Shanda Stock Falls

Could loose money have clouded the vision of the company? Shanda has announced that they are to move to TV, movies and print. Just a slight change into plans or what would you say?

So, instead of having clear-cut game operator in their hands, they have to worry about budding media company, which has its arms around the whole China market. This is very bad news for the investors as they put their money into a game operator. Well, those investors are clearly disappointed. Other investors, who put their money on growth company with limited risk are disappointed, because assessing the market risk just got harder.

The question is, why Shanda would like to do this kind of a stunt? I can't answer to that question, I can only guess. My guess is that Shanda feels that its financial situation is strong. Game operator business has many competitors and more are coming, they could be trying to corner a small segment that will keep them ahead the competition, since as previously noted, Shanda has already done lot of work, covering the game distribution and content issues. Third reason could be traditional one. Chinese enterprises tend to spread out to different fields according the latest whims of the owner. In time, these vast empires get chopped into pieces, but that is another story.