Ads keep adding up at SINA
11%? That's pretty much the same pace as China's economy over the past year, isn't it? However, there is more to that $59.8 million than meets the eye. The company's Web-based ad business soared 40% higher in the three months that ended in June. It now makes up 69% of the total revenues at SINA.
The sandbag comes in the company's mobile services. Things just haven't been the same in that space since governmental crackdowns and tighter control of mobile giants like China Mobile
Some companies like KongZhong
Earnings rose nicely, climbing from $0.18 a year ago to $0.25 per share in its latest quarter. Back out stock-based compensation charges and the amortization of intangible assets, and that adjusted figure grows to $0.27 per share. It was on that basis that analysts were expecting a profit of just $0.24 a share.
Investors initially marked down the shares in after-hours trading. The second quarter was impressive, but the company's top-line guidance of $63 million to $65 million for the current quarter finds Wall Street's estimates on the high side.
You may want to approach the dip as a buying opportunity. Ad growth is the real story here. The mobile services dip is a red herring. With SINA positioned well for the no-brainer ad market uptick leading into next year's Olympic Games in Beijing, SINA is in the right place at the right time.
SINA struck a revenue-sharing deal with Google
The potential of Google's proven prowess in search advertising is compelling, but SINA is a company that deserves to be respected on its own. It deserves better than the negative market reaction it's getting, especially when the future of online advertising is so bright.
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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.