Sina Will Focus on Mobile in Alibaba Alliance as Earnings FalterLulu Yilun Chen
Sina Corp., owner of China’s largest Twitter-like service, will push into mobile e-commerce through an alliance with Alibaba Group Holding Ltd. to revive flagging advertising sales.
Alibaba, operator of the Taobao Marketplace and Tmall.com retail sites, will help Sina better target merchants wanting to place ads on its Weibo microblog service, Sina Chief Executive Officer Charles Chao said on a call today after the company posted a first-quarter loss. The call marks Sina’s first public comments detailing the partnership since Alibaba paid $586 million for an 18 percent stake in Weibo in April.
Sina is focusing on mobile platforms to bolster earnings from advertising, its biggest sales contributor, after recording the smallest revenue gain in three years in 2012. The Beijing-based company’s ad sales fell last quarter from the three months ended December as a slowdown in China’s economy damped spending.
“The cooperation with Alibaba will help Sina to some extent and bring in some more revenue” in the longer term, Eric Qiu, an analyst at Guosen Securities Co. in Hong Kong with a neutral rating on Sina, said by phone. “However returns won’t be too obvious” in the coming months, he said.
The two companies will also work closely on online search capability on Weibo through mobile devices, with Sina investing “quite heavily” in this area, Chao said. Alibaba will help merchants with a strong credit rating on Taobao and Tmall set up official accounts on Weibo, boosting user traffic on the microblog, he said.
“We believe these kinds of activities will help to increase commercial eco-system on Weibo and create demand for advertising,” Chao said. “We will be able to have much more targeted advertising, effective advertising on Weibo” in collaboration with Alibaba, he said.
Alibaba’s Alipay will become an important third-party payment system on Weibo, the executive said, without providing a timeframe. The microblog also has its own payment network, Weibo Wallet, whose mobile version is in beta testing, he said.
Sina may hire more people to work on projects with Alibaba, Chao said, without specifying how many.
Sina rose as much as 7 percent in after-hours trading in New York. The stock fell 1.2 percent to close at $58.81 on the Nasdaq Composite Index yesterday, narrowing its gain this year to 17 percent.
The company yesterday forecast second-quarter non-GAAP revenue of $143 million to $147 million, including advertising sales of $117 million to $119 million. Analysts project revenue of $144 million, according to the average of nine estimates compiled by Bloomberg.
Its first-quarter net loss narrowed to $13.2 million from $13.7 million a year earlier. That’s worse than the $5.6 million loss predicted by analysts, based on the average of 10 estimates compiled by Bloomberg before the results. Sales climbed 19 percent to $126 million.
Advertising revenue fell 15 percent from the three months ended Dec. 31 to $94.3 million, Sina said.