Money Matters - Simplified

Shanda Unsurprisingly Soars

Shanda (Nasdaq: SNDA) posted another great quarter last night, with its pioneering role in multiplayer online fantasy games saving the day.

Revenue soared 48% to $181.1 million. Net margins widened, affording
earnings a chance to grow even faster (up 53% to $0.90 a share).
Shanda's casual games took a hit, but its bread-and-butter role-playing
games were more than enough to deliver spectacular growth.

Shanda's report isn't necessarily a surprise. It is the last of the major Chinese Web-gaming companies to report, and Perfect World (Nasdaq: PWRD), Changyou.com (Nasdaq: CYOU), and NetEase.com (Nasdaq: NTES) all took healthy steps forward during the same three months.

It's also not much of a surprise to see Shanda file to release its gaming unit as an IPO. It had alerted shareholders
about the plan back in May. This seems to be the new fashion trend
among companies with healthy online gaming operations in China. Shanda
Games will join fellow 2009 debutantes Changyou.com and CDC Software (Nasdaq: CDCS).

Despite the blazing growth spurts, though, this is still a sorely
undervalued industry. Shanda, Perfect World, Changyou, NetEase, and
even straggler Giant Interactive (NYSE: GA) are trading at 2009 earnings multiples in the teens. Analysts see healthy bottom-line gains next year, too.

 

Copyright 2009 by United Press International.