SINA Reports Third Quarter 2011 Financial Results

SHANGHAI, Nov 8, 2011 /PRNewswire-Asia/ -- 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 third quarter ended September 30, 2011.

Third Quarter 2011 Highlights

• Net revenues grew 20% year over year to $130.3 million. Non-GAAP net revenues grew 21% year over year to $125.6 million, reaching the high end of the Company's guidance of between $123 million and $126 million.
• Advertising revenues grew 25% year over year to a historical high of $101.0 million, within the Company's guidance of between $100 million and $102 million.
• Non-advertising revenues grew 7% year over year to $29.3 million. Non-GAAP non-advertising revenues grew 9% year over year to $24.6 million, exceeding the Company's guidance of between $23 million and $24 million.
• Net loss attributable to SINA was $336.3 million, or $5.10 diluted net loss per share attributable to SINA. Net loss included non-cash impairment charges totaling $350.1 million, $68.9 million of which related to an impairment of MVAS goodwill and the remaining $281.2 million related to other-than-temporary impairment write-downs on investments in China Real Estate Information Corporation ("CRIC") and Mecox Lane Limited ("MCOX"). Non-GAAP net income attributable to SINA, which excludes impairment charges and other items, was $17.5 million, or $0.26 non-GAAP diluted net income per share attributable to SINA.

"Since the official launch of Weibo.com v4.0 in September, over half of the existing users have upgraded, and we continue to see rapid growth of new users. Our focus now turns to adding more social networking features to Weibo to increase user stickiness," said Charles Chao, CEO of SINA. "For the third quarter, SINA's online brand advertising revenues reached a new high, for the first time exceeding over $100 million per quarter," Mr. Chao added.

Third Quarter 2011 Financial Results

For the third quarter of 2011, SINA reported net revenues of $130.3 million, compared to $108.2 million for the same period last year. Non-GAAP net revenues for the third quarter of 2011 totaled $125.6 million, compared to $103.6 million for the same period last year.

Brand advertising revenues for the third quarter of 2011 were $101.0 million, compared to $81.0 million for the same period last year. Non-advertising revenues for the third quarter of 2011 totaled $29.3 million, compared to $27.3 million for the same period last year. MVAS revenues for the third quarter of 2011 amounted to $21.4 million, compared to $20.7 million for the same period last year.

Gross margin for the third quarter of 2011 was 56%, down from 60% for the same period last year. Advertising gross margin for the third quarter of 2011 was 59%, compared to 63% for the same period last year. Non-GAAP advertising gross margin for the third quarter of 2011 was 60%, compared to 63% for the same period last year. The decrease in non-GAAP advertising gross margin was mainly due to increased spending on bandwidth and content, as well as increased personnel-related costs. MVAS gross margin for the third quarter of 2011 declined to 32% from 38% for the same period last year. The decline in MVAS gross margin was primarily due to product mix change and increased revenue share with MVAS partners.

Operating expenses for the third quarter of 2011 totaled $132.9 million, which included a goodwill impairment of $68.9 million, compared to $36.0 million for the same period last year. The goodwill impairment resulted from a combination of factors, including a decline in the business condition of the Company's MVAS business, reduction in the projected operating results of the MVAS business and decreases in revenues and earnings multiples of peer MVAS companies. Non-GAAP operating expenses for the third quarter of 2011 were $60.4 million, compared to $33.5 million for the same period last year. The increase in non-GAAP operating expenses was mostly due to increased marketing expenditures, personnel-related expenses and infrastructure related costs related to Weibo.com.

Loss from operations for the third quarter of 2011 was $59.8 million, compared to income from operations of $28.5 million for the same period last year. Non-GAAP income from operations for the third quarter of 2011 was $8.9 million, compared to $26.9 million for the same period last year.

Non-operating loss for the third quarter of 2011 was $275.2 million, compared to non-operating income of $4.9 million for the same period last year. In accordance with GAAP, the Company reassessed its investments in CRIC and MCOX in the third quarter of 2011 and recognized other-than-temporary impairment charges of $230.3 million and $50.9 million, respectively. Non-GAAP equity income from CRIC for the third quarter of 2011 was $4.2 million, compared to $5.3 million for the same period last year.

Provision for income taxes for the third quarter of 2011 was $1.4 million, compared to $2.2 million for the same period last year.

Net loss attributable to SINA for the third quarter of 2011 was $336.3 million, compared to net income attributable to SINA of $31.3 million for the same period last year. Diluted net loss per share attributable to SINA for the third quarter of 2011 was $5.10, compared to diluted net income per share attributable to SINA of $0.48 for the same period last year. Non-GAAP net income attributable to SINA for the third quarter of 2011 was $17.5 million, compared to $33.2 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA for the third quarter of 2011 was $0.26, compared to $0.50 for the same period last year.

As of September 30, 2011, SINA's cash, cash equivalents and short-term investments totaled $742.1 million, compared to $882.8 million as of December 31, 2010. The decrease in the cash balance was mainly due to acquiring a 19% interest in MCOX for $66.0 million in the first quarter of 2011 and a 9% interest in Tudou Holdings Limited for $66.4 million in the third quarter of 2011. Cash flow from operating activities for the third quarter of 2011 was $14.3 million. Cash paid for capital expenditures for the third quarter of 2011 was $19.6 million.

Others

On November 4, 2011, the Company held its Annual General Meeting of Shareholders. At the meeting, the shareholders re-elected Pehong Chen (with 35,023,147 shares voting for, 658,622 shares against and 401,156 shares abstaining) and Lip-Bu Tan (with 33,443,754 shares voting for, 2,236,765 shares against and 402,406 shares abstaining) as directors of SINA. The shareholders also approved and ratified the appointment of PricewaterhouseCoopers Zhong Tian CPAs Limited Company as the Company's independent auditors for the fiscal year ending December 31, 2011 (with 35,677,348 shares voting for, 22,723 shares against and 382,854 shares abstaining).

On September 21, 2011, the Company subscribed a total of $50 million in the Yunfeng Funds, each of which is a limited partnership established for the purpose of making investments in Alibaba Group, a leader in the Chinese e-commerce industry. The transaction between Yunfeng Funds and Alibaba Group closed on October 27, 2011.

Business Outlook

SINA estimates that its non-GAAP net revenues for the fourth quarter of 2011 will be between $128 million and $131 million, with advertising revenues to be between $103 million and $105 million and non-GAAP non-advertising revenues to be between $25 million and $26 million. Non-GAAP net revenues and non-GAAP non-advertising revenues exclude the recognition of $4.7 million in deferred license revenue related to SINA's equity investment in CRIC.

Non-GAAP Measures

This release contains financial measures that are not prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures, which are used as measures of SINA's performance, should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with 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 "Unaudited Reconciliation of Non-GAAP to GAAP Results."  These non-GAAP measures include non-GAAP non-advertising revenues, non-GAAP net revenues, non-GAAP gross profit, non-GAAP advertising gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP equity income from CRIC, non-GAAP net income attributable to SINA and non-GAAP diluted net income per share attributable to SINA.

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 items, including stock-based compensation, amortization of intangible assets, recognition of deferred revenues and gain/loss resulting from the disposal, purchase or impairment of a business, investment or non-controlling interest in a 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 more 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 comparing the Company's current financial results with the Company's past financial results in a consistent manner, and 2) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose. The Company's management further believes the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains/losses and other items (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 payments and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding the amortization expense of intangible assets from its non-GAAP financial measures is useful for itself and investors, because it enables 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 and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's management believes excluding the recognition of deferred revenues, mostly relating to the license agreements resulting from SINA injecting its online real estate advertising business into its majority-owned subsidiary China Online Housing Technology Corporation ("COHT") and exchanging its interest in COHT for approximately a 33% interest in CRIC upon the successful listing of CRIC on the NASDAQ Global Select Market in October 2009, from its non-GAAP financial measures is useful for itself and investors, because it enables a more meaningful comparison of the Company's revenue performance between reporting periods. In addition, such revenues will not result in cash settlement in the future and is not an indicator used by management to measure the Company's core operating results and business outlook.

The Company's non-GAAP equity income from its interest in net income attributable to CRIC excludes stock-based compensation, amortization expense of intangible assets and gains from the purchase of a business, which are consistent with the Company's adjusted items to calculate non-GAAP measures.

The Company's management believes excluding gain/loss resulting from the disposal, purchase or impairment of a business, investment or non-controlling interest in a subsidiary from its non-GAAP financial measure 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 p.m. Eastern Standard Time on November 8, 2011 to present an overview of the Company's financial performance and business operations. A live webcast of the call will be available through the Company's corporate website at http://corp.sina.com. The conference call can be accessed as follows:

A replay of the conference call will be available through midnight Eastern Standard Time, November 15, 2011. The dial-in number is + 1 617 801 6888. The pass code for the replay is 64721236.

About SINA

SINA Corporation (Nasdaq GS: SINA) is an online media company and mobile value added service (MVAS) provider serving China and the global Chinese communities. With a branded network of localized websites targeting Greater China and overseas Chinese, the Company provides services mainly through SINA.com (online news and content), Weibo.com (microblog) and SINA Mobile (MVAS). Through these businesses and properties and other business lines, SINA offers an array of services including region-focused online portals, microblog, blog, video and music streaming, photo sharing, online games, email, search, classified listings, MVAS, 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 fee-based services.

Safe Harbor Statement

This press release contains forward-looking statements that relate to, among other things, SINA's expected financial performance and SINA's strategic and operational plans (as described, without limitation, in the "Business Outlook" section and in quotations from management in this press release). 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 press 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 current global financial and credit market crisis and its impact on the Chinese economy, the uncertain regulatory landscape in the People's Republic of China, fluctuations in the Company's quarterly operating results, the Company's reliance on online advertising sales and MVAS for a majority of its revenues, any failure to successfully develop, introduce, drive adoption of or monetize new features and products, including Weibo.com and MVAS products, the Company's reliance on mobile operators in China to provide MVAS, changes by mobile operators in China to their policies for MVAS, any failure to successfully integrate acquired businesses, risks associated with CRIC, impairment of its investments and any failure to compete successfully against new entrants and established industry competitors. Further information regarding these and other risks is included in SINA's Annual Report on Form 20-F for the year ended December 31, 2010 and its other filings with the Securities and Exchange Commission.

Contact:

Cathy Peng
IR Manager
SINA Corporation
Phone: +86-10-82628888 x 3112
Email: [email protected]

SOURCE SINA Corporation