First Quarter 2009 Highlights   -- Net revenues increased 3% year over year to $73.8 million, within the      Company's guidance of between $73.0 million and $77.0 million.   -- Advertising revenues decreased 10% year over year to $43.2 million,      within the Company's guidance of between $43.0 million and $46.0      million.   -- Non-advertising revenues increased 30% year over year to $30.6 million,      within the Company's guidance of between $30.0 million and $31.0      million.   -- GAAP net income(*) decreased 31% year over year to $9.7 million, or      $0.17 diluted net income per share.   -- Non-GAAP net income(*)(**) decreased 24% year over year to $13.5      million, or $0.23 diluted non-GAAP net income per share.    (*)  Net income for the first quarter of 2008 has been revised (see        explanation under non-operating income section below).   (**) Non-GAAP measures are described below and reconciled to the        corresponding GAAP measures in the section below entitled        "Reconciliation of Non-GAAP to GAAP Results."   

"The uncertainty in the Chinese economy at the beginning of the year had a severe impact on our online advertising business in the first quarter of 2009. Although market visibility is still relatively low, we have seen improved confidence and sentiment among our advertisers." said Charles Chao, CEO of SINA. "While fighting the tough economic cycle, we remain focused on our long-term strategy in building the leading online media platform in China by investing in products, content and brand. We believe our investments in the downturn will make SINA a more competitive company in the long run when the Chinese economy further recovers."

Financial Results

For the first quarter of 2009, SINA reported total revenues of $73.8 million, compared to $71.3 million in the same period in 2008 and $101.5 million for the fourth quarter of 2008.

Advertising revenues for the first quarter of 2009 totaled $43.2 million, representing a 10% decrease from the same period last year and a 38% decrease from last quarter. For the first quarter of 2009, advertising revenues from China accounted for 98% of the Company's total advertising revenues and also experienced the same degree of decline from the same period last year and last quarter.

Non-advertising revenues for the first quarter of 2009 totaled $30.6 million, representing a 30% increase from the same period in 2008 and a 4% decline from the previous quarter. For the first quarter of 2009, MVAS revenues, which accounted for 95% of non-advertising revenues, reached $29.0 million, representing a 34% increase from the same period last year and a 3% decline sequentially.

Gross margin for the first quarter of 2009 was 52%, compared to 59% for the same period last year and 60% last quarter. Advertising gross margin for the first quarter of 2009 was 50%, compared to 60% in the same period last year and 64% in the previous quarter. Excluding stock-based compensation and amortization expense of intangible assets, non-GAAP advertising gross margin for the first quarter of 2009 was 52%, compared to 62% in the same period last year and 65% in the previous quarter. The decrease in advertising gross margin was due to a decline in advertising revenues without a proportionate decrease in advertising cost of revenues. MVAS gross margin for the first quarter of 2009 was 55%, compared to 56% in the same period last year and 50% last quarter. The sequential increase in MVAS gross margin was mainly due to a shift in product mix toward MVAS with lower revenue share with channel partners.

Operating expenses for the first quarter of 2009 totaled $29.9 million, an increase of 4% from the same period last year and a decrease of 24% from last quarter. Non-GAAP operating expenses for the first quarter of 2009, which exclude stock-based compensation and amortization expense of intangible assets, was $26.9 million, representing a 4% increase from the same period last year and a 26% decrease from last quarter. The sequential decrease in operating expenses was mainly due to lower marketing expenditures and professional service fees, as well as lower accrued bonuses and commissions.

Income from operations for the first quarter of 2009 was $8.7 million, compared to $13.4 million for the same period last year and $21.5 million from last quarter. Non-GAAP income from operations for the first quarter of 2009 was $12.5 million, compared to $17.0 million for the same period last year and $25.6 million from last quarter.

Interest and other income for the first quarter of 2009 was $3.1 million, compared to $4.2 million for the same period last year and $5.5 million last quarter.

On June 5, 2009, the Company furnished a Form 6-K/A to the Securities and Exchange Commission to amend the Form 6-K furnished to the Securities and Exchange Commission on May 16, 2008, including the press release and unaudited financial results as of March 31, 2008 and for the three months ended March 31, 2008 (the "Q1 2008 Press Release").

The Company's results for the first quarter of 2008 included $2.0 million of net foreign exchange gains mainly related to capital repatriation from the closing of a subsidiary in the PRC ("foreign exchange gains"), which the Company recognized as other income under non-operating income. After reviewing the accounting treatment for the foreign exchange gains, the Company and its independent accountant determined that the requirements for releasing cumulative translation adjustments of liquidated foreign subsidiaries and recognizing the released amounts as foreign exchange gains in the income statement under Statement of Financial Accounting Standards No. 52, Foreign Currency Translation ("SFAS 52") and FASB Interpretation 37, Accounting for Translation Adjustments upon Sale of Part of an Investment in a Foreign Entity-an interpretation of FASB Statement No. 52 ("FIN 37") were not met, and the Company is, therefore, required to reverse such gains from non-operating income, net income and net income per share in the relevant period covered by the Q1 2008 Press Release. These adjustments do not impact the Company's cash position, revenues or income from operations.

Provision for income taxes for the first quarter of 2009 was $2.1 million, compared to $3.6 million for the same period last year and $1.8 million last quarter. The Company made a provision for income taxes for the first quarter of 2009 assuming an effective tax rate of 12% for its China operations.

Net income for the first quarter of 2009 was $9.7 million, or $0.17 diluted net income per share, compared to $14.1 million, or $0.23 diluted net income per share, for the same period last year. Non-GAAP net income for the first quarter of 2009 was $13.5 million, or $0.23 diluted non-GAAP net income per share, compared to $17.6 million, or $0.29 diluted non-GAAP net income per share, for the same period last year.

As of March 31, 2009, SINA's cash, cash equivalents and short-term investments totaled $564.3 million, compared to $511.6 million and $603.8 million as of March 31, 2008 and December 31, 2008, respectively. The sequential decrease in cash, cash equivalents and short-term investments reflects a $50 million share repurchase implemented in the first quarter of 2009 (see also Share Repurchase Program below). Cash flow from operating activities for the first quarter of 2009 was $15.9 million, compared to $24.7 million for the same period last year and $44.5 million last quarter.

Business Outlook

The Company currently estimates its total revenues for the second quarter of 2009 to be between $85 million and $89 million, with advertising revenues to be between $55 million and $58 million and non-advertising revenues to be between $30 million and $31 million. Stock-based compensation for the second quarter of 2009 is expected to be approximately $3 million to $4 million, which excludes any new shares that may be granted.

Announced Merger

On December 22, 2008, the Company announced that it entered into a definitive agreement with Focus Media Holding Limited ("FMCN") to acquire substantially all of the assets of FMCN's digital out-of-home advertising networks, including LCD display network, poster frame network and certain in-store network. The transaction is intended to combine the new media platform of the two companies in China to provide more effective and integrated marketing solutions to customers. The transaction is subject to customary closing conditions and certain regulatory approvals. Currently, the transaction is being reviewed by the Department of Commerce of China for anti-trust.