2010-11-17 15:25

SHANGHAI - China's Sina Corp disappointed Wall Street with a soft outlook for its fourth quarter, citing a slowdown in advertising spending for certain categories, sending its US shares lower in after-hours trade.

China's largest Internet portal competes with Tencent Holdings and Sohu in China's roughly $600 million portal advertising market.

For the past two quarters, the World Cup and Shanghai World Expo have boosted advertising spending across portals such as Sohu.

"People might be disappointed that the fourth quarter growth wasn't as strong as expected," said Paul Wuh, a Hong Kong based analyst with Samsung Securities.

"Autos represent a large percentage of their overall (advertising) revenues for the company, so if that area is flat, it is very hard to see significant upside growth," Wuh said. China's largest Internet portal attributed the slowdown to a spike in advertising spending in the autos category in the first half of the year and the lack of marquee events in the fourth quarter.

China's largest Internet portal said its third-quarter net profit jumped 87 percent, beating analysts' estimates as big ticket events such as the Shanghai World Expo and the World Cup boosted ad sales.

Sina expects adjusted revenue of $103-$106 million in the fourth quarter, below analysts' average forecast for $108.7 million, according to Thomson Reuters I/B/E/S.

A bright spot for Sina is its highly popular microblog, Weibo. A microblog, such as Twitter, allows users to follow other users and view their posts.

Sina shares have jumped 44 percent in the third quarter on hopes of the firm monetising Weibo. They were down 4 percent in after-hours trade to $54.73. The stock closed at $56.99 on Tuesday on Nasdaq.

Advertising revenue climbed 27 percent, driven by spending during the Shanghai World Expo that ended in October.

Sina, which has seen its mobile value-added-services depressed this year due to Chinese telecom firms implementing stricter rules last year, said it sees normalised services in the first quarter of 2011.

Third-quarter net income attributable to Sina was $31.3 million, or 48 cents per share, versus $16.7 million, or 29 cents a share, a year earlier.

Excluding items, the company earned 50 cents a share. That beat the average Wall Street target of 40 cents a share.

Third-quarter revenue, excluding its carved-out real estate advertising business, rose 20 percent to $103.6 million, in line with analysts' target of $103.2 million.