Time Warner Tops Forecast on Rebound in Ad Sales

 

Like other media companies, Time Warner has benefited from a rebound in advertising sales. In a conference call with investors Wednesday morning, the chief executive, Jeffrey L. Bewkes, said that revenue for the company’s channels increased 18 percent, reaffirming the strength of its cable content. The company’s results were mostly in line with expectations.

Net income declined 10 percent, to $651 million, or 59 cents a share, in the quarter, from $725 million, or 62 cents a share, from in the period a year ago. Adjusted earnings, at 58 cents a share, were slightly above expectations.

Analysts said the decline was mostly because of higher costs associated with the rights to the N.C.A.A. basketball tournament, which Time Warner’s cable channels shared with CBS for the first time this year. Total programming costs for the network division — which includes TNT, TBS, CNN, and HBO — jumped 37 percent from the quarter a year ago.

Partly offsetting the costs, combined advertising revenue for the channels climbed 48 percent, helping the company achieve the overall 18 percent gain in revenue for the division. “Investment in must-see sports is really paying off,” Mr. Bewkes said, crediting the NCAA basketball telecasts on the TBS, TNT and truTV channels.

Revenue declined 3.3 percent at the company’s motion picture arm, Warner Brothers, where net income declined almost 50 percent because its film slate was healthier in the same period last year.

Michael Nathanson, an analyst for Nomura Securities, said the decline was a result of fewer home video releases in the quarter “and the lack of any major box-office hits with releases.”

On Wednesday, Time Warner said it had acquired Flixster, an online community for film buffs that recommends films and has a strong presence on mobile phones. The acquisition also includes Rotten Tomatoes, a Web site that compiles film reviews. Time Warner said that Rotten Tomatoes would remain independent.

The price of the acquisition was not disclosed. Time Warner is expected to leverage Flixster and its fan base as it introduces “Digital Everywhere,” a pay-once, play-anywhere approach to digital movie delivery.

Time Warner’s publishing arm, Time Inc., which remains much smaller than the television or film divisions, reported revenue that was effectively flat. Asked on the conference call if he intended to sell Time Inc. — a persistent question — Mr. Bewkes said no and reiterated the opportunity that he saw for magazines on tablet computers.

Time Inc. confirmed early this week that it had struck a deal with Apple to make the iPad versions of Time, Sports Illustrated and Fortune available free to existing subscribers of the magazines. Previously, only People magazine was available that way for authenticated subscribers.

In an outlook statement on Wednesday, Time Warner affirmed that it expected earnings growth in 2011 to be in “the low teens” in percentage growth.

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Merck’s Quarterly Profit Surges on Sales and Cost Savings

 

The results beat Wall Street expectations and suggest drug sales and cost savings from acquiring Schering-Plough were starting to pay off.

Merck shares rose 18 cents Friday to close at $35.95. Net income in the quarter was $1.04 billion, or 34 cents a share, up from $299 million, or 9 cents a share, in 2010’s first quarter.

Revenue edged up 1 percent to $11.58 billion. That includes several billion dollars from products added in the Schering-Plough acquisition in November 2009. Excluding numerous one-time items, net income was $2.86 billion, or 92 cents a share.

On that basis, analysts had forecast earnings of 84 cents a share and revenue of $11.38 billion. Analysts typically exclude one-time items in their estimates.

The $1.82 billion in net charges included $1.58 billion in merger-related write-downs on the value of assets and research, $126 million in restructuring costs and a $500 million payment to settle arbitration with Johnson & Johnson over the rights to two drugs. A year ago, Merck had charges totaling $2.31 billion.

Merck, based in Whitehouse Station, N.J., raised the bottom end of its 2011 profit forecast by 2 cents, predicting $3.66 to $3.76 a share, or $2.04 to $2.39 including one-time charges.

Production costs fell 22 percent to $4.06 billion, partly because Merck has sold some factories.

A Jeffries & Company analyst, Ian Hilliker, wrote to investors that the higher revenue and lower-than-expected costs gave Merck a strong “earnings beat.”

Top-performing drugs included Singulair and Januvia, plus some drugs acquired with Schering: the allergy spray Nasonex and Remicade for immune disorders. Their growth was partly offset by a $356 million drop in revenue from two former blockbuster heart drugs, Cozaar and Hyzaar, caused by generic competition.

Januvia and Janumet, a pill that combines Januvia with the generic diabetes drug metformin, had combined quarterly sales that topped $1 billion for the first time, up 47 percent.

Total pharmaceutical revenue rose 2 percent to $9.82 billion. Two units Merck acquired with Schering, animal health and consumer health, also performed well. Animal health revenue rose 7 percent and consumer health 6 percent, on strong sales of Claritin allergy pills and Coppertone sun care products.

 

PC Sales Off, Games Buoy Microsoft

While Microsoft reported Thursday that its fiscal third-quarter profits were up 31 percent, revenue from the division that includes the Windows operating system fell 4 percent, to $4.45 billion.

The fall was due in part to an overall decline in PC sales worldwide of about 3.2 percent. Analysts have blamed the earthquake and tsunami in Japan, a big market for computers, for part of that decline.

But the sales of tablet computers, like the iPad, were another major factor and that could become a persistent problem for Microsoft. The category of the tablet computer created by Apple and its iPad is expanding quickly. Apple has sold 19.5 million iPads, and all the big PC makers and cellphone makers are making tablets.

Most of the tablets on the market run either Apple’s operating system software or Google’s Android software. Manufacturers have shown little interest in using Microsoft Windows software to run a tablet.

Canalys, a technology market research firm, noted that when tablet computers are grouped with PCs, Apple becomes the fourth largest PC manufacturer in the world with almost 10 percent of the market. The three biggest PC makers, Hewlett-Packard, Acer and Dell, are all making tablets that don’t use Microsoft software.

One other indication of Microsoft’s changing stature: for the first time, Apple’s quarterly profits exceeded Microsoft’s — $5.99 billion compared with $5.23 billion. Last year, Apple surpassed Microsoft in market capitalization and in revenue.

“It’s a huge testament to Apple,” said Colin Gillis, an analyst with BGC Financial. “There is clearly some disruption in the PCs.” However, Mr. Gillis noted that Microsoft Windows 7 is the fastest-selling operating system in history. He thinks Microsoft will probably make a move into tablets later this year with its expected release of Windows 8. In any case, Mr. Gillis said, “PCs aren’t going to disappear.”

Microsoft also has found itself left behind in software for cellphones. It recently acted to ramp up its presence on mobile phones through an agreement with Nokia, the Finnish handset maker that is troubled, but still the largest makers of cellphones in the world. The two companies are working together on new mobile phones that would use Microsoft’s Windows Phone operating system.

Microsoft has seen declines in its operating software before, as recently as last year’s first fiscal quarter when it fell 4 percent.

To be sure, other parts of the company’s business remain strong and helped Microsoft report Thursday that net income in its third quarter rose 31 percent to $5.23 billion, or 61 cents a share, from $4 billion, or 45 cents a share, in the quarter a year ago. Revenue climbed 13 percent, to $16.43 billion, from $14.5 billion.

The company’s Office software, where it has no significant competition, grew 21 percent, to $5.25 billion. Office 2010 is the fastest-selling version of Office ever, Microsoft said, with businesses deploying the software at five times the rate of its predecessor.

However, revenue from Microsoft’s entertainment and devices, which includes the Xbox 360 video game console and the innovative Kinect game controller that interprets gestures and voice commands, gained 60 percent, to $1.94 billion. Kinect, a sensor that lets players interact with video games without having to hold a controller, did particularly well, selling 2.4 million units in the quarter. Customers bought 2.7 million Xbox 360s.

Microsoft blamed the economy for the lower revenue from Windows. Consumers are saving their money rather than buying new computers, said Peter Klein, Microsoft’s chief financial officer. Asked in an interview about the impact of tablets on computer sales, he acknowledged that “it’s part of the story.”

“There are a whole host of consumer purchases vying for the consumer wallet,” Mr. Klein said.

Sales of Windows for consumers PCs fell 8 percent in the quarter, Microsoft said. Windows for netbooks, the small laptops that had been big sellers until tablets came along, declined 40 percent, highlighting the rapid shift in computer buying habits.

Revenue from Microsoft’s online properties like the MSN portal and Bing search engine rose 14 percent, to $648 million. The unit lost $726 million in operating income, continuing a pattern of losses.

Two years ago, Microsoft signed an agreement to take over Yahoo’s search business to create a more formidable rival to Google. However, Yahoo’s chief executive, Carol A. Bartz, said last week that the partnership had not yielded the expected financial results for Yahoo and that technical glitches by Microsoft were to blame.

Downbeat reports about personal computer shipments in early 2011 had raised questions about Microsoft’s future dominance. Microsoft has developed an operating system for smartphones, but it is on relatively few phones. It does not have software that makers of tablet computers want. In after-hours trading, Microsoft’s shares lost 1.4 percent. They had ended regular trading at $26.71, up 33 cents, or 1.25 percent.

 

PC Sales Off, Games Buoy Microsoft

While Microsoft reported Thursday that its fiscal third-quarter profits were up 31 percent, revenue from the division that includes the Windows operating system fell 4 percent, to $4.45 billion.

The fall was due in part to an overall decline in PC sales worldwide of about 3.2 percent. Analysts have blamed the earthquake and tsunami in Japan, a big market for computers, for part of that decline.

But the sales of tablet computers, like the iPad, were another major factor and that could become a persistent problem for Microsoft. The category of the tablet computer created by Apple and its iPad is expanding quickly. Apple has sold 19.5 million iPads, and all the big PC makers and cellphone makers are making tablets.

Most of the tablets on the market run either Apple’s operating system software or Google’s Android software. Manufacturers have shown little interest in using Microsoft Windows software to run a tablet.

Canalys, a technology market research firm, noted that when tablet computers are grouped with PCs, Apple becomes the fourth largest PC manufacturer in the world with almost 10 percent of the market. The three biggest PC makers, Hewlett-Packard, Acer and Dell, are all making tablets that don’t use Microsoft software.

One other indication of Microsoft’s changing stature: for the first time, Apple’s quarterly profits exceeded Microsoft’s — $5.99 billion compared with $5.23 billion. Last year, Apple surpassed Microsoft in market capitalization and in revenue.

“It’s a huge testament to Apple,” said Colin Gillis, an analyst with BGC Financial. “There is clearly some disruption in the PCs.” However, Mr. Gillis noted that Microsoft Windows 7 is the fastest-selling operating system in history. He thinks Microsoft will probably make a move into tablets later this year with its expected release of Windows 8. In any case, Mr. Gillis said, “PCs aren’t going to disappear.”

Microsoft also has found itself left behind in software for cellphones. It recently acted to ramp up its presence on mobile phones through an agreement with Nokia, the Finnish handset maker that is troubled, but still the largest makers of cellphones in the world. The two companies are working together on new mobile phones that would use Microsoft’s Windows Phone operating system.

Microsoft has seen declines in its operating software before, as recently as last year’s first fiscal quarter when it fell 4 percent.

To be sure, other parts of the company’s business remain strong and helped Microsoft report Thursday that net income in its third quarter rose 31 percent to $5.23 billion, or 61 cents a share, from $4 billion, or 45 cents a share, in the quarter a year ago. Revenue climbed 13 percent, to $16.43 billion, from $14.5 billion.

The company’s Office software, where it has no significant competition, grew 21 percent, to $5.25 billion. Office 2010 is the fastest-selling version of Office ever, Microsoft said, with businesses deploying the software at five times the rate of its predecessor.

However, revenue from Microsoft’s entertainment and devices, which includes the Xbox 360 video game console and the innovative Kinect game controller that interprets gestures and voice commands, gained 60 percent, to $1.94 billion. Kinect, a sensor that lets players interact with video games without having to hold a controller, did particularly well, selling 2.4 million units in the quarter. Customers bought 2.7 million Xbox 360s.

Microsoft blamed the economy for the lower revenue from Windows. Consumers are saving their money rather than buying new computers, said Peter Klein, Microsoft’s chief financial officer. Asked in an interview about the impact of tablets on computer sales, he acknowledged that “it’s part of the story.”

“There are a whole host of consumer purchases vying for the consumer wallet,” Mr. Klein said.

Sales of Windows for consumers PCs fell 8 percent in the quarter, Microsoft said. Windows for netbooks, the small laptops that had been big sellers until tablets came along, declined 40 percent, highlighting the rapid shift in computer buying habits.

Revenue from Microsoft’s online properties like the MSN portal and Bing search engine rose 14 percent, to $648 million. The unit lost $726 million in operating income, continuing a pattern of losses.

Two years ago, Microsoft signed an agreement to take over Yahoo’s search business to create a more formidable rival to Google. However, Yahoo’s chief executive, Carol A. Bartz, said last week that the partnership had not yielded the expected financial results for Yahoo and that technical glitches by Microsoft were to blame.

Downbeat reports about personal computer shipments in early 2011 had raised questions about Microsoft’s future dominance. Microsoft has developed an operating system for smartphones, but it is on relatively few phones. It does not have software that makers of tablet computers want. In after-hours trading, Microsoft’s shares lost 1.4 percent. They had ended regular trading at $26.71, up 33 cents, or 1.25 percent.

 

A.M.D.’s Profit Bolstered by Sales of Chips for Netbooks

SAN FRANCISCO (Reuters) — The chip maker Advanced Micro Devices topped earnings expectations for the quarter on Thursday and predicted revenue in the current period that was in line with forecasts.

The company said it had strong demand for its recently released chips aimed at netbooks, a niche dominated by its larger rival Intel, but which is also under pressure from increasing tablet sales.

The chief executive of A.M.D., Dirk Meyer, left the company in early January after disagreements with its board about what the company’s strategy in the growing market for tablets and smartphones should be, and he has yet to be replaced.

Net income in the first quarter was $510 million, or 68 cents a share, compared with $257 million, or 35 cents a share, in the same period last year.

Revenue was $1.61 billion, up 2 percent year over year.

The company, based in Sunnyvale, Calif., said it expected second-quarter revenue to be flat or slightly down, compared with the first quarter.

Analysts had expected revenue of $1.61 billion for the first quarter and $1.59 billion for the second quarter.

On the basis of nongenerally accepted accounting principles, A.M.D. said its earnings were 8 cents a share, higher than the 5 cents that analysts on average expected, according to Thomson Reuters.

“What we saw from the Intel results, and what we’re seeing again from A.M.D. today, doing a bit better than expected, is probably a positive sign about the state of the aggregate PC world,” an analyst at Longbow Research, JoAnne Feeney, said.

On Tuesday, Intel posted better-than-expected results, helping reduce fears that the popularity of Apple’s iPad was cutting into PC sales.

But A.M.D. has less exposure than Intel to corporate customers, making it more sensitive to consumers’ whims.

And while any growth for A.M.D. in netbooks would increase its market share, the segment has low margins compared with more robust notebook and desktop PCs.

A.M.D. is also releasing new chips, code-named Llano, aimed at laptops and desktops that will compete with Intel’s recently introduced Sandy Bridge chips. Both offer integrated graphics processing meant to make additional graphics chips unnecessary.

 

A.M.D.’s Profit Bolstered by Sales of Chips for Netbooks

SAN FRANCISCO (Reuters) — The chip maker Advanced Micro Devices topped earnings expectations for the quarter on Thursday and predicted revenue in the current period that was in line with forecasts.

The company said it had strong demand for its recently released chips aimed at netbooks, a niche dominated by its larger rival Intel, but which is also under pressure from increasing tablet sales.

The chief executive of A.M.D., Dirk Meyer, left the company in early January after disagreements with its board about what the company’s strategy in the growing market for tablets and smartphones should be, and he has yet to be replaced.

Net income in the first quarter was $510 million, or 68 cents a share, compared with $257 million, or 35 cents a share, in the same period last year.

Revenue was $1.61 billion, up 2 percent year over year.

The company, based in Sunnyvale, Calif., said it expected second-quarter revenue to be flat or slightly down, compared with the first quarter.

Analysts had expected revenue of $1.61 billion for the first quarter and $1.59 billion for the second quarter.

On the basis of nongenerally accepted accounting principles, A.M.D. said its earnings were 8 cents a share, higher than the 5 cents that analysts on average expected, according to Thomson Reuters.

“What we saw from the Intel results, and what we’re seeing again from A.M.D. today, doing a bit better than expected, is probably a positive sign about the state of the aggregate PC world,” an analyst at Longbow Research, JoAnne Feeney, said.

On Tuesday, Intel posted better-than-expected results, helping reduce fears that the popularity of Apple’s iPad was cutting into PC sales.

But A.M.D. has less exposure than Intel to corporate customers, making it more sensitive to consumers’ whims.

And while any growth for A.M.D. in netbooks would increase its market share, the segment has low margins compared with more robust notebook and desktop PCs.

A.M.D. is also releasing new chips, code-named Llano, aimed at laptops and desktops that will compete with Intel’s recently introduced Sandy Bridge chips. Both offer integrated graphics processing meant to make additional graphics chips unnecessary.

 

IPhone Sales Help Profit and Revenue at Verizon

Verizon Communications posted strong first-quarter growth in wireless subscribers, helped by sales of the Apple iPhone, but the effect on its earnings failed to impress investors.

With subscriber growth barely beating Wall Street estimates, some analysts complained about profit margins and others said revenue growth was lower than they had hoped at Verizon Wireless, the mobile venture of Verizon and the Vodafone Group.

Verizon Wireless posted net additions of 906,000 subscribers, just slightly ahead of expectations from analysts contacted by Reuters, who had predicted more than 888,000 subscribers.

While Verizon Wireless, the top mobile service, added only slightly more subscribers than it did in the fourth quarter, it was well ahead of its archrival, AT&T, which added 62,000 net subscribers in the quarter.

But a crucial point for investors when comparing the two was that AT&T, even though it no longer had exclusive rights to the iPhone, won more new iPhone customers in the quarter than Verizon.

The expectation had been that hordes of customers would flee AT&T when the Verizon iPhone arrived because popular phones typically experience a surge in sales during the quarter when they are introduced.

“It was a stronger new customer driver for AT&T,” Steve Clement, an analyst at Pacific Crest, said.

Verizon, which put the iPhone on store shelves on Feb. 10, said it sold 2.2 million iPhones by the end of the quarter, compared with the 3.6 million iPhone sales at AT&T, which had the phone for the entire quarter.

About 22 percent of Verizon’s iPhone customers switched from rival carriers, but about 23 percent of AT&T’s were also new to that company. This implies that Verizon won fewer than 500,000 new customers through the iPhone, while AT&T added more than 800,000 iPhone customers from other carriers.

In addition, higher sales of advanced devices like the iPhone came at a high cost for Verizon as its profit margin dipped, Michael Nelson, a Mizuho analyst, said.

Its margin was 43.7 percent, compared with the 46 percent it posted a year earlier, based on earnings before interest, taxes, depreciation and amortization.

While the iPhone helped Verizon raise subscriber numbers, its sales were not significantly better than analyst expectations, as some investors had hoped.

“Over all it was a solid quarter, not necessarily a blowout quarter,” Mr. Nelson said.

Verizon earnings rose to $1.44 billion, or 51 cents a share, from $443 million, or 16 cents a share in the same quarter a year ago, when it shouldered hefty one-time charges.

Revenue rose to $26.99 billion, from $26.9 billion in the year-earlier period; the average analyst expectation was $26.86 billion, according to Thomson Reuters.

Shares of Verizon fell 88 cents, or 2.3 percent, to close at $36.91.

 

Intel’s Quarterly Profits Are Lifted by Sales of Chips for High-End Servers

Despite facing one challenge after another in the first quarter, Intel posted strong profits on higher sales across its product line. The results surprised many investors, as well as Intel executives, who had projected a far bleaker quarter after a product recall, consolidation after two acquisitions and the effects of the Japanese earthquake on production.

The first quarter “was a very strong quarter and significantly better than we expected,” Stacy J. Smith, Intel’s chief financial officer, said in an interview on Tuesday.

The company had exceptionally strong sales of chips for high-end server computers that power corporate data centers and the Internet. This market for “cloud computing” is helping Intel weather the slowdown in other areas of the computer market.

“Intel continues to have a very strong position in the higher end of the market,” said Ashok Kumar, an analyst with Rodman & Renshaw. “Their position there is golden.”

Intel appears to have managed to turn a disastrous product introduction into one of its most successful chips. A technical error in a companion chipset to the company’s long-awaited Sandy Bridge processor led the company to quickly issue a recall, fix those chips and then to reissue the product. The problem, Intel executives said, did not hurt Intel’s bottom line.

“Early demand has been outstanding,” said Paul S. Otellini, Intel’s chief executive, in a conference call with analysts.

Quarterly profit rose 29 percent to $3.16 billion, or 56 cents a share, up from a profit of $2.44 billion, or 43 cents a share, in the first quarter last year. Revenue for the quarter was $12.8 billion, up 25 percent from $10.3 billion a year ago. Revenue in Intel’s data center group grew 32 percent.

The report beat Wall Street’s forecasts handily. Analysts surveyed by Thomson Reuters had forecast revenue of $11.6 billion and earnings of 46 cents a share for the quarter. Intel’s profit margin was 61 percent for the quarter, in line with expectations.

Intel forecast second-quarter revenue of $12.5 billion to $13.3 billion.

The company announced the results after the close of the markets on Tuesday. Shares of Intel rose almost 5 percent in after-hours trading, after closing up 24 cents at $19.86.

With the PC industry facing mounting pressure from low-price tablet computers and smartphones, Intel executives said that the company planned to pursue both those areas. “We remain committed to success in the smartphone market,” Mr. Otellini said.

Kevin Cassidy, an analyst with Stifel Nicolaus, said the strong results showed that smaller devices had not hurt PC demand as much as some might have thought. “It shows there’s still a need for PCs in the world,” he said.

During the quarter, Intel closed on the acquisitions of Infineon Wireless Solutions and McAfee. The combination of both acquisitions contributed revenue of $496 million. Mr. Otellini told analysts that the earthquake and tsunami in Japan had closed its offices in the area but that Intel’s supply chain was not seriously affected.

Intel’s results come amid concerns about the overall health of the PC market. Just last week, the research company IDC released a report saying that the global PC market declined 3.2 percent during the first quarter, the first major contraction since the economic recession began. The company originally predicted quarterly growth of 1.5 percent over last year.

In explaining its gloomier view, the report pointed to rising fuel and commodity prices, combined with supply constraints caused by the recent earthquake and tsunami in Japan.

The Intel executives assured analysts that the company was not experiencing such a contraction, but rather the opposite, particularly in emerging markets. However, demand in the United States market remained soft, the executives said.

In the fourth quarter, Mr. Otellini said that he expected Intel’s revenue to grow about 10 percent for the full year. But in January, company executives said growth would probably be in the mid- to high teens. On Tuesday, Mr. Otellini adjusted that forecast yet again, projecting revenue growth of more than 20 percent.

“All of our product segments are growing,” Mr. Otellini said. “Over all, we are beginning 2011 with great momentum.”

 

Nintendo 3DS clocks up 400,000 US sales in opening week, nearly matches month-long total for DS

。 By Vlad Savov posted Apr 15th 2011 4:15AM Now we're talking. After Nintendo slyly told us that the 3DS set a day-one US sales record for its handheld division, it has now been more forthright and actually disclosed some cold hard numbers. 400,000 3DS units were shifted in the month of March, says Nintendo of America chief Reggie Fils-Aime, which amounts to just one working week's worth of sales when you consider the portable console launched on March 27th. That was still enough time for it to threaten the DS' overall March tally of 460,000, however, and extrapolated over a full 30 days would total a whopping 2.4 million transactions. Of course, sales rarely sustain such a roaring pace after launch, but Reggie foresees good things for the 3DS with a marquee Legend of Zelda game, the launch of the E-Shop, and Netflix integration all coming over the summer. So the future's bright, we just wish it didn't have to be turquoise.

 

Virtual sales aid poorer nations

Flying mounts and other items can be expensive in World of Warcraft and other games Up to 100,000 people in China and Vietnam are playing online games to gather gold and other items for sale to Western players, a report suggests.

The global market for such virtual game goods is worth at least $3bn (￡1.8bn) the World Bank study estimates.

About 75% of that comes from so-called "gold farmers" who stockpile game currencies to sell on later.

Encouraging these in-game services could aid development in many poorer countries, said the report.

Virtual farms

Popular online games such as Lineage and World of Warcraft revolve around the gear that players gather to outfit their characters. Better equipment makes characters more powerful.

Some of that equipment can be found on monsters, as well as being bought from other players who have found or made it.

Increasingly, the report said, Western players who have limited time for gaming are buying game cash, gear and high level characters from people in China and Vietnam that are paid to play as a job.

About a quarter of all players of massively mutiplayer online games spend real money on virtual items, suggests the report. Some pay significant sums, with one player splashing out almost 5,700 euros (￡5,000) on a single account.

This has led to some of the biggest suppliers becoming substantial businesses, it said, despite the efforts of many game studios to snuff out a trade that they believe undermines the game.

The largest eight Chinese suppliers of game gold have an annual turnover of about $10m (￡6.1m) each. A further 50-60 firms have annual revenues of about $1m (￡600,000).

Billion dollar business

The most up to date figures for global virtual sales suggests that the market was worth $3bn in 2009.

About 30% of the virtual currency being traded is "hand made" by human players, said the report; a further 50% comes from "bot farms" that automatically play the game and 20% is stolen from hacked accounts.

More cash from game sales returns to producers than from cash crops such as coffee

The supply chain getting the virtual goods to players was very mature, said the report's authors Dr Vili Lehdonvirta of the University of Tokyo and Dr Mirko Ernkvist from the University of Gothenburg.

They gave the example of a 100 dollar payment made via Paypal for game gold. After processing fees, the cash would be split between a large retailer ($30), a smaller farmer ($45) and the individual ($23) who had gathered the gold.

Coffee comparison

The high proportion of money from such sales that reaches those in the country where the work was done might mean that it could aid development in many nations, said the report which was co-commissioned by the World Bank and development organisation InfoDev.

It contrasted this situation with that of coffee which was worth $70bn annually in 2009 but only $5.5bn of that reached nations that farm coffee beans.

"This suggests that the virtual economy can have a significant impact on local economies despite its modest size," it said.

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Watch: Nintendo 3DS Sales

在 ServiceModel 客户端配置部分中，找不到引用协定“TranslatorService.LanguageService”的默认终结点元素。这可能是因为未找到应用程序的配置文件，或者是因为客户端元素中找不到与此协定匹配的终结点元素。
在 ServiceModel 客户端配置部分中，找不到引用协定“TranslatorService.LanguageService”的默认终结点元素。这可能是因为未找到应用程序的配置文件，或者是因为客户端元素中找不到与此协定匹配的终结点元素。

Bronx Zoo's Lost Snake Slithers, Hisses and Tweets

New York's lost Egyptian cobra is one of Twitter's most popular new members.

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