SINA Corporation

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SINA Corporation

1468 Nan Jing Road, W, United Plz
Shanghai
200040
China
Telephone: 86-21-6289-5678
Fax: 86-21-6279-3803
Web site: http://www.sina.com

Public Company
Incorporated: 1993 as Beijing Stone Rich Sight Information Technology Company Ltd.
Employees: 785
Sales: $200.0 million (2004)
Stock Exchanges: NASDAQ
Ticker Symbol: SINA
NAIC: 541512 Computer Systems Design Services

SINA Corporation (Sina) is one of China's leading Internet-based media groups, providing Chinese-language web portals and services, e-mail access, as a well as a variety of value-added services for the mobile telephone market. Sina, based in Shanghai, targets Internet users in mainland China, already the world's second largest Internet population in the mid-2000s, as well as in Hong Kong and Taiwan, and the Chinese community in North America. The company operates four localized web sites (sina.com.cn; sina.com.tw; sina.com.hk; and sina.com) targeting each market, with an array of news, information, and online "department" stores. The company's online services include SinaSearch; SinaChat; Club Yuan, an online dating club; e-Card, an online greeting card service; SinaBaby, a virtual parenting game; and MySina, a home page personalization service. Sina lays claim to more than 115 million registered users worldwide, making it the leading Chinese Internet brand name. Sina's background as the creator of the first Chinese interface for Windows software, and one of the first Chinese-language Internet browsers, also positions it as an important provider of Chinese-language software for Internet and online use, including web search and e-commerce tools. A major part of Sina's revenues comes from its range of value-added services for China's fast-growing mobile telephone market. The company offers value-added services based on multimedia messaging (MMS) protocols and short-messaging services (SMS) protocols, as well as wireless access protocol (WAP), including games, news, and messaging. Sina has been listed on the NASDAQ since 2000. In 2004, the company posted $200 million in revenues.

Chinese Net Pioneers in the 1990s

Wang Zhidong, who created the present Sina Corporation through the merger of U.S.-based Sinanet and his own company, Beijing Stone Rich Sight Information Technology Company Ltd., in 1999, is widely considered one of the great visionaries of China's fast-growing Internet market. Wang, the son of a poor rural school teacher in Guangdong province, had displayed an early interest in electronics, and an aptitude for math and chemistry as a young boy. Yet, as Wang himself told Asia Week: "Before I went to university in Beijing, I never touched a computer."

At university, Wang studied radio electronics, and became such a good student that his professor refused to allow him to switch to computer technology, where Wang's real interest lay. Instead, Wang taught himself at home, and by the end of the 1980s had already begun writing software for the growing number of computer companies in the Haidian area of Beijing. In 1989, after graduating at the age of 21, Wang decided to go into business for himself. Wang reportedly shut himself in his little apartment and began working on Chinese-language software for personal computers. In this way, Wang saved up enough money to launch his own company, Chinese Star, in order to produce software that enabled Western applications to run on Chinese-language personal computers (PCs).

The emergence of Windows as the dominant force in the PC market encouraged Wang to change his direction. After leaving Chinese Star, Wang decided to formulate a new software, this time to create an interface that could translate Windows for Chinese PCs. In this venture, Wang was joined by Yan Yanchou.

Yan himself had already earned a reputation as one of China's most respected computer experts. The son of a former government official (jailed under the Mao regime), Yan had excelled in school, and was admitted to the prestigious National Research Institute in Beijing in 1978. There, Yan taught himself how to design hardware systems and the software to run them. Yan was credited with designing China's first two computer systems, the first for a dedicated payroll system, the second for a computer-controlled flour mill system. By 1983, Yan had been assigned one of only two computers in China at the time. Yan then created CC-DOS, for Chinese Character DOS, adapting the early Microsoft code for Chinese characters.

Wang and Yan set up a new company, Suntendy Electronic Technology and Research, and set to work developing a new program, a software-based shell program that provided Chinese-language conversion for the new graphics-based Windows operating system. The pair developed RichWin, and went looking for financing. After an investment from the Stone Group, a Hong Kong-based electronics distributor, Wang and Yan renamed their company Beijing Stone Rich Sight Information Technology Company (SRS).

Launched in 1993, three years before Microsoft's own Chinese-language version, RichWin became an essential component in the growth of the Chinese PC market. By the mid-1990s, nearly 80 percent of the country's three million computers ran the RichWin shell.

A trip to the United States by Wang in 1995 changed the course of SRS. There, Wang discovered the Internet for the first time, and quickly grasped its potential. As Wang Yan, a Sorbonne-educated lawyer who joined the company soon after to help it develop its Internet business, explained to AsiaWeek: "He got online for the first time, and stayed online for two whole days. It changed him a lot. Right away he started planning his internet strategy. He began to imagine a different future for the company."

Returning home, Wang decided to steer SRS onto the Internet, launching a program he called "Project Surf." Wang met with a great deal of resistance within the company, especially from its software engineers who were more accustomed to writing code than writing web pages. Wang's plan quickly received the nickname "Project Stinky Fish." Another hurdle for the project was the fact that, at the time, only a few thousand hardline members of the Communist Party elite had any kind of access online. Yet as Wang told AsiaWeek: "I just felt it was the right move, and that we should do it."

By 1996, RichWin had added its first browser, capable of translating web sites into Chinese characters, along with a built-in dictionary for looking up English words. The browser also came to include its own search engine, developed by Wang's younger brother, Wang Zhidang.

In support of its browser, SRS put up its first online bulletin board. The initial intent of the bulletin board was for users to report bugs and share tips for using the software. Yet the board quickly developed a social aspect, as users met to discuss a wide variety of subjects. Recognizing the potential—and the pent-up need in China for a forum for relatively free expression, SRS stepped up its transition to Internet portal (or "chortal" as the new breed of Chinese portals became called). The company brought in Wang Yan to lead the development of the site, modeling its content after U.S. counterparts such as AOL, Yahoo!, and others. By 1997, the company's service included chat rooms, forums, news and other information, as well as a growing range of multimedia content.

Although other chortals sprang up, SRS gained a clear and early lead as China's most popular web portal. By the summer of 1997, when China participated in the World Cup, the site began registering more than three million hits per day. That year was widely considered as the start of China's Internet boom which was to see the country become the world's second largest Internet market, trailing only the United States, by the mid-2000s.

Emerging As Sina in the 2000s

Despite SRS's rising success in China, Wang became interested in expanding the site's reach to the large Chinese population outside of mainland China, including in Taiwan, Hong Kong, North America, and elsewhere. Wang's attention fell on Sinanet, a small company that had been founded at Stanford University by three Taiwan-born students in the mid-1990s.

Launched in 1995, Sinanet quickly attracted the large Chinese-speaking population in the United States, who also began using the site as a way to communicate with family members in Taiwan and Hong Kong. Sinanet attracted investors as well, such as Stan Saih, who had founded Acer Computer, and who gave the company its own servers and computers, as well as operating funds. With Saih's backing Sinanet moved into its own offices.

The steady growth of the company led the founding partners to seek professional management, bringing in former Trend Micro head Daniel Chang as the company's CEO. The company now began signing on a growing number of content providers and advertisers, and adding new servers to keep up with the fast-growing membership. By the late 1990s, Sinanet had launched a companion site in Taiwan and was prepared to add a site dedicated to the Hong Kong market as well. Yet the company soon realized that its future success required an entry into the mainland Chinese market.

In late 1998, SRS and Sinanet agreed to merge their operations, creating Sina.com. The mainland China chortal was renamed Sina.com.cn, and all of the company's sites were redesigned to offer a similar browsing experience. Nonetheless, due to cultural and political differences, the company's four sites, including the newly launched Hong Kong sites, each maintained their own editorial staff and content.

Company Perspectives:

SINA Corporation is the leading online media company and value-added information service provider for China and for Chinese communities worldwide and has more than one hundred million registered users.

By 1999, Sina had begun to prepare its initial public offering (IPO). Because the Chinese market was closed to foreign investors, the company decided to list on the NASDAQ, following in the footsteps of another content provider, China.com. As preparation for the offering, Sina brought in a new executive team and board of directors, including investment banker Daniel Mao as COO, and Jim Sha, a cofounder of Netscape, as CEO.

Sha's management, however, quickly came into conflict with Wang's vision of the company. Sha, pointing to the still tiny Internet market, wanted to steer Sina's focus toward its North American and Western markets. Yet Wang remained committed to the vast potential of the Chinese market. As the conflicts increased within the company, Wang began to take control, resulting in what BusinessWeek labeled a "purge" of the company's management shortly before the launch of the company's IPO. As quoted by Wired, Wang said: "I learned what Sina.com needed to go forward, and felt the need to set the company on a clear, concise course."

Sina's IPO was a success as investors eagerly embraced an entry into what many observers now recognized as the fastestgrowing and soon-to-become largest Internet market in the world. Sina's stock soared, valuing the company at its peak at some $1.5 billion, despite the fact that the company's revenues numbered in just the tens of millions and it had yet to turn a profit.

Sina moved to capitalize on its momentum. In 2000, the company formed an alliance with China Telecom (CT) in an effort to boost Internet usage in China. The deal brought Sina into CT's "Home Online" advertising campaign, bundling Sina's browser software, e-mail, news ticker delivery service, and pager service as part of a giveaway of ten million CDs. The campaign worked growing from just 4.5 million Internet users in 1999, to more than 50 million by 2002, with the actual figure (because people often shared connections) estimated to be double that amount.

Sina also began developing new revenue stream sources. The rising popularity of mobile telephone use in China, especially in value-added services such as SMS, provided the company with a new market. In May 2001, the company unveiled a portfolio of some 60 new subscription-based services taking advantage of SMS to provide Sina's content to the fast-growing mobile market.

Yet the crash of Internet stocks hit China that year, and, as Sina's value plummeted, its investors staged a new boardroom purge. This time out, Wang became the victim, and was forced to resign in June 2001. Taking his place as CEO was Daniel Mao.

The slump in Sina's shares proved short-lived, as the company's value began to climb again, backed by the soaring potential of the Chinese Internet and mobile telephone market. Sina boosted its range of services through acquisition, acquiring Shanghai-based Techur Technology in 2002, an operator of a leading B2B web portal and developer of logistics and Internet software. In 2003, the company purchased MeMeStar Ltd., which provided value-added services to more than two million mobile telephone subscribers. By then, Sina finally had become profitable.

In March 2004, the company acquired Crillion Corp., which operated a popular SMS-based job search service. The company also reached an agreement with Korea's Plenus to introduce that company's games technology into the Sina portals.

Sina continued looking for fresh expansion opportunities at the beginning of 2005. In January, Sina prepared to acquire Zhongsou.com, and its web search engine technologies, in a move designed to help Sina counter the efforts of competitors such as Yahoo! and Google as they entered the Chinese market. As the leading portal to the vast Chinese Internet and mobile markets, Sina emerged as an important player in connecting China to the rest of the world.

Principal Subsidiaries

Rich Sight Investment Limited (Hong Kong); SINA.com (Hong Kong) Limited; SINA.com Online (U.S.A.); SINA.com (BVI) Ltd. (British Virgin Islands).

Principal Competitors

Suho.com; NetEase.com; Beijing Blue IT Industries.

Key Dates:

1991:: Wang Zhidong and Tan Yanchou establish Suntendy Electronic Technology and Research to develop a Chinese language shell, called RichWin, for the Windows operating system.
1993:: RichWin is launched; the company changes its name to Beijing Stone Rich Sight Information Technology Company (SRS).
1995:: The company begins developing the first browser capability for RichWin; Sinanet is founded at Stanford University.
1996:: The first Internet-capable RichWin version is launched.
1998:: SRS and Sinanet merge and form Sina.com.
1999:: SINA Corporation (Sina) goes public with a listing on the NASDAQ.
2000:: Sina launches value-added services for the mobile telephone market.
2001:: A slump in stock price leads to Wang's dismissal as company CEO.
2002:: Techur Technology, a B2B portal operator and software developer, is acquired; the company turns a profit for the first time.
2003:: MeMeStar, a value-added SMS provider, is acquired.
2004:: Crillion Corp., provider of job-search services for SMS, is acquired.
2005:: Zhongsou, a web search developer, is acquired.