Sina (NASDAQ: SINA) reported results last night, showing revenue up 11% at $59 million. Operating income was under $13 million. The company has a market cap of $2.3 billion.
Baidu (NASDAQ: BIDU) and Sohu (NASDAQ: SOHU) both reported results last month. Revenue gains were fine, but the base is still tiny. Baidu, the largest search engine in China, had a profit of only $19 million. But, it sports a market cap of $6.6 billion. It trades at 42 times revenue, compared to Google at less than 12x.
Therein lies the mystery. China has over 130 million web users, putting it second only to the U.S. But the revenue generated from its major web portals remains remarkably small.
The issue also points to whether valuations for these companies are much, much too high. It will take them a long time to become as big as Yahoo! (NASDAQ: YHOO) which has a market cap of $30 billion.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
8-08-2007 @ 9:17PM
tt-b said...
That is the exact problem with ALL stocks in China, and in fact, 130 million is a gross exaggeration to my mind. I would say closer to 100, the same 100 million who own everything in China except for 7 old bicycles, about 3 donkeys and 5 left footed size 6 boys shoes. I never have understood all the West screaming 1.3 billion consumers and simply peeing themselves to get into China. 90% of the country can't afford a stick of gum from the West. The wages I saw posted on the side of a factory-dorm in Guangzhou last Feb was about 75$/month for 6 days work, no benefits, 10 hour days minimum. It isn't worth it to advertise in China as if the market were the same deep pockets as in the US (relatively, I mean, lots of poverty and inequality in the USA, of course, and getting more all the time) and when the west, Congress, our various presidents, stop and ponder, the group think they are making dumb decisions based on will crumble and the stocks tumble. IMO