China's Tencent fourth-quarter net income up 51 percent, misses forecasts
By Yimou Lee and Paul Carsten
HONG KONG/BEIJING (Reuters) - Tencent Holdings Ltd, China's biggest social network and online entertainment firm, posted a 51 percent gain in fourth-quarter net income, missing estimates, as sharing and content costs took a bite out of healthy revenue growth.
Net income for the quarter ending December rose to 5.95 billion yuan (651 million pounds), below estimates of 6.26 billion yuan, according to a Thomson Reuters SmartEstimate poll of 11 analysts.
Revenue grew 24 percent to 20.978 billion yuan, slightly above forecasts of 20.5 billion yuan, on the back of strong sales from online gaming on PCs and smartphones linked to social networks like hit app WeChat, which now has 500 million monthly active users globally.
Online gaming sales accounted for over half of Tencent's total revenues.
Tencent has long depended on online gaming to generate revenue, but the company which competes on several fronts with Alibaba Group Holding Ltd and Baidu Inc also wants to emulate Facebook Inc's success in making money from mobile advertising as well as its online video platform.
This expansion is coming at a price, as Tencent needs to draw heavy user traffic to attract advertisers.
Cost of revenues in the fourth quarter rose 2 percent year-on-year, largely due to a 59 percent jump in the cost of Tencent's social network and gaming business partly due to sharing and content costs, the company said.
(Reporting by Yimou Lee in HONG KONG and Paul Carsten in BEIJING; Editing by Miral Fahmy)
