Revocation of Video License Causes Disruption;Expect Near-Term Weakness; Downgrade from Buy to Hold Rating
We believe thatSina is dealing with several headwinds that could create uncertainty in thenear term. On the one hand, one major negative that may cause weakness in 2Q14 and3Q14 is the revocation of Sina’s online video license, which was a disruptionto the company’s advertising sales. Therefore, Sina’s portal business may notshow better growth even with a big advertising event like the World Cup. In addition, compared with the rapid growth in China’s internet andmobile sectors, SINA’s investment in its new business seemed to lag behind itspeers. We believe the company needs to invest in verticals as well as mobile toreinvigorate the business. Due to uncertainties in the near term as well asinvestments, we downgrade Sina to a Hold from Buy. The company will report 2Q14results on August 14; we expect results and guidance to just be in line withconsensus.