Sina Corp. Earnings: Here’s Why Shares Fell Hard

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Sina Corporation (NASDAQ:SINA) climbed to a profit in the third quarter and beat Wall Street’s expectations in the process. SINA is an online media company and mobile value-added information service provider in the People’s Republic of China and the global Chinese communities.

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Sina Corporation Earnings Cheat Sheet

Results: Reported a profit of $9.9 million (14 cents per diluted share) in the quarter. Sina Corporation had a net loss of $336.3 million or a loss $5.10 per share in the year-earlier quarter.

Revenue: Rose 17% to $152.4 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Sina Corporation reported adjusted net income of 17 cents per share. By that measure, the company beat the mean estimate of 5 cents per share. It beat the average revenue estimate of $102.6 million.

Quoting Management: “The London 2012 Olympic Games could very well be termed in China as the ‘social’ Olympics, pushing Weibo.com’s daily active users to a new record and Weibo’s registered accounts to surpass 400 million,” said Charles Chao, CEO and Chairman of SINA. “We are pleased with the initial results of Weibo monetization, as advertising revenues doubled from the previous quarter and we started revenue sharing with application developers. We believe these new initiatives will help us reduce the impact of China’s weak macro-economic conditions. As we look forward into 2013, we are preparing to launch Weibo advertising solutions geared toward the small and medium-sized enterprise market, which will open up new opportunities for SINA advertising.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 1.7 percentage points from the year-earlier quarter to 54.4%. In that span, margins have contracted an average of 3.9 percentage points per quarter on a year-over-year basis.

Revenue has increased for four consecutive quarters. Revenue increased 10.6% to $131.6 million in the second quarter. The figure rose 6% in the first quarter from the year earlier and climbed 21.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with net income of 10 cents versus a mean estimate of a loss of 9 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 9 cents a share to 10 cents over the last thirty days. The average estimate for the fiscal year is a loss of 12 cents per share, a rise from 13 cents thirty days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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