SINA Corp (SINA) recently approved a new share repurchase program worth approximately $500.0 million. SINA’s management expects to fund the program using the existing cash balance of the company. Shares of SINA declined 1.35% to close at $52.46 on April 11, 2014.
SINA’s share repurchase program is expected to enhance shareholder returns. As of Dec 31, 2013, SINA had cash & cash equivalents of $1.87 billion, which is sufficient to fund the current program. Further, the upcoming Initial Public Offering of Weibo is also expected to boost its coffers in 2014.
SINA posted adjusted earnings of $27.5 million or 39 cents per share in the fourth quarter, which surpassed the Zacks Consensus Estimate of 34 cents. Adjusted earnings also happened to be much better than 5 cents reported in the year-ago quarter.
Revenues in the quarter rose 7.0% on a year-over-year basis to $192.3 million, trailing the Zacks Consensus Estimate of $197.0 million. The year-over-year growth in revenues in the fourth quarter was primarily attributable to the strong momentum from the monetization of Weibo.
Sina provided its first quarter 2014 revenue guidance in a range of $162–$167 million. The current Zacks Consensus Estimate of $171 million happens to be higher than the guidance range.
We believe that SINA remains a premier company based on its strong product pipeline, continuous investments in product development and marketing and a robust user base for its e-commerce and Weibo offerings.
However, increasing competition from Sohu.com Inc. (SOHU), Yahoo (YHOO), NetEase (NTES) and Tencent will hurt profitability over the long term. Further, we believe that increasing regulations imposed by the Chinese government may put some pressure on the stock.
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