Netease.com Inc, one of the top three Chinese Internet portals, reported record profits in the second quarter Tuesday.

The NASDAQ-listed company said Tuesday in Beijing that its profit in the past three months reached US$9.2 million, growing 20 per cent over theprevious quarter. Its earnings per diluted American depository receipt (ADR) were 28 US cents, compared with 26 US cents for the first quarter of this year.

"Even with the outbreak of SARS, which had a temporary impact on the growth of our online game business, we were able to generate healthy increases in total revenues,'' said Ted Sun, Netease's acting chief executive officer.

The company's total revenues stood at US$16.50 million for the second quarter, a growth of 15.5 per cent over revenues for the first quarter.

Netease's income from online advertising rose by 73.6 per cent quarter-on-quarter to US$2.5 million from April to June.

Sun attributed the success in online advertising to the improved portal content and strengthened sales force.

At the same time, Netease's non-advertising revenues also maintained a steady growth at US$13.90 million, up 9 per cent for the quarter.

The Chinese portal made about 47 per cent of its revenues from wireless messaging services, mainly messages sent to mobile phone users.

Its online game business was the only segment affected by SARS, as most of the Internet cafes in China were closed due to the epidemic.

According to Ted Sun, 45 per cent of its online game users played games at Internet cafes before the outbreak of SARS in April.

By the end of June, Netease had US$88.20 million in cash on hand, not including US$75 million raised from issuance of interest-free convertible bonds in July.

Ted Sun said his company still had an option to issue another US$25 million in such bonds in one month, but that issuance depended on whether the underwriters would back it in another two or three weeks.

Yin Yijian, an Internet industry analyst with Shanghai-based Shenyin & Wanguo Securities, believes that Netease's growth momentum will continue for the rest of the year.

"Although its advertising revenue growth is very rapid, it is still quite small compared with that of its major competitors Sina Corp and Sohu.com Inc, so there is lots of room for Netease to develop.''

Netease's ADRs in the after-hours trading on the US-based NASDAQ stock market rose by 11 per cent to US$48.59 Tuesday with the improvement in its financial position.

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