Tencent to slow investments as costs lower earnings

Tencent Holdings (700.HKG), China’s largest internet company by sales, will decrease the pace of its investments due to lower earnings that resulted from several dozen equity investments in 2011, Bloomberg reported. President Martin Lau said the company will still complete “at least ten” deals this year. Tencent posted its lowest full-year profit growth since 2005 after the acquisition of Riot Games, developer of the blockbuster game “League of Legends,” increased general and administrative expenses by 86%. Fourth-quarter profit stayed in line with analyst predictions of around RMB2.54 billion (US$401 million), up 15%. Last year’s 27% profit increase was far lower than the 56% posted in 2010. The company’s stock gained 28% in 2011, outperforming those of rival’s Baidu (BIDU.NASDAQ) and NetEase (NTES.NASDAQ). CEO Pony Ma noted that Tencent will be cautiously controlling the pace of its investments, though focus will be on long-term rather “short-term profit.”