Weibo Wobbles but It Won't Fall Down

SINA (Nasdaq: SINA  ) is paying the price for the success of its scorching hot Weibo.com microblogging site.

Adjusted earnings were roughly cut in half at SINA in its latest quarter, as operating expenses have nearly doubled over the past year in support of Weibo and its now 200 million registered accounts.

The good news is that analysts knew this was coming. SINA's tweaked profit of $0.20 a share actually beat the $0.19 the pros were targeting.

Revenue -- adjusted to back out deferred license revenue related to SINA's equity investment in China Real Estate Information (Nasdaq: CRIC  ) -- grew 21% to $114.3 million, just shy of the $114.7 million that Wall Street was expecting on that basis.

Online advertising continues to be the driver at SINA, growing 25% to now account for more than 80% of adjusted revenue. Mobile value-added services just don't move the needle the way they used to a decade ago.

If the market was kinder, now would be the time investors would be suggesting a Weibo spinoff. The sticky Web 2.0 site would command a handsome premium on its own, and margins would improve dramatically at SINA without having to bankroll Weibo's growth.

Unfortunately, this is a tough time for Chinese dot-coms to go public. YouTube-esque Tudou.com (Nasdaq: TUDO  ) got creamed during yesterday's IPO. If Renren (NYSE: RENN  ) -- which went public billed as China's Facebook earlier this year -- got smacked down into the single digits, it will be hard to find buyers for China's Twitter.

It's just as well. Investors know the score. Margins are currently depressed, because SINA has its eyes on the bigger picture.

SINA is forecasting adjusted revenue between $123 million and $126 million for the current quarter, implying similar year-over-year top-line growth as this past quarter.

Investors bid the stock down 5% yesterday, probably fearful of owning the shares heading into what could have been a dicey report. It wasn't. The coast is clear. Everybody's now welcome back into the SINA waters.     

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