Chinese Internet Giant Sina Swings to Quarterly Loss
The operator of Sina Weibo, known as “China’s Twitter,” cited a onetime charge related to a recent investment from e-commerce giant Alibaba.
Chinese tech giant Sina, operator of the country’s most popular micro-blogging service, Sina Weibo, reported a surprise loss for the second quarter.
The company said it swung to a loss of $11.5 million, compared with a profit of $33.2 million during the same period last year. China watchers and analysts had been expecting another profitable quarter from the company.
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A onetime charge of $27.1 million in connection with a recent investment in Weibo by e-commerce giant Alibaba Group dragged down the bottom line. Revenue increased 20 percent to $157.5 million. Operating expenses rose, driven by higher personnel costs.
In April, Sina struck a deal with Alibaba, in which Yahoo owns a stake, giving Alibaba an 18 percent stake in Sina Weibo for $586 million. The partnership is expected to create new revenue streams for Sina as Alibaba’s marketing and e-commerce services are integrated into the micro-blog platform.
A Twitter-like service with added conversation and social networking functions, Sina is known to self-censor its users' posts and occasionally takes direct instruction from government authorities on particular keywords and topics to ban from discussion. Nevertheless, it is regarded as the freest and most lively space in the Chinese media landscape -- something akin to a virtual public square. In 2012, Sina said it had 46 million daily active users.
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Much like Twitter in its early years, however, Sina has had trouble monetizing the service to a degree commensurate with its level of influence.
Sina also partnered with Chinese online video giant Youku Tudou in June, in a content sharing agreement that gives Weibo users access to the company’s vast video library. Video content can now be integrated in Weibo as thumbnail links and personalized recommendations.
Said Sina chairman and CEO Charles Chao: "Our strategy to diversify Sina's revenue stream to beyond big-brand advertisers and to leverage Weibo's continued traffic growth to develop social and mobile advertising as well as value-added services is placing Sina in a good position for more profitable revenue growth, while making heavy investments for the future."
Georg Szalai contributed to this report.