SINA Corp (SINA - Free Report) 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.
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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 - Free Report) , Yahoo , NetEase (NTES - Free Report) 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.