A Wall Street Transcript Interview with Echo He, Maxim Group Senior Vice President in Equity Research: Are Chinese Internet Giants Growing Faster than their Competition from the United States?

Wall Street Transcript

67 WALL STREET, New York - October 15, 2013 - The Wall Street Transcript has just published its Internet Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Data Hosting Centers - Cloud Computing Secular Trends - Colocation, Managed Hosting and Cloud Computing - Increased Mobile Content Traffic - Chinese Online Monetization Trends - Internet Infrastructure Build - Enterprise Adoption of Cloud Computing

Companies include: Sina Corp. (SINA), Baidu, Inc. (BIDU), Ctrip.com International Ltd. (CTRP) and many others.

In the following excerpt from the Internet Services Report, an expert on China's rapidly growing internet sector discusses the outlook for top stocks for investors:

TWST: What has been the impact so far for Sina of the Weibo-Alibaba collaboration, and what do you expect the impact to be going forward?

Dr. He: I would say Sina (SINA), first of all, is a very solid social media network in China. It's probably not the most popular, but it's among the top three, I would say, maybe the number-two. The previous issue is, it had a good user activity but it came to face stiff competition in front of Tencent's (0700.HK) social media network. Then investors started to doubt whether Weibo could make enough revenue or profit to make that network - actually make Sina's valuation justifiable.

But then came in Alibaba's investment. This investment is coming with a package, not only 18% purchase from Alibaba, but also there is almost guaranteed $380 million revenue to Weibo in the next three years. That probably is the bottom line, and if Alibaba was able to grab more of its own client on to Sina's Weibo platform, it may generate more revenue for Sina Weibo, and that $380 million is the sole share of the Sina Weibo, not the total revenue between the two parties. So I think that gives a bottom-line protection of Sina Weibo's profitability. That actually lifted a lot of concerns on the stock. So I recently upgraded the stock, initially from "sell" to "hold," and then from "hold" to "buy." That was the main reason.

Also some other reasons - Sina management did spend efforts on getting into the online video market, I mean, making more money on online media market as well as e-commerce and mobile game market. Those are minor issues. The major issue is the Weibo's profitability, which seems to have a good cushion right now.

TWST: What is your view of Youku's decision to shift away from long-form TV dramas?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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