The9 Reports Third Quarter 2006 Unaudited Financial Results

By TechSecurityChina.com Editor
November 16, 2006

Chinese online game operator The9 (NCTY) annaounded its unaudited financial results for the quarter ended September 30, 2006.

Net revenues for the third quarter of 2006 decreased by 9% quarter-over-quarter and increased by 26% year-over-year to US$29.5 million. Net income for the third quarter of 2006 was US$8.1 million, a 24% decrease from US$10.7 million in the second quarter of 2006.

Jun Zhu, Chairman and Chief Executive Officer of The9 Limited, said, “As communicated in August, the third quarter is a transitional quarter. Several important milestones were achieved in the third quarter for our operation of Blizzard Entertainment’s World of Warcraft game in China, including merging of servers, launching content upgrade patch and adding new server site to pave the way for future growth. In the third quarter, WoW game attained peak and average concurrent users of approximately 595,000 and 280,000, respectively, in mainland China.”

For the third quarter of 2006, The9 reported total gross revenues of US$31.1 million, a 9% decrease from US$34.3 million in the second quarter of 2006. Gross profit for the third quarter of 2006 decreased by 13% to US$13.6 million from US$15.7 million in the second quarter of 2006.

For the third quarter of 2006, operating expenses decreased by 18% to US$5.6 million from US$6.9 million in the second quarter of 2006.

As of September 30, 2006, the company’s total cash and cash equivalents balance was US$96.4 million, compared to the total cash and cash equivalents of US$83.2 million as of June 30, 2006. The increase was mainly due to the proceeds received from the sales of prepaid cards, offset in part by prepaid royalty payments to the licensor relating to Blizzard Entertainment’s World of Warcraft’s China operations and the capital expenditures relating to the seventh server site for WoW game in the third quarter of 2006.











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