@import url(http://finance.paidcontent.org/client/paidcontent/privatelabel.css);
August 13, 2008 at 18:00 PM EDT
NetEase.com Reports Second Quarter 2008 Unaudited Financial Results

BEIJING, Aug. 13 /Xinhua-PRNewswire/ -- NetEase.com, Inc. (Nasdaq: NTES), one of China's leading Internet and online game services providers, today announced its unaudited financial results for the quarter ended June 30, 2008.

William Ding, Chief Executive Officer and Director of NetEase stated, ''We experienced a strong second quarter due to solid execution in our online gaming and advertising businesses. We believe that China's online gaming industry is in the midst of unprecedented growth and NetEase is very well positioned to benefit from this trend. During the second quarter, our flagship game, Fantasy Westward Journey, which remains among the Top 10 in downloads, still continued to perform quite well, fueled by periodic releases of new expansion packs and successful in-game marketing activities. In addition, Westward Journey II is attracting greater user interest, and Westward Journey III is progressing well. We also successfully completed the development of Tianxia II, our first 3D item-based game, and launched open beta testing in June on schedule. By focusing on a step-by-step development approach, we were able to make continuous enhancements based on player feedback.''

Mr. Ding continued, ''To leverage the opportunities provided by the 2008 Beijing Olympic Games, we have been further strengthening the content on our portal, which helped drive increased traffic to our site and achieve further growth in the number of our e-mail users during the second quarter. These efforts resulted in significant sequential growth in adverting revenue this quarter as our advertisers have increasingly recognized the value of marketing their products and services on our portal.''

Second Quarter 2008 Financial Results

Revenues

Total revenues for the second quarter of 2008 were RMB715.9 million (US$104.4 million), compared to RMB651.9 million (US$95.0 million) and RMB558.0 million (US$81.3 million) for the preceding quarter and the second quarter of 2007, respectively.

Revenues from online games were RMB595.0 million (US$86.8 million) for the second quarter of 2008, compared to RMB555.9 million (US$81.0 million) and RMB475.1 million (US$69.3 million) for the preceding quarter and the second quarter of 2007, respectively.

Revenues from advertising services were RMB103.9 million (US$15.2 million) for the second quarter of 2008, compared to RMB77.1 million (US$11.2 million) and RMB65.3 million (US$9.5 million) for the preceding quarter and the second quarter of 2007, respectively.

Revenues from wireless value-added services and others (''WVAS and others'') were RMB16.9 million (US$2.5 million) for the second quarter of 2008, compared to RMB18.9 million (US$2.8 million) and RMB17.5 million (US$2.6 million) for the preceding quarter and the second quarter of 2007, respectively.

Gross Profit

Gross profit for the second quarter of 2008 was RMB722.8 million (US$105.4 million), compared to RMB532.0 million (US$77.6 million) and RMB437.8 million (US$63.8 million) for the preceding quarter and the second quarter of 2007, respectively. The quarter-over-quarter and year-over-year increases in gross profit were primarily driven by the receipt of a business tax refund of RMB146.8 million (US$21.4 million) in June 2008 for certain excess amounts paid in previous years, which was determined as a result of application of the newly approved basis by allowing the deduction of revenues shared with co-operators before applying the business tax rate. In addition, higher demand for game and advertising services in the second quarter of 2008 contributed to the higher gross profit. The revenue from Fantasy Westward Journey continued to grow as a result of new designs and features introduced since late September 2007 and certain in-game marketing activities launched during festival occasions. Higher demand for advertising services in the second quarter of 2008 was primarily driven by increased advertising activities in connection with the Beijing Olympics.

Gross Margin

Gross profit margin for the online game business for the second quarter of 2008 was 91.2%, compared to 90.2% for each of the preceding quarter and the second quarter of 2007. The quarter-over-quarter and year-over-year increases in gross profit margin were primarily due to the higher revenue and the business tax refund received in June 2008 as explained above, partially offset by higher staff-related costs as a result of an increase in headcount and increases of other cost of revenues.

Gross profit margin for the advertising business for the second quarter of 2008 was 52.6%, compared to 45.8% and 47.2% for the preceding quarter and the second quarter of 2007, respectively. The quarter-over-quarter and year-over-year increases in gross profit margin were primarily driven by increased revenue, partially offset by higher staff-related costs as a result of an increase in headcount, higher content cost caused by price increases and increases in other cost of revenues driven by greater demand associated with the Beijing Olympics.

Gross profit margin for the WVAS and others business for the second quarter of 2008 was 28.8%, compared to the gross loss margin of 6.2% and 28.1% for the preceding quarter and the second quarter of 2007, respectively. The quarter-over-quarter and the year-over-year improvements in gross margin were mainly caused by the business tax refund received in June 2008 as explained above.

Operating Expenses

Total operating expenses for the second quarter of 2008 were RMB149.7 million (US$21.8 million), compared to RMB127.6 million (US$18.6 million) and RMB142.8 million (US$20.8 million) for the preceding quarter and the second quarter of 2007, respectively. The quarter-over-quarter increase in selling and marketing expenses was primarily driven by higher marketing cost associated with the open beta testing of Tianxia II, higher marketing cost in connection with the Beijing Olympics and higher staff-related costs as a result of increased headcount. The slight quarter-over-quarter increase in general and administration expenses was mainly due to the receipt of a non- recurring local government rent subsidy of RMB1.0 million (US$0.1 million) by one of the Company's subsidiaries which was recorded in the first quarter of 2008. The year-over-year increase in selling and marketing expenses was primarily due to higher staff-related costs resulting from increased headcount and increased incentive payments associated with the increased revenues. The year-over-year decrease in general and administrative expenses was primarily due to a reduction of professional service fees in the second quarter of 2008. The quarter-over-quarter and year-over-year increases in research and development cost were primarily due to higher staff-related costs caused by increased headcount and new incentive payments.

Net Profit

Net profit for the second quarter of 2008 totaled RMB438.2 million (US$63.9 million), compared to RMB269.4 million (US$39.3 million) and RMB312.6 million (US$45.6 million) for the preceding quarter and the second quarter of 2007, respectively. NetEase reported basic and diluted earnings per American depositary share (''ADS'') of US$0.53 and US$0.49 for the second quarter of 2008, respectively. The Company reported basic and diluted earnings per ADS of US$0.32 and US$0.30 and US$0.37 and US$0.34 for the preceding quarter and the second quarter of 2007, respectively.

Income Taxes

Effective as of January 1, 2008, the Chinese government adopted a new income tax law which unified the enterprise income tax payable by domestic and foreign-invested enterprises at 25%. Prior to the adoption of the new law, a number of the Company's subsidiaries and variable interest entities (''VIEs'') were entitled to various preferential tax treatments. The Company's subsidiaries and VIEs are currently in the process of applying for the New/High Technology Enterprises ("NHTEs") tax treatment pursuant to the "Working Guidelines for Assessment of New/High Technology Enterprises" issued by the Chinese tax authorities on July 8, 2008. Accordingly, NetEase followed the applicable accounting standards and adopted the statutory rate of 25% in making tax provisions for the second quarter ended June 30, 2008, except for entities still enjoying unexpired tax holidays.

The tax charge for the second quarter of 2008 was RMB140.0 million (US$20.4 million), compared to the tax charge of RMB114.8 million (US$16.7 million) and the tax charge of RMB2.0 million (US$0.3 million) for the preceding quarter and the second quarter of 2007, respectively. The quarter-over-quarter increase in tax charge was mainly as a result of an increase in revenue recognized for the second quarter of 2008. The year-over-year increase in tax charge was mainly due to the lower effective tax rate in effect under the pre-2008 tax laws and the receipt of an investment incentive tax refund of RMB24.4 million (US$3.6 million) recorded in the second quarter of 2007. Under the pre-2008 tax laws, the Company's effective tax rate was well below 10% in the second quarter of 2007. The Company expects to reverse any excess tax provisions in subsequent periods when its subsidiaries and VIEs in China are granted the NHTE preferential tax status, which will be expected to be partially offset by the expected reduction to deferred tax assets recorded at the lower NHTE preferred tax rates in the future quarters.

Other Information

As of June 30, 2008, the Company's total cash and time deposit balance was RMB4.96 billion (US$722.4 million), compared to RMB4.16 billion (US$606.3 million) as of December 31, 2007. Cash flow generated from operating activities was approximately RMB513.3 million (US$74.8 million) for the second quarter of 2008, compared to RMB495.0 million (US$72.2 million) and RMB331.0 million (US$48.3 million) for the preceding quarter and the second quarter of 2007, respectively.

On July 2, 2007, the Company's Board authorized a share repurchase program of up to US$120 million of the Company's outstanding ADSs. As of July 1, 2008, the Company had spent in aggregate a total purchase consideration of approximately US$46.4 million (including transaction costs). The share repurchase program ended on July 1, 2008.

By July 11, 2008, the Company's outstanding zero-coupon convertible subordinated notes due July 15, 2023 (the ''Notes'') totaling US$63.4 million as of June 30, 2008 were fully converted at the request of the noteholders pursuant to a redemption notice issued by the Company to the noteholders dated June 13, 2008. In the redemption notice, the Company called for the redemption of the Notes, and noteholders might surrender their notes for conversion at any time before the close of business on July 11, 2008 at the conversion price of US$0.4815 per ordinary share.

    ** The United States dollar (US$) amounts disclosed in this press release
       are presented solely for the convenience of the reader.  Translations
       of amounts from RMB into United States dollars for the convenience of
       the reader were calculated at the noon buying rate of US$1.00 =
       RMB6.8591 on June 30, 2008 in The City of New York for the cable
       transfers of RMB as certified for customs purposes by the Federal
       Reserve Bank of New York.  No representation is made that the RMB
       amounts could have been, or could be, converted into US$ at that rate
       on June 30, 2008, or at any other certain date.  The percentages stated
       are calculated based on RMB.

Conference Call

NetEase's management team will host a conference call at 9:00 pm Eastern Time on Wednesday, August 13, 2008 (Beijing/Hong Kong Time: 9:00 am, Thursday, August 14, 2008). Chief Executive Officer William Ding, Acting Chief Financial Officer Onward Choi, and Co-Chief Operating Officer Michael Tong will be on the call to discuss the quarterly results and answer questions.

Interested parties may participate in the conference call by dialing 800-240-2134 (international: 303-262-2054), 10-15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 800-405-2236 (international 303-590-3000), and entering passcode 11117399#. The replay will be available through August 28, 2008 Eastern Time.

This call is being webcast live and archived, and will be available for 12 months on NetEase's corporate web site at http://corp.netease.com , Investor Info: Earnings Call.

About NetEase

NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. NetEase's online communities and personalized premium services have established a large and stable user base for the NetEase websites which are operated by its affiliates. In particular, NetEase provides online game services to Internet users through the licensing or in-house development of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia II and Datang.

NetEase also offers online advertising on its websites which enables advertisers to reach its substantial user base. In addition, NetEase has paid listings on its search engine and web directory and classified ads services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content, matchmaking services, music and photos from the Web which are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.

Other community services which the NetEase websites offer include instant messaging, online personal ads, matchmaking, alumni clubs and community forums. NetEase is also the largest provider of free e-mail services in China. Furthermore, the NetEase websites provide various channels of content. NetEase aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content such as cartoons, games, astrology and jokes, from over one hundred international and domestic content providers.

This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that NetEase will not be successful in its product diversification efforts, including its focus on item- and fee-based games and exploration of strategic licensing opportunities; the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its leading position in that market, which could occur if, for example, its new online games or expansion packs and other improvements to its existing games do not become as popular as management anticipates; the ability of NetEase to effectively market its games and other services and achieve a positive return on its marketing expenditures; the risk that changes in Chinese government regulation of the online game market may limit future growth of NetEase's revenue or cause revenue to decline; the risk that NetEase may not be able to continuously develop new and creative online services; the risk that NetEase will not be able to control its expenses in future periods; competition in NetEase's existing and potential markets; governmental uncertainties (including possible changes in the effective tax rates applicable to NetEase and its subsidiaries and affiliates and the ability of NetEase to receive approvals of the preferential tax treatments previously available to certain of its subsidiaries and VIEs in China), general competition and price pressures in the marketplace; the risk that security, reliability and confidentiality concerns may impede broad use of the Internet and e-commerce and other services; the risk that fluctuations in the value of the Renminbi with respect to other currencies could adversely affect NetEase's business and financial results; and other risks outlined in NetEase's filings with the Securities and Exchange Commission. NetEase does not undertake any obligation to update this forward-looking information, except as required under applicable law.



                              NETEASE.COM, INC.
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                    December 31,     June 30,      June 30,
                                        2007           2008          2008
                                        RMB            RMB       USD (Note 1)
    Assets

    Current assets:
       Cash                         2,482,820,821  2,399,140,819  349,774,871
       Time deposits                1,675,813,944  2,555,926,069  372,632,863
       Accounts receivable, net       166,727,514    193,788,408   28,252,745
       Prepayments and other
        current assets                 45,143,728     51,984,984    7,578,980
       Deferred tax assets             65,787,113     53,998,465    7,872,529
    Total current assets            4,436,293,120  5,254,838,745  766,111,988

    Non-current assets:
       Non-current rental deposits      3,033,171      3,361,265      490,045
       Property, equipment and
        software, net                 183,471,666    177,187,171   25,832,423
       Prepayment for land use
        right, net                     26,956,800     12,692,783    1,850,503
       Deferred tax assets             19,060,225     19,156,835    2,792,908
       Other long-term assets          16,844,399     16,630,620    2,424,607
    Total non-current assets          249,366,261    229,028,674   33,390,486
    Total assets                    4,685,659,381  5,483,867,419  799,502,474

    Liabilities and Shareholders'
     Equity

    Current liabilities:
        Zero-coupon convertible
         subordinated notes due
         July 15, 2023                641,778,908    435,086,431   63,432,000
       Accounts payable                89,143,868    106,281,532   15,494,968
       Salary and welfare payables     68,653,742     66,705,318    9,725,083
       Taxes payable                   92,438,670    179,856,649   26,221,611
       Deferred revenue               354,966,697    405,937,457   59,182,321
       Accrued liabilities             29,844,067     40,537,832    5,910,080
    Total current liabilities       1,276,825,952  1,234,405,219  179,966,063

    Long-term payable:
       Other long-term payable         10,200,000     10,200,000    1,487,076
    Total long-term payable            10,200,000     10,200,000    1,487,076

    Total liabilities               1,287,025,952  1,244,605,219  181,453,139

    Shareholders' equity            3,398,425,631  4,239,058,030  618,019,569

    Minority interests                    207,798        204,170       29,766
    Total liabilities and
     shareholders' equity           4,685,659,381  5,483,867,419  799,502,474

    The accompanying notes are an integral part of this press release.


                              NETEASE.COM, INC.
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                         Quarter Ended
                      June 30,       March 31,      June 30,       June 30,
                        2007           2008           2008           2008
                         RMB            RMB            RMB       USD (Note 1)
    Revenues:
    Online game
     services        475,149,731    555,859,907    595,039,049     86,751,768
    Advertising
     services         65,328,019     77,144,002    103,937,354     15,153,206
    Wireless
     value-added
     services and
     others           17,494,877     18,919,553     16,897,198      2,463,472

    Total revenues   557,972,627    651,923,462    715,873,601    104,368,446
    Business taxes   (21,926,013)    (7,469,810)   137,081,472     19,985,344

    Total net
     revenues        536,046,614    644,453,652    852,955,073    124,353,790

    Total cost of
     revenues        (98,267,119)  (112,495,076)  (130,164,922)   (18,976,968)

    Gross profit     437,779,495    531,958,576    722,790,151    105,376,822

    Operating
     expenses:
    Selling and
     marketing
     expenses        (49,272,271)   (38,246,993)   (53,403,127)    (7,785,734)
    General and
     administrative
     expenses        (48,380,093)   (43,143,442)   (44,127,629)    (6,433,443)
    Research and
     development
     expenses        (45,110,176)   (46,184,577)   (52,208,647)    (7,611,589)
    Total
     operating
     expenses       (142,762,540)  (127,575,012)  (149,739,403)   (21,830,766)

    Operating
     profit          295,016,955    404,383,564    573,050,748     83,546,056

    Other income
     (expenses):
    Investment
     income              117,317        101,650        123,534         18,010
    Interest
     income           28,409,895     30,873,332     31,439,986      4,583,690
    Other, net        (8,934,188)   (51,178,963)   (26,439,269)    (3,854,627)

    Profit before
     tax             314,609,979    384,179,583    578,174,999     84,293,129
    Income tax        (2,013,483)  (114,832,848)  (140,003,786)   (20,411,393)

    Profit after
     tax             312,596,496    269,346,735    438,171,213     63,881,736
    Minority
     interests                --          3,511            117             17
    Net profit       312,596,496    269,350,246    438,171,330     63,881,753

    Earnings per
     share, basic           0.10           0.09           0.14           0.02
    Earnings per
     ADS, basic             2.52           2.22           3.62           0.53
    Earnings per
     share,
     diluted                0.09           0.08           0.14           0.02
    Earnings per
     ADS, diluted           2.35           2.08           3.39           0.49
    Weighted
     average
     number of
     ordinary
     shares
     outstanding
     basic         3,100,597,113  3,028,995,782  3,027,874,505  3,027,874,505
    Weighted
     average
     number
     of ADS
     outstanding,
     basic           124,023,885    121,159,831    121,114,980    121,114,980
    Weighted
     average
     number of
     ordinary
     shares
     outstanding,
     diluted       3,318,874,571  3,233,744,526  3,233,701,752  3,233,701,752
    Weighted
     average
     number
     of ADS
     outstanding,
     diluted         132,754,983    129,349,781    129,348,070    129,348,070

    The accompanying notes are an integral part of this press release.


                              NETEASE.COM, INC.
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                          Quarter Ended
                         June 30,       March 31,     June 30,     June 30,
                           2007           2008          2008         2008
                            RMB            RMB           RMB      USD (Note 1)
    Cash flows from
     operating
     activities:
    Net profit         312,596,496    269,350,246    438,171,330   63,881,753
    Adjustments to
     reconcile net
     profit to net
     cash provided
     by operating
     activities:
    Depreciation and
     amortization       24,063,948     24,085,433     23,183,012    3,379,891
    Share-based
     compensation
     cost               27,057,772     19,282,517     20,836,332    3,037,765
    Allowance/
     (reversal) of
     provision for
     doubtful debts      2,009,537     (1,202,665)    (1,419,319)    (206,925)
    Gain on disposal
     of property,
     equipment
     and software         (321,538)       (53,816)       (23,045)      (3,360)
    Write-off of
     property,
     equipment
     and software               --             --          5,247          765
    Unrealized
     exchange losses     8,866,712     50,399,867     26,574,778    3,874,383
    Share of loss by
     minority
     interests                  --         (3,511)          (117)         (17)
    Net equity share
     of loss from an
     associated
     company                    --        386,123        487,300       71,044
    Changes in
     operating
     assets and
     liabilities:
       Accounts
        receivable     (47,689,980)    53,521,635    (77,960,545) (11,366,002)
       Prepayments
        and other
        current
        assets         (18,488,436)    (5,467,334)    (3,312,399)    (482,921)
       Deferred tax
        assets           4,126,531     (6,896,626)    18,685,274    2,724,158
       Deferred tax
        assets -
        non-current     (1,389,030)       (84,913)       (11,697)      (1,705)
       Accounts
        payable         31,741,208       (900,446)    16,206,953    2,362,840
       Salary and
        welfare
        payables         5,216,308    (17,343,345)    15,394,921    2,244,452
       Taxes payable      (347,813)    68,672,447     18,745,532    2,732,943
       Deferred
        revenue        (11,475,172)    40,579,198     10,391,562    1,515,004
       Deferred tax
        liabilities     (4,089,877)            --             --           --
       Accrued
        liabilities       (829,872)       635,974      7,367,340    1,074,097
          Net cash
           provided by
           operating
           activities  331,046,794    494,960,784    513,322,459   74,838,165

    Cash flows from
     investing
     activities:
          Purchase
           of property,
           equipment
           and
           software     (7,948,685)   (15,418,337)   (20,258,398)  (2,953,507)
          Proceeds
           from sale
           of property,
           equipment
           and
           software          5,812         56,540         62,501        9,112
          Prepayment
           on land
           use right   (26,956,800)      (822,182)            --           --
          Incentive
           received
           on land
           use right            --             --     15,000,000    2,186,876
          Transfer
           from
           restricted
           cash       (761,580,600)            --             --           --
          Net change
           in time
           deposits
           with terms
           of three
           months      313,909,363   (252,686,082)  (309,877,981) (45,177,644)
          Placement/
           rollover
           of matured
           time
           deposits    (90,542,729)  (422,426,062)  (201,856,509) (29,429,008)
          Uplift of
           matured
           time
           deposits    212,513,368    126,035,000    180,542,729   26,321,635
          Net change
           in other
           assets               --       (412,578)        81,783       11,923
          Net cash
           (used in)
           investing
           activities (360,600,271)  (565,673,701)  (336,305,875) (49,030,613)


    Cash flows from
     financing
     activities:
       Proceeds from
        employees
        exercising
        stock
        options         18,924,290        642,039        328,603       47,908
       Repurchase of
        company
        shares        (574,604,375)   (76,433,652)            --           --
       Payment of
        other long-
        term payable       (38,575)            --             --           --
          Net cash
           provided
           by (used in)
           financing
           activities (555,718,660)   (75,791,613)       328,603       47,908
       Effect of
        exchange
        rate changes
        on cash held
        in foreign
        currencies      (2,236,633)   (74,851,929)   (39,668,730)  (5,783,372)
          Net increase
           (decrease)
           in cash    (587,508,770)  (221,356,459)   137,676,457   20,072,088
    Cash, beginning
     of the quarter  1,507,868,910  2,482,820,821  2,261,464,362  329,702,783
    Cash, end of the
     quarter           920,360,140  2,261,464,362  2,399,140,819  349,774,871

    Supplemental
     disclosures
     of cash flow
     information:
        Cash paid
         for income
         tax, net of
         tax refund     16,061,871     33,512,049    117,313,562   17,103,346
    Supplemental
     schedule of
     non-cash
     investing and
     financing
     activities:
       Treasury stock
        cancellation   643,954,432             --     76,433,652   11,143,394
          Fixed asset
           purchases
           financed by
           accounts
           payable      11,520,005      9,716,130     10,529,644    1,535,135
          Conversion
           of
           convertible
           notes to
           ordinary
           shares               --             --    168,377,187   24,548,000

    The accompanying notes are an integral part of this press release.



                              NETEASE.COM, INC.
                        UNAUDITED SEGMENT INFORMATION

                                           Quarter Ended
                          June 30,     March 31,      June 30,     June 30,
                            2007          2008          2008         2008
                             RMB          RMB           RMB      USD (Note 1)
    Revenues:
    Online game services 475,149,731   555,859,907   595,039,049   86,751,768
    Advertising services  65,328,019    77,144,002   103,937,354   15,153,206
    Wireless value-added
     services and others  17,494,877    18,919,553    16,897,198    2,463,472
    Total revenues       557,972,627   651,923,462   715,873,601  104,368,446

    Business taxes:
    Online game services (15,679,941)     (747,630)  133,155,985   19,413,040
    Advertising services  (5,552,882)   (6,557,240)   (8,834,675)  (1,288,022)
    Wireless value-added
     services and others    (693,190)     (164,940)   12,760,162    1,860,326
    Total business taxes (21,926,013)   (7,469,810)  137,081,472   19,985,344

    Net revenues:
    Online game services 459,469,790   555,112,277   728,195,034  106,164,808
    Advertising services  59,775,137    70,586,762    95,102,679   13,865,184
    Wireless value-added
     services and others  16,801,687    18,754,613    29,657,360    4,323,798
    Total net revenues   536,046,614   644,453,652   852,955,073  124,353,790

    Cost of revenues:
    Online game services (45,151,473)  (54,290,222)  (63,985,689)  (9,328,584)
    Advertising services (31,585,837)  (38,290,401)  (45,063,123)  (6,569,830)
    Wireless value-added
     services and others (21,529,809)  (19,914,453)  (21,116,110)  (3,078,554)
    Total cost of
     revenues            (98,267,119) (112,495,076) (130,164,922) (18,976,968)

    Gross profit (loss):
    Online game services 414,318,317   500,822,055   664,209,345   96,836,224
    Advertising services  28,189,300    32,296,361    50,039,556    7,295,354
    Wireless value-added
     services and others  (4,728,122)   (1,159,840)    8,541,250    1,245,244
    Total gross profit   437,779,495   531,958,576   722,790,151  105,376,822

    Gross profit (loss)
     margin:
    Online game services       90.2%         90.2%         91.2%        91.2%
    Advertising services       47.2%         45.8%         52.6%        52.6%
    Wireless value-added
     services and others      (28.1%)        (6.2%)        28.8%        28.8%



    The accompanying notes are an integral part of this press release.



                              NETEASE.COM, INC.
                   NOTES TO UNAUDITED FINANCIAL INFORMATION

    Note 1:  The conversion of Renminbi (RMB) into United States dollars (USD)
             is based on the noon buying rate of USD1.00 = RMB6.8591 on June
             30, 2008 in The City of New York for cable transfers of Renminbi
             as certified for customs purposes by the Federal Reserve Bank of
             New York.
    Note 2:  Share-based compensation cost reported in the Company's unaudited
             condensed consolidated statements of operations is set out as
             follows:


                                                Quarter Ended
                                 June 30,   March 31,    June 30,   June 30,
                                   2007        2008        2008       2008

                                    RMB         RMB         RMB    USD (Note 1)
    Share-based compensation
     cost included in:
    Cost of revenue              4,211,757   3,147,772   3,396,419    495,170
    Operating expenses
    - Selling and marketing
      expenses                   4,088,683   2,548,679   2,675,811    390,111
    - General and
      administrative expenses    9,233,855   7,084,995   7,538,343  1,099,028
    - Research and development
      expenses                   9,523,477   6,501,071   7,225,759  1,053,456



    For more information, please contact:

    C

SOURCE NetEase.com, Inc.

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