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Sina (NSDQ: SINA) may have taken the crown in the Twitter-style, homegrown microblogging race in China, but its leadership has come at a price. The Chinese internet and mobile company today reported that Q2 profit was down by more than 60 percent compared to the same period a year ago — caused in part by the company’s investments in Weibo, currently the country’s biggest microblogging platform.
The company reported net income of $10 million for Q2, compared to $25.2 million for the quarter a year ago. Despite the big drop, the company’s earnings still beat Wall Street expectations, according to Reuters.
Q2 revenue, excluding advertising, was up 21 percent over last year to $114.3 million. That was at the higher end of the company’s guidance of between $112 million and $115 million for the quarter. Ad revenues, meanwhile, were up by 26 percent to $91.8 million, at the high end of the company’s estimates and a record for Sina. Still, that growth over last year is half that of the year before that, where events like the World Cup and Expo 2010 Shanghai gave the online advertising industry a huge boost.
Weibo has been around for less than two years, but in that time it has picked up more than 200 million users, according Sina’s CEO, Charles Chao, quoted in the release. This works out to a 56.5 percent share of the social networking base, according to stats from iResearch.
Earlier this month, the company also rolled out a new virtual currency, Weibi, to use via the blogging portal. Weibo may be most like Twitter now, but ultimately Sina has ambitions to make into a wider social network covering activities like games, photosharing and other social media services.
There may be more social media investments yet to come from Sina. It has been reported that Sina has taken a $40 million investment in Tudou, a Chinese social media focused on online video which listed on Nasdaq yesterday at a value of $174 million. That investment, if accurate, would give Sina a four percent stake in Tudou.