SINA Corp. (
reported third quarter earnings of 7 cents, which beat the Zacks
Consensus Estimate by a couple of cents. However, reported
revenue was short of the consensus mark.
Total revenue (excluding deferred revenue) jumped 17.6% year
over year to $147.7 million in the reported quarter and was
toward the higher end of management's guided range of $145.0
million to $148.0 million.
The year-over-year growth in total revenue was primarily
driven by higher advertising revenue in the quarter, up 19.4%
year over year to $120.6 million, and marginally ahead of the low
end of management's guidance range of $120.0 million to $122.0
Non-advertising revenue increased 10.3% year over year to
$27.1 million in the quarter. This was slightly ahead of the
company's guided range of $25.0 million to $26.0 million.
Mobile-value-added-services (MVAS) revenue was $19.1 million,
slightly down from $21.4 million in the year-ago quarter.
Gross profit on a non-GAAP basis surged 14.3% year over year
to $78.3 million in the quarter. Gross margin declined 150 basis
points ("bps") from the year-ago quarter to 53.4%.
Advertising gross margin declined to 55.2% from 59.3% in the
prior-year quarter. The year-over-year decline was primarily due
to increased spending on production-related labor, infrastructure
and content. Non-advertising gross margin expanded 850 bps to
43.1% in the reported quarter. MVAS gross margin expanded 400 bps
on a year-over-year basis to 36.0%, attributable to favorable
Operating loss, excluding one-time items and charges, came in
at $5.6 million in the quarter compared to a profit of $68.8
million in the prior-year quarter. The year-over-year decline was
primarily due to higher operating expenses, which increased 23.8%
from the year-ago period, owing to higher personnel-related
expenses and infrastructure costs related to Weibo.com.
Interest and other income decreased 24.7% year over year to
$4.4 million in the reported quarter.
Net income on a non-GAAP basis was $4.7 million compared with
$11.4 million in the year-ago quarter. Our non-GAAP earnings
figure for the third quarter excludes amortization of intangible
assets; deferred revenue related to CRIC transaction, share of
equity investments and gain on sale of (impairment) on equity
investments but includes stock-based compensation expenses.
Our non-GAAP calculations may differ from management's
presentation due to the inclusion/exclusion of some items that
were not considered by management.
On a fully diluted GAAP basis, the company reported net income
of $9.9 million (14 cents per share) compared with loss of $336.3
million ($5.10 loss per share) in the comparable prior-year
SINA exited the third quarter with cash, cash equivalents and
short-term investments of $696.2 million compared with $716.3
million at the end of the second quarter. Cash flow from
operating activities in the quarter was $17.7 million.
SINA expects non-GAAP net revenue to be between $132.0 million
and $136.0 million for the fourth quarter of 2012. Advertising
revenue is expected in the range of $110.0 million to $112.0
million (up 6% to 8% year over year), while non-GAAP
non-advertising revenue is projected in the range of $22.0
million to $24.0 million (down 4% to 12% year over year).
We believe that SINA remains a premier company based on its
strong product pipeline, continuous investments in product
development and marketing and a robust user base for its
E-Commerce and Weibo offerings.
However, earnings growth continued to disappoint primarily 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
We believe that increasing competition in the domestic market
Sohu.com Inc. (
, Tencent and Alibaba will hurt profitability over the long term.
Further, we believe that increasing regulations from the Chinese
Government will remain the primary concern for the stock going
We remain Neutral on the stock 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
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