Sina reported third-quarter profit of 35 cents per share

Zacks, an investment research firm, reported today that the third-quarter profit reported by Sina was 35 cents per share (taking stock-pay into account), with analysts over Zack's estimate averaging 17 cents per share. Zacks is currently rating Sina shares as "buy".

Revenue

In the third quarter, Sina's revenue rose 21.2% to $184.6 million, much higher than the previous forecast of 176 million to 180 million dollars, and more than the average estimated $181 million trillion by analysts in Zacks Statistics.

Sina's third-quarter revenue growth was mainly driven by higher revenue from online advertising and fee-based services. Ad revenue rose 25.7% per cent year-on-year to 151.6 million dollars, in line with Sina's previous forecast of 151 million to 153 million dollars. Non-advertising revenue rose 4.7% per cent to 28.4 million trillion dollars, better than the 25 million to 27 million dollars previously announced by Sina. Mobile value-added services revenue of 13.5 million U.S. dollars, down 29.5% year-on-year.

Operating performance

Gross margin rose 950 basis points from the same period last year, reaching 64%. This is mainly due to higher revenue base, as well as advertising and non-advertising business gross margin growth.

Operating costs grew 19.6% per cent year-on-year. This significant increase was mainly due to higher product development costs (up 28.8% per cent year-on-year), as well as general management costs (up 15.9% per cent year-on-year).

Operating profit of 18.8 million U.S. dollars, and the same period last year, the loss of 2.5 million U.S. dollars. The rebound was mainly due to revenue growth and gross profit margins. Net profit is 23.8 million dollars, or 35 cents per share, above 5.4 million dollars a year earlier, or 8 cents per share.

Cash

By the end of the third quarter, Sina had held cash, cash equivalents and short-term investments of $1.22 billion trillion, compared with $1.24 billion at the end of the second quarter. Third-quarter operations brought in cash for 12.3 million dollars.

Prospect

Sina expects the fourth-quarter revenue to be 190 million to 194 million dollars. Advertising revenue will be 160 million to 162 million U.S. dollars, advertising revenue will be 30 million to 32 million dollars.

Recommendations

Sina reported stable third-quarter results, with profits and revenues exceeding the average estimates of analysts in Zacks statistics. Based on a strong product line, ongoing investment in product development and marketing, and a strong user base for electricity and microblogging services, we think Sina is still a good company. Cooperation with Alibaba Group will enhance Sina's position in China's electricity market.