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SINA Corp.’s Q4 Results Beat Estimates (SINA)

Although SINA Corp. (NASDAQ: SINA) reported that its fiscal fourth-quarter profit  fell by 75% from the year-earlier quarter due to sluggish advertising revenue growth at its microblogging service Weibo and some investment decisions that went astray, shares climbed on Wednesday as results topped  analysts’ estimations.

Despite being the market—leader in China’s social media sector, SINA has struggled to boost revenue through advertising lately. While the revenue has been increasing sequentially, competition in the social media’s landscape has become ever more intense in China with the arrival of Tencent Holdings LTD.

WeChat, a smartphone app developed by Tencent, has been penetrating at a very brisk pace in China’s touch screen computing market.

Speaking to analysts at a conference call on Wednesday, SINA’s Chief Executive, Charles Chao said that the people were spending less time on Weibo as competition from apps such as WeChat was eating up the market-share, a trend which he said is likely to continue.

However, Chao added that “Weibo has reached a critical mass and will continue to grow in user base and user activity given its network effect.”

According to the Company, daily active users at Weibo climbed 82% in fiscal fourth quarter to 46.2 million, from the year earlier period.

For the fiscal fourth quarter, SINA reported net profit of $2.4 million or 3 cents a share, compared to a profit of $9.3 million or 14 cents a share, in the year earlier quarter. The recently concluded quarter included loses worth $4.4 million linked to bad unprofitable equity investments along with $1.8 million impairment charges.

Stripping out onetime items such as stock based compensation and other charges, adjusted or non-GAAP earnings came at 13 cents a share down from 21 cents a share. Analysts’ consensus estimate was for earnings of 5 cents a share, according to a data compiled by Thomson Reuters.

Net revenue during the period jumped 4.3% to $139.1 million. After adjusting deferred licensing revenue, net revenue stood at $134.4 million, beating its own lower range guidance of $132 million.

While revenue from advertising climbed 6.8% to $110.7 million, non-advertising revenue fell 4.2% to $28.5 million, in the fourth quarter.

Stripping out the impact of deferred revenue, SINA expects first quarter revenue to some in the range of $115 million to $119 million, which is matching with analysts’ estimate of $117 million.


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