gryphon Asset Management.
Naspers share price was down nearly 4 percent by 1307 GMT at
1,220 rand, but were up 11 percent so far this year.
The Internet segment, which includes websites like FlipKart,
Souq.com and OLX, was the biggest profit churner, riding on
Naspers' shareholding in China's Tencent's and on
Mail.ru in Russia.
Naspers' stake in Tencent, China's largest listed tech firm
with a market value of nearly $140 billion, is worth nearly as
much as Naspers' entire market value.
Naspers has been strengthening its e-commerce muscle and in
February plucked the head of its eastern European on-line
marketplace, Bob van Dijk, as its new CEO.
"We are a strong believer in the potential of the Chinese
internet market. It is already is the largest in the world and
has grown quite strong, but that market still has a lot of
runway," van Dijk told Reuters.
Despite posting a 64 percent jump in e-commerce revenue,
Naspers still booked some 5.3 billion rand in trading losses for
the segment, chiefly because of expansion expenditure.
"My biggest problem with this company is they are operating
in a very aggressive space ... there is always going to be a
component of their revenue that they have to spend as capex just
to maintain their business," Beelders said.
Naspers' Multichoice business - which holds a set of
lucrative television sports rights - added 1.3 million new
households in the year, helping boost revenue by 20 percent.
The company's price earnings ratio is 99 times, making it
one of the most expensive stocks on the Johannesburg bourse by
that measure. Tencent is trading close to 50 times earnings.
"This is certainly an exciting business, but we think there
is significant downside risk in the share price if the future
performance of Tencent doesn't turn out as the market expects,"
said Nic Norman-Smith, a portfolio manager at Lentus Asset
(Editing by Joe Brock)