SINA Corp. (SINA) is set to announce its third quarter results after the closing bell on Nov 16.
SINA’s third-quarter revenue guidance of $91–$94 million was below the Zacks Consensus Estimate. The company expects Advertising revenues to be $60–$62 million and non-advertising revenues to be $31–$32 million in the third quarter. SINA remains guarded on advertising spending particularly brand advertising as consumers remain cautious.
SINA is a leading provider of online media and value-added information services in China . Although the company’s second quarter results beat Zacks consensus estimates, it has been down on a year over year basis. The company is facing severe competition in its mobile and online brand advertising business.
However, the stock has rallied much and we expect the company to benefit from the growing trends in the wireless business. We expect a huge improvement in SINA’s advertising business, as advertising spending recovers. Moreover, SINA has a strong net cash position.
SINA’s online advertising business has continued to do well and has built a competitive edge based on its popularity in China. The company posted strong financial results for 2008. Both its revenue and EPS have exceeded our expectations. This was due to strong growth in Advertising revenue, which grew by 53% in 2008.
We expect the company to post upbeat third quarter results due to resurgence in the online advertising business and strong growth in the wireless mobile business and see further upside to the stock. We maintain our Neutral rating on the stock.
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