Sina CEO Charles Chao is reportedly laying the groundwork for Weibo's IPO. (File Photo)
Chinese internet giant Sina has announced it will divide its business into two distinct entities, separating its web portal from Weibo, the country's most popular Twitter-like microblogging service, paving the way for a Weibo IPO, reports Shanghai's First Financial Daily.
According to a statement released on Dec. 28, when the structural adjustment comes into effect the company's portal business will be led by Du Hong, Sina's chief operating officer and current vice president, while general manager of Sina Mobile Wang Gaofei will helm Weibo. The two units will control their own products, technological innovation and have distinct teams.
In 2013, the company plans to focus on its mobile business and will use Weibo as its major mobile portal, providing the logic for the recent adjustments, inside sources told the newspaper.
Growth of Weibo's user base slowed last year as the market matures, and mobile users make up an increasingly large part of activity on the microblogging service, said Wen Tianli, general manager of China Renaissance Securities, an investment bank. Currently, more than 60% of Weibo's traffic comes from mobile users, underscoring the importance of mobile in for the company's future.
Xie Wen, former CEO of Yahoo China, said the adjustment is not based on business, but rather capital concerns. The duopoly management is not helpful for Sina to reform its traditional portal business, but in fact is a capital split in a bid for Weibo's IPO, Xie said.
The two entities will be operated entirely independently and will compete for on advertising business, something previously mentioned by Sina CEO Charles Chao, who spoke at the third quarter business meeting last year.
Chao signaled Weibo's future independence early in Aug. 2009 when he and other five executives bought 5 million Sina shares for US$180 million and established an offshore company called New-Wave to complete the management buyout, becoming its largest shareholder. Soon after the buyout, Weibo's user base saw a surge reaching one million in Nov. 2009 and 30 million at its first anniversary in Aug. 2010. Today it has a whopping 400 million users.
Meanwhile, in a planned retreated from Sina, New-Wave between September 2010 and June 2011 sold off shares in the company in four stages, leaving it the current fourth-largest Sina shareholder.
An inside source told the First Financial Daily that Chao is focusing on the commercialization of Weibo and on Weibo's IPO. Another analyst said the market value of Sina Weibo is estimated at US$3 billion, which will no doubt surge if it can grow its share among mobile users.
Du Hong 杜紅
Wang Gaofei 王高飛
Wen Tianli 溫天立
Xie Wen 謝文
Charles Chao 曹國偉