Netease.com (Nasdaq: NTES) will report fiscal fourth-quarter results on Monday, February 26. Analysts expect the China-based online game company to post earnings of 24 cents per share on revenue of $64.8 million.

Netease's Earnings to Meet Analyst Expectations

Netease derives over 80% of its revenue from two online games: Fantasy Westward Journey and Westward Online Journey II. The two games attract millions of gamers every day, each user spending a few cents per hour to play on one of the several hundred servers available for each game. Netease's third game, Datang has failed to attract a large crowd.

The9 (Nasdaq: NCTY), the online game operator of World of Warcraft (WOW) in China is due to announce quarterly earnings on Wednesday, February 14. In average, analysts expect The9 to earn 37 cents a share and post $34.1 million in revenues, up from 33 cents a share and $29.5 million revenues in the previous quarter.

Strong Server Stats Predict Strong Earnings

We have been tracking the utilization levels of the WOW servers since October 2005. Our methodology allows us to estimate the number of gamers playing the game, the daily average concurrent user (ACU) and peak concurrent user (PCU).

Based on this analysis, we predict a substantial quarter over quarter increase in revenues, and number of WOW users.

The9 (Nasdaq: NCTY), the Chinese gaming company that operates World of Warcraft (WOW) in China, is set to report earnings on November 15. Since The9 relies on WOW for 99.9% of its revenues, an assessment of the WOW's usage trend is essential for estimating the company's revenues.

To track WOW utilization we have developed software to periodically acquire the user load levels for all individual Chinese WOW server groups. Each server group hosts a virtual mini-world and at the end of the third quarter The9 was operating 273 such WOW worlds. We analyzed the data using our internally developed methodology which allows us to obtain a time-evolving picture of the game usage and important metrics such as the daily average concurrent user (ACU) and the peak concurrent user (PCU) numbers. We constantly improve our models by taking advantage of the ACU and PCU numbers reported by The9 each quarter.

Ninetowns Digital is scheduled to release its 2nd quarter 2006 quarterly results after the close of market on August 17th. As stated by the NINE management, 2006 will be a transitional period, and as a result will not be giving forward guidance with the quarterly release.

We are expecting a decrease in Yr / Yr revenue and EPS of around 6M and .08 respectively.

More important will be the progress of newer products, I-Process and I-Monitor. Management stated that by mid 2006 they will start charging for I-Process as an upgrade to the free version already given to customers, and announced that approximately 2500 customers were using I-Process. Other areas of importance will be how the NINE's relationship with the PRC Inspections Administration is progressing, and whether anything is new regarding the possibility of an acquisition that could be accreditive to EPS in the future.