WWW - Posts tagged Dot comProfitability at BloggingStocks

Dot-comProfitability posts

Will China's dot-com bubble burst?

Posted Aug 7th 2007 10:07AM by Douglas McIntyre (RSS feed)
Filed under: Earnings Reports, China

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.