SINA Corp.
(
SINA
) is scheduled to announce its fiscal second quarter 2012 results
after market closes on Wednesday, August 15, 2012. In the run up to
the earnings release we do not notice any significant change in the
analyst estimates.
However, we note that SINA's earnings lagged the Zacks Consensus
Estimates in the trailing four quarters with a negative average
earnings surprise of 9.7%.
Prior Quarter Highlights
SINA reported a 6.3% year-over-year increase in the top line
primarily driven by higher advertising revenue. However, the
company posted a loss of 21 cents, which widened from the year-ago
quarter.
Including stock-based compensation but excluding one-time items,
loss per share stood at 27 cents, in line with the Zacks Consensus
Estimate. The weaker-than-expected result was primarily attributed
to higher operating expenses in the quarter.
SINA expects non-GAAP net revenue to be between $126.0 million
and $129.0 million for the second quarter of 2012, lower than the
Zacks Consensus Estimate of $132.0 million.
For further details please read:
SINA Reports Loss in 1Q
Estimates Trend Revision
Over the past 30 days, only one out of the eight analysts
covering the stock revised the quarterly estimates upward, while no
downward revision was witnessed. The Zacks Consensus Estimate for
the second quarter of 2012 was pinned at a loss of 9 cents per
share.
Analysts covering the stock expect weaker-than-expected online
advertising spending to impact SINA's advertising revenue for the
quarter. Moreover, continued investments in Weibo may affect the
company's margins in the short-run.
Recommendation
We believe that SINA has a strong product pipeline, continuous
investment in product development and marketing and a robust user
base for its e-Commerce and Weibo offerings.
However, margin may suffer in the forthcoming quarters due to
higher operating costs related to continuing investments on 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.
Moreover, increasing competition in the domestic market from the
likes of
Sohu.com Inc.
(
SOHU
) and strict regulations in China remain the primary headwinds in
our view.
Thus, 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 term.
SINA CORP (SINA): Free Stock Analysis Report
SOHU.COM INC (SOHU): Free Stock Analysis Report
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