Chinese Internet portal Netease.com (NTES) says its online game revenue growth has not had any major upsurge as it announced its unaudited financial results for the quarter ended June 30, 2007.

    "Despite relatively flat game revenues quarter-over-quarter, we are aligning the right balance of resources with our long-standing MMORPG expertise and market leadership to build and diversify our game portfolio for near-term growth," said William Ding, CEO of Netease. "Open beta testing for Westward Journey Online III, the upgraded version of Westward Journey Online II, is scheduled to begin in August 2007, and we plan to release an expansion pack for Fantasy Westward Journey during the fourth quarter of 2007. We are also making positive progress with our programming and design improvements for Tianxia II."

    Total revenues for the second quarter of 2007 were RMB558.0 million, compared to RMB554.6 million and RMB575.3 million for the preceding quarter and the second quarter of 2006, respectively. Revenues from online games were RMB475.1 million for the second quarter of 2007, compared to RMB481.9 million and RMB486.0 million for preceding quarter and the second quarter of 2006, respectively.

    Gross profit for the second quarter of 2007 was RMB437.8 million, compared to RMB430.1 million and RMB457.4 million for the preceding quarter and the second quarter of 2006, respectively. Gross margin for the online game business for the second quarter of 2007 was 90.2%, compared to 89.6% and 90.7% for the preceding quarter and the second quarter of 2006, respectively. The company says the quarter-over-quarter increase primarily resulted from operational cost savings which more than offset a decrease in online game revenues in the second quarter of 2007. The year- over-year decrease was primarily driven by a decrease in online game services revenue from Westward Journey Online II and higher staff-related costs as a result of an increase in headcount.