) reported fourth-quarter 2013 profit of 39 cents per share
(including stock-based compensation), which beat the Zacks
Consensus Estimate by a nickel. Earnings were much better than 5
cents reported in the year-ago quarter. The results were driven
by strong revenue growth and margin expansion.
Revenues increased 7.0% year over year to $192.3 million and were
within management's guided range of $190.0 million to $194.0
million. However, revenues missed the Zacks Consensus Estimate of
The year-over-year growth in revenues was primarily driven by
higher revenues from online advertising and fee-based services.
The growth of total revenue and advertising revenues in the
fourth quarter was mainly attributable to the strong momentum for
Advertising revenues moved up 44.6% from the year-ago quarter to
$160.1 million. Advertising revenues were in line with the lower
end of management's guided range of $160.0 million-$162.0
million. Weibo advertising revenues jumped 163% year over year to
Non-advertising revenues increased 29.8% year over year to $36.9
million in the quarter, ahead of management's guided range of
$30.0 million-$32.0 million. Weibo non-advertising revenues
surged 114.0% year over year to $15.4 million, driven by the
launch of Weibo data licensing services as well as from the
growth of other fee-based services.
Mobile value-added services (MVAS) revenues were $11.1 million,
down 16.6% from the year-ago quarter.
Gross margin increased to 63.6% from 41.5% in the year ago
quarter. This increase was mainly due to a higher revenue base
and an increase in gross margins of the advertising and
non-advertising business. The increase in non-GAAP
non-advertising revenue gross margin was primarily due to a shift
in revenue mix from low-margin mobile value-added services to
higher margin Weibo value-added services.
Operating expenses increased 34.5% from the year-ago quarter to
$99.3 million. The sharp rise was mainly driven by higher selling
and marketing expenses, product development costs and general and
administrative expenses, which increased 490 bps, 350 bps and 220
bps, respectively on a year over year basis.
Operating income was $23.0 million, up from $0.9 million in the
year-ago quarter. The recovery was primarily due to an increase
in revenues and gross margin expansion. Net income improved to
$27.5 million in the quarter from $3.5 million in the year-ago
SINA exited the fourth quarter with cash, cash equivalents and
short-term investments of $1.87 billion compared with $1.22
billion at the end of the third quarter. Cash provided by
operating activities for the fourth quarter was $41.9 million
compared with $12.3 million in the prior quarter.
SINA expects revenues for the first quarter of 2014 to be in the
range of $162 million and $167 million while the Zacks Consensus
Estimate is pegged at $171.0 million. Advertising revenues are
expected in the range of $133.0 million-$136.0 million, while
non-advertising revenues are projected in the range of $29.0
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.
Moreover, vertical expansion will form an integral part of SINA's
growth strategy going forward and the company aims to achieve it
through internal expansion or through partnership with vertical
players, or in some cases through merger and acquisition.
However, increasing competition from
) and Tencent will hurt profitability over the long term.
Further, we believe that increasing regulations imposed by the
Chinese government may put some pressure on the stock.
Currently, SINA has a Zacks Rank #3 (Hold).
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