SINA Reports First Quarter 2004 Financial Results

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SINA Reports First Quarter 2004 Financial Results

The Company Reports Net Revenues of $41.4 Million and U.S. GAAP Net Income of $16.0 Million

SHANGHAI, China, April 27 /Xinhua-PRNewswire/ -- SINA Corporation (Nasdaq: SINA), a leading online media company and value-added information service provider for China and for global Chinese communities, today announced its financial results for the first quarter ended March 31, 2004:

     - Net revenues for the quarter grew by 128.5% year-over-year to a
       record $41.4 million

     - Advertising revenues for the quarter grew by 79.8% year-over-year to
       $13.1 million and accounted for 31.7% of total revenues

     - Non-advertising revenues for the quarter grew by 161.4% year-over-year
       and accounted for 68.3% of total revenues

     - US GAAP net income for the quarter was $16.0 million; or $0.28 diluted
       net income per share, compared to a net income of $3.4 million, or
       $0.07 diluted net income per share for the same period in 2003.

     - Pro forma net income for the quarter was $16.6 million, or
       $0.29 diluted net income per share, compared to a pro forma net income
       of $4.1 million, or $0.08 diluted net income per share for the same
       period in 2003.

     - Cash flow from operating activities for the quarter was $19.7 million,
       compared to $3.8 million for the same period in 2003.

"In this past quarter, we have again performed above our expectation to achieve new heights in both our revenues and profit," said Wang Yan, CEO of SINA. "We are off to a good start in 2004. While we are seeing stronger competition in all segments of our market, we continue to see growths in our businesses. "

Financial Results

For the quarter ended March 31, 2004, SINA reported record net revenues of $41.4 million, an increase of 128.5% from $18.1 million reported in the same period in 2003 and an increase of 8.2% from $38.3 million reported in the previous quarter.

Advertising revenues totaled $13.1 million for the quarter, representing a 79.8% increase from $7.3 million reported in the same period in 2003 and a 1.4% increase from $12.9 million reported in the previous quarter.

Non-advertising revenues totaled $28.3 million for the quarter, a 161.4% increase from $10.8 million reported in the same period in 2003 and a 11.6% increase from $25.3 million reported in the previous quarter. Non-advertising revenues accounted for 68.3% of the total net revenues for the quarter, compared to 59.7% for the same period in 2003 and 66.2% for the previous quarter. The increase in non-advertising revenues was primarily driven by the growth in mobile value-added service, which grew 180.4% year over year and 12.8% sequentially.

The gross margin for the quarter was 69.7%, down from 72.1% reported in the previous quarter and up from 66.3% reported in the same period in 2003.

Operating expenses for the first quarter totaled $12.8 million, an increase of 4.6% from $12.2 million reported in the previous quarter and an increase of 46.4% over $8.7 million reported in the same period in 2003.

Net income for the first quarter was $16.0 million, representing an increase of 375.2% from a net income of $3.4 million for the same period in 2003 and an increase of 73.1% from a net income of $9.3 million for the previous quarter. Diluted net income per share was $0.28 for the first quarter, compared to a diluted net income per share of $0.07 for the same period of 2003 and a diluted net income per share of $0.16 for the previous quarter.

On a pro forma basis, net income for the first quarter totaled $16.6 million, compared to a pro forma net income of $4.1 million for the same period in 2003 and of $15.9 million for the previous quarter. Diluted net income per share, on a pro forma basis, was $0.29 for the quarter, compared to a pro forma diluted net income per share of $0.08 for the same period of 2003 and of $0.28 for the previous quarter. Pro forma net income excludes non-cash charges relating to amortization of intangible assets, stock based compensation and convertible bond issuance cost, and impairment charge on Sun Media Group investment. For the fourth quarter of 2003, the Company took an impairment charge in the amount of $6.1 million for the investment in Sun Media Group.

As of March 31, 2004, SINA's cash, cash equivalents and investments in marketable securities totaled $238.1 million, an increase of $11.0 million from three months ago. Cash flow from operating activities for the first quarter was $19.7 million, compared to $19.5 million for the previous quarter and $3.8 million for the same period in 2003. During the first quarter, SINA paid a total of $15.7 million in net cash for acquisitions, deposit for acquisition as well as investment in a joint venture.

New Businesses

In January 2004, SINA and Yahoo entered into a joint venture for online auction in China. In April, both companies' top executives unveiled the auction site "www.1pai.com.cn" through a charity event. The site is expected to be fully operational by June and become a cornerstone of both companies' e-commerce strategy in China.

In February 2004, SINA furthered its investment in online games and online communities products through its strategic licensing agreement with a leading Korean game portal company, NetMarble. This cooperation allowed SINA to acquire capabilities to develop and provide series of casual games, avatars, hompy and animated online chat rooms to our vast user base. SINA is expected to launch its game portal in early second half of 2004.

In February 2004, SINA signed an agreement to acquire a leading mobile value-added service provider Crillion Corp. The company, based in Shenzhen, provides mobile community services as well as job information from career centers nationwide via its short message service platform. The acquisition was closed at the end of March. The up-front payment of the acquisition included $9.9 million in cash and 195,593 newly issued SINA ordinary shares. In addition to the up-front payment, SINA will make future contingent payments based on Crillion's financial performance in 2004 and 2005. The future earn- out payments will be paid out roughly on a 1.5 to 2.0 times 2004 and 2005 earnings basis respectively, provided that Crillion's pretax net income for 2004 and 2005 is over $6.7 million and $13.3 million, respectively. As a result of the acquisition, the Company recorded certain intangible assets in the amount of $4.5 million, which will be amortized over periods ranging from 1.3 to 3.0 years. In addition, the Company recorded goodwill in the amount of $9.9 million for this acquisition. The future earn-out payments for this acquisition, if any, will be recorded as additional goodwill. The goodwill will not be amortized but will be assessed for impairment on an annual basis.

"We continue to focus on investment in potential high growth areas such as online gaming and community and e-commerce," said Hurst Lin, COO of SINA. "Additionally, we are also on the lookout for investment opportunities that will consolidate our leadership position in wireless and online portal."

Business Outlook

The Company estimates that its total revenues for Q2 2004 to be between $48.5 million and $49.5 million, with advertising revenues between $14.5 million and $15.0 million and non-advertising revenues between $34.0 million and $34.5 million. Pro forma EPS on a fully diluted basis is expected to be $0.31 to $0.32 for Q2 2004.

NON-GAAP Measures

To supplement the consolidated financial statements presented in accordance with GAAP, SINA uses non-GAAP measures of gross profit, operating income, net income and earnings per share, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses that are not expected to result in future cash payments, gains and losses that are non-recurring in nature or may not be indicative of our core operating results. In addition, because the Company has historically reported certain non-GAAP results to investors, the Company believes the inclusion of non-GAAP measures provides consistency in our financial reporting. These measures should be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for or superior to GAAP results. Consistent with the Company's historical practice, the non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.

Conference Call

SINA will host a conference call at 9:00 p.m. Eastern Time today to present an overview of the Company's financial performance and business operations for the first quarter 2004. The dial-in number for the call is 617-801-9713. The pass code is 25444851. A live Webcast of the call will be available from 9:00 p.m. - 10:00 p.m. ET on Tuesday, April 27th, 2004 (9:00 a.m. - 10:00 a.m. Beijing Time on April 28th, 2004). The call can be accessed through the Company's corporate web site at http://corp.sina.com. The call will be archived for 12 months on SINA's corporate website at http://corp.sina.com. A replay of the conference call will be available for forty-eight hours after the conclusion of the conference call. The dial-in number is 617-801-6888. The pass code for the replay is 83860423.

About SINA

SINA Corporation (Nasdaq: SINA) is a leading online media company and value-added information service (VAS) provider for China and for global Chinese communities. With a branded network of localized web sites targeting Greater China and overseas Chinese, SINA provides services through five major business lines including SINA.com (online news and content), SINA Mobile (mobile value-added services), SINA Online (community-based services and games), SINA.net (search and enterprise services) and SINA E-Commerce (online shopping and travel). Together these provide an array of services including region-focused online portals, mobile value-added services, search and directory, interest-based and community-building channels, free and premium email, online games, virtual ISP, classified listings, fee-based services, e-commerce and enterprise e-solutions.

Safe Harbor Statement

This announcement contains forward-looking statements concerning SINA's expected financial performance (as described without limitation in the Business Outlook section and quotations from management in this press release), as well as SINA's strategic and operational plans. SINA may also make written or oral forward-looking statements in our periodic reports to the Securities and Exchange commission on forms 10-K, 10-Q, 8-K, etc., in its annual report to shareholders, in its proxy statements, in its offering circulars and prospectuses, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, SINA's historical losses, its limited operating history, the uncertain regulatory landscape in the People's Republic of China, fluctuations in quarterly operating results, the Company's reliance on wireless short messaging service and online advertising sales for a majority of its revenues, the Company's reliance on mobile operators in China to provide wireless short messaging service, any failure to successfully develop and introduce new products and any failure to successfully integrate acquired businesses. Further information regarding these and other risks is included in SINA's Annual Report on Form 10-K for the period ended December 31, 2003 and its recent reports on Form 10-Q as well as in its other filings with the Securities and Exchange Commission.


                               SINA CORPORATION
                UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                    (in thousands, except per share data)

                                                    Three months ended
                                                  March 31,       December 31,
                                               2004       2003        2003
    Net revenues
        Advertising                          $13,118     $7,298     $12,939
        Non-Advertising                       28,270     10,816      25,331
                                              41,388     18,114      38,270

    Cost of revenues
        Advertising                            4,332      2,826       4,169
        Non-Advertising                        8,194      3,267       6,493
        Stock-based compensation                  -          14          -
                                              12,526      6,107      10,662

    Gross profit                              28,862     12,007      27,608

    Operating expenses
        Sales and marketing                    7,098      4,454       6,588
        Product development                    1,974      1,421       1,779
        General and administrative             3,215      2,116       3,421
        Stock-based compensation                  -         230           7
        Amortization of intangibles              484        505         415
                                              12,771      8,726      12,210

    Income from operations                    16,091      3,281      15,398

    Other income, net                          1,049        401         523
    Gain (loss) on Sun Media Investment           59         -       (6,063)
    Loss on equity investment                   (333)      (306)       (117)

    Income before income taxes                16,866      3,376       9,741

    Provision for income taxes                  (824)        -         (472)

    Net income                               $16,042     $3,376      $9,269

    Shares used in computing basic
     net income per share                     49,329     46,774      48,647

    Basic net income per share                  0.33       0.07        0.19

    Shares used in computing diluted
       net income per share                   57,826     50,844      57,784

    Diluted net income per share*              $0.28      $0.07       $0.16

    * Net income used for diluted net
      income per share calculation

    Net income                               $16,042     $3,376      $9,269

    Amortization of convertible
     bond issuance cost                          171         -          171

    Net income used for diluted
     net income per share calculation        $16,213     $3,376      $9,440


                               SINA CORPORATION
           UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                    (in thousands, except per share data)

                                                    Three months ended
                                                  March 31,       December 31,
                                               2004       2003        2003
    Net revenues
        Advertising                          $13,118     $7,298     $12,939
        Non-Advertising                       28,270     10,816      25,331
                                              41,388     18,114      38,270

    Cost of revenues
        Advertising                            4,332      2,826       4,169
        Non-Advertising                        8,194      3,267       6,493
                                              12,526      6,093      10,662

    Gross profit                              28,862     12,021      27,608

    Operating expenses
        Sales and marketing                    7,098      4,454       6,588
        Product development                    1,974      1,421       1,779
        General and administrative             3,215      2,116       3,421
                                              12,287      7,991      11,788

    Income from operations                    16,575      4,030      15,820

    Other income, net                          1,220        401         694
    Loss on equity investment                   (333)      (306)       (117)

    Pro forma net income before income taxes  17,462      4,125      16,397

    Provision for income taxes                  (824)       -          (472)

    Pro forma net income                      16,638      4,125      15,925

    Shares used in computing pro forma
     basic net income per share               49,329     46,774      48,647

    Pro forma basic net income per share        0.34       0.09        0.33

    Shares used in computing pro forma
     diluted net income per share             57,826     50,844      57,784

    Pro forma diluted net income per share     $0.29      $0.08       $0.28

    Reconciliation from GAAP results
     to pro forma results:

    GAAP net income                          $16,042     $3,376      $9,269

    Stock based compensation
          Cost of revenues                        -          14          -
          Operating expenses                      -         230           7

    Amortization of intangibles                  484        505         415
    Amortization of convertible
     bond issuance cost                          171                    171
    Loss (gain) on Sun Media Investment          (59)                 6,063

    Pro forma net income                     $16,638     $4,125     $15,925


                               SINA CORPORATION
                        UNAUDITED SEGMENT INFORMATION
                                (in thousands)

                                                  Three months ended
                                                March 31,        December 31,
                                             2004        2003         2003
    Net revenues
                 Advertising                 $13,118      $7,298     $12,939
                 Mobile related               25,786       9,197      22,859
                 Others                        2,484       1,619       2,472
                                             $41,388     $18,114     $38,270

    Cost of revenues
                 Advertising                  $4,332      $2,826      $4,169
                 Mobile related                7,977       3,032       6,299
                 Others                          217         235         194
                                             $12,526      $6,093     $10,662


                               SINA CORPORATION
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
                          (in thousands U.S. dollar)

                                                   March 31        December 31
                                                     2004              2003
    Assets
       Cash, cash equivalents and
         investments in marketable securities     $238,142          $227,164
       Accounts receivable, net                     26,714            17,606
       Property and equipment, net                   9,573             8,646
       Long-term investment                         12,958             8,878
       Goodwill/intangible assets, net              34,258            18,660
       Other assets                                 16,125             8,943
          Total assets                            $337,770          $289,897

    Liabilities and Shareholders' Equity
       Liabilities                                 $43,171           $30,390
       Convertible Debt                            100,000           100,000
       Shareholders' equity                        194,599           159,507

          Total liabilities and
           shareholders' equity                   $337,770          $289,897

SOURCE SINA Corporation

CONTACT:
Chen Fu,
Investor Relations of SINA Corporation,
+8621-6289-5678 x6089,
fuchen@staff.sina.com; or
Denise Roche of The Ruth Group,
+1-646-536-7008,
droche@theruthgroup.com,
for SINA Corporation