NetEase's 20 per cent drop in quarterly revenue for mobile and e-commerce operations disappointed investors who sent the stock plunging 16 per cent on the Nasdaq Stock Market in the United States. The Beijing-based firm saw net profit of US$10.2 million for the three months to September, against $9.2 million in the previous quarter. Rivals Sina and Sohu recorded quarterly figures of $11.7 million and $2.7 million, respectively. Turnover rose 7.4 per cent from the second quarter to US$17.7 million. However, sales from short messaging and e-commerce services dropped 20.7 per cent to $7.6 million. After the announcement, NetEase's share price tumbled to $54.90 in after-hours trading from $65.85 at the end of the regular trading session. The stock has risen more than 1,400 per cent this year. Acting chief executive Ted Sun blamed the end of affiliated marketing programmes and a clampdown by the country's two key mobile operators on offering fee-based products for the drop in mobile revenue. 'Unlike Sina and Sohu which provide content, we are more focused on services. That's why we are more affected,' Mr Sun said. Sina and Sohu recently reported jumps of 24.1 and 6.2 per cent respectively in non-advertising revenue - mainly from SMS and downloads - suggesting NetEase was losing share in a lucrative market of 220 million mobile-phone users. 'The impact is already there in the past quarter. There won't be any more negative influence going forward,' Mr Sun said, adding NetEase would not switch its focus to follow rivals. 'Ring-tones and logo downloads are only commoditised products. We'd rather develop something unique.' To attract users, NetEase offered free services including instant messaging between personal computers and handsets. Mr Sun said the company would start charging for the service from next year. This means e-commerce sales are unlikely to pick up in this quarter. 'It is an investment for the long term,' he said. 'These services will be a significant growth driver in the future.' The fall in mobile revenue was offset by robust earnings in online advertising and gaming services. Advertising sales reached $3.3 million, a 30 per cent rise from the previous quarter. Online gaming revenue climbed 55.9 per cent to $6.8 million from the preceding quarter, thanks to the launch of self-developed game Westward Journey Online Version 2, which attracted 1.2 million paying users last month and brought in $6.5 million during the quarter. The firm will launch its second self-developed game at the end of the year.