Sina takes $100m hit on write downs

09:09, March 03, 2011      

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Sina Corp, China's biggest Internet portal, is seeking more channels to generate profit as it reported net losses of about $100 million in the fourth quarter.

Sina plans to get involved in the booming e-commerce industry by buying a 19 percent stake in Shanghai-based fashion e-commerce company Mecox Lane. And its Twitter-like microblogging service is also expected to turn a profit in the second half of this year.

According to an announcement by US-listed Mecox Lane yesterday, Sina will buy the shares from two shareholders of the e-commerce company, the Hong Kong-based Maxpro Holdings and US-based Ever Keen Holdings, at a price of $66 million.

"We believe that this investment could further strengthen our Internet marketing capacity and also help to build a fashion e-commerce platform for Sina," said CEO Charles Chao.

Li Weidong, research director of ChinaVenture, a Beijing-based research and consulting institute, said that Sina's brand value and distribution channels could help Mecox Lane to perform even better online.

Mecox Lane reported net revenue of $1.1 million in the fourth quarter, down 61.7 percent year on year.

Sina reported net revenue of $110 million in the fourth quarter on losses of $100 million. In 2010, total net revenue was $402.6 million, with losses of $19.1 million, the company said yesterday.

The company mainly attributes the losses to write-downs on its 33 percent share in the China Real Estate Information Corporation, which is also listed on Nasdaq.

Sina's CEO Chao said that in 2011, the company would still focus on investing in its infrastructure to further boost user numbers. Chao also said that Sina would experiment with generating revenue from the company's microblog in the second half of the year, which currently has more than 100 million subscribers in China.

ChinaVenture's Li said that profit generated by the microblog would be considerable if the platform has enough subscribers, and microblog marketing and game development would be two major ways to generate profits in the future.

Sina expects net revenue to hit $96 million in the first quarter of this year, 80 percent of which is ad revenue.

Source: Global Times
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