NetEase (NTES), one of China's leading Internet and online game services providers, had a bad start to fiscal 2014. NetEase' results were upsetting. The Chinese gaming company posted weak results, disappointing expectations. However, management is citing this as seasonal weakness. The CEO, on the other hand, is expecting growth in the business. Let us find out what NetEase has in store for investors.
NetEase failed to impress investors with its results. The company's quarterly revenue declined to $380.5 million from $392 million. However, management thinks that the weakness was due to weaker World of Warcraft contribution in the quarter. Taking this as a seasonal weakness, NetEase is feeling confident and sees better financials in the second quarter. But, the EPS downtrend in the past might hurt NetEase, and the company might even lose market share in the future.
Can it bounce back?
NetEase has been impressive in the past as the company has always performed well, posting solid results. Even 2013 was a solid financial year for NetEase. NetEase is working efficiently, and moreover, its games are gaining traction. The company is continually coming up with strong games in the in-house games segment, with its most famous game, Fantasy Westward Journey 2, gaining good traction.
NetEase has always been innovative and it has come up with new products and variety that have helped it take a good position in the gaming segment in China. Further, NetEase is making progress in mobile games. With the launch of two new games, Hearthstone, which is a strategy card game licensed from Blizzard Entertainment, and Mini Westward, which is a mobile adaptation of Fantasy Westward Journey, are doing well in the market, and they are seeing more customer engagement.
NetEase' self-developed games also continue to increase its popularity, as the company is making exciting enhancements and attracting attention from loyal and growing communities. NetEase is also making aggressive promotional campaigns to support its games in order to attract more gamers. Further, NetEase has new products in its pipeline.
Focus on games and features
The gaming company is introducing a number of new expansion packs for its popular games such as Tianxia III, New Westward Journey Online III and Legend of Fairy. Besides this, the company is making solid moves to progress in the gaming segment. It is bringing in first shooter game, Crisis 2015, and is making attempts to work closely with Blizzard Entertainment to bring Heroes of the Storm, a free-to-play online team brawler game to China. This is a great move by NetEase, and it is expecting to cover up the losses that were incurred in the past.
The growing mobile segment is proving to be a profitable venture for NetEase. With the growing mobile segment, the company is growing its portfolio of online games. Seeing the growth in the mobile market, NetEase is working hard to build its mobile portfolio and is planning to introduce a number of new mobile apps and games this year, including several high quality licensed mobile games that will further broaden the company's strong portfolio.
Moving forward, NetEase is planning to integrate its mobile game services withYiChat, which is an instant messaging social platform. This is a strategic move by NetEase to drive more user engagement. NetEase also continue
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