SINA Reports First Quarter Profit – Analyst Blog

Excluding one-time items, but including stock-based compensation expenses, SINA Corporation (SINA) reported net profit for the fiscal first-quarter of 2010, which was a modest improvement from the year-ago quarter and a significant improvement from the previous quarter. The results were encouraging, as earnings surpassed the Zacks Consensus Estimate of 23 cents, or a positive surprise of 21.7%.

On a non-GAAP basis (excluding one-time charges), the company reported revenue of $80.3 million, up 19% year over year. Revenue for the quarter slightly exceeded the company’s guidance range of $78 – $80 million. Revenue increased due to the company’s growth in the online advertising business, which grew double-digits sequentially and year over year, partially offset by a decrease in non-advertising revenues in the quarter. We expect a huge improvement in SINA’s advertising business, as advertising spending and the Chinese economy recovers.

Non-GAAP advertising revenues of $54.3 million increased 47.0% year over year and were slightly above the company’s guidance range of $53.0 – $54.0 million. Non-GAAP non-advertising revenues of $26.0 million decreased 15.0% year over year and were at the high end of management’s guidance of $25.0 – $26.0 million.

Non-GAAP advertising gross margin in the quarter was 58.0%, up from 47.0% last year, but down from 60.0% in the preceding quarter. The increase from the year-ago quarter was due to advertising revenue growth outpacing the growth in advertising cost. As a result, the overall non-GAAP gross margin also increased to 57.0% from 52.0% last year, while it was roughly in line with the 57.3% posted in the preceding quarter.

Operating margin on a non-GAAP basis came in at 20.8% versus 15.2% last year and 19.9% last quarter. Margins were affected by operating expenses, which increased 14.9% year over year and decreased 20.3% sequentially. The year-over-year increase was mainly due to higher personnel-related expenses, such as sales commissions and bonuses, as well as marketing costs.

On a non-GAAP basis, excluding one-time income and charges, but including stock-based compensation expenses, net earnings was $18.1 million or $0.28 per share versus $10.2 million or 17 cents last year and $6.0 million or 9 cents last quarter. EPS exceeded the Zacks Consensus Estimate of 23 cents by 5 cents.

During the quarter, the company generated $18.2 million of cash from operations, compared with $34.3 million last quarter. The company ended the quarter with cash and equivalents of $828.0 million, up from $821.5 million in the previous quarter. As of March 31, 2010, convertible debt remained at $99 million.

For the second quarter 2010, SINA expects non-GAAP net revenues in the range of $90 million to $93 million with non-GAAP advertising revenues in the range of $70 million to $72 million, and non-GAAP non-advertising revenues at between $20.0 million to $21.0 million.