May 27, 2010 (Chinavestor) Earnings season hasn't brought much in the way of clarity for investors in Chinese online gaming firms with Netease.com (Nasdaq:NTES), the most profitable online gaming firm in China disappointing investors, worse numbers from Giant Interactive (NYSE:GA) and somewhat encouraging numbers from Perfect World (Nasdaq:PWRD).
Shanda Games (Nasdaq:GAME) is a pure play on China's burgeoning online gaming market, which may have as many as 70 million current users. The company now accounts for 80% of Shanda Interactive's (Nasdaq:SNDA) profits, so saying these gaming firms are linked at the hip is somewhat of an understatement.
Analysts expect Shanda Interactive (Nasdaq:SNDA) to earn 65 cents on revenue of $201.74 million. The forecast for Shanda Games (Nasdaq:GAME) is a profit of 17 cents on sales of $171.55 million.
Disappointments from both firms along the same lines as those delivered by Netease.com (Nasdaq:NTES) and Giant Interactive (NYSE:GA) would almost certainly punish both Shandas and the sector at large.
Related story: Netease.com Q1 profit hurt on lower margins.
Shanda Games (Nasdaq:GAME) and Shanda Interactive (Nasdaq:SNDA) will probably need to handily beat estimates and offer strong full-year guidance to have investors feeling good about the sector again.