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China's Internet portals post impressive
results
By Peter Morris
Sina
Corp, China's largest Internet portal, hauled in record
revenues in the fourth quarter thanks to strong growth
in mobile messaging and online advertising. Sina, the
first Chinese Internet company to list on the Nasdaq,
said that revenues for the past quarter reached a record
high of US$38.3 million, a whopping 197 percent
year-on-year increase.
For the year ended
December 31, 2003, Sina's pro forma net income was $41.6
million, quite a turnaround when compared to a pro forma
net loss of $1.4 million for the same period in 2002.
The Internet portal estimates revenues of approximately
$40 million for the current quarter, with $12.7-13.2
million in advertising revenues and $26.8-27.3 million
in non-advertising revenues. Analysts estimate that
China's online advertising market grew 120 percent in
2003 to over 1 billion yuan ($130 million), with Sina
accounting for 300 million yuan of the total - more than
any other Chinese Internet portal.
In 2004, Sina
plans to continue focusing on advertising and wireless
services, but the website will seek new revenue growth
by investing in online gaming, search engines and
e-commerce. Growth in mobile message services is
expected to remain strong in 2004, particularly as more
people become familiar with multimedia messaging, which
enables mobile phone users to send pictures and videos
to friends, but at a higher cost than text messaging.
Online shopping also holds promise for Sina in the
coming years, as online payment regimes become more
sophisticated and the number of credit card holders
increases in China.
Meanwhile, rival Sohu.com,
which is also listed on the Nasdaq, revealed on Tuesday
that it had reached full-year profitability in 2003 on
revenues of $80.4 million, representing a year-on-year
growth of 180 percent. The popular Chinese Internet
portal racked up profits of $26.4 million for the year,
or 66 cents per share, compared with a net less of $1
million in 2002. However, quarter-on-quarter growth was
only 11 percent on revenues of $24.6 in the last
quarter, indicating a potential slowdown in revenue
growth.
Online advertising contributed to 39
percent of Sohu's total revenues in the fourth quarter
($9.5 million), but quarter-on-quarter growth for
advertising was only 9 percent. Sohu has attributed
flagging growth in advertising and mobile messaging to
increasing competition from rival Internet portals and
online gaming websites such as Baidu.com (China's
homegrown version of Google) and the popular online
gaming company Shanda. Both of these websites are
expected to have their own Nasdaq listings this year.
Shanda, founded in 1999, is now China's biggest
online game operator with over 170 million users. The
company's revenues for last year are expected to surpass
the 1 billion yuan mark ($120 million), and Shanda's
success has even prompted the president of Microsoft
China, Tang Jun, to jump on the online gaming bandwagon.
Jun, whose tenure as the president of Microsoft China
began last March, was appointed as Shanda's president on
Wednesday after the recent resignation of Chen Tianqiao,
Shanda's founder and chairman. Under Jun's management,
Microsoft China's revenues were the highest among all of
Microsoft's offices in its last fiscal year ended in
June, according to China Daily.
Shanda is widely
expected to raise about $300 million when it launches
its IPO on the Nasdaq later this year, and Jun's
appointment will give confidence to overseas investors
concerned about corporate governance in China. Shanda
carries the South Korean online role playing game
"Legend of MIR II", a big hit among Chinese gamers, and
has also developed its own game named "The World of
Legend", which debuted in China last August.
Sohu responded to this increasing competition for Chinese
eyeballs by purchasing the online gaming website 17173.com for $20.5
million last November. Sohu also plans to test
a new online game called "Blade Online" during
the second quarter of 2004 after initially failing to attract
gamers to "Knight Online", its first online game.
Sohu is hoping that 17173.com, one of China's most
popular websites, will give the portal a foothold in the
lucrative Chinese gaming market.
Competition
among Chinese Internet portals will intensify this year
as the number of Internet users in China is expected to
top 100 million in 2004, compared with an estimated 79.5
million at the end of 2003.
NetEase.com, the
last of China's big three Internet portals listed on the
Nasdaq, will announce its 2003 results in the coming
weeks. On Wednesday, Sohu's share price was 27.53, down
9.47 percent. Sina Corp closed at 40.82 (down 5.29
percent) and NetEase lost 7.90 percent to close at
40.79.
(Copyright 2004 Asia Times Online Co,
Ltd. All rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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