Sina Corporation (SINA)

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SINA Corporation (SINA)

Q2 2008 Earnings Call

August 6, 2008 9:00 pm ET


Cathy Peng - Investor Relations Manager

Charles Chao - President and Chief Executive Officer

Herman Yu - Chief Financial Officer


Jason Brueschke - Citigroup

Richard Ji - Morgan Stanley

Wallace Cheung - Credit Suisse

Eddie Leung - Merrill Lynch

C. Ming Zhao - Susquehanna Financial Group

Paul Wei - Lehman Brothers

Vivian Li - Piper Jaffray

Dick Wei - J.P. Morgan

Leah Hao - Analyst

Elinor Leung - CLSA



Good day, ladies and gentlemen, and welcome to SINA Corporation’s second quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s conference, Ms. Cathy Peng, Investor Relations Manager. Please go ahead, Madam.

Cathy Peng

Thank you. Good morning. Welcome to SINA's earnings release for the second quarter 2008. Joining me today are our president and CEO, Charles Chao, and our Chief Financial Officer, Herman Yu. This conference call is also being broadcast on the Internet and is available through the investor relation section of the SINA website.

Before the management presentation, I would like to read to you the Safe Harbor statement in connection with today’s conference call. During the course of this conference call, we may make forward-looking statements, statements that are not historical fact, including statements about our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements.

Further information regarding these and other risks is included in SINA’s annual report on Form 20-F for the year ended December 31, 2007, and its other filings with the Securities and Exchange Commission.

Additionally, I would like to remind you that our discussion today includes non-GAAP measures which exclude stock-based compensation, as well as other items. We use non-GAAP measures to exclude certain items that are not expected to result in future cash payments that are non-recurring or that may not be indicative of our core operating results. For further explanation of our non-GAAP measures and detailed reconciliations between our GAAP and non-GAAP results, please refer to our earnings release.

Following management’s prepared remarks, we will open the lines for a brief Q&A session.

With that, I would like to turn the call over to our President and CEO, Charles Chao.

Charles Chao

Thank you, Cathy and good morning, everyone. Welcome to SINA's second quarter 2008 financial results conference call. I am very pleased to report another strong quarter with record revenues and earnings. We are very excited that the momentum in the growth of our core business in online advertising and mobile value-added service has continued to accelerate in the second quarter.

For the second quarter, our total revenues grew by 52% year over year to reach $91.3 million; our advertising revenues grew by 58% year over year and 36% quarter over quarter to reach $64.9 million. Our non-GAAP net income totaled $26.2 million, representing a 62% increase from the same period last year, and a 33% increase from the previous quarter.

Now let’s take a closer look at our performance for the second quarter. During the second quarter, with the start of the Olympic Torch relay, the competition among Internet portals in China to brand exposure and advertising dollars has intensified. Despite a very aggressive marketing campaigns by our major competitors, SINA continued to maintain a leading position in terms of [relevant] information from our Internet portals in China according to various independent research. More importantly, we have further enhanced our position as the leading online advertising platform in China by recording the highest quarterly growth rate for advertising in the last five years.

In the second quarter, we continued to see accelerated growth for our advertising in the China market. On a year-over-year basis, advertising revenues for China grew by 59%. SINA's strong verticals continued to perform well and advertising revenues from automobile, finance, and real estate combined grew by 92% on a year-over-year basis, accounting for 58% of our total advertising revenues for the second quarter.

Real estate overtook financial service as the best performing sector for the ad revenue growth in the second quarter with 159% year-over-year growth. We believe that we will continue to be very competitive in these vertical areas in the future.

According to newly published semi-annual China Internet report by [PNIC], the number of Chinese Internet users reached 253 million by the end of June 2008, making China the country with the largest Internet population.

The rapid growth of China’s Internet population has significantly increased penetration of Internet media in China, especially in [northern] areas, making Internet an increasingly competitive media for marketing purposes.

Despite a slowdown in the Chinese economy and the decline [inaudible] and housing markets, we see a continuing shift of marketing dollars from traditional media to online as advertisers seek more cost-effective marketing campaigns, as well as better reach for a more [affluent] audience.

Another encouraging result from the recent Internet report is that more than 81% of Chinese Internet users get their news from the Internet. This figure is almost 10% higher than the previous survey and it is also higher than that of most other countries, and it is a strong indication of the power of the Internet media in China. This trend is in favor of our future growth [inaudible] and undoubtedly the most influential online media company in China.

SINA's media influence was further demonstrated in the coverage of the recent massive earthquake in Sichuan Province in China. During the earthquake coverage, [inaudible] integrated all our interactive communities, including blogs, podcasting, and video into our news coverage.

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