SINA's Big Plans for China's Future

On Thursday, SINA (SINA) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.

SINA has been a big part of the Internet revolution in China and has benefited greatly from the upsurge in interest in online commerce and advertising in recent years. As competition increases, the company has come out with some interesting new strategic moves to retain its leadership role in the industry. Let's take an early look at what's been happening with SINA over the past quarter and what we're likely to see in its report.

Stats on SINA

Source: Yahoo! Finance.

How will SINA fare this quarter?
In recent months, analysts have scaled back their views on SINA's earnings somewhat, widening their loss estimates for the first quarter by $0.01 per share and cutting full-year 2013 earnings projections by $0.04 per share. But they've gotten more optimistic about SINA's prospects in 2014, and that longer-term optimism has helped push the stock up about 10% since early February.

SINA started out trying to be all things to Chinese Internet users, offering news portals, search engines, e-commerce, and other related services. But lately, SINA's main claim to fame in the Internet space has been its SINA Weibo microblogging service, which is similar to what Twitter provides to users in the U.S. and throughout the world. With the benefit of the Chinese government, SINA and many of its domestic peers have been able to hold foreign competitors largely at bay.

To try to take advantage of its opportunity, SINA has made some high-profile partnerships to bolster its growth. Its partnership with Apple (AAPL 1.27%) will automatically give iOS users in China built-in preloaded capacity to use SINA Weibo and its sharing functions, and Apple hopes to benefit from giving its users Weibo functionality in the same way that Apple buyers in the U.S. value having Twitter available on their mobile devices. Moreover, its agreement with Baidu has the two online giants cooperating on aspects including search and cloud-based services, helping to boost their joint mobile presence.

But the latest big partnership involves a major investment from e-commerce giant Alibaba, which took an 18% stake in SINA Weibo in late April. With $586 million in new capital, Weibo should be able to boost its growth, and Alibaba hopes to find new ways to use social media to develop new advertising and business opportunities that will benefit both SINA and its own businesses.

In SINA's quarterly report, watch for early signs of how the Alibaba relationship is going. With so much happening in the Internet industry in China, SINA will have to work hard to keep up, but so far, it seems to making smart moves to stay ahead of the game.

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