Shanda Games Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: For the second time in two months, Shanda Interactive's (NAS: SNDA) gaming unit is rallying. Shares of Shanda Games (NAS: GAME) rose as much as 12% after the company announced plans to pay out $285 million in special dividends to domestic and foreign investors.

So what: Holders of class A and B shares will each receive $0.51 per stub held. Holders of American depositary shares will receive $1.02 per ADS held. The payment amounts to a massive 25% yield as of Friday's close.

Now what: Management justified the payout by pointing to $584 million in net available cash and investments and $275 million in operating cash flow generated last year. Do you believe the special dividend is a smart move? Would you buy shares of Shanda Games at current prices? Please weigh in using the comments box below.

Interested in more information about Shanda Games? Add it to your watchlist byclicking here.

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