Chinese Internet portal Sina.com (SINA) has announced impressive unaudited financial results for the quarter ended March 31, 2007.

Sina reported total revenues of US$51.3 million, compared to US$46.7 million in the same period in fiscal 2006 and US$56.4 million for the fourth quarter of 2006.

Advertising revenues for the first quarter of 2007 totaled US$31.8 million, representing a 43% increase from the same period last year and an 11% decrease from last quarter. Advertising revenues in China grew 45% year over year to US$30.9 million for the first quarter of 2007. The quarter over quarter decrease in advertising revenues was mainly due to seasonality, as the first quarter historically has been the Company's weakest quarter for advertising revenues. Advertising revenues in the first quarter of 2007 represented 62% of total revenues, up from 47% in the same period last year.

"We are very pleased with another quarter of solid financial and operational performance. Our online advertising revenues in the first quarter continue to be strong with our advertising revenues in China having grown 45% or more year over year for the fourth consecutive quarter," said Charles Chao, CEO of Sina. "On the operational front, we believe that we have made measurable gains in transforming Sina into a multimedia content platform with strong user participation and sticky interactive community."

Non-advertising revenues for the first quarter of 2007 totaled US$19.5 million, a 20% decrease from the same period in 2006 and a 6% decrease from the previous quarter.

MVAS revenues for the first quarter of 2007 were US$18.2 million, declining 20% from the same period last year and declining 5% from last quarter. Revenues from interactive voice response declined 32% quarter over quarter to US$3.5 million. During the first quarter of 2007, the company began placing less emphasis on promoting IVR due to an increase in operator costs for IVR. As a result of switching from the company's proprietary IVR platform to China Mobile's IVR platform, operator costs for IVR increased from 15% to 30%. SMS revenues decreased 1% sequentially to US$10.6 million, while revenues from 2.5G products, including multimedia messaging service, wireless application protocol and Kjava, increased 32% quarter over quarter to US$3.2 million.

Other non-advertising revenues, mainly search and other fee-based revenues, were US$1.3 million for the first quarter of 2007, representing a decline of 31% from the same period last year and 7% from last quarter. The decline in other non-advertising revenues was mainly due to the continued phasing out of the prior search business.

Gross margin for the first quarter of 2007 was 59%, down from 61% in the same period last year and 62% in the last quarter. Advertising gross margin for the first quarter of 2007 was 58%, compared to 63% in the same period last year and 65% in the previous quarter. Advertising gross margin in the first quarter of 2007 included stock-based compensation, which was equivalent to 1% of advertising revenues.

Operating expenses for the first quarter of 2007 totaled US$22.9 million, an increase of 4% from the same period last year and a decline of 7% from last quarter. Non-GAAP operating expenses for the first quarter of 2007, which exclude stock-based compensation and amortization expense of intangible assets, was US$20.8 million, representing a 2% increase from the same period last year and a decline of 7% from last quarter.

Net income for the first quarter of 2007 was US$8.6 million or US$0.15 diluted net income per share, compared to US$7.0 million or US$0.12 diluted net income per share for the same period last year. Non-GAAP net income for the first quarter of 2007 was US$11.4 million or US$0.19 diluted non-GAAP net income per share, compared to US$9.6 million or US$0.16 diluted non-GAAP net income per share for the same period last year.

As of March 31, 2007, Sina's cash, cash equivalents and investments in marketable securities totaled US$382.7 million, compared to US$304.4 million and US$362.8 million as of March 31, 2006 and December 31, 2006, respectively. Cash flow from operating activities for the first quarter of 2007 was US$16.6 million, compared to US$12.5 million for the same period last year and US$14.9 million last quarter.

The company estimates its total revenues for the second quarter of 2007 to be between US$58.0 million and US$60.0 million, with advertising revenues to be between US$40.0 million and US$41.0 million and non-advertising revenues to be between US$18.0 million and US$19.0 million. Stock-based compensation for the second quarter of 2007 is expected to be approximately US$2.0 million, which excludes any new shares that may be granted.

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