Sina gets lift from recovering ad market

SHANGHAI, CHINA: A strongly recovering ad market should boost Sina Corp through the middle of the year, China's largest Internet portal said as it gave forecast-beating results and a strong outlook, sending its shares higher.

Sina forecast adjusted second-quarter revenue at $90-$93 million, roughly in line with an analyst view of $93.5 million, and up from net revenue of $80.3 million in the first quarter, excluding revenue from its carved-out real estate advertising business.

"Sina delivers a strong set of first-quarter results, in particular brand ad revenue beating guidance," Credit Suisse analyst Wallace Cheung wrote in a note. "Second-quarter guidance is also above expectation, as guidance indicated brand advertising revenue will grow at 46-50 percent year on year."

Sina competes with Tencent Holdings and Sohu in China's portal advertising market, worth about $160 million in revenue in last year's third quarter. Sina was the leader with 34 percent market share.

The company saw its first-quarter profit more than double, beating Wall Street expectations, as strong online ad revenues countered weakness in its mobile segment.

"We feel very good about this year's performance but the second half will really depend on the situation of the Chinese economy as well as the year-to-year comparison," CEO Charles Chao said on an earnings conference call.

Chao, a media-shy CEO who started his career as a journalist with the Shanghai Media Group, said Sina continued to seek acquisitions and investments in e-commerce, gaming and the mobile sector but had no announcements for the near future.

"We believe the higher than normal P/E ratio created by the initial IPOs on China's newly introduced stock exchange for SMEs has temporarily created a bubble in China's TMT market, so we are becoming more cautious on our investment decisions," he said.

Rival Tencent, China's biggest Internet firm, last week reported another quarter of record profit and is on the prowl for global Internet acquisitions.

Late last year, China's major wireless operators suspended billing for some third-party wireless services as part of an anti-pornography crackdown by the government, affecting mobile revenue of Internet portals such as Sina and Sohu.

Sina's first-quarter net income was $24.4 million, or 37 cents per share, compared with $9.7 million, or 17 cents a share, a year ago. Excluding special items, the company earned 34 cents a share.

Analysts on average expected first-quarter earnings of 27 cents per share, excluding special items.

China is the world's largest Internet market by users with more than 400 million netizens.

Sina shares have fallen 22 percent so far this year versus a 3 percent rise on the Nasdaq .IXIC, on concerns over lost revenue from the pornography crackdown and stiff competition in the portal business. They closed Monday's trade at $34.85.