NEW YORK (TheStreet) -- The9 Limited(NCTY) - Get Report rose 13.36% to $2.80, up 33 cents from its previous close of $2.47, at the close of the trading day on Friday after a report that the company had teamed with ZTE to debut a new set-top box next month.

Shanghai Dailycited a ZTE announcement that the set-top box would offer the highest Internet access speed in China through ZTE's network equipment. Guangdong Cable, which has contributed $2.05 million into the joint venture, will offer video content through the box and The9 will provide the latest online games through television.

The stock had a volume of 1,431,404, more than 21 times its average of 66,512. It hit a high of $3.20 and a low of $2.41 for the day. The stock holds a one-year high of $4.50 and a one-year low of $2.08.

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TheStreet Ratings team rates THE9 LTD -ADR as a "sell" with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate THE9 LTD -ADR (NCTY) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 48.4% when compared to the same quarter one year ago, falling from -$18.58 million to -$27.56 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, THE9 LTD -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for THE9 LTD -ADR is currently extremely low, coming in at 11.32%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -640.67% is significantly below that of the industry average.
  • The share price of THE9 LTD -ADR has not done very well: it is down 10.87% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • THE9 LTD -ADR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, THE9 LTD -ADR reported poor results of -$3.37 versus -$1.81 in the prior year. This year, the market expects an improvement in earnings (-$3.25 versus -$3.37).
  • You can view the full analysis from the report here: NCTY Ratings Report

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