SINA Slips Despite Earnings Beat

Nov.15.07 | About: Sina Corporation (SINA)

Sina Corp., a leading Shanghai-based online media company and mobile value-added service provider serving China and Chinese communities globally, announced its unaudited Q3 financial results on Wednesday. Third-quarter net income rose 60% to $17.2 million ($0.28/share), from $10.7 million ($0.19/share) a year ago. Adjusted earnings were $0.32/share on a 15% rise in revenue to $64.3 million from $56.1 million. Analysts had expected EPS of $0.28 on revenue of $64.6 million. For Q4, Sina forecasts revenue of $68-70 million; analysts are calling for $69.6 million. Shares in Sina, China's top portal by revenue, fell 6.6% in after-hours trading to $46.20 after closing down 3.9% to $49.50 in regular trading on Nasdaq. "There was no surprise in the revenue forecast," said JP Morgan's Dick Wei. "The gross margin fell in the wider sector." Margins have been squeezed by China's mobile carriers, forcing online firms into other more lucrative sectors. Sina's mobile services revenue, which has been declining since government-mandated policy changes last year by, declined 24% to $16.6 million. Sina is beefing up its on-line gaming unit to take advantage of a booming domestic market with more products and investment, and said advertising revenues next year will benefit from increased spending on the Olympic Games, and from financial institutions. The company is planning to raise the fees it charged for Olympic advertising, but had not yet decided by how much, Charles Chao, Sina's CEO, told analysts during a conference call.

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