South Korean online giant NHN (naver.com & hangame.com) released fiscal 2nd qtr. earnings report on the 1st. Thanks to its gross sales figure of $1.33 billion, the NHN bow target its annual sales to reach up to $5.4 Billion (readjusted 6%).

The major Korean portal NHN’s 2nd quarter sales and earnings break down as follows. From total sales of $1.329 billion, search engine took in $681 million (51%) to as the main profit generator and game site racked in $285 million (22%), banner ads with $246 million (19%), EC (E-Commerce) sales of $91 mil (7%) and rest areas combined for $24 mil (1%). In addition, business profit was $506 million with net profit of $324 million.

This latest figures compared to same time last year shows 59.9% growth in sales, 65.1% business profit and the numbers increased 9.1% since last quarter with 8.6% net profit result.

Search engine ads on the rebound, resigning with Overture unclear
Specially, the concerns from the ads run with search engine service in previous quarter (mere 1% increase) quickly dissipated with the 2nd qtr. results (16.1% increases). Banner Ads also rose to 20.9% compared to the previous qtr. with sales figure of $246 million. NHN’s CFO Hong Huh said, “The growth rate for search engine category declined slightly comparing to banner ads or EC but overall annual sales target for the search engine should easily be met with more than 90% increases over last year.”

Besides the search engine ads, the banner ads showed high increases. Credit is given to its rebuffed corporate image and higher ad running fees. The high effects of online banner ad success is promoting added increased interests from major corporations and HNN rates the banner ads to do better in future too.

Further, NHN with upcoming 3rd qtr contracts with its search ad managing Overture is reviewing other alternative strategies with the resigning. NHN’s domestic business manager Hwee-Young Choi said, “Under contracts, Naver has shown many possibilities throughout past two years. For the future, NHN will continue to monitor the situation to our advantage, the re-negotiations for the contract are still in the talks, and definite decisions have not reached yet.”

Will concentrate strengthening game sector and overseas business opportunities
Game category sales ($285 mil) declined 8.2% in comparison to previous quarter much of it due to untimely World Cop Soccer event that took away lot of its gamers. To cope with this NHN will upgrade web-board game and provide ‘Dungeon & Fighter’ channeling service and same time upgrade game line up with games like ‘Skid rush’ and ‘Art soccer’ in hopes to turn around the online game market.

NHN’s Choi also said, “with external growth helping the outstanding results of 2nd qtr will well continue into last half of the year with the major services. With our effort centered on main service, we expect for the same result in second half of this year. With success of our domestic market we are committing to successful opening of both US’ game portal (iiji.com) and search engine in Japanese market.”

NHN has said they are targeting annual sales of $5.4 Billion (6% adjustment) with net profit margin to $2 Billion (increased 8%) for the fiscal year.

In the meanwhile, recent website downtime incident with IBM has not affected its relationship at all and it plans to continue the partnership. To compete on global market and gain networks, NHN cannot afford to depart with IBM it seems. NHN’s CFO said, “The incident from last March was found to be with its domain manager ‘gabia.com’ and not with IBM.”