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SINA Reports Second Quarter 2011 Financial Results
Aug 17, 2011 (05:08 PM EDT)


SHANGHAI, Aug. 17 , 2011 /PRNewswire-Asia/ -- SINA Corporation (NASDAQ GS: SINA), a leading online media company and mobile value-added service ("MVAS") provider for China and for the global Chinese communities, today announced its unaudited financial results for the second quarter ended June 30, 2011.

Second Quarter 2011 Highlights

  • Net revenues grew 20% year over year to $119.0 million.  Non-GAAP net revenues grew 21% year over year to $114.3 million, within the Company's guidance of between $112 million and $115 million.
  • Advertising revenues grew 26% year over year to a record $91.8 million, reaching the high end of the Company's guidance of between $90 million and $92 million.
  • Non-advertising revenues grew 3% year over year to $27.2 million.  Non-GAAP non-advertising revenues grew 4% year over year to $22.5 million, within the Company's guidance of between $22 million and $23 million.
  • Net income attributable to SINA for the second quarter of 2011 was $10.0 million, or $0.15 diluted net income per share attributable to SINA.  Non-GAAP net income attributable to SINA was $13.3 million, or $0.20 non-GAAP diluted net income per share attributable to SINA.

"SINA's brand advertising business was robust in the second quarter, despite growing on top of a large base, in part benefiting from the elevation of SINA's media brand as the popularity of Weibo.com spread in China," said Charles Chao, CEO of SINA, "Launched less than two years ago, Weibo.com has become an online phenomenon with registered accounts recently surpassing 200 million."

Second Quarter 2011 Financial Results

For the second quarter of 2011, SINA reported net revenues of $119.0 million, compared to $99.4 million for the same period last year.  Non-GAAP net revenues for the second quarter of 2011 totaled $114.3 million, compared to $94.7 million for the same period last year.  Brand advertising revenues for the second quarter of 2011 were $91.8 million, compared to $73.1 million for the same period last year.  The 26% year over year growth in brand advertising was on top of a base that grew 52% year over year in the previous year, boosted by the 2010 World Cup and Expo 2010 Shanghai.

Non-advertising revenues for the second quarter of 2011 totaled $27.2 million, compared to $26.3 million for the same period last year.  MVAS revenues for the second quarter of 2011 amounted to $19.5 million, compared to $20.0 million for the same period last year.

Gross margin for the second quarter of 2011 was 57%, down from 58% for the same period last year.  Advertising gross margin for the second quarter of 2011 was 59%, compared to 60% for the same period last year.  Non-GAAP advertising gross margin for the second quarter of 2011 was 60%, compared to 61% for the same period last year.  MVAS gross margin for the second quarter of 2011 was 39%, compared to 42% for the same period last year.  The decline in MVAS gross margin was primarily due to product mix and increased revenue sharing with MVAS partners.

Operating expenses for the second quarter of 2011 totaled $59.7 million, compared to $32.0 million for the same period last year.  Non-GAAP operating expenses for the second quarter of 2011 were $56.4 million, compared to $29.1 million for the same period last year. The increase in operating expenses was primarily due to increased marketing expenditures and personnel-related expenses related to Weibo.com.

Operating income for the second quarter of 2011 was $8.7 million, compared to $26.1 million for the same period last year.  Non-GAAP operating income for the second quarter of 2011 was $8.1 million, compared to $25.0 million for the same period last year.

Non-operating income was $2.6 million in the second quarter, compared to $1.5 million for the same period last year.  Interest and other income, net was $3.9 million, compared to $1.6 million for the same period last year, primarily due to higher interest rates on bank deposits in China. Non-GAAP equity income from China Real Estate Information Corporation ("CRIC") for the quarter was $2.4 million, compared to $3.4 million from the same period last year.

Provision for income taxes for the second quarter of 2011 was $1.3 million, compared to $2.4 million for the same period last year.

Net income attributable to SINA for the second quarter of 2011 was $10.0 million, compared to $25.2 million for the same period last year. Diluted net income per share attributable to SINA for the second quarter of 2011 was $0.15, compared to $0.38 for the same period last year.  Non-GAAP net income attributable to SINA for the second quarter of 2011 was $13.3 million, compared to $27.7 million for the same period last year. Non-GAAP diluted net income per share attributable to SINA for the second quarter of 2011 was $0.20, compared to $0.42 for the same period last year.

As of June 30, 2011, SINA's cash, cash equivalents and short-term investments totaled $826.4 million, compared to $882.8 million as of December 31, 2010.  The decrease in the cash balance was mainly due to acquiring approximately a 19% interest in Mecox Lane Limited in the first quarter of 2011. Cash flow from operating activities for the second quarter of 2011 was $11.4 million, compared to $12.9 million for the same period last year. For the six months ended June 30, 2011, the Company issued 3.7 million new ordinary shares to settle conversion requests equivalent to $96.1 million, reducing the convertible debt amount to $3.0 million as of June 30, 2011.

Business Outlook

SINA estimates that its non-GAAP net revenues for the third quarter of 2011 will be between $123 million and $126 million, with advertising revenues to be between $100million and $102 million and non-GAAP non-advertising revenues to be between $23 million and $24 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 advertising revenue, non-GAAP non-advertising revenue, non-GAAP net revenues, non-GAAP gross profit, non-GAAP advertising gross margin, non-GAAP operating expenses, non-GAAP income from operations, 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 of net income attributable to SINA 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 9 p.m. Eastern Time on August 17, 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:

US:

+1 617 597 5361

UK:

+44 207 365 8426

Hong Kong:

+852 3002 1672

Passcode for all regions:

49743348



A replay of the conference call will be available through midnight Eastern Time, August 24, 2011. The dial-in number is + 1 617 801 6888. The pass code for the replay is 49178960.

About SINA

SINA is an online media company and MVAS provider in the People's Republic of China and for 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, MVAS, microblog, blog, video and music streaming, photo sharing, online games, email, search, 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 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: 8610-82628888 x 3112
Email: ir@staff.sina.com.cn

SINA CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. Dollars in thousands, except per share data)














Three months ended


Six months ended



June 30,


March 31,


June 30,



2011


2010


2011


2011


2010

Net revenues:










   Advertising

$  91,787


$  73,090


$  72,345


$  164,132


$  127,369

   Non-advertising

27,176


26,326


27,866


55,042


57,048



118,963


99,416


100,211


219,174


184,417

Cost of revenues:










   Advertising  (a)

37,665


29,053


33,088


70,753


53,055

   Non-advertising

12,957


12,303


13,763


26,720


25,172



50,622


41,356


46,851


97,473


78,227

Gross profit

68,341


58,060


53,360


121,701


106,190












Operating expenses:










   Sales and marketing (a)

37,880


19,584


25,718


63,598


36,634

   Product development (a)

14,377


7,983


10,263


24,640


15,668

   General and administrative (a)

7,173


4,169


5,596


12,769


10,375

   Amortization of intangibles

259


246


258


517


2,846



59,689


31,982


41,835


101,524


65,523

Income from operations

8,652


26,078


11,525


20,177


40,667












Non-operating income:










  Interest and other income, net

3,884


1,601


2,692


6,576


3,194

  Earnings (loss) from equity investments, net

(1,283)


(84)


2,348


1,065


9,907



2,601


1,517


5,040


7,641


13,101












Income before income taxes

11,253


27,595


16,565


27,818


53,768

Provision for income taxes

(1,253)


(2,391)


(1,669)


(2,922)


(4,289)












Net income

10,000


25,204


14,896


24,896


49,479

  Less: Net income (loss) attributable to noncontrolling interest

40


(25)


(111)


(71)


(103)












Net income attributable to SINA

$  9,960


$  25,229


$  15,007


$  24,967


$  49,582























Basic net income per share attributable to SINA

$  0.15


$  0.41


$  0.24


$  0.39


$  0.81

Diluted net income per share attributable to SINA

$  0.15


$  0.38


$  0.23


$  0.37


$  0.76












Shares used in computing basic










  net income per share attributable to SINA

65,614


61,066


62,942


64,278


60,995

Shares used in computing diluted










  net income per share attributable to SINA

66,848


65,562


66,659


67,203


65,530























(a) Stock-based compensation in each category:











Cost of revenues - advertising

$  777


$ 812


$  609


$  1,386


$  1,833


Sales and marketing

658


615


520


1,178


1,368


Product development

538


444


430


968


1,096


General and administrative

1,880


1,531


1,485


3,365


3,263



SINA CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)











June 30,



December 31,




2011



2010


Assets


Current assets:














Cash and cash equivalents


$  477,765



$  643,619


Short-term investments


348,622



239,216


Accounts receivable, net


102,173



89,843


Other current assets


38,273



35,981


     Total current assets


966,833



1,008,659








Property and equipment, net


53,062



33,289

Goodwill and intangible assets, net


85,066



85,574

Investments


582,472



508,113

Other assets


6,875



455

Total assets


$ 1,694,308



$ 1,636,090









Liabilities and Shareholders' Equity


Current liabilities:







Accounts payable


$ 9,603



$ 3,963


Accrued liabilities


155,208



128,050


Income taxes payable


11,731



17,011


Convertible debt


2,950



99,000


    Total current liabilities


179,492



248,024








Long-term deferred revenue


135,901



145,274

Other long-term liabilities


2,048



2,266


    Total liabilities


317,441



395,564








Shareholders' equity







SINA shareholders' equity


1,375,431



1,239,308


Noncontrolling interest


1,436



1,218


    Total shareholders' equity


1,376,867



1,240,526








Total liabilities and shareholders' equity


$ 1,694,308



$ 1,636,090



SINA CORPORATION

UNAUDITED SEGMENT INFORMATION

(U.S. Dollars in thousands)














Three months ended


Six months ended



June 30,


March 31,


June 30,



2011


2010


2011


2011


2010












Net revenues











Advertising

$  91,787


$ 73,090


$  72,345


$  164,132


$  127,369


Mobile related

19,515


19,964


21,287


40,802


44,518


Others

7,661


6,362


6,579


14,240


12,530



$  118,963


$ 99,416


$  100,211


$  219,174


$  184,417












Cost of revenues











Advertising

$  37,665


$ 29,053


$  33,088


$  70,753


$  53,055


Mobile related

11,907


11,660


12,961


24,868


24,084


Others

1,050


643


802


1,852


1,088



$  50,622


$ 41,356


$  46,851


$  97,473


$  78,227



SINA CORPORATION

UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP RESULTS

(U.S. Dollars in thousands, except per share data)









































Three months ended



June 30, 2011


June 30, 2010


March 31, 2011







Non-GAAP






Non-GAAP






Non-GAAP



Actual


Adjustments


Results


Actual


Adjustments


Results


Actual


Adjustments


Results




















Advertising revenues

$  91,787




$  91,787


$  73,090




$  73,090


$  72,345




$  72,345

Non-advertising revenues

27,176


(4,686)

(c)

22,490


26,326


(4,686)

(c)

21,640


27,866


(4,686)

(c)

23,180

Net revenues

$  118,963


$  (4,686)


$  114,277


$  99,416


$  (4,686)


$  94,730


$  100,211


$  (4,686)


$  95,525
























777

(a)





812

(a)





609

(a)






(4,686)

(c)





(4,686)

(c)





(4,686)

(c)


Gross profit

$  68,341


$  (3,909)


$  64,432


$  58,060


$  (3,874)


$  54,186


$  53,360


$  (4,077)


$  49,283
























(3,076)

(a)





(2,590)

(a)





(2,435)

(a)






(259)

(b)





(246)

(b)





(258)

(b)


Operating expenses

$  59,689


$  (3,335)


$  56,354


$  31,982


$  (2,836)


$  29,146


$  41,835


$  (2,693)


$  39,142











































3,853

(a)





3,402

(a)





3,044

(a)






259

(b)





246

(b)





258

(b)






(4,686)

(c)





(4,686)

(c)





(4,686)

(c)


Income from operations

$  8,652


$ (574)


$  8,078


$  26,078


$  (1,038)


$  25,040


$  11,525


$  (1,384)


$  10,141
























3,853

(a)


















259

(b)





3,402

(a)





3,044

(a)






(4,686)

(c)





246

(b)





258

(b)






3,553

(d)





(4,686)

(c)





(4,686)

(c)






386

(e)





3,558

(d)





3,283

(d)


Net income attributable to SINA

$  9,960


$  3,365


$  13,325


$  25,229


$  2,520


$  27,749


$  15,007


$  1,899


$  16,906







































Diluted net income per share attributable to SINA

$ 0.15




$ 0.20


$ 0.38




$ 0.42


$ 0.23




$ 0.25

Shares used in computing diluted


















  net income per share attributable to SINA

66,848




66,848


65,562




65,562


66,659




66,659







































Gross margin - advertising

59%


1%


60%


60%


1%


61%


54%


1%


55%





Six months ended



June 30, 2011


June 30, 2010







Non-GAAP






Non-GAAP



Actual


Adjustments


Results


Actual


Adjustments


Results














Advertising revenues

$  164,132




$  164,132


$  127,369




$  127,369

Non-advertising revenues

55,042


(9,372)

(c)

45,670


57,048


(9,372)

(c)

47,676

Net revenues

$  219,174


$  (9,372)


$  209,802


$  184,417


$  (9,372)


$  175,045


















1,386

(a)





1,833

(a)






(9,372)

(c)





(9,372)

(c)


Gross profit

$  121,701


$  (7,986)


$  113,715


$  106,190


$  (7,539)


$  98,651


















(5,511)

(a)





(5,727)

(a)






(517)

(b)





(2,846)

(b)


Operating expenses

$  101,524


$  (6,028)


$  95,496


$  65,523


$  (8,573)


$  56,950


















6,897

(a)





7,560

(a)






517

(b)





2,846

(b)






(9,372)

(c)





(9,372)

(c)


Income from operations

$  20,177


$  (1,958)


$  18,219


$  40,667


$  1,034


$  41,701


















6,897

(a)












517

(b)





7,560

(a)






(9,372)

(c)





2,846

(b)






6,836

(d)





(9,372)

(c)






386

(e)





(536)

(d)


Net income attributable to SINA

$  24,967


5,264


$  30,231


$  49,582


$ 498


$  50,080



























Diluted net income per share attributable to SINA

$ 0.37




$ 0.45


$ 0.76




$ 0.76

Shares used in computing diluted












  net income per share attributable to SINA

67,203




67,203


65,530




65,530



























Gross margin - advertising

57%


1%


58%


58%


2%


60%















(a)  To adjust stock-based compensation related to employee incentives.

(b)  To adjust amortization of intangible assets.

(c)  To adjust the recognition of deferred revenue mostly related to the license agreements resulting from the CRIC Transaction.

(d)  To adjust share of CRIC's GAAP to Non-GAAP reconciling items, net of share of amortization of CRIC's intangibles not on CRIC's books.

(e)  To adjust write down on investment



UNAUDITED RECONCILIATION OF SINA'S SHARE OF CRIC'S NON-GAAP TO GAAP RESULTS*






















Three months ended



June 30, 2011


June 30, 2010


March 31, 2011



Actual


Adjustments


Non-GAAP Results


Actual


Adjustments


Non-GAAP Results


Actual


Adjustments


Non-GAAP Results





















To adjust stock-based compensation



$ 1,313






$ 1,311






$ 996




To adjust amortization expenses of intangible



















 assets resulting from business acquisitions



1,540






1,474






1,503




Equity income (loss) from CRIC

$  (483)


$ 2,853


$  2,370


$  650


$ 2,785


$  3,435


$  3,364


$ 2,499


$  5,863


Share of amortization of CRIC's intangibles not



















 on CRIC's books

$  (700)


$ 700


$ -


$  (773)


$ 773


$ -


$  (784)


$ 784


$ -



$ (1,183)


$ 3,553


$  2,370


$  (123)


$ 3,558


$  3,435


$  2,580


$ 3,283


$  5,863











































Six months ended



June 30, 2011


June 30, 2010



Actual


Adjustments


Non-GAAP Results


Actual


Adjustments


Non-GAAP Results















To adjust stock-based compensation



$ 2,309






$ 2,601




To adjust amortization expenses of intangible













 assets resulting from business acquisitions



3,043






3,173




To adjust gains from the purchase of a business:













 Income from investment in affiliates**



-






(7,155)




 Gain from settlement of pre-existing













 relationship with COHT



-






(701)




Equity income from CRIC

$  2,881


$  5,352


$  8,233


$  11,456


$  (2,082)


$  9,374


Share of amortization of CRIC's intangibles not













 on CRIC's books

$  (1,484)


$  1,484


$  -


$  (1,546)


$  1,546


$  -



$  1,397


$  6,836


$  8,233


$  9,910


$  (536)


$  9,374














* Income (loss) from CRIC is recorded one quarter in arrears.

** Represents the excess of fair value over the carrying amount recognized as a result of acquisition of COHT.



SOURCE SINA Corporation