) reported non-GAAP fourth-quarter 2012 earnings of 13 cents per
share, down from 21 cents per share reported in the year-ago
quarter. Including stock-based compensation, earnings came in at
5 cents per share, much better than the Zacks Consensus Estimate
of a loss of 2 cents per share.
Total revenue (excluding deferred revenue) jumped 4.4% year
over year to $134.4 million in the reported quarter and in line
with management's guided range of $132.0 million to $136.0
million. However, revenues fell shy of the Zacks Consensus
Estimate of $143.0 million.
The year-over-year growth in total revenue was primarily
driven by higher advertising revenue in the quarter, up 6.7% year
over year to $110.7 million, and was slightly ahead of the low
end of management's guided range of $110.0 million to $112.0
million. Weibo display advertising contributed 19.0% or $21.3
million of total advertising revenues. Moreover, advertising from
telecommunications, IT services and FMCG sector further
contributed to the growth in advertising revenues.
Non-advertising revenue decreased 4.8% year over year to $23.8
million in the quarter, slightly ahead of the mid-point of
management's guided range of $22.0 million to $24.0 million.
Mobile-value-added-services (MVAS) revenues were $13.2 million,
down 38.0% from the year-ago quarter. However, Weibo value-added
services helped the rest of the non-advertising revenues to
increase by a staggering 181.0% from the year-ago quarter to
Gross profit on a non-GAAP basis increased 9.3% year over year
to $75.4 million in the quarter. Gross margin expanded 250 basis
points ("bps") from the year-ago quarter to 56.1% due to higher
revenue base and prudent product mix. Including stock-based
compensation, gross profit came in at $74.7 million.
Operating profit on a non-GAAP basis came in at $6.4 million
in the quarter compared with a profit of $6.7 million in the
year-ago quarter. The year-over-year decline was primarily due to
higher operating expenses, which increased 10.6% from the
year-ago period, owing to higher personnel-related expenses,
lease expenses and infrastructure costs. Including stock-based
compensation of $5.5 million, income from operations came in at
Net income on a non-GAAP basis was $8.9 million compared with
$13.9 million in the year-ago quarter. Including stock-based
compensation, earnings came in at $3.5 million.
SINA exited the fourth quarter with cash, cash equivalents and
short-term investments of $713.6 million compared with $696.2
million at the end of the third quarter. Cash flow from operating
activities in the quarter was $33.5 million.
SINA expects non-GAAP net revenue to be between $115.0 million
and $119.0 million for the first quarter of 2013. Advertising
revenues are expected in the range of $94.0 million to $96.0
million, while non-GAAP non-advertising revenues are projected in
the range of $21.0 million to $23.0 million.
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, the company expects to
strengthen its Weibo value-added services on the back of
continued growth in the mobile internet in China.
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
forward. Moreover, the company provided a tepid outlook for the
We believe that increasing competition from
), 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
Currently, SINA has a Zacks Rank #3 (Hold).
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