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The9 Announces Stable Q2 Financial Results

Chinese online game operator The9 has announced its second quarter financial results, showing that despite a decline in sales credited to World of Warcraft server maintenance and an income decrease after issuing 15 percent of the company to Electro
Chinese online game operator The9 has announced its financial results for the second quarter ended June 30, 2007, which found sales remained stable in comparison with the previous quarter, with a 5 percent year-over-year increase to $35.5 million. Subscription-based game sales, which includes game playing time, merchandise and installation package sales, showed an 8 percent decrease since last quarter, and a 4 percent decrease from last year to $32.3 million. Virtual items sales were $2.1 million. Profits, at $6.6 million, also decreased 23% from the previous quarter and 40% over last year; The9 chairman and CEO Jun Zhu attributed this decrease to the issuing in May of about 4.5 million new shares (15 percent of the company) to Electronic Arts for $167 million. Zhu also commented that despite the temporary shutdown of World of Warcraft servers in mainland China for upgrades, to which it attributes the lion's share of the decline in sales, the commercialization of Soul of the Ultimate Nation in May 2007 helped keep sales stable compared to the previous quarter. "In the second quarter of 2007, we attained aggregate peak concurrent users of approximately 930,000 for games that are currently in commercial operation," he added. "As of June 30, 2007, we had over 22.4 million total registered users." Looking toward the next quarter, The9 says it will continue executing its diversification strategy by expanding its game portfolio with the licenses to operate multiplayer strategy/shooter Field of Honor and Nexon's massively popular casual online dancing game Audition in mainland China, Hong Kong and Macau. Calling the second quarter of 2007 a "transitional quarter," Hannah Lee, Senior Vice President and Chief Financial Officer, commented, "Field of Honor and Audition are strong additions to our game pipeline, and together with all the other high-caliber games to be launched in the future, we are confident that The9 will continuously capitalize on its unparalleled game portfolio so as to achieve long-term sustainable growth."

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