Tencent 4Q profit beats analyst estimates
Tencent Holdings Ltd China’s largest Internet company, posted fourth-quarter profit that beat analyst estimates on rising advertising sales.
Net income rose 37 percent to 3.46 billion yuan ($557 million) in the fourth quarter, the Hong Kong-listed company said in a statement today. That compares with the 3.32 billion yuan average of 11 analyst estimates compiled by Bloomberg. Sales rose 53 percent to 12.2 billion yuan.
Billionaire Chairman Pony Ma is trying to commercialize the free WeChat instant messaging service to contend with Sina Corp. (SINA)’s Twitter-like application Weibo amid slowing growth in Tencent’s gaming business. Development of the application, which had more than 300 million users by January, comes amid a shift in Internet usage from personal computers to mobile devices.
“Revenue, especially from ad sales was better than expected,” Ma Yuan, a Beijing-based analyst at Bocom International Holdings Co., said before the earnings. “The first quarter is expected to be a strong quarter for Tencent because of online gaming during Chinese New Year.” The company’s selling and marketing expenses increased to 9 percent of revenue in the fourth quarter from 7 percent in the third quarter on increased expenses for promoting games and WeChat in Asian markets. WeChat has the potential to reach at least 400 million users by the end of 2013 and earn annual revenue of as much as 2.16 billion yuan.