After last week’s blockbuster Facebook-WhatsApp deal, the internet industry appears set for more excitement in the coming months. According to media reports, Chinese online media giant Sina Corp. is looking to spin off its popular Weibo service via an initial public offering in the United States.
The spinoff, said to be worth US$500 million, could take place in the second quarter, the Wall Street Journal cited sources as saying. Credit Suisse AG and Goldman Sachs Group Inc have been hired to arrange the deal, the paper said, pointing to an initiative that obviously aims to capitalize on the current market frenzy surrounding internet plays.
Sina can take the opportunity to cash in on its investment in the Twitter-like microblog platform. More importantly, it can secure additional funding to take Weibo to a new stage and compete with WeChat, the popular mobile text and voice messaging service developed by Tencent Holdings.
The US listing will reportedly pave way for Weibo to get more support from e-commerce giant Alibaba Group. According to the Journal, Alibaba is likely to boost its stake in Weibo to 30 percent if an IPO takes place.
In April 2013, Alibaba bought 18 percent stake in Weibo from Sina for US$586 million, implying a US$3.25 billion valuation for the company. Alibaba is now said to be keen to lift its stake in order to boost its mobile presence.
If the plans succeed, Weibo can draw more support from Alibaba, while the latter will be in a stronger position to challenge Tencent in online to offline business.
Sina Weibo, one of several Twitter-like short messaging microblog tools in China, has emerged as one the main public opinion platforms for mainlanders amid a tight media censorship environment. Weibo’s huge user base makes it a front-runner in the nation’s mobile internet market.
Public activists as well as commentators have been using Weibo to voice their opinions on a range of political and social issues, causing some headache to Beijing. Citing harmful postings and the need to prevent social unrest, authorities have started putting pressure on Weibo to censor sensitive content. That has affected its growth prospects in recent months.
According to a report from the China Internet Network Information Center, the total number of microblog users in China fell 9 percent to 280.8 million last year, from 308.6 million in 2012.
Still, Sina said its users reached 61.4 million in the fourth quarter to December, up 4.2 percent from previous quarter.
Sina has been talking about monetizing Weibo but the results so far have been insignificant. In the three months ended December, Weibo recorded its first quarterly profit of US$3 million, helped by improved advertising revenue and income from other sources including sale of data on user behavior, according to Sina chief executive Charles Chao.
Since Weibo is mostly an information distribution platform without interaction with users, making profit from it directly could be challenging. Nevertheless, through big data analysis from trending topics on the platform, it can generate vital leads for Alibaba’s e-commerce operations.
Integration with Alibaba’s instant messaging platform Laiwang for mobile commerce development is another possibility.
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