Tencent announces $4.5 billion in 2011 revenue

Chinese internet portal Tencent (TCEHYquote) reported today that revenue was up 45% to $4.5 billion in 2011. Net profit increased 26% to 1.6 billion, with basic earnings beating estimates at 5.609 RMB ($0.88) per share.

Tencent offers China’s largest instant message service (QQ) and social networking platform (Qzone), Twitter-like micro-blogging service Tencent Weibo and a strong slate of online gaming, including licenses like EA’s Sims Social. The company owns Riot Games, publisher of the popular League of Legends strategy game.

Most of Tencent’s income came from “Internet value-added services,” which includes games, credited with $3.6 billion in revenue. $519 million came from mobile and telecommunications services, while $316 million came from online advertising.

Gross margin decreased slightly to 65.2% from 67.8%, and net margin decreased to 35.9% from 41.3%.

Tencent Chairman and CEO Ma Huateng said that 2011 was a “competitive and dynamic” year, crediting the company’s open platform strategy for creating a healthy and secure online ecosystem. “In the face of changing technologies and volatile capital markets,” he said, “Tencent enhanced its core user experience and achieved growth in revenue and earnings, while delivering innovations that kept us at the forefront of industry evolution.”

In 2012, the company will focus on expanding its third-party offerings, strengthening its security software, expanding its online advertising business and increasing its market share with online games.

Tencent Holdings trades primarily in Hong Kong, although there is a U.S. presence on the pink sheets.

However, both the Global X Social Media Index ETF (SOCLquote) and the Claymore China Technology ETF (QQQCquote) offer concentrated exposure to the company, with 11.66% and 10.69% weighting, respectively. 


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