) reported third-quarter profit of 35 cents per share (including
stock-based compensation), exceeding the Zacks Consensus Estimate
of 17 cents cent per share.
Revenues jumped 21.2% year over year to $184.6 million and
were much better than management's guided range of $176.0 million
to $180.0 million. Revenues also beat the Zacks Consensus
Estimate of $181.0 million.
The year-over-year growth in revenues was primarily driven by
higher revenues from online advertising and fee-based services.
Advertising revenues moved up 25.7% from the year-ago quarter to
$151.6 million. Advertising revenues were within management's
guided range of $151.0 million-$153.0 million.
Non-advertising revenues increased 4.7% year over year to
$28.4 million in the quarter, ahead of management's guided range
of $25.0 million-$27.0 million. Mobile value-added services
(MVAS) revenues were $13.5 million, down 29.5% from the year-ago
Gross margin increased 950 basis points (bps) from the
year-ago quarter to 64.0% due to higher revenue base and increase
in gross margin of the advertising and non-advertising
Operating expenses increased 19.6% from the year-ago quarter.
The sharp rise was primarily driven by higher product development
cost (up 28.8%) and general & administrative expense (up
Operating income was $18.8 million, recovering from a loss of
$2.5 million in the year-ago quarter. The recovery was primarily
due to increase in revenues and gross margin expansion. Net
income improved to $23.8 million or 35 cents per share in the
quarter from $5.4 million or 8 cents in the year-ago quarter.
SINA exited the third quarter with cash, cash equivalents and
short-term investments of $1.22 billion compared with $1.24
billion at the end of the second quarter. Cash provided by
operating activities for the third quarter was $12.3 million
SINA expects revenues for the fourth quarter of 2013 to be in
the range of $190 million and $194 million. Advertising revenues
are expected in the range of $160.0 million-$162.0 million, while
non-advertising revenues are projected in the range of $30.0
SINA reported solid third quarter results, with both earnings
and revenues exceeding the Zacks Consensus Estimate. 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. In this regard, the partnership with Alibaba Group is
expected to boost SINA's position in the Chinese e-commerce
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 #2 (Buy).
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