Sina.com reports falling profits
Chinese web portal Sina.com is showing that the pressure from the entry of global giants is finally affecting its bottom-line. The company has said that their profits in the three months ending Sept. 30 fell by a bigger-than-expected 37 percent. Much of this is due to the increased spending on advertisement to bring in more customers especially on a new mobile related service they launched recently.
Sina.com reported earnings of $9.1 million for the quarter. This is a big letdown from the earning figures of $14.5 million in the same period last year. It also was a disappointment when compared to the companyâ€™s own estimated figures of $13 million to $14 million released in the month of August.
In fact, the revenue figures were also below the estimates of the market at around $49.6 million. This shows a drop down of 5% from the figures in the same period last year. This news led to the companyâ€™s share prices going down by nearly 6%. Sina CEO Wang Yan claimed that the drops are due to the huge spending on promoting their services through traditional media like television ads.
He said in a statement: “We believe that this was the right thing to do as we believe that the subscribers brought in through these advertising campaigns will generate benefits in future quarters.â€