Real Name Rule To Add To Sina Weibo's Woes
Sina Corp has warned that its popular microblogging service will suffer from the Chinese government's requirement that users of Sina Weibo register under their real names.
The real-name registration requirement, which Beijing has said must be completed by March 16, "will have a negative impact on user activity in the short term," Charles Chao, chief executive, told investors on Tuesday.
The warning is set to sour sentiment towards Sina shares, as it comes just as investors are getting impatient to see the company make money from Sina Weibo.
Sina reported a $9.3m net profit, 14 cents per share, for the fourth quarter of 2011 as opposed to a $100m loss a year earlier. However, excluding writedowns and other adjustments, earnings more than halved to 21 cents per share compared with a year earlier.
In the face of new government restrictions, slow moves by Sina to monetise Weibo and fierce competition in the microblogging market, the stock had slumped to just $48 by the end of last year from a $142 peak in last April, but it has recovered more than 13 per cent since the beginning of this year.
Sina said it aimed to start monetising Weibo in the second half of this year, an announcement long awaited by investors, but did not expect to see significant revenue contributions from the Twitter equivalent until next year.
The company plans to make money from Weibo mainly through advertising, fees from enterprise accounts and revenue sharing from selling virtual goods.
A platform it launched last year on which third-party developers can offer games to Weibo users will end its free period in June, Mr Chao said.
But before that, Sina plans to pour even more money into the service than last year. Mr Chao said he expected $160m of Weibo-related costs this year, compared with about $120m in 2011.
That comes as prospects for online advertising â€“ Sina's main source of revenue â€“ are uncertain. The company said it expected revenue in the first quarter to grow less than 10 per cent year-on-year, compared with 19 per cent last year. Mr Chao pointed to a drop of more than 3 per cent in traditional ad spending in the Chinese market in January as ecommerce companies are cutting their ad spend, and due to an expected decline in advertising by car companies, the largest advertisers on Sina's online portal, this quarter.
The new government rules are already affecting Sina Weibo. Mr Chao said more than 40 per cent of users who tried to complete registration failed to pass the identity verification. He said they would probably no longer be allowed to post messages after the March 16 deadline.
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