Earnings Call Excerpt
Here’s the entire text of the Q&A from Sina’s (ticker: SINA) Q3 2005 conference call. The prepared remarks are here. We recognize that this transcript may contain inaccuracies - if you find any, please post a comment below and we’ll incorporate your corrections. And please note: this conference call transcript is a Seeking Alpha product, so feel free to link to it but reproduction is not permitted without the explicit permission of Seeking Alpha.
Question & Answer
Operator
Operator Instructions And our first question comes from the line of Lu Sun of Lehman Brothers. Please proceed.
Q - Lu Sun
Hi, good morning. I actually has a, several questions. First question is on your online advertising business. Can you actually tell us, were would you see the highest growth going into 2006 and I think on last call you actually guided for about 30% year-on-year growth for 2006, and it seems like the run rate in this quarter has slow down a bit, just 24% year-on-year. Do you think that would pickup in the fourth quarter and also going into this 2006 as you raise your rate? And second question is on your wireless product service business. Do you have, do you think that your return on investment for the SMS product is going to be especially the subscription product is going to be higher than some of the other new applications such as a WAP or JAVA game, especially going to the next year? And how would you want to position yourself going to 2006? Thank you.
A - Charles Chao
Okay let me, this is Charles. I am going to talk about the second question first. And yes and we had about 24% growth year-on-year on the pricing, this quarter and I think we talked about that before that this quarter year-to-year comparisons, but not in, I think 30% just because we have higher rate into, towards that quarter or to forth, so because of that 15 in that quarter. And so, we have offered very high rates for that comparison and we recall also that in the first quarter of last year, we had a flat quarter from the third quarter actually with the flat decline in current quarter just for the same reason. And so, I think that’s really in about 15 value, where we did not get 30% for the third quarter and for the first quarter, and we did expect that, we’ve been in a range, I mean, but not necessarily, I think that something radically will be very close to hit that range in our guidance between 24 million to 25 million, for the first quarter where we can go into higher units. And as I mentioned in my press, in my presentation, we think we might, now that we are meeting our rate counts for some of our prime inventories. And so far, that has been treated well in the, on all our customers. And we did not see too much negative impact that tells us again that we will still have the potential, I mean, to increase the pricing going forward. And so, with the, comp, we are comfortable with the hiring been in general, I think, its demand is good and hoping about 2006, I think the growth will come from federal, obviously is the price up, so there we have impact, of course we always help people, that the price increase on rate count is not necessary transfer into, leading to increase because the compact structure for our pricing model. And the way we feel advertising in China, but it does have, in general, for the revenues. And some of the areas where we believe will, will drive the growth next year, when we actually be, that real estate will be still increasing, pretty nicely next year. Especially, for SINA it tends now, we’re regarded that is, we’re not the best product for real estate advertising, for its effectiveness. And, we give up the potential data and in transformation in the discussion just not meant, internet in-taking market share away from the traditional media especially newspaper and one of the important area is for that is been actually traditionally a lot, few asset enterprises spend, and a lot of money on newspapers for advertisement and the market account, the market, as you’re aware of that, and the net loss was shift recently and the profit margin for these industry also got decreased significantly, and they become much more cautious, cautious in terms of their return on investment, for their net pricing and increasingly more and more these in of a kind to discover that internet actually is a very big media for these kinds of pipelines, especially it will tend to the target, that generated target entirely on our website. And so, basically we did see advertising, pickup in advertising probably next year. And another area of course, despite the internet company, that into the industry and website and, we will be having another investment in this sector in China or with the Russia or two. And that could broad new companies, excuse me, which will demand these advertising on our website and of course you have seen that, at eBay and the top of the larger auction site, spend a lot of money on advertising and as we have got pretty much, which would, we expect there was been pretty good turn over in our auction joint venture Yahoo! in near future, so we’ll be receiving advantages on this e-Commerce sector advertising in China next year. And this area of course, we spoke about and which media advertising before, especially for FMCG prospects going forward. And we still have, we have increased our investment in confident areas for we go and come again and the work is going to continue to prevent according to 2006, in so that will bring in a, I think a more advertising dollars from FMCG product with the presentation of, which maybe a comment. So, I think, overall, I think, I think the 30% unit growth, on unit growth was for next year, will be bit note of information we have, we believe at SINA Corp., frankly saying. So, and that’s so far to advertising, and, the wireless business, I’m sorry, can you, if you repeat that question again, again, I think, I’ll talk to on that advertising profit.
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