* Shares down 6 pct on ad revenue disappointment (Recasts; adds analyst comments, share movement)
By Bijoy Anandoth Koyitty
BANGALORE, May 20 (Reuters) - NetEase.com Inc (NTES.O),China's No. 2 online games operator,
reported a 55 percent jumpin first-quarter profit as online games revenue rose 30percent, but shares fell 6 percent as advertising revenueslumped further.
Analysts said the company's rivals such as Baidu Inc(BIDU.O), Tencent (0700.HK), Perfect World
Co Ltd (PWRD.O) andSina Corp (SINA.O) had a better quarter in terms of advertisingrevenue.
"I was actually expecting advertising to be down a littlebit, but the miss was very significant...," Thinkequity analystAtul Bagga said
by phone.
Advertisers remained cautious overall during the firstquarter as the global economic slowdown continued, ChiefExecutive William Ding said in a release.
Online advertising results from NetEase's competitors werenot as bad, which implies some company specific issues in thequarter as well, Adam Krejcik of Roth Capital Partners said.
NetEase's total revenue rose about 20 percent to $114.4million, but lagged analysts' expectations of $116.6 milliondue to a 47
percent fall in advertising revenue to $6 million.
However, revenue from the company's core online gamesbusiness rose to $106.0 million from $81.4 million a year ago.
NetEase.com's online game business did well, helped by thelongevity of the game lifecycles, strong user loyalty androbust online communities, CEO Ding said.
GAME ON
NetEase, which is chasing Shanda Interactive EntertainmentLtd (SNDA.O), is a major player in the burgeoning Chineseonline gaming market, which could almost double to 34.5 billionyuan ($5.06 billion) by 2012 from 18.3 billion yuan last year,according to U.S. research firm Oppenheimer.
Beijing-based NetEase said last month it had
won thelicence to host Activision Blizzard's (ATVI.O) popularrole-playing game World of Warcraft for three years in mainlandChina.
World of Warcraft's current licence is owned by rival The9Ltd (NCTY.O) and is set to expire in June.
"The main story of the company is in 2010, when it willhave a number of games operating their full potential, and theyhave got some new games that will be coming online,"ThinkEquity's Bagga said.
Article Source: www.reuters.com.