Gross loss margin for the wireless value-added services and others business for the second quarter of 2007 was 28.1%, compared to gross loss margin of 36.1% and 2.3% for the preceding quarter and the second quarter of 2006, respectively. The quarter-over-quarter improved gross loss margin was primarily due to increased revenues from online fee-based premium services supplied to registered users of the Netease websites, including premium matchmaking and dating services and product sales generated from registered users. The year-over-year decline in gross margin was primarily driven by a decrease in revenue from wireless services.

    Total operating expenses for the second quarter of 2007 were RMB142.8 million, compared to RMB117.7 million for the preceding quarter.

    Net profit for the second quarter of 2007 totaled RMB312.6 million, compared to RMB301.5 million and RMB314.1 million for the preceding quarter and the second quarter of 2006, respectively.

    As of June 30, 2007, the Netease's total cash and time deposit balance was RMB3 billion, compared to RMB3.9 billion and RMB3.6 billion as of December 31, 2006 and June 30, 2006, respectively.