For Immediate Release
Chicago, IL – December 1, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: SINA Corp. (SINA), Focus Media (FMCN), Sohu Inc. (SOHU), Baidu Inc. (BIDU) and AirMedia Group (AMCN).
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Here are highlights from Monday’s Analyst Blog:
SINA Finishes Private Equity Deal
SINA Corp. (SINA) announced the completion of private equity placement of its ordinary shares with New Wave Investment Holding Company Limited, a British Virgin Islands company established and controlled by Charles Chao, SINA’s Chief Executive Officer (CEO) and other members of the management.
The company will receive gross proceeds of $180 million in exchange for approximately 5.6 million shares. The issuance of shares to New Wave will have a dilutive effect on the company’s outstanding shares in the fourth quarter of 2009.
New-Wave now becomes Sina’s largest single investor. Other investors in New-Wave include CITIC Capital Holdings, FountainVest Partners and Sequoia Capital who are backing Sina’s purchase of new shares, which will give the combined group a 9.4% stake in the company.
The company had entered into the agreement in Sep 2009. SINA said proceeds will be used for acquisitions and general corporate purposes. The management buy in will help strengthen Sina management’s hold on the company and will provide greater confidence to the investors in SINA’s business.
While this is positive news, SINA’s failed merger with ad group Focus Media (FMCN) due to the failure to secure approval from Chinese regulatory authorities does not bode well for the company. This merger would have been an important addition to the media segment, enabling SINA to compete against other media giants such as Beijing-based China Central Television and Shanghai Media Group. Moreover, there would have been a strong synergistic effect on SINA’s online advertising platform and significantly enhance the company’s position in the media space.
The company expects strong growth in advertising revenue in 2010 and resurgence in margins. Third quarter results exceeded the company’s own guidance and beat Zacks Consensus Estimates. Moreover, the company is witnessing signs of a strong recovery in the advertising market of China, which is reflected in the higher-than-expected guidance.
We expect the company to benefit from the growing trends in the wireless business and expect a huge improvement in SINA’s advertising business, as advertising spending recovers. However, SINA faces increased competition from Sohu Inc. (SOHU) and Tencent and popular internet search companies such as Baidu Inc. (BIDU) and AirMedia Group (AMCN). Moreover the cyclical nature of online advertising adds to risk.
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