The rearview mirror is clear at SINA
The Chinese new media mogul enjoyed an impressive fourth quarter. Revenue rose 44% to $101.5 million. Earnings, on an adjusted basis, spiked 44% to $0.49 a share. Analysts were expecting SINA to earn just $0.45 a share in adjusted profitability, on $99.4 million in revenue.
Even if SINA is forced to mark down its net income as a result of foreign exchange gains, it will still top Mr. Market's forecasts with a profit of $0.47 a share. That'll be good enough to extend SINA's streak of beating estimates in each of the past 12 quarters.
What the future holds
Unfortunately, that streak may be coming to an end.
SINA suffered a dramatic plunge in its brand advertising stronghold this year. Its business tagged a "significant rebound" beginning in late February, but the company still guided investors to expect just $73 million to $77 million in revenue this quarter. Analysts were already braced for a more modest 10% sequential slide, but now the company is telegraphing a 24% to 28% sequential dive on the top line.
Most of the shortfall comes from the company's advertising side, which will shrink from 68% of the revenue mix pie in the company's fourth quarter to less than 60% during the current quarter.
The company's fade in online advertising likely explains December's move to announce the acquisition of most of Focus Media's
The good news for SINA investors is that the company has roughly $10 a share in cash and short-term investments on its balance sheet. When you pair that up with its trailing P/E ratio in the pre-teens, the multiple is sliced in half once you back out the company's cash.
True, analysts see other Chinese Internet advertising specialists such as Sohu.com
Even if the SINA-Focus Media union feels a bit too much like Yahoo!
Focus Media is a Motley Fool Global Gains recommendation. Baidu, Focus Media, and Sohu.com are Motley Fool Rule Breakers selections. SINA is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin online stocks for a long time. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.