The transformation idea of traditional enterprises is more important than organizational structure

When Sina released the fourth quarter of the financial statements and announced that micro-blog for the first time to achieve profitability before and after, on Sina Weibo listing of the news was reported by foreign media, for the capital carnival of the eventful spring added another weight of the play code.

It must be emphasized that the disclosure of financial statements, it does not mean that it is only on this day that Sina is aware that Weibo has made a profit, and that, on the contrary, as the daily update of financial figures, combined with estimates and judgments about trends, Sina should be able to read the results of its microblog in the fourth quarter of last year.

But the reason Sina Weibo must wait for disclosure of financial statements before it dares to openly address the issue is not complicated: Wall Street cannot accept a Chinese internet company that is growing in high growth but unable to bring economic returns to investors, no matter how much "imagination" it carries.

The reason for emphasizing "Chinese Internet enterprise", rather than narrowly Wall Street, "China and America are different", it is a demographic dividend that is far more than the United States, and the Internet is a marginal cost-reducing industry, and if we transplant mature products from the U.S. market and their accompanying business model, profitability is a basic passing line.

In contrast to Sina Weibo and Twitter, the former has long been a source of profit, in part because of the low unit price of Chinese Internet advertising and the fact that Sina Weibo, which is the main profit-making channel for advertising, is hard to be taken seriously by advertisers. However, it is due to a number of large acquisitions and international competition based on technological innovation (in the IPO, Twitter accounts for more than 77% of clients outside the U.S., but international clients account for only 25% of their advertising revenue, which is a loss-making phase of "investing in the Future", and capital is easy to "understand".

Earlier this month, Twitter released its financial statements for the fourth quarter of last year, which, if it were to dig up $521 million trillion in equity incentive spending, generated a net profit of 10 million dollars in the quarter, and the harvesting effect was becoming more prominent. As China's "Twitter", Sina Weibo also welcomed the profit, but there are huge differences in the reasons.

From "internal and external" to "both inside and outside"

To say that Sina Weibo from the "internal and internal" situation, must return to the second quarter of 2013 years, it is this summer, China E-commerce company Alibaba announced investment Sina Weibo, with abundant cash to solve the financial pressure of Sina Weibo, while, Tencent Weibo's name in the second quarter of 2013, Tencent's earnings completely disappeared, Tencent Group of resources to bet on micro-letter, no longer expect Tencent Weibo microblogging for Sina Weibo sniper work.

Alibaba-China's most financially powerful internet giant has taken the initiative to form a community of interests with Sina Weibo, Tencent-China's most powerful social network overlord withdrew from the role of Sina Weibo's last competitor, almost tacit understanding of Sina Weibo vacated a "both inside and outside" life, it is sad, "When it is also, life is also transported, this is also".

Alibaba's biggest significance for Sina Weibo is the contribution of advertising orders. Since Alibaba has tapped into Sina Weibo, Sina Weibo grabs's ads are almost all occupied by Taobao and cat products, followed by cash flows, such as the injection of a boost to Sina Weibo, from the earnings figures can be seen in the second quarter of 2013 (that is, just when the Alibaba injection), Sina Weibo's advertising revenue is 1/3 of Sina's advertising revenue, to the fourth quarter of 2013 (that is, six months later), Sina Weibo advertising revenue has exceeded the Sina portal advertising revenue more than half of the growth rate suddenly accelerated.

In addition, Sina Weibo in the non-advertising revenue business of internal strength cultivation, it appears to be a slight improvement. On the one hand, value-added services based on traditional business models (micro-blog Members, page-tours) have a fixed scale of income growth. Revenues from the data business were also mentioned for the first time, with value-added services earning more than $15 million trillion. Chao also Tan Chen, the data business has just begun, is still exploring, but after all took a gratifying step. In the future, once the data business will be the user's interest information, social information and Taobao shopping information, Alipay payment information through, will be a gold mine.

As for the micro-letter, has now become Tencent's "weapons of mass destruction", although often used to compare with Sina Weibo, but the overlap between the two is actually limited. For Sina Weibo to clean up the Tencent Weibo, although reluctantly but difficult to easily beat the competition barrier, and micro-letter Subversion mobile phone QQ is similar to the micro-letter in the Tencent internal "self-revolution" of the careless move, Sina also benefited from this, become four portals lasted four years long micro-broad war last winner.

The delicate relationship between Sina Weibo and Tencent's micro-letters is exactly the same as Twitter and Facebook: A social-media form that focuses on the integration and distribution of public information, a social-networking form that focuses on maintaining and managing user relationships. The former is the media, can not be divorced from the "media rely on advertising for a living" logic, the role of social platform is to continuously subdivide the level of the Web page and the audience type, the advertising is not accurate enough to compress the parts to the extreme, the latter both for the network, is destined to be "first to build the ecology, after digging value", advertising is only Hanlaobaoshou path rather than purpose, The high valuations of social networks lie in the likelihood that they will take over the lives of users, as the WHATSPP case of Facebook, with its rare acquisition of money-earning power, has no bright spot.

In other words, Sina Weibo and Tencent micro-letter, Twitter and Facebook may have a war, but the war will not be in the present, with the "social" a new product, their common enemy (portal, search ...). ) has not yet ended, the meaning of solid-walled clear field is far superior to siblings.

Sina Weibo is not easy to estimate, 8 billion?

Nasdaq, which had a series of technical breakdowns at the start of Facebook's listing, finally pushed Twitter into the hands of the NYSE, and also experienced a temporary increase in IPO prices on the eve of the IPO, The NYSE's operation on Twitter is also better than Facbeook's long slump in the Nasdaq, and it is not surprising that Sina Weibo will be listed in the NYSE (SINA is on Nasdaq).

What is more difficult to measure is the valuation of Sina Weibo. In a populous country such as China, it is hard to say science by comparing the number of users in the United States with similar or similar products, and in turn calculates the valuation of Chinese Internet products by the user unit price of the latter. By this standard, Sina Weibo's valuation is about half of Twitter, or 15 billion of dollars, and if you refer to Twitter's IPO price, Sina Weibo may land on the securities market with a total valuation of around 8 billion dollars.

What about the ratio of P/E to market sales? Twitter's P/E ratios are 60 times times and 45 times times respectively, which is clearly not a stable reference, although the bubble is always there, but Twitter's technology component is able to offset the confidence barrier to investors caused by the high P/E ratio and the higher market rate, Sina Weibo will have a chance to inherit if the Twitter concept is packaged in the roadshow. By this standard, Sina Weibo's valuation is about 9 billion dollars, if still refer to Twitter's IPO price, Sina Weibo's IPO may be valued at the beginning of 4.5 billion U.S. dollars, after the figure and Alibaba to invest in Sina Weibo in accordance with Sina's market value of the gains calculated, is broadly consistent.

In any case, Sina Weibo's growth performance has not been reflected in Sina's U.S. stock trend, since 2011-This is Sina Weibo is considered the most powerful year-Sina's share price breakthrough 100 trillion dollars, Sina Weibo's share price impact on Sina is very limited, until Alibaba's investment, Sina's share price has again pulled more than 70 dollars.

That is to say, Sina Weibo has quite alternative particularity, bullish on the reasons for its valuation, such as Alibaba's overweight will bring the hot effect on Sina Weibo, but the view of empty its valuation is also a lot, the most direct is that Sina Weibo, although in China comparable to Twitter's media value, but in large data , social advertising and other jobs are not as active as Twitter, and Wall Street's advocacy of "innovation" in technology is the primary driver of the latter's overvaluation. Sina Weibo must make more time-sensitive efforts to win the recognition of investors.

Future prospects

The future of Sina Weibo is decided by the solution of "resisting", "an Nei" and two major topics.

The so-called "resisting" refers to Sina Weibo and Twitter are now facing the user growth near the saturation of the topic, in order to support stock prices and valuations, new growth will certainly fall to the world. and to develop overseas market needs, must be standardized products, rather than in-depth market operations.

The English information on Twitter is said to account for only about half as early as 2010, and Twitter is the market leader in Japan, Brazil, India and other populous countries. Just last year, Twitter sent more than three executives from Google to overseas, each responsible for the promotion and sales of their respective geo-regions, which is Google's style of doing things: sending senior executives to work overseas and, if outstanding, will be promoted and given greater authority.

Unlike the international style of Twitter's big open EAPC, Sina Weibo to expand the territory has been cautious, of course, there are cost factors, but the most critical, or Sina Weibo "not standard", this is a completely based on the needs of Chinese users have been created and continuously optimized products, even "Hot topic" Require a dedicated team to stay in business, and if it is rushed to the international market, and compared to the social-standard Pathfinder (Twitter, Facebook, etc.), the mere comment on Weibo may require a huge cost of persuading Sina Weibo to pay.

Optimistic estimates, Sina Weibo will launch after the IPO internationalization strategy, the most likely is to launch a standard version of Sina Weibo in the international market, to a more simple, independent rules of operation.

On the subject of "Ann", the situation of Sina Weibo is relatively clear, that is how to snatch the user time with the micro-letter. The previous article said, from the business point of view, Sina Weibo and Tencent Micro-letter competition overlap Area is not big, but according to the mobile internet trend so far, will maintain a long time "app" trend, and the app is not easy to use multi-threaded users, users in micro-mail social, obviously can not access micro-blog simultaneously, and vice versa. This is a zero-sum game about how to get users to stay long, and Sina Weibo must find areas where micro-letters cannot be covered, especially if the micro-letters are threatening the current and future of Weibo media status through the public account system.

Just for Sina Weibo, "resisting" and "Ann" is not in order, in the mobile internet age, time is the most wasteful of wealth, once missed development opportunities, may be very high cost to redeem, think about how to use the listing of the money that will be melted.