Sina plans to keep investing in microblog
Sophie Yu and Charlotte So
Sina, the mainland's largest internet portal, is prepared for continuing losses as it invests heavily in its Twitter-like microblogging platform, despite Beijing's tight grip on internet content.
Sina Weibo is the top social-networking platform on the mainland, where Twitter is banned.
In a growing number of cities, when users set up a Sina Weibo account they must register with their real name and a mobile number.
The new rules 'had an impact' on Sina Weibo's growth, said Charles Chao, Sina's CEO. The service added about 30 million users in the first quarter, for a total of 324 million at the end of March. In the previous quarter it added 50 million users.
Nonetheless, Sina said it would invest US$160 million in the microblog this year, up 45 per cent from last year, to improve the service.
'It is essential for us to build a more dominant scale in order for us to be successful in the long term,' Chao said on a conference call after the online portal reported a loss in the first quarter.
The firm warned that owing to the increased spending on Sina Weibo, it might post another loss in the following quarter.
The Nasdaq-listed internet giant reported a year-on-year net loss of US$13.7 million in the first quarter, as against a profit of US$15 million in the same period last year.
'We may still incur an operating loss in the second quarter as we continue to invest in our Weibo platform,' Chao said.
The loss was smaller than the market expected, as advertising income, which makes up the bulk of Sina's revenue, rose 9 per cent to US$78.5 million.
The company started to sell ads on Sina Weibo last month, which might make a 'meaningful' contribution in the second half, Chao said.
Meanwhile, net profit at Tencent, the mainland's largest provider of instant messaging and online games, grew only 2.8 per cent year on year in the first quarter.
Earnings were under pressure from its newly spun off e-commerce business and higher tax expenses.
Net profit rose to 2.95 billion yuan (HK$3.63 billion) in the quarter, from 2.87 billion yuan a year earlier. Income tax expenses soared 51 per cent to 651 million yuan.
Sales surged 52.2 per cent to 9.65 billion yuan. The firm's profit margin was trimmed to 46.2 per cent from 53.1 per cent a year earlier because of a lower profit margin at its e-commerce business, which has been a standalone unit since January.