SINA Reports Third Quarter 2008 Financial Results

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SINA Reports Third Quarter 2008 Financial Results

SHANGHAI, China, Nov. 12 /Xinhua-PRNewswire/ -- SINA Corporation (Nasdaq GS: SINA), a leading online media company and mobile value-added service (MVAS) provider serving China and the global Chinese communities, today announced its unaudited financial results for the quarter ended September 30, 2008.

    Third Quarter 2008 Highlights
    -- Net revenues increased 64% year over year to $105.4 million, exceeding
       the Company's guidance between $100.0 million and $104.0 million.
    -- Advertising revenues increased 66% year over year to $76.2 million,
       within the Company's guidance range between $75.0 million and $77.0
       million.
    -- Non-advertising revenues increased 58% year over year to $29.2 million,
       exceeding the Company's guidance between $25.0 million and $27.0
       million.
    -- GAAP net income increased 28% year over year to $22.0 million, or $0.36
       diluted net income per share.
    -- Non-GAAP net income* increased 40% year over year to $26.8 million, or
       $0.44 diluted non-GAAP net income per share.

    * Non-GAAP measures are described and reconciled to the corresponding GAAP
      measures in the section below titled "Reconciliation of Non-GAAP to GAAP
      Results."

"I am very pleased to report another record quarter for SINA with our total quarterly revenues surpassing $100 million for the first time in the Company's history. Our outstanding online media coverage of the Beijing Olympic Games and strong performance in online advertising despite intense competition are further testaments of SINA leadership position in the online media and online brand advertising space in China." said Charles Chao, CEO of SINA. "While the global economic environment in general has significantly deteriorated and the advertising market in post-Olympic China has become increasingly challenging and uncertain, we believe SINA is going to remain competitive in the market given continuing growth of Internet adoption and shift of advertising budget from offline to online."

Financial Results

For the third quarter of 2008, SINA reported net revenues of $105.4 million, compared to $64.3 million in the same period last year and $91.3 million last quarter.

Advertising revenues for the third quarter of 2008 totaled $76.2 million, representing a 66% increase from the same period last year and a 17% increase from last quarter. Advertising revenues in China grew 68% year over year, or 17% quarter over quarter, to $75.2 million for the third quarter of 2008. The growth of the Company's advertising revenues was driven mainly by the continued shift of brand advertising budget from offline to online media in China as well as the impact of the 2008 Beijing Olympics.

Non-advertising revenues for the third quarter of 2008 totaled $29.2 million, representing a 58% increase from the same period in 2007 and an 11% increase from the previous quarter. For the third quarter of 2008, MVAS revenues grew 63% from the same period last year and 11% from last quarter to $27.1 million. The growth of the Company mobile revenues mostly resulted from the stabilization of operator policies, government regulations and business environment.

Gross margin for the third quarter of 2008 was 57%, down from 62% for the same period last year and last quarter. Advertising gross margin for the third quarter of 2008 was 58%, compared to 64% for the same period last year and last quarter. Non-GAAP advertising gross margin, which excludes stock- based compensation and amortization of intangible assets, for the third quarter of 2008 was 59%, compared to 65% in the same period last year and the previous quarter. The decline in advertising gross margin was mainly due to acquisition costs for Olympic-related contents incurred in the third quarter of 2008.

MVAS gross margin for the third quarter of 2008 was 53%, compared to 56% for the same period last year and 55% last quarter. The decline in MVAS gross margin was primarily due to increased costs related to revenue sharing arrangements.

Operating expenses for the third quarter of 2008 amounted to $40.1 million, an increase of 62% from the same period last year and an increase of 10% from last quarter. For the third quarter of 2008, non-GAAP operating expenses, which excludes stock-based compensation and amortization expense of intangible assets, were $36.9 million, representing an increase of 60% from the same period last year and an increase 10% from the previous quarter. The increase in operating expenses was primarily due to higher marketing expenses associated with the Beijing Olympics and, to a lesser extent, higher sales and engineering related payroll and other personnel costs.

Interest and other income for the third quarter of 2008 was $7.1 million, compared to $3.7 million from the same period last year and $6.7 million from last quarter. Other income for the third quarter of 2008, which mainly comprised of foreign exchange gains resulting from intercompany dividends, was $3.5 million. In the third quarter of 2008, the Company recognized an investment loss of $0.8 million, as a result of taking a controlling interest in a follow-on investment of a web application development firm. In the second quarter of 2008, the Company recorded an investment gain of $3.1 million from selling a minority equity interest in one of its subsidiaries.

For the third quarter of 2008, provision for income taxes was $4.4 million, compared to $1.7 million from the same period last year and $4.2 million from last quarter. The Company made a provision for PRC income taxes for the third quarter of 2008, based on an effective tax rate of 16% for the operations in China.

Net income for the third quarter of 2008 was $22.0 million, an increase of 28% from the same period last year and a decrease of 13% from last quarter. Diluted net income per share for the third quarter of 2008 was $0.36, compared to $0.28 in the same period last year and $0.42 last quarter. Non-GAAP net income for the third quarter of 2008 was $26.8 million, an increase of 40% from the same period last year and an increase of 3% from the previous quarter. Non-GAAP diluted net income per share for the third quarter of 2008 was $0.44, compared to $0.32 in the same period last year and $0.43 last quarter.

As of September 30, 2008, SINA's cash, cash equivalents and short-term investments amounted to $562.5 million, representing an increase of $123.1 million from a year ago. Cash flow from operating activities for the third quarter of 2008 was $26.9 million, compared to $19.6 million for the same period last year.

Voting Results of the Annual General Meeting of Shareholders

On September 8, 2008, the Company held its annual general meeting of shareholders in Hong Kong. Results of the shareholders' votes were as follows:

    -- All Class III Directors of the Company were re-elected-Director Pehong
       Chen (with 40.2 million shares voted for and 2.0 million shares
       abstained), Lip-Bu Tan (with 40.1 million shares voted for and 2.1
       million abstained) and Yichen Zhang (with 40.2 million shares voted for
       and 2.0 million shares abstained).
    -- The appointment of PricewaterhouseCoopers Zhong Tian CPAs Limited
       Company as the Company's independent auditors for the fiscal year
       ending December 31, 2008 was ratified (with 41.9 million shares voted
       for, 0.3 million shares voted against and twenty three thousand shares
       abstained).
    -- The amendment and restatement of the Company's Amended and Restated
       Articles of Association was not approved (with 21.7 million shares
       voted for, 20.5 million voted against and sixty seven thousand shares
       abstained).

Business Outlook

The Company estimates its total revenues for the fourth quarter of 2008 to be between $98.0 million and $101.0 million, with advertising revenues to be between $69.0 million and $71.0 million and non-advertising revenues to be between $29.0 million and $30.0 million.

Stock-based compensation for the fourth quarter of 2008 is expected to be approximately $3.8 million, which excludes any new shares that may be granted.

Non-GAAP Measures

This release contains non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of the Company's performance, should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). The Company's non-GAAP financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its non-GAAP financial measures.

Reconciliations of the Company's non-GAAP measures to the nearest GAAP measures are set forth in the section below titled "Reconciliation of Non-GAAP to GAAP Results." These non-GAAP measures include non-GAAP gross profit, non- GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, non-GAAP diluted net income per share and non-GAAP advertising gross margin.

The Company's management uses non-GAAP financial measures to gain an understanding of the Company's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects. The Company's non-GAAP financial measures exclude certain special items, including stock-based compensation charge, amortization of intangible assets, amortization of convertible debt issuance costs, gain/loss on the sale/purchase of business/investment and gain/loss on the sale of minority interest in subsidiary from its internal financial statements for purposes of its internal budgets. Non-GAAP financial measures are used by the Company's management in their financial and operating decision-making, because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparisons. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in the following ways: 1) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose, and 2) in comparing in a consistent manner the Company's current financial results with the Company's past financial results. The Company's management further believes the non- GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains and losses (i) that are not expected to result in future cash payments or (ii) that are non-recurring in nature or may not be indicative of its core operating results and business outlook.

The Company's management believes excluding stock-based compensation from its non-GAAP financial measures is useful for itself and investors, as such expense will not result in future cash payment and is otherwise unrelated to the Company's core operating results.

The Company's management believes excluding the non-cash amortization expense of intangible assets from its non-GAAP financial measures is useful for itself and investors, because they enable a more meaningful comparison of the Company's cash performance between reporting periods. In addition, such charges will not result in cash settlement in the future.

The Company's management believes excluding non-cash amortization expense of issuance cost relating to convertible bonds from its non-GAAP financial measure of net income is useful for itself and investors as such expense does not have any impact on cash earnings.

The Company's management believes excluding gain/loss on the sale/purchase of a business/investment and gain/loss on the sale of minority interest in subsidiary from its non-GAAP financial measure of net income is useful for itself and investors because such gains/losses are not indicative of the Company's core operating results.

The non-GAAP financial measures have limitations. They do not include all items of income and expense that affect the Company's operations. Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to the Company. Management compensates for these limitations by also considering the Company's financial results as determined in accordance with GAAP.

Conference Call

SINA will host a conference call at 8:00 p.m. Eastern Time today to present an overview of the Company's financial performance and business operations for the third quarter of 2008. The dial-in number for the call is +1-866-800-8648 (US) or +1-617-614-2702 (International) and the pass code is 61829912. A live Webcast of the call will be available from 8:00 p.m. - 9:00 p.m. ET on Wednesday, November 12, 2008 (9:00 a.m. - 10:00 a.m. Beijing Time on November 13, 2008). The call can be accessed through SINA's corporate web site at http://corp.sina.com . The call will be archived for 12 months on SINA's corporate web site at http://corp.sina.com . A replay of the conference call will be available through November 19, 2008 at midnight eastern time. The dial-in number is +1-888-286-8010 (US) or +1-617-801-6888 (International). The pass code for the replay is 50120185.

About SINA

SINA Corporation (Nasdaq GS: SINA) is a leading online media company and value-added information service provider in the People's Republic of China and for the global Chinese communities. With a branded network of localized web sites targeting Greater China and overseas Chinese, the Company provides services through five major business lines including SINA.com (online news and content), SINA Mobile (MVAS), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA E-Commerce (online shopping). Together these business lines provide an array of services including region-focused online portals, MVAS, search and directory, interest- based and community-building channels, free and premium email, blog services, audio and video streaming, game community services, classified listings, fee- based services, e-commerce and enterprise e-solutions. The Company generates the majority of its revenues from online advertising and MVAS offerings, and, to a lesser extent, from search and other fee-based services.

Safe Harbor Statement

This announcement contains forward-looking statements that relate to, among other things, SINA's expected financial performance (as described without limitation in the "Business Outlook" section and in quotations from management in this press release) and SINA's strategic and operational plans. SINA may also make forward-looking statements in the Company's periodic reports to the U.S. Securities and Exchange Commission, 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. SINA assumes no obligation to update the forward-looking statements in this release and elsewhere. Statements that are not historical facts, including statements about the Company's 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 limited operating history, the uncertain regulatory landscape in the People's Republic of China, including how the new EIT will be implemented, the changes by mobile operators in China to their policies for MVAS, the Company's ability to develop and market other MVAS products, fluctuations in quarterly operating results, the Company's reliance on online advertising sales and MVAS for a majority of its revenues, the Company's reliance on mobile operators in China to provide MVAS, 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 20-F for the year ended December 31, 2007 and its other filings with the Securities and Exchange Commission.



                                 SINA CORPORATION
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (U.S. Dollars in thousands, except per share data)

                                   Three months ended      Nine months ended
                                 September 30,   June 30,    September 30,
                                 2008     2007     2008      2008      2007
    Net revenues:
        Advertising             $76,205  $45,830  $64,940  $188,981  $118,796
        Non-advertising          29,209   18,519   26,380    79,068    56,642
                                105,414   64,349   91,320   268,049   175,438
    Cost of revenues:
        Advertising  (a)         32,138   16,614   23,686    74,856    45,449
        Non-advertising          13,117    7,851   11,466    34,761    22,501
                                 45,255   24,465   35,152   109,617    67,950
    Gross profit                 60,159   39,884   56,168   158,432   107,488

    Operating expenses:
        Sales and marketing (a)  22,264   12,276   21,102    58,363    35,357
        Product development (a)   8,693    5,905    7,385    22,092    16,037
        General and
         administrative (a)       8,709    6,291    7,824    23,944    19,835
        Amortization of
         intangibles                411      257      258       926       918
                                 40,077   24,729   36,569   105,325    72,147
    Income from operations       20,082   15,155   19,599    53,107    35,341

    Non-operating income:
       Interest and other
        income, net               7,089    3,734    6,704    20,013     8,983
       Investment gains (loss)     (779)      --    3,137     2,358       830
       Amortization of
        convertible debt
        issuance cost                --       --       --        --      (342)
                                  6,310    3,734    9,841    22,371     9,471

    Income before income taxes   26,392   18,889   29,440    75,478    44,812
    Provision for income taxes   (4,429)  (1,735)  (4,245)  (12,254)   (4,594)

    Net income                  $21,963  $17,154  $25,195   $63,224   $40,218


    Basic net income per share    $0.39    $0.31    $0.45     $1.13     $0.73
    Diluted net income per
     share                        $0.36    $0.28    $0.42     $1.04     $0.68

    Shares used in computing
     basic
      net income per share       55,964   55,304   55,672    55,728    54,892
    Shares used in computing
     diluted
       net income per share      60,639   60,210   60,669    60,535    59,768

    Net income used for diluted
     net income
      per share calculation:
    Net income                  $21,963  $17,154  $25,195   $63,224   $40,218
    Amortization of convertible
     debt issuance cost              --       --       --        --       342
                                $21,963  $17,154  $25,195   $63,224   $40,560

    (a) Stock-based
     compensation included
     under SFAS 123R was as
     follows:
       Cost of revenues -
        advertising                $834     $341     $854    $2,412    $1,245
       Sales and marketing          482      211      617     1,598       884
       Product development          428      356      582     1,470     1,241
       General and
        administrative            1,887      816    1,743     5,249     2,582



                               SINA CORPORATION
                   RECONCILIATION OF NON-GAAP TO GAAP RESULTS
               (U.S. Dollars in thousands, except per share data)


                                                    Three months ended
                                                    September 30, 2008
                                                                     Non-GAAP
                                             Actual    Adjustments    Results

                                                            834 (a)
                                                             88 (b)
    Gross profit                             $60,159       $922      $61,081

                                                         (2,797)(a)
                                                           (411)(b)
    Operating expenses                       $40,077    $(3,208)     $36,869

                                                          3,631 (a)
                                                            499 (b)
    Income from operations                   $20,082     $4,130      $24,212

                                                          3,628 (a)
                                                            469 (b)
                                                            779 (d)
    Net income                               $21,963     $4,876      $26,839


    Diluted net income per share               $0.36                   $0.44

    Shares used in computing diluted
       net income per share                   60,639                  60,639

    Net income used in computing diluted
      net income per share:
    Net income                               $21,963                 $26,839
    Amortization of convertible debt
      issuance costs                              --                      --
                                             $21,963                 $26,839

    Gross margin - advertising                   58%         1%          59%


                                                    Three months ended
                                                    September 30, 2007
                                                                    Non-GAAP
                                             Actual    Adjustments   Results


                                                            341 (a)
    Gross profit                             $39,884       $341      $40,225

                                                         (1,383)(a)
                                                           (257)(b)
    Operating expenses                       $24,729    $(1,640)     $23,089

                                                          1,724 (a)
                                                            257 (b)
    Income from operations                   $15,155     $1,981      $17,136


                                                          1,724 (a)
                                                            257 (b)
    Net income                               $17,154     $1,981      $19,135


    Diluted net income per share               $0.28                   $0.32

    Shares used in computing diluted
       net income per share                   60,210                  60,210

    Net income used in computing diluted
      net income per share:
    Net income                               $17,154                 $19,135
    Amortization of convertible debt
      issuance costs                              --                      --
                                             $17,154                 $19,135

    Gross margin - advertising                   64%         1%          65%


                                                   Three months ended
                                                     June 30, 2008
                                                                     Non-GAAP
                                             Actual    Adjustments    Results

                                                            854 (a)
                                                             89 (b)
    Gross profit                             $56,168       $943      $57,111

                                                         (2,942)(a)
                                                           (258)(b)
    Operating expenses                       $36,569    $(3,200)     $33,369

                                                          3,796 (a)
                                                            347 (b)
    Income from operations                   $19,599     $4,143      $23,742

                                                          3,796 (a)
                                                            317 (b)
                                                         (3,137)(e)
    Net income                               $25,195       $976      $26,171


    Diluted net income per share               $0.42                   $0.43

    Shares used in computing diluted
       net income per share                   60,669                  60,669

    Net income used in computing diluted
      net income per share:
    Net income                               $25,195                 $26,171
    Amortization of convertible debt
      issuance costs                              --                      --
                                             $25,195                 $26,171

    Gross margin - advertising                   64%         1%          65%


                                                   Nine months ended
                                                  September 30, 2008
                                                                    Non-GAAP
                                             Actual   Adjustments    Results

                                                          2,412 (a)
                                                            177 (b)
    Gross profit                            $158,432     $2,589     $161,021

                                                         (8,317)(a)
                                                           (926)(b)
    Operating expenses                      $105,325    $(9,243)     $96,082

                                                         10,729 (a)
                                                          1,103 (b)
    Income from operations                   $53,107    $11,832      $64,939

                                                         10,726 (a)
                                                          1,043 (b)
                                                            779 (d)
                                                         (3,137)(e)
    Net income                               $63,224     $9,411      $72,635


    Diluted net income per share               $1.04                   $1.20

    Shares used in computing diluted
       net income per share                   60,535                  60,535

    Net income used in computing diluted
      net income per share:
    Net income                               $63,224                 $72,635
    Amortization of convertible debt
      issuance costs                              --                      --
                                             $63,224                 $72,635

    Gross margin - advertising                   60%         2% *        62%


                                                    Nine months ended
                                                    September 30, 2007
                                                                     Non-GAAP
                                             Actual    Adjustments    Results


                                                          1,245 (a)
    Gross profit                            $107,488     $1,245     $108,733

                                                         (4,707)(a)
                                                           (918)(b)
    Operating expenses                       $72,147    $(5,625)     $66,522

                                                          5,952 (a)
                                                            918 (b)
    Income from operations                   $35,341     $6,870      $42,211

                                                          5,952 (a)
                                                            918 (b)
                                                            342 (c)
                                                           (830)(d)
    Net income                               $40,218     $6,382      $46,600


    Diluted net income per share               $0.68                   $0.78

    Shares used in computing diluted
       net income per share                   59,768                  59,768

    Net income used in computing diluted
      net income per share:
    Net income                               $40,218                 $46,600
    Amortization of convertible debt
      issuance costs                             342                      --
                                             $40,560                 $46,600

    Gross margin - advertising                   62%         1%          63%

    (a) To adjust stock-based compensation charges
    (b) To adjust  amortization of intangible assets
    (c) To adjust amortization of convertible debt issuance cost
    (d) To adjust gain/loss on the sale/purchase of business and investments
    (e) To adjust gain on the sale of minority interest in subsidiary

    *    Rounding


                                 SINA CORPORATION
                          UNAUDITED SEGMENT INFORMATION
                            (U.S. Dollars in thousands)

                                   Three months ended      Nine months ended
                                 September 30,   June 30,    September 30,
                                 2008     2007     2008      2008      2007

    Net revenues
      Advertising               $76,205  $45,830  $64,940  $188,981  $118,796
      Mobile related             27,117   16,601   24,517    73,325    51,854
      Others                      2,092    1,918    1,863     5,743     4,788
                               $105,414  $64,349  $91,320  $268,049  $175,438

    Cost of revenues
      Advertising               $32,138  $16,614  $23,686   $74,856   $45,449
      Mobile related             12,622    7,328   10,929    33,075    21,228
      Others                        495      523      537     1,686     1,273
                                $45,255  $24,465  $35,152  $109,617   $67,950


                                 SINA CORPORATION
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                           (U.S. Dollars in thousands)


                                              September 30,   December 31,
                                                      2008        2007
                              Assets
    Current assets:

       Cash and cash equivalents                  $343,488          $271,666
       Short-term investments                      219,001           206,333
       Accounts receivable, net                     88,935            56,719
       Other current assets                         10,420             8,840
             Total current assets                  661,844           543,558

    Property and equipment, net                     35,039            26,846
    Goodwill and intangible assets, net             95,027            89,358
    Other assets                                     1,358             2,501
    Total assets                                  $793,268          $662,263

         Liabilities and Shareholders' Equity
    Current liabilities:
       Accounts payable                             $1,403              $940
       Accrued liabilities                          81,117            56,931
       Income taxes payable                         16,747             9,079
       Convertible debt                             99,000            99,000
            Total current liabilities              198,267           165,950

    Other long-term liabilities                      2,524             1,337
            Total liabilities                      200,791           167,287

    Shareholders' equity                           592,477           494,976

    Total liabilities and shareholders' equity    $793,268          $662,263


    For more information, please contact:

     Cathy Peng
     SINA Corporation
     Phone: +86-10-8262-8888 x3112
     Email: ir@staff.sina.com.cn

SOURCE  SINA Corporation
    -0-                             11/12/2008
    /CONTACT: Cathy Peng, SINA Corporation, +86-10-8262-8888 x 3112,
ir@staff.sina.com.cn/
    /Web site: http://corp.sina.com/
    (SINA)

CO:  SINA Corporation
ST:  China
IN:  CPR ENT ITE MLM TLS
SU:  ERN CCA ERP



JH
-- CNW038 --
7636 11/12/2008 17:00 EST http://www.prnewswire.com