CHICAGO, Aug. 31, 2011 /PRNewswire/ -- Zacks.com announces
the list of stocks featured in the Analyst Blog. Every day the
Zacks Equity Research analysts discuss the latest news and events
impacting stocks and the financial markets. Stocks recently
featured in the blog include: SINA Corp. (Nasdaq: SINA),
Google Inc. (Nasdaq: GOOG), Baidu Inc. (Nasdaq:
BIDU), Microsoft Corp. (Nasdaq: MSFT) and Youku.com
Inc (NYSE: YOKU).
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Here are highlights from Tuesday's Analyst Blog:
SINA Acquires Stake in Tudou
Chinese micro-blog "weibo" provider, SINA Corp. (Nasdaq:
SINA) recently acquired a 9.05% stake in Shanghai-based video company, Tudou Holdings
Ltd. Tudou offers movies, TV series and self-produced content it
produces itself, as well as third-party videos similar to Google
Inc.'s (Nasdaq: GOOG) YouTube platform.
In a regulatory filing with the Securities and Exchange
Commission (SEC), SINA reported that it has acquired 1.075 million
American depositary receipts (ADRs) of Tudou at its initial public
offering held in this month, for $31.2
million. Post Tudou's listing, SINA bought another 1.49
million ADRs for $35.2 million.
SINA's primary revenue source is online-advertising. However,
the competition within the Chinese advertising market is fierce, as
popular Internet search companies such as Baidu Inc.
(Nasdaq: BIDU), AirMedia Group, Microsoft Corp. (Nasdaq:
MSFT) and Google have attracted a lot of advertising clients. SINA
is a relatively small company compared to its peers and hence
encounters numerous hurdles in the advertising market.
We believe the acquisition of the Tudou stake will help SINA
gain market share going forward, as the latter is the #2 website in
terms of advertising revenue (14.0% market share in the second
quarter) in the online-video market, according to research firm
Analysys International,. Youku.com Inc (NYSE: YOKU) was the
leading company (23.0% market share) at the end of the second
quarter.
SINA is adding video, social-networking and electronic commerce
to its website to attract users in China, the world's biggest Internet
market.
The company is also aggressively pushing its micro-blog service
"Weibo" and has total registered users of more than 200 million at
the end of June, 2011. Although management expects to spend more on
Weibo ($100.0 million in fiscal 2011)
to incorporate features such as virtual currency and games, we
believe that increasing advertising revenue from the monetization
of Weibo will drive top-line growth going forward.
Our Take
We maintain our Neutral rating over the long term (6-12 months).
We believe SINA remains a premier company due to its strong product
pipeline, continuous investment in product development and
marketing and a robust user base for its E-Commerce and Weibo
offerings.
However, higher operating expense, a sluggish macro environment
and increasing competition from Tencent Holdings and Sohu.com Inc. will hurt
profitability over the long term. Moreover, we believe that more
stringent government regulation will hurt the company's subscriber
growth and monetization efforts going forward.
Currently, SINA has a Zacks #5 Rank, which implies a Strong Sell
rating over the short term.
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