Perfect World Co. PWRD reported 4Q10 earnings Monday after the close with total revenue coming in at $89.8M, slightly below Oppenheimer's/consensus estimate of $91.0/$90.1M, due to soft performance in online games. GAAP EPS came in at $0.36, below Oppenheimer's/consensus estimates of $0.52/$0.48, due to operating margin pressures from R&D and promotional spending on new game launches.
PWRD expects to regain sales and earnings momentum in 2011 with a solid pipeline. Management guided to 8-12% q/q revenue growth for 1Q and steadily improving margins. After launching three new games in 4Q10, Oppenheimer expects PWRD's margin pressures to ease steadily in 2011. Oppenheimer is lowering its 12- to 18-month price target from $34 to $30 on lower estimates.
Oppenheimer has an Outperform rating on PWRD
PWRD closed Monday at $21.62
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