NetEase Makes Investors Uneasy

Shares of plummeted 22% Tuesday after the Chinese Internet company reported earnings that were below analysts’ estimates.

NetEase’s quarterly profit more than doubled to 89 cents a share, but that was two cents below what analysts were looking for. Sales of $57.2 million beat estimates, but the company warned that fourth-quarter results will also be below forecasts, citing a slowdown in its core online games business.

On a conference call, the company cited growing competition for its tougher operating environment. Shares of rival Shanda Interactive lost 3.6% on the day.

It was the second disappointing earnings report from the Chinese Internet sector in recent weeks, following’s earnings miss late last month.

The broader market lost ground Tuesday on a warning from Toll Brothers that shook investors’ faith in the housing boom.

The Nasdaq lost 6 to 2172, the S&P 500 slipped 4 to 1218, and the Dow fell 44 to 10,539. Volume declined to 1.91 billion shares on the NYSE, but rose to 1.64 billion on the Nasdaq. Decliners led 19-12 on the NYSE, and 18-12 on the Nasdaq. Downside volume was 65% on the NYSE, and 51% on the Nasdaq. New highs-new lows were 67-104 on the NYSE, and 81-58 on the Nasdaq.

Cisco edged higher ahead of its earnings report due out after the close on Wednesday.

Agilysis jumped 7% on its results, while Cincinnati Bell lost 4% on its earnings.

Bitstream soared 31% after reporting a profit.

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