Investment is top priority to increase dominance, chief executive says
Employees work at Sina Corp headquarters in Beijing. The company said its Twitter-like Weibo service had more than 100 million users by the end of February. [Photo / Bloomberg]
BEIJING - China's largest Internet portal Sina Corp said it will not push for early profits from its Twitter-like service, Sina Weibo, with regard to long-term growth, even though its registered users exceeded 100 million by the end of February.
The company's micro-blogging service has seen user numbers double from four months ago, in what Sina Chief Executive Charles Chao described as "explosive growth", during a conference call on Wednesday.
"The year 2011 is one of investment," he said, adding that the company will focus on product development, marketing and enlarging the user base to further enhance Sina Weibo's "dominance in an increasingly complicated social media market in China".
However, he said the company will examine different methods of generating revenue for the micro-blogging service, including advertising, real-time searches, e-commerce, and games, to capitalize on Sina Weibo's increasing popularity in the world's largest Internet market.
According to the domestic research company iResearch, Sina Weibo took 56.5 percent of the nation's active micro-bloggers in 2010, followed by 21.5 percent for Tencent Holdings Ltd. On a browsing-time basis, the service had a market share of 86.6 percent, against second-placed Tencent with 9.1 percent.
On Tuesday, the investment bank, China International Capital Corp, set a target price for Sina at $104 this year, rising to $201 within the next three years given Sina Weibo's edge.
Chao said the company will increase expenditure on its micro-blogging service and will provide a new version of the Weibo product - featuring instant communication and group functions - in the second quarter.
It will recruit 1,000 new employees this year, boosting its current headcount of 3,500.
Sina also said it will pay $66 million for a 19 percent stake in the Nasdaq-listed Mecox Lane Ltd, a Chinese online apparel retailer, as part of its efforts to expand the ways it generates revenue and to cash in on the country's booming e-commerce market, after the Internet portal posted an unexpected fourth-quarter loss.
"We want to explore different ways of direct participation in the e-commerce area, and Mecox is just our first step in terms of the e-retail market and gaining more experience," said Chao.
A Deutsche Bank research note expected China's e-commerce market to reach more than 1.5 trillion yuan ($228 billion) by 2014, with a compound annual growth rate of 42 percent.
Chao said Sina will continue to look for other opportunities in the e-commerce industry.
It reported a loss of $100 million in the fourth quarter after a $128.6 million write-down of the failure of an equity investment in China Real Estate Information Corp, a real-estate information provider.
Revenue rose 12 percent to $110 million, boosted by a 30 percent increase in online advertising sales, Sina said.