Sina Technology News, February 25th early morning Beijing time, according to foreign media reports on Friday, although Chinese Internet-related concepts surged strongly at the beginning of 2012, they have recently lagged behind the overall market. Despite the fact that the China Internet Stock Index (CHDOT) of the independent research website TickerSpy rose by more than 2% last month, it still underperformed the S&P 500 index by approximately 1.3 percentage points during the same period. The reason is that the latest round of quarterly financial reports issued by several Chinese Internet companies fell short of expectations, causing investors to alter their optimistic forecasts regarding Chinese Internet-related stocks.
Recently, the US independent research agency Paragon Report analyzed investment opportunities in the Chinese Internet sector as well as securities research reports for Renren Inc. (NYSE stock code: RENN) and Baidu (Nasdaq stock code: BIDU).
Although profit margins have decreased due to rising costs, the total revenue of China's Internet industry continues to grow rapidly. According to a report released by market research firm iResearch, advertising revenue from Chinese online video websites increased by 99.9% in 2011, reaching 6.27 billion yuan, and is expected to soar further to 12.6 billion yuan this year. Meanwhile, China's mobile Internet continues to attract more users.
In addition, according to a report released by market research company Analysys International, the total income of China's mobile Internet services reached 86.22 billion yuan in 2011. By the end of last year, the total number of users in China's mobile Internet market had reached 431 million.
Online games are an important driver of revenue growth in China's Internet industry. Analysys International pointed out that the revenue from China's online game market reached 10.29 billion yuan in the fourth quarter of 2011, increasing by 8.3% quarter-over-quarter and 28.5% year-over-year. Analysys International expects that the number of web game players in China will increase by 36.4% in 2012, reaching 75 million people, and is expected to further increase to 97.5 million people by the end of 2014.
Baidu released its latest quarterly earnings report last week, showing that its quarterly profit increased by 77% year-over-year, mainly due to increases in both the number of customers and revenue per customer. Analysys International pointed out that Baidu holds a 78.3% market share in China's search engine market.
Baidu CEO Robin Li mentioned during the earnings call that China's mobile Internet market is growing at an "astonishing rate." Li stated that currently, mobile service revenue accounts for a very small proportion of the company's total revenue, and Baidu will continue to make efforts to generate more revenue from mobile services.
Renren Inc. will release its latest quarterly earnings report on March 8th. As a social networking site in China, Renren mainly generates revenue through online advertising and Internet value-added services. (Lin Jing)
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