Sina shows sharp rise in profit
By Yu Chen (China Daily)
Updated: 2004-07-29 08:36

Chinese Internet giant Sina Corp yesterday posted a net revenue of US$49.2 million for the second quarter of the year ending on June 30, an historic record buoyed by strong business performance.

Sina said yesterday in its financial report that its revenues in the second quarter grew by 89.3 per cent year-on-year and 18.9 per cent quarter-on-quarter.

And second-quarter net profit rose to US$18 million, or 31 cents per share, from US$7.1 million, or 14 cents per diluted share, a year earlier.

"Exposed to fiercer market competition, we managed to maintain our leading position and high momentum," said Wang Yan, chief executive officer of Sina Corp.

Revenue from online advertising reached US$15.5 million, representing a growth of 63.4 per cent from the same period last year.

It accounted for 32 per cent of the total revenue.

Revenue for non-online advertising businesses also soared 104.2 per cent to US$33.7 million.

"The sound national economy is very conducive to the Internet giant as more companies are advertising their products or services via the Internet," said Zhang Bing, an analyst with CITIC Securities.

He believed that online advertising will continue to play a key role in sustaining the firm's momentum in the long run.

"Meanwhile, non-online advertising business is of vital importance in further expansion," he said.

He said that future revenue was expected to come from higher-end, more data-rich mobile services such as multi-media messaging (MMS), mobile Internet and online gaming.

Figures indicate that value-added new services accomplished a revenue of US$5.1 million in the second quarter, registering a growth of 200 per cent quarter-on-quarter.

But he admitted that the user base for more expensive mobile services was not as large as for basic short messaging services (SMS).

"But those value-added services will become very prosperous in the near future as the market is being cultivated now," Zhang said.

Sina and its major rivals Sohu.com and NetEase.com all turned profitable last year with the introduction of value-added services such as SMS.

But Sina's financial report yesterday showed that its key mobile short messaging business was declining.

Excluding contributions from newly-acquired messaging company, Crillion Corp, SMS revenue dropped from US$23.7 million in the first quarter down to US$20 million in the second quarter.

Analysts believe that the Internet sector has been hit by a year-long government campaign to wipe out Internet content such as pornography and violence.

As growth slows, firms have developed other business lines.

"Our SMS is going to decline further and our new business is going to grow but (that) depends on a lot of factors," Chief Financial Officer Charles Chao said.

Excluding some items, Sina posted a pro forma profit of US$19.1 million, or 33 cents a share, topping its own forecast of 31 to 32 cents a share.

Sina yesterday also forecasted revenue in the third quarter would be between US$49 million to US$50 million, with advertising revenue of US$18 million to US$18.5 million and non-advertising revenue of US$31 million to US$31.5 million.

Pro forma earnings would be from 29 cents to 30 cents per share, it said.

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