Tencent, the Chinese Internet company that leads the country’s big online gaming industry, joined a march of web giants in the country to recently suggest profits are getting harder to come by.
Net profit growth slowed to 6.6% in the three months to March, down from a 50% rise in the fourth quarter of last year and a 60% year-on-year increase in the first quarter of 2014. Last week, e-commerce leaders Alibaba Group said income fell by 49% in the three months to March and JD.com reported a loss.
Growth in Tencent’s operating profit in the first quarter of this year was 20% versus 54% in the first three months of 2014.
Like Alibaba and JD, Tencent reported better healthier sales. Its revenue grew by 22% in the first three months of the year to $3.6 billion, according to a quarterly earnings report this evening. The company’s Hong Kong-traded shares edged down 0.1% at the Hong Kong Stock Exchange today, though have increased by half in the past year.
China’s Internet businesses, while buoyed by the world’s largest number of mobile phone and web users, are facing a transition from the desktop to mobile-led environment. They each have also moving been into each other’s market niches, stiffening competition, and wading into new markets abroad to acquire talent, technology, products and customers.
Online games that account for more than half of its business were a standout for Tencent, with revenues gaining 28%. Another success is Tencent’s WeChat mobile communication app.
The Shenzhen-based business is led by billionaire Ma Huateng.
By Russell Flannery / Forbes
