) is scheduled to announce its fiscal first quarter 2012 results
after market closes on Tuesday, May 15, 2012. In the run up to the
earnings release, we do not notice any significant changes in the
analyst estimates for the quarter. However, we note that SINA has
failed to outperform the Zacks Consensus Estimates on three
occasions out of the last four quarters.
Prior Quarter Highlights
SINA's fourth-quarter bottom line not only missed the Zacks
Consensus Estimate but plummeted 68.7% on a year-over-year basis
primarily due to margin contractions. However, the top line
increased 22.5% from the comparable prior-year quarter, primarily
driven by higher advertising revenue.
For further details please read:
SINA Misses Estimates in 4Q
Current Quarter Expectations
Though SINA did not provide any earnings estimate, the Zacks
Consensus Estimate projects a loss of 27 cents per share for the
first quarter. SINA expects non-GAAP net revenue to be between
$101.0 million and $104.0 million for the first quarter of 2012.
The Zacks Consensus Revenue Estimate is pegged at $107.0
Moreover, the company expects non-GAAP advertising revenue in
the range of $78.0 million to $80.0 million, while non-GAAP
non-advertising revenue is projected in the range of $23.0 million
to $24.0 million.
Estimates Trend Revision
Over the past 30 days, out of the seven analysts covering the
stock, only one analyst revised the quarterly estimates downward
and no upward revision was witnessed. The Zacks Consensus Estimate
for the first quarter of 2012 worsened from a loss of 25 cents to
29 cents per share.
Analysts covering the stock believe that weaker-than-expected
advertising revenues in the first quarter will hurt the top line of
the company. Moreover, SINA has been under pressure from the
Chinese government to impose restrictions on user content.
Of course, Weibo's growing popularity in the micro-blog market
is a positive catalyst for the company. In 2011, the micro-blog
market expanded 296% year over year and accumulated 250 million
users. Incidentally, Weibo has 140 million active users.
We believe that SINA remains a premier company owing to its
strong product pipeline, continuous investment in product
development and marketing and a robust user base for its E-Commerce
and Weibo offerings.
However, earnings growth may disappoint in the forthcoming
quarters due to higher operating costs related to its social
networking platform, Weibo. We believe that any weakness in
advertising revenue will impact SINA's ability to counter
increasing operating expenses, which in turn will hurt its bottom
line going forward.
We believe that increasing competition in the domestic market
), Tencent and Alibaba will remain the primary headwinds over the
long term. Further, we believe that the increasing regulations from
the Chinese Government remain the primary concern going
We remain Neutral over the long term (6-12 months). Currently,
SINA has a Zacks #3 Rank, which implies a Hold rating in the near
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