NetEase cut its quarterly payout to $0.48. Second-quarter revenue rose 7.9%, while net income fell 19%. Shares traded at €110.50 on Oct. 15, ahead of the Nov. 19 results.
NetEase reported RMB 30.1 billion in second-quarter revenue, while net income came to RMB 6.98 billion. The figures show sales climbing as earnings fell, a gap investors will be watching in the company's next report.
Revenue increased 7.9% year over year. Adjusted net income was about RMB 7.7 billion, and gross margin rose to 70.5% from 64.7%. Games and related services generated about RMB 25.0 billion; online games accounted for RMB 24.5 billion, up 10% year over year. First-half revenue reached RMB 60.7 billion, a 7% increase. NetEase's investor relations materials provide company financial updates. Yahoo Finance says NetEase is scheduled to report third-quarter results before the market opens on Nov. 19.
The dividend fell by one-third, from $0.72 to $0.48 per quarter.
At the current quarterly rate, the dividend equals $1.92 a year on an annualized basis. MarketBeat reported an indicated yield of 1.5% on Oct. 13. The quarterly reduction was $0.24. For shareholders holding the stock for income, that means less cash in each payment. The annualized figure reflects the current rate and does not guarantee future payments.
NetEase's dividend move differs from a recent payout cut at Wendy's. A Wendy's dividend report covered weaker restaurant sales. Wendy's had also withdrawn its outlook. NetEase, by contrast, reported revenue growth alongside a decline in net income.
At Lang & Schwarz, NetEase traded at €110.50 at 10:08 a.m. CEST on Oct. 15. Its Nasdaq shares closed at $123.73 on Oct. 14, when the company's market capitalization was $78.8 billion. Those prices come from different markets and dates, so they are not simultaneous quotes.
BNP Paribas Exane initiated coverage on Sept. 22 with an outperform rating and a $180 price target, according to MarketBeat. That is an analyst assessment, not a guaranteed outcome. NetEase attributed the lower net-income result chiefly to investment losses, while gaming revenue increased.
Dividend yield compares a company's annualized dividend with its share price. The indicated yield can change when the share price moves, even if the dividend stays the same; a dividend cut reduces the cash payment itself. NetEase's third-quarter results are scheduled before the market opens on Nov. 19.
