Malware Attacks Don’t Keep Tencent From Generating More China Revenue

Tencent Holdings Limited, one of China’s top Internet firms, announced its unaudited consolidated results for the third quarter ended September 30, 2010.

Ma Huateng, chairman and CEO of Tencent, stated, “During the third quarter of 2010, we registered solid growth in our operating and financial results. The recent malware incident has once again highlighted the importance of enhancing our security technology and infrastructure, especially when our large user can become attractive targets of malicious attacks. We will significantly increase our investments in security technology and infrastructure in order to better protect our users in the face of increasing security threats in the Internet industry in China.”

Tencent previously announced that it will shut down its instant messaging service QQ on computers that installed the anti-virus software run by Qihoo 360, marking the escalation of the war between the two software giants in China.

Tencent said in a statement popping out on screens of QQ users in recent weeks that 360 Safe recently launched a new service, which allegedly hijacks QQ’s security module and affects the normal functioning of QQ. With 360 Safe installed, Tencent will not be able to protect the accounts of users, the company states. Therefore, to avoid the computer desktops of users being turned into a battlefield, it has made this “hard” decision.

Even in the face of attacks on Tencent’s services, total revenues for the instant messaging and online game services firm were USD780.0 million, an increase of 11.9% over the second quarter of 2010 and an increase of 55.1% over the third quarter of 2009.

Revenues from Internet value-added services were USD616.2 million, an increase of 15.3% quarter-on-quarter or an increase of 57.4% year-on-year. Revenues from mobile and telecommunications value-added services were USD103.7 million, an increase of 3.1% quarter-on-quarter or an increase of 55.8% year-on-year. Revenues from online advertising were USD57.1 million, a decrease of 3.8% quarter-on-quarter or an increase of 30.3% year-on-year.

Gross profit was USD529.8 million, an increase of 11.4% quarter-on-quarter or an increase of 51.4% year-on-year. Gross margin decreased to 67.9% from 68.2% last quarter.

The company also reported that active instant messaging user accounts on its QQ system increased 3.9% quarter-on-quarter to 636.6 million.