Sina Corporation's (SINA) reports its second quarter earnings on Monday and some Hong Kong based money managers are quietly cheering for disappointing results.
Sina has become quite the sensation in China due to its microblogging platform known as Weibo.
"Our worries are that the second quarter results will have some negative surprises because developing the new monetized weibo required a lot of capex from Sina," says Agnes Deng, fund manager of the Greater China Fund (GCH) in Hong Kong.
"The margins will have likely come down to make that investment in monetization. There is some panic over Sina's earnings in China right now, but once you get past the disappointment in the quarter, and if the stock does go down, I think it could provide us with another opportunity to buy," Deng says. They've been sitting on the stock since last year and have been riding it out. The stock has been rising ever since, with hardly a breather for an entry point.
Many investors buying Sina are buying it for weibo, which is accelerating its monetizing process after launching its virutal cash and e-commerce weibo platform this month.
The average estimate of analysts is for Sina's net income to come in at 18 cents per share, a decline of 55% from the company's actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 36 cents. For the year, analysts are projecting profit of 88 cents per share, a decline of 42.1% from last year, the Wall Street Cheat Sheet blog reported on Wednesday.
Sina has missed estimates in the last two quarters. In the first quarter, it missed the mark by 2 cents as a result of reporting net income of 21 cents against an estimate of profit of 23 cents per share. In the fourth quarter of the last fiscal year, the company fell short of forecasts by one cent.
By Kenneth Rapoza (Forbes)