Sina profits quadruple to US$16m in 1st quarter
By Liu Baijia (China Daily)
Updated: 2004-04-29 09:10

Nasdaq-listed Chinese Internet company Sina Corp said yesterday its profits almost quadrupled year-on-year in the first quarter due to strong growth of its wireless message business.

Sina said in its financial report that its revenues in the first three months grew by 129 per cent year-on-year and 8.2 per cent quarter-on-quarter.

Its net profits rocketed to US$16 million from US$3.4 million in the same period last year and US$9.3 million in the previous quarter.

The diluted earning per share was 28 US cents, compared with 7 US cents a year ago and 16 US cents in the fourth quarter.

"We are off to a good start in 2004," said Wang Yan, chief executive officer of the biggest Chinese Internet portal.

Non-advertising business, especially wireless message service, was the biggest factor to the company's growth.

Sina reported US$28.3 million of non-advertising revenues, a 161.4 per cent increase from in the same period in 2003 and a 11.6 per cent increase from the previous quarter.

Hurst Lin, Sina chief operating officer, said over the phone that the 2.5G services like wireless Internet surfing service WAP (wireless application protocol), voice chat IVR (interactive voice response) and multimedia messaging services contributed significantly to the company's growth in the wireless business.

Lu Sun, an analyst covering Sina with Lehman Brothers in Hong Kong, said: "The market was worried about intensifying competition in the wireless content space, but Sina's result showed that it has maintained its leadership position, and witnessed strong growth in 2.5G applications."

Sina, the biggest advertising company in China, said its advertising business grew slightly to US$13.1 million with a quarter-on-quarter increase of 1.4 per cent and a year-on-year growth of 79.8 per cent.

"The first quarter is usually a flat season for advertising, as clients hold their spending due to the Chinese New Year in February," said Lin.

Sun from Lehman Brothers said: "Advertising revenue came in slightly below our forecast, but we believe the company will recover in the second quarter and especially in the third, driven by seasonal pick up in overall advertising spending and the increase in company's advertising accounts."

Sina had US$238.1 million of cash, cash equivalents and investments in marketable securities by March 31, an increase of US$11.0 million from three months ago.

The company's stocks on the NASDAQ in New York rose 3.32 per cent to US$36.40 at the market close, but gained another 4 per cent in the after-hours trading to US$37.86 due to the announcement of the results.

Sina said in January that it would build an online auction joint venture with US giant Yahoo!, whose website will be officially launched in June.

The company also announced it would acquire Shenzhen-based wireless service provider Crillion Corp and finished the acquisition in March.

Sina said it expects to raise revenues round US$48.5 million to US$49.5 million this quarter.

The advertising revenues are estimated to be between US$14.5 million and US$15.0 million and non-advertising revenues between US$34.0 million and US$34.5 million. The diluted pre-tax earning per share is expected to be 31 to 32 US cents.

"Actually I think Sina's management has been quite conservative in its guidance, the guidance for 20 per cent topline and 10 per cent bottom line growth sequentially should be achievable," said Sun from Lehman Brothers.

The Sina chief operating officer also said that since all revenues from Crillion will be booked into Sina's account from this quarter, the increase of wireless revenues will be further enhanced in the second quarter.

Sun estimated Crillion will contribute at least US$16 million to Sina for the whole year.

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