21Vianet Group Shares Plummet 14% On Weak Outlook, But Q3 Results Top View

(RTTNews) - Shares of 21Vianet Group, Inc. (VNET) plunged nearly 14 percent in extended trading on Tuesday after the Chinese integrated Internet infrastructure services company provided revenue forecast for the fourth quarter and full-year 2014, below Street view.

However, earnings per ADS and quarterly net revenues topped analysts' expectations. The company also reported a profit for the quarter compared to a loss last year, reflecting improved gross margins and strong double-digit revenue growth.

"We are pleased to have continued our solid growth momentum during the third quarter. This growth was driven by the increasing strength in our cloud and mobile verticals as well as by contributions from recently completed strategic acquisition," Founder, Chairman and CEO Josh Chen said in a statement.

Beijing-based largest carrier-neutral Internet data center services provider in China, reported net income of RMB 39.60 million or $6.45 million for the third quarter, compared to a net loss of RMB 13.21 million in the prior-year quarter.

Earnings per American Depositary Share or ADS, was RMB 0.54 or $0.09, compared to earnings per ADS of RMB 0.24 last year. Each ADS represents six ordinary shares.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of RMB 0.50 per share for the quarter. Analysts' estimates typically exclude special items.

Excluding items, adjusted net income for the quarter was RMB 17.73 million or $2.89 million, compared to RMB 29.18 million in the year-ago quarter. Earnings per ADS were RMB 0.24 or $0.04, compared to RMB 0.48 a year ago.

Total net revenues for the quarter surged 51.5 percent to RMB 778.53 million or $126.84 million from RMB 514.02 million in the same quarter last year, and topped seven Wall Street analysts' consensus estimate of RMB 774.35 million.

The company attributed the revenue growth to the strong demand for core internet data center (IDC) business, contributions from acquisitions, as well as rapidly growing content delivery network (CDN) and cloud businesses.

Net revenues from hosting and related services surged 52.0 percent to RMB 513.21 million or $83.61 million, primarily due to an increase in the total number of cabinets under management, an increase in demand for CDN services as well as the contributions from a recently completed acquisition.

Net revenues from managed network services also surged 50.4 percent to RMB 265.31 million or $43.23 million, primarily due to contributions from acquisitions.

Gross margin for the quarter improved 370 basis points to 29.7 percent from last year's 26.0 percent, primarily due to higher margin revenue contributions from acquisitions and Microsoft cloud services.

The company noted that it expanded data center portfolio by adding 1,200 cabinets, increasing the total number of cabinets by 36 percent to 18,144 from last year. The company also made solid progress in its cloud business, as supported by the launch of its IBM private cloud and Microsoft WebDirect payment services.

Looking ahead to the fourth quarter, the company expects net revenues between RMB 812 million and RMB 848 million. Street is currently looking for revenues of RMB 901.06 billion for the quarter.

For fiscal 2014, the company now projects net revenues in the range of RMB 2.84 billion to RMB2.87 billion. Street is currently looking for full-year 2014 revenues of RMB 2.98 billion.

"Looking forward, we remain committed to building upon our robust financial and operating performance and exploring new strategic opportunities that strengthen our foundation in China's data center and cloud services markets," CFO Shang-Wen Hsiao added.

VNET closed Tuesday's regular trading session at $20.76, up $0.39 or 1.91% on a volume of 3.70 million shares. However, the stock plummeted $2.86 or $13.78% in after-hours trading.