Friday, May 13, 2011

Sina (SINA) Misses EPS Targets Slightly as it Invests in Weibo, Guides Down Slightly for Q2 Revenue

Sina (SINA) reported a miss in earnings in after hours by 2 cents, but the stock is largely unaffected.  At this point, despite not so hot revenue growth (+17% year over year), the company is being valued for its "Twitter of China" (Weibo) and hence investors are overlooking the near term, for the potential unlocking of value in an IPO in the coming years.

Technically the stock has come in to the 50 day moving average, after a wild run in which it essentially doubled in value in 6 weeks.  This gives new investors a line in the sand to attempt a long position (of course if the 50 day moving average is broken, there should be far more downside) - but valuation remains "pricey".  Of course the value of 140M (and growing) Chinese "twitter users" generating almost no current revenue is all in the eyes of the beholder.  Even the American Twitter, with a far more rich user base, has had a slow beginning in monetizing its users.

Full report here.

Via Reuters

  • China's Sina Corp reported a 39 percent drop in first-quarter net profit as it spent more on Weibo, its highly popular Twitter-like service, to lure new users. Sina, which also operates China's top Internet portal, said first-quarter adjusted operating expenses ballooned 41 percent to $39.1 million, mainly due to higher personnel-related costs and increased marketing expenses for Weibo.
  • Sina reported first-quarter net profit of $15 million, or 23 cents a share, compared with $24.4 million, or 37 cents a share, last year.   Excluding items, it earned 25 cents a share, missing the average forecast of earnings of 26 cents a share.
  • The company said revenue from mobile value-added services, which can include things like ringtone downloads, fell 13 percent to $21.3 million due mainly to rules implemented by China Mobile in late 2009 and early 2010. 
  • Advertising revenue rose 33 percent to $72.3 million in the first quarter. 
  • Revenue, excluding Sina's carved-out real estate advertising business, rose 19 percent to $95.5 million, beating analysts' expectations of $95.4 million. 
  • Sina said it plans to significantly increase its investment in Weibo, which boasts of more than 140 million registered users. 
  • For the second-quarter, Sina expects adjusted revenue of $112-$115 million, versus analysts' expectations of $115.3 million.
  • Sina said in April it had no immediate plans to list Weibo and that it would diversify its operations into e-commerce and online games next year.   
  No position

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