Sina banks on Wiebo, spooks investors

Nov 16 2012, 17:32 IST
Comments 0
SummaryChinese Internet company Sina Corp said its fourth quarter will be hit by a softer economy.

Chinese Internet company Sina Corp said its fourth quarter will be hit by a softer economy and posted weaker-than-expected sales guidance, despite a stronger revenue contribution from its hot microblogging platform Weibo.

Shares in Sina fell 7 percent after it forecast adjusted net revenue of $132 million to $136 million in the current quarter, below analysts' expectations for $151.9 million according to Thomson Reuters I/B/E/S.

Sina, which makes most of its revenue from online advertising both on its website and Weibo, is facing stiff headwinds as firms slash advertising budgets due to a worsening economic outlook.

We are going to see a weaker quarter for advertising overall in the fourth quarter, said Charles Chao, Sina's chief executive on an earnings conference call. The firm forecast Q4 advertising revenues would rise 6-8 percent from a year earlier.

Chao said Weibo contributed 16 percent to total revenue in the third quarter, up from 10 percent in the previous quarter. The platform, which is very popular with white-collar workers, university students and celebrities, had 424 million registered users at the end of the quarter, up from 368 million three months earlier.

Advertisers, like luxury brands, that traditionally don't advertise with Sina's main portal website flocked to Weibo to test out the social platform, Chao said.

There were about 230,000 Weibo advertising accounts in the quarter, and Sina was in the process of rolling out a online payment system and new Weibo advertising product to increase monetization at the end of the fourth quarter.

We believe a 'promoted feed advertising' will become one of the major forms of (Weibo) advertising going forward, said Chao, adding that the product will be effective also on mobile platforms, allowing Sina to tap into Weibo's growth on mobile devices.

Q3 PROFIT BEAT

For the third quarter, Sina's net profit was $9.9 million compared with a loss of $336.3 million a year earlier, and slighly ahead of analysts' expectations of $7.5 million.

Sina's quarterly advertising revenue rose 19 percent to $120.6 million, while non-advertising revenue rose 9 percent to $31.8 million.

The company started monetizing Weibo by offering special services to business accounts and selling VIP memberships to regular users earlier this year.

For its mobile-value-added-services business, Sina said it expects revenue to continue to decline due to new regulatory policies.

The company was also affected by a spat between Japan and China over islands in the East China Sea as Japanese automakers cut back on advertising in China. Chao said

Single Page Format
Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...