Sina Corp, China’s biggest Internet portal, forecast a record quarterly sales drop, citing a “challenging” online advertising market.

The company projected yesterday third-quarter sales will drop as much as 14 percent to US$91 million, missing the US$96 million median of nine analyst estimates compiled by Bloomberg.Chief Executive Officer Charles Chao said in a conference call, without specifying the previous forecast. China’s economic slowdown in the first half weakened spending by Sina’s customers in the automobile, property and technology industries.
Timothy Chan, who rates Sina said “Sina’s guidance is for a much steeper drop than Sohu’s, underperform” at CLSA Ltd in Hong Kong. “Sina’s content-related costs are also going up, which makes us quite negative on the company.” Sina predicted online ad sales may fall as much as 21 percent in the current period, larger than local rival Sohu.com Inc’s projected drop.
“The online advertising market is still challenging, and visibility is still low,” Chao said. The stock fell 1.1 percent to US$30 in NASDAQ Stock Market trading on Monday before the results were announced, reducing its gain to 30 percent this year. That compares with a 29 percent advance in Sohu, the second-biggest Chinese portal.
In July, Sohu reported second-quarter advertising sales rose 5 percent. Sina’s second-quarter net income declined 41 percent to US$13.3 million. Profit missed the US$13.7 million median of five analyst estimates compiled by Bloomberg.Operating expenses rose to US$36.7 million in the second- quarter, compared with US$29.9 million in the previous three months.
Yu, Chief Financial Officer Herman said Sina plans to maintain increases in network spending to host more video content and attract online advertisers as demand remains “cautious”. The Beijing-based company forecast ad sales in the current quarter may be between US$49.5 million and US$51.5 million, compared with US$51.1 million a year earlier.
Jason Brueschke, a Citigroup Inc analyst wrote in an Aug 27 report “Media content and bandwidth costs are still rising faster than revenues; we see a growing competitive environment.”
This news is from China electronics manufacturer.