Shanda to Spin Off 95% of Revenues

• By the tickerspy.com Staff
• On 11:45 am EDT, Friday September 4, 2009

In April a Chinese online gaming spinoff became only the second IPO of 2009, and now Shanda Interactive (NASDAQ: SNDA - News) is following suit.

Shanda Interactive has filed for the initial public offering of its gaming unit, a move that could net the Chinese company as much as $800 million. According to Reuters, Shanda founder Chen Tianqiao, has expressed interest in separating from the company's gaming roots in the past, but analysts remain puzzled. Sterne Agee Leech analyst James Lee told Reuters, "Everyone is scratching their head as to why they want to spin out this unit that gives them 95% of their revenue." Shanda plans to fund acquisitions and joint ventures with the funds generated by the IPO.

If this year's trend is any indication, the spinoff is likely to be a successful one. The 2009 IPOs Index has outperformed the S&P 500 by more than 25% year to date.

Investors are selling shares in response to the news, driving Shanda stock down by 4% while the remainder of the sector advances. As a whole, the Chinese Online Gaming Stocks Index is ahead by 1.4% today. Over the last month, the Index is lagging the S&P 500 by -5.3%.

Webzen (NASDAQ: WZEN - News), The9 Limited (NASDAQ: NCTY - News), and Sohu.com's (NASDAQ: SOHU - News) April spinoff Changyou.com (NASDAQ: CYOU - News) are among the day's biggest gainers.

GigaMedia (NASDAQ: GIGM - News), Giant Interactive (NYSE: GA - News), and Netease.com (NASDAQ: NTES - News) are also advancing in the rally.

Perfect World (NASDAQ: PWRD - News) will launch closed beta testing for its Fantasy Zhu Xian game next Thursday. Perfect World and Changyou.com are the sector's only stocks to remain positive over the last month.

As of this writing, the Chinese Online Gaming Stocks Index is one of the 25 worst-performing tickerspy Indexes over the last month, down by -5%.

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