SINA Corp (
reported second-quarter loss of 26 cents per share (including
stock-based compensation), much wider than the Zacks Consensus
Estimate of a loss of 1 cent per share.
Revenues jumped 20.4% year over year to $152.8 millionand were
much better than management's guided range of $143.0 million to
$147.0 million. Revenues also beat the Zacks Consensus Estimate
of $150.0 million.
The year-over-year growth in revenues was primarily driven by
higher advertising as well as non-advertising revenues.
Advertising revenues in the quarter moved up 16.9% from the
year-ago quarter to $120.6 million. Advertising revenues were
slightly ahead of the high end of management's guided range of
$117.0 million to $119.0 million.
Non-advertising revenues increased 35.4% year over year to
$32.2 million in the quarter, ahead of management's guided range
of $26.0 million to $28.0 million. Mobile value-added services
(MVAS) revenues were $19.9 million, up 12.7% from the year-ago
However, Weibo value-added services helped the rest of the
non-advertising revenues which increased by a staggering 186.0%
from the year-ago quarter to $7.7 million.
Gross margin increased 70 basis points (bps) from the year-ago
quarter to 52.1% due to higher revenue base and increase in gross
margin of the non-advertising business. Advertising gross margin
remained flat while the non-advertising gross margin expanded 400
bps in the quarter.
Operating expenses as percentage of revenues increased to
67.1% from 55.0% in the year-ago quarter. The sharp rise was
primarily driven by higher General & Administrative expense
(up 130.1%) and higher Product development cost (up 57.8%).
Operating loss was $27.6 million, wider than a loss of $9.2
million in the year-ago quarter. The decline was primarily due to
higher operating expenses, which surpassed the growth in
revenues. Net loss improved from $19.9 million or 30 cents per
share reported in the year-ago quarter to $17.4 million or 26
cents in reported quarter.
SINA exited the second quarter with cash, cash equivalents and
short-term investments of $1.24 billion compared with $681.9
million at the end of the first quarter. Cash provided by
operating activities for the second quarter of 2013 was $43.6
million against a cash outflow from operating activities in the
previous quarter of $5.9 million.
SINA expects revenues for the third quarter of 2013 to be in
the range of $176.0 million-$180.0 million. Advertising revenues
are expected in the range of $151.0 million-$153.0 million, while
non-advertising revenues are projected in the range of $25.0
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, the Weibo value-added
services have started witnessing substantial growth in
In this regard, the recent partnership with Alibaba Group is
expected to boost SINA's position in the Chinese e-commerce
market. SINA has already permitted Alibaba to increase its
ownership in Weibo to 30% on a fully diluted basis.
However, results continued to disappoint primarily due to
higher general & administrative expense, personnel costs and
product development costs related to Weibo.
We believe that any weakness in advertising revenues will
impact SINA's ability to counter increasing operating expenses,
which in turn will hurt its bottom line, going forward.
Moreover, increasing competition from
Sohu.com Inc. (
and Tencent will hurt profitability over the long term. Further,
we believe that increasing regulations imposed by the Chinese
government will remain the primary concern for the stock, going
Currently, SINA has a Zacks Rank #3 (Hold).
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