China's Sina said its ad sales surged 45% in the fourth quarter to fuel big profit growth, as reports suggested the internet giant is preparing a U.S. initial public offering for its popular Twitter-like microblogging service, Weibo.
The Financial Times reported that Sina had asked Goldman Sachs and Credit Suisse to prepare to spin Weibo off in a U.S. stock market listing.
The news came as a welcome break for a company hit by reports suggesting its Weibo user base is eroding after a government crackdown on online freedom of expression, and because of competition from hot mobile social app WeChat. Weibo is extremely viral, and brands rely on it to push out content, monitor chatter and react to crises.
Nasdaq-listed Sina denied Tuesday that people are leaving Weibo, but it acknowledged its user base is growing more slowly than in the past and said it was working to boost engagement. Daily active users increased 4.2% from September to December, from 58.9 million to 61.4 million, the company said.
Net income reached $44.5 million for the quarter, up from $2.4 million in the same period in 2012.
Sina's total ad revenues for the fourth quarter of 2013 jumped 45% from the previous year to hit $160.1 million. Ad sales for the Weibo unit alone rose even more sharply in the fourth quarter, up 163% to reach $56 million.
Sina's total quarterly revenues grew 42% from the year-earlier period, reaching $197 million.
Sina Weibo has seen a boost in ad revenue since e-commerce giant Alibaba took an 18% stake in it last year, though some users have complained the platform has become too commercial.
Weibo, though monitored by censors, nonetheless has allowed Chinese citizens more freedom than ever before to exchange information. But recent months brought a Chinese government effort to clamp down on some outspoken and high-profile microbloggers, leading to reports of fading popularity for the platform.
Douglas White, Hong Kong-based founder of Asian digital agency PRDA, said brands shouldn't worry about Weibo.
"Everything is cyclical, and Weibo is very, very sound," he said, noting it's still the most viable Chinese social platform for desktops, and that he believes the IPO reports are credible.
Sina Weibo, like Facebook, is seeing diminished activity, Mr. White said, "but it doesn't mean they are going away, it means people are looking at specialized alternatives," including Pinterest, Instagram and Snapchat.