“Thank heavens for low expectations.
Chinese social-media company Sina(SINA)–that country’s answer to Twitter–has jumped 7.8% to $57.67 this morning, after reporting better than expected earnings, despite sluggish revenue growth and tumbling profits.
Sina reported a profit of $2.4 million yesterday after the close, above analyst forecasts for a $900,000 loss, according to Bloomberg. While the number beat expectations, profits fell 75% from a year ago. Revenues rose just 4.3% to $139.1 million, while profits fell 75%.
So why is the stock surging? Chalk it up to Weibo, the company’s Twitter-like platform.Oppenheimer’s Andy Yeung and Gloria Yu note that Weibo ad revenues grew by 10% during the quarter, which helped to alleviate the damage done by falling revenues in legacy businesses.
They also point out that that gross margins expanded by about 2.6 percentage points during 2012 to 57%, and while operating margins fell 0.45 percentage points last year, they improved by 1.5 percentage points during the fourth quarter. And if the company figures out new ways to boost revenues from Weibo, margins could head higher….”
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