Highlighted stocks include Shanda Interactive Entertainment Limited ( Revenue soared 42.7% to $137.3 million from the third quarter of 2007. Revenue also jumped 11.8% from the second quarter of 2008, higher than the company's previous guidance of quarter-over-quarter growth between 6% to 9%. Online gaming was hot, increasing 40.7% year-over-year.

Net income leaped 41.1% to $49.4 million compared to the year ago period. Earnings per share for the ADS shares were 68 cents compared to analysts' estimates of 55 cents.

Estimates have been rising in the last week. Full year 2008 consensus estimates

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Highlighted stocks include Baidu.com (BIDU), Sohu.com (SOHU), United Online (UNTD) and Yahoo (YHOO).

Key Points: Despite the resignation of Jerry Yang, forecasts are trending downward for Yahoo Other Internet companies are doing well, however, such as Sohu.com and United Online

Without Merger, Few Positive Catalysts For Yahoo Over The Short-Term

Yesterday, Yahoo (YHOO) announced the resignation of Jerry Yang from the CEO post. The announcement was met with cheer as shares rose by nearly a buck to $11.55.

Playing a role in the upward move were speculators hoping for renewed merger talks with Microsoft (MSFT). The problem is that there is no guarantee that a merger will occur.

Without a merger, there are few catalysts for the stock. Naming a well-respected outsider as a CEO might help, but the company is struggling with both tough competition and a weak economy.

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Dolby Laboratories (DLB), based in San Francisco, is a recognized innovator in audio entertainment. The company was founded in London, England by Ray Dolby in 1965 after Dolby received his Ph.D. in physics from Cambridge University. Though Dolby Laboratories was a U.S. corporation at the time of its inception (Dolby started his career in high school as a part-time employee for Ampex Corporation in Redwood City, California), the company moved its headquarters to San Francisco in 1976.

Dolby, at the Austin Game Developer’s Conference, recently announced the availability of software development kits for Dolby® Axon, a voice communication platform designed to deliver a 3-D voice experience in online games and virtual worlds that is clearer, more realistic, and more immersing.

Axon includes such features as 3-D voice complete with surround panning and distance attenuation; an occlusion engine that dynamically responds to game geometry, enabling gamers to experience voice

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NetEase.com, Inc. (NTES) is one of the leading providers of online gaming, advertising, web-based communication services, and a variety of interactive content in China.

NetEase is currently trading at 16.8x estimated 2008 EPADR of $1.56, a discount to the industry. Rolling our valuation to fiscal 2009 EPADR estimate of $1.74, the company is trading at 15.1x, which is far below the industry average. NetEase faces intense competition in the gaming and advertising market. Delayed product launches and growing operating expenses have hurt profitability.

NetEase appears to have turned the corner, posting better-than-expected revenue and earnings results in the first half of 2008. The company’s solid execution in its online games and advertising business has helped NTES grow its top and bottom line. We believe that China's online gaming and advertising industry is in the midst of unparalleled growth and NetEase is well positioned to benefit from this trend.

Although

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NetEase.com’s (NTES) revenue and earnings for the second quarter exceeded market expectations due to strong growth from its online games and advertising business and business tax refund.

We think NetEase’s results demonstrate that it has the ability and experience to expand the life cycle of its online games despite the fierce competition in the Chinese online gaming market. However, we are concerned that NetEase’s current games have gotten long in the tooth, and new games may not be as successful as its current popular games. We need more time to confirm whether its growth momentum in the fourth quarter is sustainable in the future. Therefore, we are maintaining our Hold rating on NetEase.

The factors in the company’s favor are online gaming and advertising revenues. The potential opportunity for online usage in China is huge, with 253 million internet users. This means only 19% of its 1.3 billion citizens use

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