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Sina’s Earnings Drop 

The market isn’t quite sure what to conclude out of the company’s Q2 financial results released early Wednesday. Even though Sina may have announced another better-than-expected quarter, investors aren’t ready yet to fully reward the Chinese internet company for its efforts.

Sina’s adjusted quarterly revenue increased by 14% Y/Y to $211 million, including a 13% increase in advertising revenue to $176.3 million. However, the company reported an astonishing 67% decrease in adjusted net income to $4 million and 65% drop on a per-share basis to only $0.06. Despite these rather disappointed results, analysts were even less optimistic than that and consensus estimates predicting lower second-quarter revenue of $200.8 million, and adjusted earnings of just $005 per share.

Also Weibo, which is for sure the primary driver of Sina’s growth, performed sell above analysts’ expectations. It achieved adjusted earnings of $10.9 million, or $0.05 per share. Note that this is a huge improvement compared to last year period’s adjusted net loss of $5.1 million, or $0.03 per share. But it can’t be said that investors are really encouraged by Weibo’s results and Sina’s clear dependence on its micro-blogging site.

Sina

 

CEO Charles Chao tried to reassure some confidence in the company’s future and added “We are confident that with Weibo’s firm execution in growing user base and engagement, capitalizing on the mobile strategy, and leveraging partnership with Alibaba to enable e-commerce Transactions, the powerful social media platform and cohesive ecosystem that we have built can better fulfill the needs of users, customers and merchants at various dimensions and can generate sustainable earnings and cash flows and create long-term value to our shareholders.”

Following the news, shares of Sina traded up a modest 1.5%. But having to bear in mind numerous uncertainties as Weibo continues its oversized role in guiding Sina’s results, it’s hard to blame the market for yesterday’s rather muted reaction to the company’s latest quarterly beat.

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