Sina Pledges Change, But Then Disses Shareholders

Nov. 09, 2017 5:41 PM ETSINA Corporation (SINA)43 Comments
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  • The intensifying spat between Sina and a dissident shareholder is likely to ultimately cool down without any legal action.
  • Eventually all this could see the addition of 1-2 new independent directors to its board.
  • At the end of the day, this display of shareholder defiance and resulting arrogance by a Chinese company chief is quite expected, and probably reflects cross-cultural differences more than anything.

The battle for reform at Internet stalwart Sina (NASDAQ:SINA) has taken a somewhat nasty twist, with a dissident shareholder threatening legal or other action following a power play by longtime CEO Charles Chao to deprive minority shareholders of influencing the company through use of the ballot box. This particular move doesn't come as a huge surprise, as it's quite typical of Chinese CEOs like Chao to believe they know what's best and do their utmost to ignore anyone who disagrees with their view.

That said, Chao did sound a slightly conciliatory note in this battle for reform, which is being led by a dissident minority shareholder called Aristeia Capital. I'll go into that shortly, though first we should review this colorful battle and also what it might mean for Sina. The company's share price has taken a bit of a beating these last few weeks and is now down around 8 percent amid all the brouhaha.

I don't know if the stock will drop further on worries about a looming battle between Aristeia and Chao over Sina's future direction. But it would certainly serve Chao right if that were to happen, since his tone was definitely somewhat arrogant and dismissive of minority shareholders. Again, this is quite par for the course for private Chinese companies, whose founders typically believe that stock markets are there to give them money and nothing more.

Let's quickly review how we got to this place, and then the latest war of words between Sina and Aristeia. Put simply, Aristeia believed that Sina was grossly undervalued due to poor management, and mounted a campaign for a seat on the company's board. That effort ultimately failed at the company's annual shareholder meeting last week due to Chao's control of about a third of Sina's shares.

I did

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