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Renren Slumps to Loss as China Slowdown Damps Online Ads
Renren Inc. (RENN), the Chinese social network, posted a fourth-quarter loss as it boosted spending on software development and advertising sales fell.
The net loss was $21.1 million in the three months ended Dec. 31, compared with net income of $44.3 million a year earlier, the New York-listed company said in a statement today. Renren was expected to post a loss of $28.2 million, according to the average of five analyst estimates compiled by Bloomberg. Sales rose 49 percent to $48.8 million.
Renren boosted research and development spending by 84 percent in the quarter as it created new applications to compete with Tencent Holdings Ltd (700) and Sina Corp. (SINA) and to tap users shifting to portable devices from desktop computers. Slowing growth in China damped advertising demand.
“Revenue couldn’t make up for costs on new services,” Echo He, an analyst at Maxim Group LLC in New York, said before the earnings. “Renren needs to invest because it lacks new growth points.”
The Beijing-based company forecast revenue of $44 million to $46 million in the first quarter, representing growth of as much as 43 percent from the year earlier. That compares with the $47 million average of three analyst estimates compiled by Bloomberg.
Renren’s social network, with features similar to those of Facebook Inc.’s site, had the third-highest number of unique visitors in December with 101.7 million, according to data compiled by Bloomberg Industries. Sina’s Weibo was the most- visited social-network site, followed by Tencent’s pengyou.com, according to the data.
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