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Sina's Tencent battle

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auditor1 November 19, 2012 (Chinavestor) China's mighty Sina Copr. (NASDAQ:SINA) reported third quarter numbers and issued Q4 guidance on Friday, sending its stock to a tail spin. While the stock may make a come back on Monday, it might just be a dead cat bounce. There are serious fundamental challenges Sina Corp. (NASDAQ:SINA) has to overcome to restore investors' confidence. And it's not just Sina that's suffering. NetEase.com Inc. (NASDAQ:NTES) as well as Baidu.com Inc. (NASDAQ:BIDU) suffered severe blows last week.

What's hurting Sina (NASDAQ:SINA) is lack of constant top and bottom line growth.Take a look at the following chart. While revenues recovered, earnings fell from last quarter. This chart doesn't encompass 2011 Q3 numbers because Sina reported a net loss of over $300 million due to a one time charge. So year over year comparison doesn't make sense here.

Sina Corp. (NASDAQ:SINA) revenues/earnings last 4 quarters

SINA_2012Q3_rev


But it's not just current quarter that failed to impress investors. The Company issued 2012 Q4 revenue guidance of $132 million to $136 million, well below analyst estimates of $152 million. And just how bad $134 million looks like, please take a look at the following chart.

Sina Corp. (NASDAQ:SINA) top/bottom line with company estimate

SINA_2012Q3_rev_est

Finally, there is a fierce competition Sina's microblog got from Tencent Hold. (HKG:0700). WeChat, an application from Tencent (HKG:0700) was quoted as responsible for slowing down user growth at Weibo, Sina's microblog. Considering that Tencent Hold. (HKG:0700) is the leading internet site in China, there is a lot to fear from such a foe going forward. Investors better keep a close eye on Sina's Weibo going forward.



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