NEW YORK, NY -- (Marketwire) -- 02/24/12 -- After a strong start to 2012, Chinese internet stocks have lagged the market of late as disappointing quarterly earnings results have soured investor optimism on the sector. Despite being up more than 2 percent over the last month, TickerSpy's Chinese Internet Stocks index (CHDOT) lags the S&P 500 by roughly 1.3 percent. The Paragon Report examines investing opportunities in China's Internet Sector and provides equity research on Renren, Inc. (NYSE: RENN) and Baidu, Inc. (NASDAQ: BIDU). Access to the full company reports can be found at:
While higher costs have compressed margins, revenues throughout the industry continue to skyrocket. Ad revenue from China's online video sites surged 99.9% to 6.27 billion yuan in 2011 and is expected to exceed 12.6 billion yuan this year, according to iResearch. Meanwhile, mobile internet in China continues to attract more users. According to Analysys International, revenues from China's mobile Internet services amounted to 86.22 billion yuan in 2011 and the market had 431 million users as of the end of last year.
Online gaming is becoming a significant growth driver in the Chinese internet sector. Analysys International says that from China's online gaming market grew 8.3% quarter on quarter and 28.5% year on year to 10.29 billion yuan in Q4 2011. The number of browser game players in China is expected to grow 36.4% to 75 million in 2012 before reaching 97.5 million by the end of 2014, Analysys International predicts.
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Last week Baidu reported that its latest quarterly profit rose 77 percent over a year earlier as customer numbers and spending per customer rose. Baidu has a 78.3 percent share of China's search engine market, according to Analysys International, a research firm in Beijing. China's mobile Internet market is growing at an "astonishing pace," Chief Executive Officer Robin Li said on a conference call today. Baidu will step up efforts in generating sales from mobile services, which make up a small percentage of revenue at present, Li said.
Renren is set to post quarterly earnings on March 8th. Renren Inc. is a social networking Internet platform in China. Renren generates revenues from online advertising and Internet value-added services (IVAS).
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