Sina Corp. (SINA) posted fourth-quarter earnings that surpassed analysts’ estimates as its Weibo microblog earned a profit for the first time and advertising revenue from new services more than doubled at the business.
Net income rose to $44.5 million from $2.36 million a year earlier, Sina said in a statement yesterday. That beat the $28.1 million average of six analysts’ estimates compiled by Bloomberg. Sales gained 42 percent to $197 million.
Value-added services, including games and VIP membership fees, boosted Weibo’s profitability and non-advertising revenue and helped Sina counter competition from Tencent Holdings Ltd. (700) Sina has selected banks for an initial public offering of Weibo that could raise about $500 million, according to two people with knowledge of the matter.
“Sina reported a solid set” of results, Alicia Yap, an analyst at Barclays Plc in Hong Kong, wrote in a report. “The margin improvement was mainly attributed to the enhanced ability of Sina to scale its advertising business profitably.”
Advertising revenue climbed 45 percent to $160.1 million from a year earlier, within the company’s forecast range of $160 million to $162 million. Total non-advertising revenue rose 30 percent, while at Weibo the increase was 114 percent, it said.
The company forecast first-quarter non-GAAP revenue of $162 million to $167 million, including advertising revenue of $133 million to $136 million.
Sina is working with Alibaba Group Holding Ltd., a shareholder in its Weibo unit, to boost usage of the service. Sina Weibo was China’s biggest microblogging outlet with 61.4 million daily active users at the end of December, rising from 58.9 million as of September and 36 percent higher than a year earlier, Chairman Charles Chao said on a call today.
While growth in Sina Weibo users was the slowest on record, the average amount of time users spent on the service rose 16 percent from a year earlier, Chao said.
“They do have a franchise in terms of their installed customer base,” Ashok Kumar, head of technology research at Aegis Capital Corp., told Bloomberg Television today. “The majority of Sina’s valuation is from their ownership of Weibo.”
The stock advanced 4.3 percent to close at $76.08 in Nasdaq Stock Market trading yesterday. Shares of Sina fell as much as 8 percent in extended trading after the results before recovering.
The company is forming an Internet finance unit and is looking for opportunities through acquisitions and investments, Chao said.
Sina said in April that it agreed to sell 18 percent of Weibo to Alibaba for $586 million. The two companies decided to collaborate in areas including online marketing and payment as more users turn to e-commerce on smartphones and tablets.
In August, Alibaba began allowing shoppers to log on to its Taobao Marketplace e-commerce website using their Weibo accounts, after suspending sellers’ access to Tencent’s WeChat instant-messaging service.
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