SINA, Sohu.com, and Baidu Are Doing Just Fine

SINA (NASDAQ: SINA  ) is holding up better than the worrywarts were expecting.

The Chinese dot-com pioneer delivered a blowout quarter last night. Adjusted revenue climbed 4% to $134.4 million, as online advertising inched 7% higher. Outside of SINA's bread-and-butter online advertising revenue, healthy growth in its monetization efforts for its Weibo micro-blogging website wasn't enough to offset a sharp drop in its original mobile value added services business.

The news gets better -- at least as it pertains to Wall Street forecasts -- on the way down the income statement. Gross margins actually improved, and SINA's adjusted earnings of $0.13 a share landed well ahead of the mere $0.05 a share that analysts were targeting.

Investors probably could've seen this coming.

Sohu.com (NASDAQ: SOHU  ) reported a better-than-expected 6% year-over-year increase in brand advertising when it reported earlier this month.

Sure, these are small spurts compared to the 42% top-line pop that Baidu (NASDAQ: BIDU  ) posted the day of Sohu.com's report, but we can't compare the companies. Baidu's specialty is paid search. SINA and Sohu.com -- two of the oldest publicly traded Chinese Internet companies -- rely on the more traditional display advertising.

Baidu even got beaten up post-earnings despite that huge pop. Guidance didn't meet expectations, and Mr. Market punished the search speedster, perhaps unfairly.

The strong SINA quarter bodes well for Youku Tudou and Renren, as China's leading video-sharing site and social networking website operator, respectively, are set to report fresh financials in early March.

SINA and Sohu.com do more than merely dabble in online video and social media. SINA had a healthy stake in Tudou when it was combined with Youku. Sohu.com's investment in online video and SINA's investment in social media have also been a drag on earnings growth at both companies.

However, the fact that earnings are deteriorating as quickly as Wall Street was predicting is naturally a good thing for SINA.

The current quarter will be challenging. SINA is calling for a sharp sequential decline in revenue. However, this is a seasonal business. The $115 million to $119 million that SINA is now projecting is actually a double-digit year-over-year increase. Wall Street already saw this coming, perched in the middle of the action with a forecast for $117.4 million.

Investors will want to wait until Youku Tudou and Renren report next month to get the complete snapshot of China's online advertising market, but first wave of reports has held up surprisingly well.

A safer way to play international growth
Profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report, "3 American Companies Set to Dominate the World," shows you how. Click here to get your free copy before it's gone.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2266303, ~/Articles/ArticleHandler.aspx, 12/23/2014 12:10:44 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement