AP News

Perfect World shares bounce on weak 2Q, forecast

NEW YORK (AP) — Shares of Perfect World Co., a Chinese video game company, regained early losses on Tuesday, a day after the company said its second-quarter net income sank by half as fewer people played its online games.

THE SPARK: Results missed expectations and Perfect World also forecast that revenue in its current quarter would be flat to slightly down from the second quarter.

THE BIG PICTURE: Perfect World is dependent on excitement created by new game launches, and there were no new launches during the quarter. Perfect World's upcoming title, "Return of the Condor Heroes," is not expected to launch until late in the third quarter, at earliest. The company also said Robert Hong Xiao, chief operating officer, will become co-CEO, along with current CEO Michael Chi.

THE ANALYSIS: Roth Capital Partners analyst Adam Krejcik said the quarter's results were disappointing and lowered his estimates and price target on the stock. Even though the stock is relatively cheap, he said, there appear to be few events in the near term that will move the price higher. He kept his "Neutral" rating on the stock.

SHARE ACTION: Shares were unchanged at $10.52 in midday trading, after earlier dropped as low as $9.50., or 9.7 percent in heavy trading. The Beijing company's stock had been nearly flat for the year.

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