The large internet companies in China are facing two problems. The first is that they are not very large. The second is that they are making less money.
Sina.com (SINA), the company that owns China’s largest internet portal, reported that its fourth quarter earnings fell 15% to $11.7 million. The company blamed a drop in its mobile phone revenue. Sina also said its blog traffic jumped 10x, but it has not figured out how to make money on these pages.
Earlier in the week, another Chinese internet firm, Sohu (SOHU), announced that its profits were down.
China has the second largest number of internet subscribers in the world at 137 million. While US internet companies have revenue in the billions of dollars and Google has a market cap of $140 billion, Sina was able to make less than $40 million in profit for an entire year.
The lack of scale at the large Chinese portals still gives US companies like Yahoo! and Google some time to increase their market share in the huge Asian country. But, with local companies doing so poorly, it does raise the issue of how valuable the Chinese internet market is. Maybe the portal and search business don’t play there as well has they do the US.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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