Why Perfect World (PWRD) Stock Is Down Today

NEW YORK (TheStreet) -- Perfect World (PWRD) was falling -9.5% to $16.60 Tuesday after concurrent PC users fell sequentially in the first quarter, and despite positive earnings.

For the first quarter Perfect World announced earnings of 70 cents a share, beating the Capital IQ Consensus Estimate of 56 cents a share by 14 cents. Revenue grew 42.5% from the year-ago quarter, but fell 2.5% from the previous quarter to $143.3 million. Analysts expected revenue of $140.7 million for the quarter.

Perfect World announced that average concurrent PC users dropped 18% from the previous quarter to 662,000 users. The company said the drop-off was due to anti-cheating efforts and seasonality. Mobile games help offset some of the decline.

Gross margin fell to 73.6% in the first quarter, down from 75.1% in the fourth quarter and 77.8% in the year-ago quarter.

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TheStreet Ratings team rates PERFECT WORLD CO LTD as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PERFECT WORLD CO LTD (PWRD) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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