Second Quarter 2009 Highlights    -- Net revenues decreased 1% year over year to $90.3 million, exceeding      the Company's guidance between $85.0 million and $89.0 million.   -- Advertising revenues decreased 11% year over year to $57.8 million,      reaching the high end of the Company's guidance between $55.0 million      and $58.0 million.   -- Non-advertising revenues increased 23% year over year to $32.5 million,      exceeding the Company's guidance between $30.0 million and      $31.0 million.   -- GAAP net income(*) decreased 41% year over year to $13.3 million, or      $0.23 diluted net income per share.   -- Non-GAAP net income(*)(**) decreased 27% year over year to      $17.1 million, or $0.29 diluted non-GAAP net income per share.    (*)  Net income for the second quarter of 2008 has been revised (see        explanation under interest and other 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."    

"During the second quarter of 2009, we saw strong execution in our online advertising business in China, which grew 35% from the prior quarter. The sequential growth rate was faster than our typical seasonal adjustment and shows that we are able to take advantage of an economic rebound," said Charles Chao, CEO of SINA. "While further improvement of our advertising business will depend on the depth and sustainability of the economic recovery in China, we are seeking opportunities in the current environment to play a more critical and expanded role to brand advertisers in China by leveraging SINA's leading online media platform, strong brand recognition and large, high-end user base."

Financial Results

For the second quarter of 2009, SINA reported total revenues of $90.3 million, compared to $91.3 million in the same period in 2008 and $73.8 million for the first quarter of 2009.

Advertising revenues for the second quarter of 2009 totaled $57.8 million, representing an 11% decrease from the same period last year and a 34% increase from last quarter. For the second quarter of 2009, advertising revenues from China, which represented 99% of the Company's total advertising revenues, decreased 11% from the same period last year and grew 35% from last quarter.

Non-advertising revenues for the second quarter of 2009 totaled $32.5 million, representing a 23% increase from the same period in 2008 and a 6% increase from the previous quarter. For the second quarter of 2009, MVAS revenues, which accounted for 95% of non-advertising revenues, reached $30.9 million, representing a 26% increase from the same period last year and a 7% increase from the previous quarter.

Gross margin for the second quarter of 2009 was 56%, compared to 62% for the same period last year and 52% last quarter. Advertising gross margin for the second quarter of 2009 was 58%, compared to 64% in the same period last year and 50% in the previous quarter. Excluding stock-based compensation and amortization expense of intangible assets, non-GAAP advertising gross margin for the second quarter of 2009 was 59%, compared to 65% in the same period last year and 52% in the previous quarter. The year over year decrease in advertising gross margin was due to a decline in advertising revenues while advertising cost of revenues, primarily bandwidth related, increased. The sequential improvement in advertising gross margin was due to advertising revenues growing faster than advertising cost of revenues. MVAS gross margin for the second quarter of 2009 was 50%, compared to 55% in the same period last year and last quarter. The year over year and quarter over quarter declines in MVAS gross margin were primarily due to increased costs related to revenue sharing arrangements.

Operating expenses for the second quarter of 2009 totaled $36.7 million, flat over the same period last year and an increase of 23% from last quarter. Non-GAAP operating expenses for the second quarter of 2009, which exclude stock-based compensation and amortization expense of intangible assets, was $33.6 million, an increase of 1% from the same period last year and an increase of 25% from last quarter. The sequential increase in operating expenses was mainly due to higher marketing expenditures, bonuses and commissions and allowances for bad debt.

Income from operations for the second quarter of 2009 was $13.6 million, compared to $19.6 million for the same period last year and $8.7 million from last quarter. Non-GAAP income from operations for the second quarter of 2009 was $17.4 million, compared to $23.7 million for the same period last year and $12.5 million from last quarter.

Interest and other income for the second quarter of 2009 was $1.7 million, compared to $4.1 million for the same period last year and $3.1 million last quarter. The decrease in interest and other income was mainly due to lower interest rates on our cash, cash equivalents and short-term investments. On June 5, 2009, the Company furnished a Form 6-K/A to the Securities and Exchange Commission to revise the foreign exchange gains recognized in 2008 and to amend the Form 6-K furnished to the Securities and Exchange Commission on August 11, 2008, including the press release and unaudited financial results as of June 30, 2008 and for the three months ended June 30, 2008. Please refer to Form 6-K/A dated June 5, 2009 for further discussion.

Gain on investment for second quarter of 2008 relates to a $3.1 million gain resulting from the sale of a minority equity interest in the Company's subsidiary China Online Housing Technology Corporation ("China Online Housing") to E-House (China) Holdings Ltd ("E-House").

Provision for income taxes for the second quarter of 2009 was $2.0 million, compared to $4.2 million for the same period last year and $2.1 million last quarter. The Company made a provision for income taxes for the second quarter of 2009 based on an estimated annual effective tax rate of 11% for its China operations.

Net income for the second quarter of 2009 was $13.3 million, compared to $22.5 million in the same period last year and $9.7 million last quarter. Diluted net income per share for the second quarter of 2009 was $0.23, compared to $0.37 in the same period last year and $0.17 last quarter. Non- GAAP net income for the second quarter of 2009 totaled $17.1 million, compared to $23.5 million in the same period last year and $13.5 million in the previous quarter. Non-GAAP diluted net income per share for the second quarter of 2009 was $0.29, compared to $0.39 in the same period last year and $0.23 last quarter.

As of June 30, 2009, SINA's cash, cash equivalents and short-term investments totaled $582.0 million, compared to $540.9 million and $603.8 million as of June 30, 2008 and December 31, 2008, respectively. Cash flow from operating activities for the second quarter of 2009 was $18.8 million, compared to $20.8 million for the same period last year and $15.9 million last quarter.

Business Outlook

The Company currently estimates its total revenues for the third quarter of 2009 to be between $91 million and $94 million, with advertising revenues to be between $60 million and $62 million and non-advertising revenues to be between $31 million and $32 million. Stock-based compensation for the third quarter of 2009 is expected to be approximately $3 million to $4 million, which excludes any new shares that may be granted.

Announced Mergers

On July 23, 2009, the Company announced that it entered into a definitive agreement to merge its online real estate business with E-House's wholly-owned subsidiary CRIC Holdings Limited ("CRIC"). Under the Agreement, SINA will inject its online real estate business into its majority-owned subsidiary China Online Housing. CRIC will issue its ordinary shares to SINA in exchange for SINA's equity interest in China Online Housing, giving SINA a 39% equity interest in CRIC (without giving effect to any initial public offering shares). The closing of the transaction is conditional upon the closing of a proposed initial public offering of CRIC and listing of CRIC's American depositary shares representing its ordinary shares on a major stock exchange in the United States (the "Proposed IPO") and certain other customary closing conditions. Immediately upon the closing of the transaction and the Proposed IPO, E-House will be the majority shareholder of CRIC and SINA will be the second largest shareholder of CRIC. Upon the consummation of the transaction, SINA will be required to de-consolidate the financial results of its real estate business and account for its investment in CRIC using the equity method of accounting. Advertising revenues from SINA real estate business accounted for approximately 15% and 16% of SINA's total advertising revenues for fiscal year 2008 and for the six months ended June 30, 2009, respectively.

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 its 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 still undergoing antitrust review by the Department of Commerce of China. If the anti-trust approval is not received by the end of September 2009, both parties will need to re-negotiate an extension of the closing deadline in order to complete the transaction. Based on the December 22, 2008 announcement, SINA will issue 47 million newly issued ordinary shares to FMCN as consideration for the acquired assets. FMCN will then distribute SINA shares to its shareholders shortly after the closing.