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Revenue grew 24 percent to 20.978 billion yuan
($3.44 billion), though this was still slightly above forecasts
of 20.5 billion yuan, on the back of strong sales from online
gaming on PCs and smartphones linked to social networks like hit
app WeChat, which now has 500 million monthly active users
globally.
Net income for the quarter ending December rose 51 percent to
5.95 billion yuan ($955 million), below estimates of 6.26
billion yuan, according to a Thomson Reuters SmartEstimate poll
of 11 analysts.
Online gaming sales accounted for over half of Tencent's total
revenues.
Tencent has long depended on online gaming to generate revenue,
but the company which competes on several fronts with Alibaba
Group Holding Ltd and Baidu Inc also wants to emulate Facebook
Inc's success in making money from mobile advertising as well as
its online video platform.
The company also faces entrenched competition overseas to its
WeChat app from rivals like WhatsApp, KakaoTalk and Line.
"(The) traditional way of advertising, investing money in order
to attract users overseas, is coming to an end," Martin Lau,
Tencent's president, told reporters at a media briefing in Hong
Kong on Wednesday following the earnings results.
"The effectiveness is actually not as good, and to some extent
in a lot of overseas markets, their mobile chat apps (are)
already pretty dominant," he said. "From a marketing investment
purpose, we are going back to China."
Tencent's expansion is coming at a price in China too, where it
needs to draw heavy user traffic to attract advertisers.
Cost of revenues in the fourth quarter rose 2 percent
year-on-year, largely due to a 59 percent jump in the cost of
Tencent's social network and gaming business partly due to
sharing and content costs, the company said.
Tencent said in 2015 it would focus on four areas. These include
enabling offline business transactions with their mobile
internet services, advertising, and building up its online
payment system. Developing its digital content business is
another goal, particularly for film, television, sports, music
and literature.
(Reporting by Yimou Lee in HONG KONG and Paul Carsten in
BEIJING; Editing by Miral Fahmy/Ruth Pitchford)
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