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Giant Interactive (GA) is taking a giant hit this morning, after Roth Capital’s Adam Krejcik downgraded the China-based online multi-player game company to Hold from Buy.

Last night, Giant posted Q2 results in line with Street expectations, with revenue of $73.6 million and profits of 20 cents a share GAAP, 21 cents non-GAAP. Average revenue per user for its online games fell 3.2% from the year ago quarter, and 12.1% from Q1. The drop in part reflects the impact of the Sichuan earthquake earlier in the year.

The company did not provide third quarter guidance.

• Durable Orders for July - Street expects 0.0%, compared to 0.8% in June

• Crude Inventories for the week of 8/23 - last week's reading came in at 9.39M

Giant Interactive (GA), a Shanhait-based online game company, said it plans to buyback up to $150 million of its outstanding American Depositary Shares. The company has a market cap of $2.3 billion. In a statement, CEO Yuzhu Shi said that “current ADS price levels do not reflect our current potential value.”

After hours, GA is up 37 cents, or 3.8%, to $10.

Today (July 31), all major Chinese internet media outlets are reporting that Giant Interactive (GA) will likely pay half a billion dollars to buy Shanghai-based online game company Nineyou International Limited (9you). Rumors indicate negotiations have entered the 'detail' phase.

GA and 9you both deny these reports. 9you published a formal announcement that it has no plans whatsoever to merge with another company. GA closed at $9.00 Wednesday, down 10%, while the Dow Jones Industrial Average gained 1.63% and the NASDAQ rose 0.44%. $9.00$ is the all-time closing low for GA.