UPDATE 2-Global Sources profit trails Street; Q3 view weak

(Recasts; adds analyst comments, background)

By Bijoy Anandoth Koyitty

BANGALORE, Aug 14 (Reuters) - China-related media services provider Global Sources Ltd's (GSOL.O) quarterly profit trailed market estimates, and its third-quarter outlook was hit as its expansion plans are expected to push up costs, sending its shares down more than 15 percent.

At least two analysts indicated Global Sources intends to invest aggressively in the booming market for online services in China, as the company's rivals also look to grab a bigger share of the market.

Late last month, the holding company of China's biggest e-commerce firm and Global Sources rival Alibaba.com (1688.HK), Alibaba Group, launched its free online advertising service Alimama.com.

Total online advertisement in China is expected to reach 12.2 billion yuan ($1.78 billion) in 2008, growing 58.5 percent from last year, according to the Data Center of the China Internet.

Global Sources plans to go after clients of Alibaba.com and China.com (8006.HK) with its aggressive push into the online services space, Roth Capital Partners analyst John Ma said by phone.

A major chunk of the fresh investments will go into its Chinese and English Business to Business (B2B) websites, Ma said.

The majority of Global Sources' online revenue comes from the English B2B website, targeted at exporters. The Chinese website caters to local buyers.

The investments will be used to increase the workforce supporting the English website as well as to strengthen the trading platform of the Chinese website, Ma said.

For the third quarter, Global Sources forecast earnings of 2 cents to 3 cents a share on revenue of $38.5 million to $39 million.

Analysts on average were expecting earnings of 14 cents a share on revenue of $40.8 million, according to Reuters Estimates.

The company posted second-quarter earnings of $8.4 million, or 18 cents a share, compared with $4.2 million, or 9 cents a share, a year earlier.

Revenue rose 21 percent to $63.7 million, helped by a 30 percent jump in online services revenue to $24.1 million.

Analysts on average were expecting earnings of 19 cents a share on revenue of $62.7 million.

Shares of Global Sources fell to a low of $12.81, before recovering some losses to trade down $2.17 at $12.98 Thursday afternoon on Nasdaq. ($1=6.860 Yuan) (Editing by Pratish Narayanan)