Weibo CEO Expects Losses to Narrow This Year
By Lorraine Luk
SHANGHAI-- Weibo Corp., China's version of Twitter, will likely remain unprofitable this year, its chief executive said in an interview, as the company is increasing investments to acquire new users.
Weibo, which means microblog in Chinese, works much like Twitter, allowing users to send brief public messages to followers, who can comment on or repost them. It was launched in 2009 and attracted large numbers of users as it became a sort of virtual town square where the Chinese could discuss anything from pop stars to corrupt politicians.
The Chinese social media company raised $286 million in its initial public offering on the Nasdaq Stock Market in April. Chief Executive Wang Gaofei said his company is focused on China and has no immediate plans for expansion overseas.
The company had 66.6 million average daily active users as of March 31.
Despite its popularity, Weibo posted a net loss of $38 million last year as the company spent heavily to attract users. That trend is expected to continue, he said.
"User acquisition will be our top priority in 2014-2015 as Chinese consumers' migration to smartphones is expected to accelerate. We need to grasp this window of opportunity to tap the billions of first-time mobile Internet users in China," Mr. Wang told The Wall Street Journal on the sidelines of the Mobile Asia Expo.
As part of its efforts to improve Weibo's user experience, Mr. Wang said the company also is interested in acquiring content and technology companies in China, but he declined to disclose more details.
While investments in new features and users will continue to weigh on Weibo's profitability this year, the company's net loss is expected to narrow from last year as revenue from advertising and value-added services will increase significantly, said Mr. Wang, declining to provide specific figures.
For example, Chinese e-commerce giant Alibaba Group Holding Ltd. has integrated its online payment platform, Alipay, into Weibo, which has helped attract more merchants to feature advertisements on the microblogging site, he said.
Earlier this week, the company also introduced a new service in China that enables fans of celebrities who pay a monthly membership fee to access some exclusive content such as videos and photos and buy virtual gifts like flowers for the celebrities they follow, Mr. Wang said.
He added that Weibo plans to launch more mobile games to increase revenue from its social-media platform.
To strengthen its position as the dominant social-media platform in China, Weibo plans to invest in brand-building in less developed third and fourth tier cities where Weibo has little presence.
"Since more than half of China's total population is still not on mobile Internet, Weibo will focus on capturing the big growth potential in the domestic market for now", said Mr. Wang. "Third to fourth tier cities are important for Weibo's future growth as they account for 60% of the country's population."
Morgan Stanley analyst Philip Wan said he expects Weibo to remain unprofitable this year due to heavy investments but expect positive margins in 2015. But a major uncertainty is censorship in China, he said.
The Chinese government fined Weibo's parent company, Sina Corp., about $815,000 last month over "unhealthy and indecent content" and moved to revoke Sina's Internet-publication license and its license for online transmission of audiovisual programs.
Commenting on the regulatory risk, Mr. Wang said the Chinese government's media censorship won't affect the growth of social media because of high demand from consumers.
He said Weibo knows how to manage its content in a better way as it has regular dialogue with the government.
Write to Lorraine Luk at lorraine.luk@wsj.com
(END) Dow Jones Newswires
June 11, 2014 11:13 ET (15:13 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.DN201406110073202014-06-11 15:13:00.0005I8J335ACBE9PHVIIMA9D6LMCQDJNF
By Lorraine Luk
SHANGHAI-- Weibo Corp., China's version of Twitter, will likely remain unprofitable this year, its chief executive said in an interview, as the company is increasing investments to acquire new users.
Weibo, which means microblog in Chinese, works much like Twitter, allowing users to send brief public messages to followers, who can comment on or repost them. It was launched in 2009 and attracted large numbers of users as it became a sort of virtual town square where the Chinese could discuss anything from pop stars to corrupt politicians.
The Chinese social media company raised $286 million in its initial public offering on the Nasdaq Stock Market in April. Chief Executive Wang Gaofei said his company is focused on China and has no immediate plans for expansion overseas.
The company had 66.6 million average daily active users as of March 31.
Despite its popularity, Weibo posted a net loss of $38 million last year as the company spent heavily to attract users. That trend is expected to continue, he said.
"User acquisition will be our top priority in 2014-2015 as Chinese consumers' migration to smartphones is expected to accelerate. We need to grasp this window of opportunity to tap the billions of first-time mobile Internet users in China," Mr. Wang told The Wall Street Journal on the sidelines of the Mobile Asia Expo.
As part of its efforts to improve Weibo's user experience, Mr. Wang said the company also is interested in acquiring content and technology companies in China, but he declined to disclose more details.
While investments in new features and users will continue to weigh on Weibo's profitability this year, the company's net loss is expected to narrow from last year as revenue from advertising and value-added services will increase significantly, said Mr. Wang, declining to provide specific figures.
For example, Chinese e-commerce giant Alibaba Group Holding Ltd. has integrated its online payment platform, Alipay, into Weibo, which has helped attract more merchants to feature advertisements on the microblogging site, he said.
Earlier this week, the company also introduced a new service in China that enables fans of celebrities who pay a monthly membership fee to access some exclusive content such as videos and photos and buy virtual gifts like flowers for the celebrities they follow, Mr. Wang said.
He added that Weibo plans to launch more mobile games to increase revenue from its social-media platform.
To strengthen its position as the dominant social-media platform in China, Weibo plans to invest in brand-building in less developed third and fourth tier cities where Weibo has little presence.
"Since more than half of China's total population is still not on mobile Internet, Weibo will focus on capturing the big growth potential in the domestic market for now", said Mr. Wang. "Third to fourth tier cities are important for Weibo's future growth as they account for 60% of the country's population."
Morgan Stanley analyst Philip Wan said he expects Weibo to remain unprofitable this year due to heavy investments but expect positive margins in 2015. But a major uncertainty is censorship in China, he said.
The Chinese government fined Weibo's parent company, Sina Corp., about $815,000 last month over "unhealthy and indecent content" and moved to revoke Sina's Internet-publication license and its license for online transmission of audiovisual programs.
Commenting on the regulatory risk, Mr. Wang said the Chinese government's media censorship won't affect the growth of social media because of high demand from consumers.
He said Weibo knows how to manage its content in a better way as it has regular dialogue with the government.
Write to Lorraine Luk at lorraine.luk@wsj.com
(END) Dow Jones Newswires
June 11, 2014 11:13 ET (15:13 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.DN201406110073202014-06-11 15:13:00.0005I8J335ACBE9PHVIIMA9D6LMCQDJNF
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