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China’s NetEase Beats Q4 Revenue And Earnings As Mobile Games Pop

Chinese gaming and Internet company NetEase ( NTES ) late Wednesday posted solid beats in revenue and earnings for the fourth quarter, as its focus on online games gained strength. The company said that revenue from online games, its biggest segment, more than doubled, while mobile original games drove growth. The company’s “Westward Journey Online” and “Fantasy Westward Journey” came in as the top two games in the Apple ( AAPL ) iOS China app store in the fourth quarter, NetEase said. “We saw year-over-year net revenue increases in the fourth quarter of 103.2% from online games, 68.1% from advertising services and 355.5% from email, e-commerce and others,” NetEase Chief Executive  William Ding said in a statement. “Business is thriving across our game and Internet service offerings. In 2015 our advertising services revenues continued to grow.” Ding said the company’s mobile portfolio now consists of more than 80 games. “Mobile games are driving rapid new growth. The steps we have taken over the last year to enhance our mobile capabilities have secured our position in the mobile arena,” he said. NetEase is best known for its desktop PC games and has had a lucrative exclusive license for Activision Blizzard ’s ( ATVI ) “World of Warcraft” in mainland China since 2009. The company also develops its own games, mostly the multiplayer variety played on desktop PCs and mobile devices. Looking to bring its most popular titles to more English speakers, Beijing-based NetEase opened its first U.S. office, in the San Francisco suburb of Redwood Shores, Calif., in February 2015. NetEase is a home-field favorite on China’s gaming scene, ranking a close second to titan Tencent Holdings ( TCEHY ). NetEase said fourth-quarter net revenue jumped 128% in local currency to RMB 7.90 billion ($1.22 billion), above the RMB 7.69 billion analysts polled by Thomson Reuters had forecast. The company said earnings per American depositary receipt were RMB 16.34 ($2.52), up 69% in local currency. Analysts had expected RMB 14.79. NetEase did not provide guidance for the first quarter of 2016. Analysts polled by Thomson Reuters expect net revenue to rise 126% in local currency to RMB 8.27 billion ($1.26 billion). Analysts expect adjusted earnings per share to rise 45% to RMB 13.97 ($2.14). NetEase stock rose 1% on Wednesday to close near 160. NetEase stock is up 43% in the past 12 months and held the No. 3 spot in Wednesday’s midweek update of the IBD 50.

Game Console Cycle Looks Bright For Activision, EA

The current video-game-console cycle still has room to run, providing upside for top game publishers like Activision Blizzard ( ATVI ) and Electronic Arts ( EA ), Piper Jaffray analyst Michael Olson said Wednesday. Olson reiterated his overweight ratings on Activision and EA stock in separate reports. He has a price target of 39 on Activision and 87 on EA. In afternoon trading on the stock market today , Activision was up over 1% to above 31 and EA was up 1.5% to above 62. “The console cycle is in its third year and investors are beginning to ask if we are nearing the ‘peak’ of this cycle,” Olson said. “While some that own these stocks for the ‘cycle trade’ may be selling, we believe there are arguments to be made that consistent growth will come over the next several years and an ongoing mix shift towards digital that will drive margins higher.” Current-generation console uptake rates have outpaced the previous generation, but the installed base has “significant room to grow,” he said. The current-generation consoles are Sony ‘s ( SNE ) PlayStation 4, Microsoft ‘s ( MSFT ) Xbox One and Nintendo ‘s ( NTDOY ) Wii U. “While the uptake rate of hardware in the current console cycle has been tracking 40% to 50% faster than the prior cycle, we believe growth of the installed base is far from over,” Olson said. “Specifically, at this point in the cycle about 40% as many consoles (Xbox One & PS4) have shipped compared to life-to-date shipments of prior-gen consoles (Xbox 360 & PS3).” Sales of previous-generation consoles (Xbox 360 and PS3) reached about 162 million units, while current-generation consoles (Xbox One and PS4) have sold about 60 million so far, he said. RELATED: Activision Blizzard Whiffs On Q4 EPS, Sales; Stock Sinks Electronic Arts Falls On Mixed Q3, Weak Guidance .  

Facebook And Amazon Lead 5 Top Tech Stocks On The Move

Loading the player… Let’s take a look at five standout tech stocks on IBD’s Stocks on the Move screen, which are trading in big volume: Facebook ( FB ),  Amazon ( AMZN ), NetEase ( NTES ), Activision Blizzard ( ATVI ) and Cray ( CRAY ). Internet Giants On The Rise Facebook is on the IBD 50 list with a highest-possible IBD Composite Rating of 99. That means its shares outperform 99% of all stocks in the market as measured by fundamental and technical factors, including earnings and sales growth, profit margins, return on equity and relative share-price performance. The stock has tried to retake the 50-day line this week, but has yet to close above that level. It’s attempted to retake the line again today, but gains faded to just 0.1% near midday. Facebook is trading about 12% below its all-time high reached on Feb. 2. Amazon has a 71 Composite Rating. The stock has suffered since the e-commerce company missed quarterly earnings estimates late last month. Shares breached the 200-day line in the days following the report and continued lower. But Amazon is now on track for its third up-day in a row, climbing 1.6% Friday. Top Gaming Stocks Move In Different Directions NetEase earns a 99 Composite Rating. When the Chinese gaming company reports quarterly results on Feb. 24, analysts expect the bottom line to grow 30%. Shares jumped in quick turnover, retaking the 200-day line in intraday trade. But the stock pared its gains to just a 1% rise and fell back below that level. NetEase is trading 24% off of its high reached in late December. Activision has a 93 Composite Rating. The video game publisher missed quarterly earnings and sales estimates late Thursday and gave conservative guidance. Shares dropped below the 200-day line last week and got close to retaking that level in Thursday’s session. Today the stock plunged 9.5% in huge volume, hitting a five and a half month low in intraday trade. Activision is now trading 30% below its late December peak. Supercomputer Maker Stages Downside Reversal And Cray beat quarterly estimates late Thursday, but its guidance was light. The supercomputer maker staged a big downside reversal and fell back below its 50-day line, dropping almost 3%. It’s trading about 17% below its recent high. Cray has a Composite Rating of 95. Image provided by Shutterstock .