Perfect World Misses Sales Expectations, Stock Dips

As its third quarter profits fell by 28.8 percent year-over-year to $31.9 million, Chinese online game company Perfect World missed sales expectations and saw its stock prices drop 16.2 percent. The Beijing-based firm reported that its total revenues exceeded guidance and increased during the three-month span (ending September 30th) by 11.6 percent to $99.1 million compared to the same period in the previous year, and grew by 10.8 percent over the previous quarter, thanks to the company's television and movie business. Perfect World, though, admitted its online gaming performance was "slightly softer" than anticipated, as those operations generated only $79.3 million during Q3 2010, down quarter-over-quarter by 1.1 percent. It blamed the slight decline on Battle of the Immortals' soft performance, which was possibly offset by other key titles. The company expects its fourth quarter revenues to fall between $87.5 million to $90.9 million, though analysts surveyed by Thomson Reuters expected $94.8 million. Perfect World predicts its Q4 gaming business to grow 1 percent to 5 percent quarter-over-quarter, helped by the recent local launches of Forsaken World and Dragon Excalibur. Analyst firm Janco Partners commented, "Aggregate portfolio online game portfolio metrics continue to disappoint and we’re not confident new game releases will stabilize a decidedly negative performance trend. ... The company’s fiscal Q3’10 game portfolio performance metrics shows meaningful degeneration, in our view." The group noted the Perfect World's's average concurrent user (733,000) and active paying customer (1.3 million) numbers for its games in China dropped quarter-over-quarter by 17.3 percent and 11.1 percent respectively, though average revenues per active paying customer ($48.6) increased by 10.6 percent compared to Q2 2010. After Perfect World shared its third quarter numbers and business outlook, the company's stock plunged by $5.11, or 16.2 percent, to $26.36 in morning trading, according to a report from the Associated Press.