Chinese Internet firm Shanda Interactive said on Wednesday its second-quarter net profit fell 95 percent on increased costs.

The firm, which has an online gaming unit, Shanda Games , said its second quarter profit fell to 8.8 million yuan ($1.38 million) from 169.9 million yuan from a year ago.

Operating expenses rose to 858.6 million yuan in the quarter, up 44 percent while cost of services also rose 44 percent in the quarter.

Revenue rose 26 percent to 1.71 billion yuan.

We believe our strategic initiatives and investments in new products and services will help us better capture the tremendous opportunities in the fast-evolving internet industry, said Chen Tianqiao, Shanda's chief executive, in a statement.

The firm's plan to list its e-book subsidiary, Cloudary Corp, was stalled in July due to unfavourable market conditions. ($1 = 6.381 Chinese Yuan)

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