Phoenix New Media: Nice Top Line But Watch the Middle 凤凰新媒体：营收不错成本堪忧

By newsdoug on June 24, 2011

High costs clip Phoenix wings Phoenix New Media (Nasdaq: FENG) has just published its inaugural quarterly results since going public in May, and while the top line looks encouraging the middle seems a bit cost-heavy and potentially worrisome. (results announcement) As I’ve said in the past, I really like this company in terms of its overall market position, as it occupies a prominent space in the higher-growth and less regulated new media space while also boasting strong connections to traditional media through its parent, Phoenix Broadcasting Satellite Television (HKEx: 2008). I’ll start with the good news, which is that Phoenix New Media’s revenue grew an impressive 77 percent for the quarter year-on-year, led by a doubling in advertising revenue. The company also seems to be moving aggressively into the mobile space, which is definitely where media is moving these days, as evidenced by the many people I see reading news off their mobile phones on the Shanghai subways. The more worrisome news lies in costs, which Phoenix New Media doesn’t seem to be controlling too well. Operating expenses nearly tripled for the quarter, and stock option related costs ballooned, no doubt related to the IPO. The result was that adjusted profit, excluding stock option-related costs, grew just 25 percent for the quarter, while on a net basis the company actually reported a large loss. Investors are clearly concerned about the costs issue, with Phoenix shares now down nearly 20 percent from their IPO price from last month after an initial 34 percent jump on their trading debut. Investors will no doubt be keeping their eye on costs in the months ahead to see if Phoenix can really soar into the top ranks of China’s new media realm.

Bottom line: Phoenix New Media is showing strong potential in the Chinese new media space, but needs to control its costs or risk getting punished by investors.

凤凰新媒体<FENG.N>刚公布5月份上市以来的首份季度财报，虽然营收不错，但其他部分看起来有点堪忧。就像我以前说的，考虑到其整体市场定位，我真的很喜欢这家公司，因为它在高速增长、且监管较少的新媒体行业，占据了重要位置，而且还通过其母公司凤凰卫视<2008.HK>与传统媒体保持着强劲联系。我先说好消息，那就是凤凰新媒体的季度营收同比增加了77%颇为不俗，其中广告收入增加了一倍。凤凰新媒体还打算积极进军移动领域，而这毋庸置疑正是媒体行业的前进方向，从我在上海地铁里看到很多人用手机阅读新闻这一点，就可见一斑。但让人担心的是成本，这一点凤凰新媒体控制的不是太好。该季度运营成本达到原来数字的近三倍，而与股票期权相关的成本飙升，毫无疑问是与IPO一事相关。财报里显示的调整後的利润，排除了股票期权相关成本，增长仅为25%，而公司实际净利润则有严重亏损。投资者很关心成本问题，凤凰股价也较IPO价格下跌了将近20%。投资者肯定会依然很关注凤凰的成本问题，观察凤凰是否可以跻身中国一流的新媒体阵营。

一句话：凤凰新媒体在中国新媒体领域展现出了强大潜力，但需要控制成本或风险。

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