SINA Corp. (
recently announced a partnership with Beijing-based
AutoNavi Holdings Limited (
. SINA is a leading provider of social networking services in
China and operates popular microblogging platform, Weibo. On the
other hand, AutoNavi is a leading provider of digital map
content, navigation and location-based solutions in China.
The partnership will allow Weibo users to directly log in to
AutoNavi's website to access its mobile map application known as
AMAP. Similarly, AMAP users will be able to directly log in to
the microblogging platform through Weibo Connect and access its
contents and services.
We believe that the partnership is mutually beneficial to both
the companies due to the massive growth opportunity in the
Chinese mobile Internet market and its allied services. According
to a latest report from China Internet Network Information Center
(CNNIC), at the end of June 2012, China had more than 388 million
mobile Internet users (approximately 72% of total Internet users)
with the number of mobile micro-blog users jumping to 170 million
at the end of the same period.
As per data available from Analysis International, China's
mobile map users reached 229 million at the end of June 2012, up
33% sequentially and a massive 206% from the comparable
prior-year quarter. Total number of mobile map users is expected
to hit 287 million by the end of 2012 and 600 million by the end
of 2015. This represents a huge growth opportunity in our
Currently, SINA has more than 400 million Weibo users while
AutoNavi expects to have approximately 100 million users by the
end of this year. We believe that the deal fills a significant
gap in both the companies' mobile product offerings, which will
further boost their respective customer base going forward.
This is particularly a positive for SINA as the company
continues to search for new avenues to monetize its mobile
traffic. Lately, SINA has been looking for partnerships to extend
its mobile market share. In July this year, SINA entered into a
to collaborate on five key aspects namely search, content,
platform, technology and resources.
We believe that partnerships with Baidu and AutoNavi, both
leaders in their respective fields, will help SINA to expand its
mobile offerings in the near term. Moreover, the partnerships
will provide SINA a significant competitive edge over its peers
Nevertheless, we believe that China's strict regulatory
environment is significant growth impediment for Internet
companies such as SINA. Moreover, earnings growth continued to
disappoint primarily due to higher operating costs related to its
social networking platform Weibo. Thus, we remain Neutral on the
stock over the long term (6-12 months).
Currently, SINA has a Zacks #3 Rank (Hold).
AUTONAVI HL-ADR (AMAP): Free Stock Analysis
BAIDU INC (BIDU): Free Stock Analysis Report
SINA CORP (SINA): Free Stock Analysis Report
To read this article on Zacks.com click here.