* Says doesn't expect significant increase in ad spend next
* Q3 net loss $5.10/share vs profit 48 cents/share year ago
* Q3 adj EPS $0.26 vs est $0.23
* Q3 revenue $130.3 mln vs est $125 mln
* Sees Q4 revenue $128-$131 mln vs est $128.1 mln
By Melanie Lee
Nov 9 Sina Corp , the operator of
China's largest Internet portal, swung to a third-quarter loss
due to hefty writedowns on investments in two online businesses,
and said it does not expect a significant increase in
advertising spending next year.
China's online advertising market grew 54.9 percent in the
third quarter to 13.7 billion yuan ($2.2 billion) with Sina
ranking fourth in the overall market behind Google China, Taobao
and Baidu , according to Beijing-based consultancy
On an earnings call on Wednesday, Sina's management gave a
cautious outlook on the advertising market for next year as
China's economic growth is expected to cool. Advertising trends
are largely tied to macro-economic conditions.
"Overall, the sentiment is good but not great based on our
assessment...There may be some increase (in advertising
spending) but not significant," Sina's Chief Executive Charles
Sina booked non-cash impairment charges -- essentially
write-offs of intangible assets -- of $350.1 million in the
third quarter due to writedowns on investments in China Real
Estate Information Corp (CRIC) and Mecox Lane Ltd
Shares in loss-making Mecox, an online retailer in which
Sina bought a stake in March, have fallen 77.7 percent so far
this year, while shares in CRIC, an Internet real estate
information and consultancy firm, have fallen around 45 percent.
Excluding one-off items, Sina posted an adjusted profit that
beat market expectations helped by strong growth in advertising
revenue and user additions on its Weibo platform.
"On the impairment charges, there's really nothing you can
do. They've made some bad investments. Mecox Lane was a bad
investment for them," said Hong Kong-based Paul Wuh, head of
Telecoms and Internet research at Samsung Securities.
Sina shares were down nearly 4 percent in extended trade
after closing at $86.94 on Tuesday. They have risen 13 percent
this year, compared with a 2 percent fall for the Nasdaq index
For the fourth quarter, Sina expects revenue of $128-$131
million. Analysts on average expect revenue of $128.1 million,
according to Thomson Reuters I/B/E/S.
For the third quarter, Sina posted a loss of $336.3 million,
or $5.10 a share, compared with a profit of $31.3 million, or 48
cents a share, a year ago.
The last time it posted a quarterly loss was in the fourth
quarter of 2010.
Excluding one-off items, it earned 26 cents a share, beating
the average forecast for earnings of 23 cents a share.
Revenue, excluding Sina's separate real-estate advertising
business, rose 20 percent to $130.3 million, beating its
forecast of $123-$126 million.
Advertising revenue rose 25 percent to $101 million, while
non-advertising revenue grew 7 percent.
Sina rolled out specialised Weibo accounts for government
officials and a functionality that allows businesses to set up
accounts on the platform in the quarter.
Analysts said doubts lingered over when and how the company
would monetise its Twitter-like Weibo platform.
Chao said the focus on Weibo is not monetisation but
continuing to enhance user experience.
The firm is testing and developing an advertising system for
Weibo to be rolled out in the second quarter next year and will
continue to enhance its micro-payment platform, he said.
"Our focus now turns to adding more social networking
features to Weibo to increase user stickiness," Chao said in a
However, not all analysts agree on the monetisation
potential of the user base.
"I'm still cautious for the potential of Weibo right now.
This is a social media platform; Twitter is a social media
platform that has had problems monetising its platform, that's
one of the biggest concerns I have," Samsung Securities' Wuh
said. Wuh has a "sell" rating on Sina.
Sina has also faced increasing regulatory scrutiny, with
government officials putting pressure on Sina to better police
Weibo, which has become a powerful medium to vent
frustration against government policies.
Chao said the firm was looking at ways to implement a
"better management system" for the platform to counter rumours
and "negative sentiment."
"There is no question that Weibo is becoming very
influential in China and has become very important in news
reporting and public opinion," Chao said, adding that the
importance of Weibo has increased government scrutiny.