##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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Form 10-K



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|   |  |                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the Fiscal Year Ended December 31,
    2003                                                 
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-30698

SINA Corporation


(Exact Name of Registrant as specified in its
charter)


|                                                                   |  |                                           
|------------------------------------------------------------------ |  | ------------------------------------------
|Cayman Islands                                                     |  | 52-2236363                                
|(State or other jurisdiction of
    Incorporation or organization) |  | I.R.S. Employer Identification
    Number)

Room 1802, United Plaza

1468 Nan Jing Road West


Shanghai 200040, China


(86-21) 6289 5678


(Address, including zip code, and telephone
number, including area code, of Registrants principal
executive offices)


Securities registered pursuant to
Section 12(b) of the Act:

None


Securities registered pursuant to
Section 12(g) of the Act:

Ordinary Share, $0.133 par value


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K. o

Indicate by check mark whether the registrant is
an accelerated
filer.     Yes þ          No o

The aggregate market value of the voting stock
held by non-affiliates of the registrant was approximately
$632,222,733 as of June 30, 2003, based upon the closing
sale price for our ordinary shares as quoted by the Nasdaq
National Stock Market reported for such date. Shares of ordinary
shares held by each officer and director and by each person
known to the registrant (based on information provided by such
persons and/or the most recent schedule 13Gs as filed by
such persons) to beneficially own 5% or more of the outstanding
ordinary shares have been excluded because such persons may be
deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.

As of March 9, 2004, there were
50,010,643 shares of the registrants ordinary shares
outstanding, $0.133 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Part III (Items 10-14) incorporate information by
reference from the definitive proxy statement for the 2004
Annual Meeting of Shareholders to be filed hereafter.











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SINA CORPORATION

INDEX

|              |  |                                                                                                                                                                                                                                    |  |          |     | 
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | --- | 
|              |  |                                                                                                                                                                                                                                    |  | Page No.
|              |  |                                                                                                                                                                                                                                    |  |         
|PART I       
|Item 1.       |  | Business                                                                                                                                                                                                                           |  |          | 2   | 
|Item 2.       |  | Properties                                                                                                                                                                                                                         |  |          | 31  | 
|Item 3.       |  | Legal Proceedings                                                                                                                                                                                                                  |  |          | 31  | 
|Item 4.       |  | Submission of Matters to a
    Vote of Security Holders                                                                                                                                                                            |  |          | 31  | 
|PART II      
|Item 5.       |  | Market for the
    Registrants Common Equity, Related Shareholders Matters
    and Issuer Purchases of Equity Securities                                                                                                          |  |          | 32  | 
|Item 6.       |  | Selected Financial Data                                                                                                                                                                                                            |  |          | 34  | 
|Item 7.       |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations                                                                                                                                          |  |          | 35  | 
|Item 7A.      |  | Quantitative and Qualitative
    Disclosures About Market Risk                                                                                                                                                                     |  |          | 58  | 
|Item 8.       |  | Financial Statements and
    Supplementary Data                                                                                                                                                                                    |  |          | 60  | 
|              |  | Report of Independent
    Accountants                                                                                                                                                                                              |  |          | 61  | 
|              |  | Consolidated Balance Sheet
    at December 31, 2003 and 2002                                                                                                                                                                       |  |          | 62  | 
|              |  | Consolidated Statement of
    Operations for the years ended December 31, 2003 and 2002
    (unaudited), six months ended December 31, 2002 and each of the
    two years in the period ended June 30, 2002 and 2001               |  |          | 63  | 
|              |  | Consolidated Statement of
    Shareholders Equity for the years ended December 31, 2003
    and 2002 (unaudited), six months ended December 31, 2002 and
    each of the two years in the period ended June 30, 2002 and
    2001 |  |          | 64  | 
|              |  | Consolidated Statement of
    Cash Flows for the years ended December 31, 2003 and 2002
    (unaudited), the six months ended December 31, 2002 and each of
    the two years in the period ended June 30, 2002 and 2001           |  |          | 66  | 
|              |  | Notes to Consolidated
    Financial Statements                                                                                                                                                                                     |  |          | 67  | 
|Item 9.       |  | Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosure                                                                                                                                           |  |          | 97  | 
|Item 9A.      |  | Controls and Procedures                                                                                                                                                                                                            |  |          |     | 
|PART III     
|Item 10.      |  | Directors and Executive
    Officers of the Registrant                                                                                                                                                                             |  |          | 97  | 
|Item 11.      |  | Executive Compensation                                                                                                                                                                                                             |  |          | 97  | 
|Item 12.      |  | Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matter                                                                                                                              |  |          | 97  | 
|Item 13.      |  | Certain Relationships and
    Related Transactions                                                                                                                                                                                 |  |          | 97  | 
|Item 14.      |  | Principal Accounting Fees
    and Services                                                                                                                                                                                         |  |          | 98  | 
|PART IV      
|Item 15.      |  | Exhibits, Financial
    Statement Schedules, and Reports on Form 8K                                                                                                                                                                |  |          | 98  | 
|              |  | SIGNATURES                                                                                                                                                                                                                         |  |          | 99  | 
|              |  | POWER OF ATTORNEY                                                                                                                                                                                                                  |  |          | 99  | 
|              |  | EXHIBIT INDEX                                                                                                                                                                                                                      |  |          | 100 | 
|EXHIBIT 10.7 
|EXHIBIT 10.8 
|EXHIBIT 10.9 
|EXHIBIT 10.10
|EXHIBIT 10.11
|EXHIBIT 10.37
|EXHIBIT 10.38
|EXHIBIT 10.39
|EXHIBIT 10.40
|EXHIBIT 10.41
|EXHIBIT 10.42
|EXHIBIT 10.43
|EXHIBIT 10.44
|EXHIBIT 10.45
|EXHIBIT 21.1 
|EXHIBIT 23.1 
|EXHIBIT 23.2 
|EXHIBIT 31.1 
|EXHIBIT 31.2 
|EXHIBIT 32.1 
|EXHIBIT 32.2 



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INFORMATION REGARDING FORWARD-LOOKING
STATEMENTS

This Annual Report on Form 10-K contains
forward-looking statements. These statements relate to future
events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as
may, will, should,
expect, plan, anticipate,
believe, estimate, predict,
potential or continue, the negative of
such terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ
materially.

Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of the
forward-looking statements. We are under no duty to update any
of the forward-looking statements after the date of this report
to conform such statements to actual results or to changes in
our expectations.

Readers are also urged to carefully review and
consider the various disclosures made by us which attempt to
advise interested parties of the factors which affect our
business, including without limitation the disclosures made
under the caption Managements Discussion and
Analysis of Financial Condition and Results of Operations
and under the caption Business  Risk Factors
included herein.

Our corporate Internet address is
http://corp.sina.com. We make available free of charge on or
through our web site our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 as soon as reasonably
practicable after we electronically file such material with, or
furnish it to, the SEC. We may from time to time provide
important disclosures to investors by posting them in the
investor relations section of our web site, as allowed by SEC
rules. Information contained on SINAs web site is not part
of this report or any other report filed with the SEC.




PART I



Item 1.     Business

Overview

SINA Corporation (SINA,
we or the Company), formerly known as
SINA.com, is a leading online media company and value-added
information services provider in China and for Chinese
communities worldwide. With a network of localized web sites
targeting Greater China and overseas Chinese, we provide an
array of services to our users including region-focused online
portals, mobile value-added services, search and directory,
interest-based and community-building channels, free and premium
email, online games, virtual ISP, classified listings, fee-based
services, e-commerce, and enterprise e-solutions. In turn, we
generate revenue through advertising, mobile value-added
services, e-commerce and enterprise services. As of
December 31, 2003, SINA had approximately 94 million
registered users worldwide. According to a survey by the Chinese
Academy of Social Sciences published in September 2003, SINA is
the web site most preferred by Internet users in China.

SINA was formed by a merger between Beijing SINA
Information Technology Co. Ltd. and California-based SINANET.com
in March 1999. In April 2000, the Company completed its initial
public offering on the Nasdaq National Market. Over the course
of the past three years, SINA has transformed itself from a pure
Internet portal relying almost exclusively on online advertising
to a company with multiple revenue streams. For the year ended
December 31, 2003, non-advertising revenues accounted for
64% of our total revenues, up from 36% for the same period in
2002.

Headquartered in Shanghai, China, SINA has
offices in six cities and a network of four web sites around the
world. The primary focus of our operations is in China, where we
generated 95% of our total revenues for the year ended
December 31, 2003. According to a survey published by the
China Internet Network Information Center, China had
79.5 million Internet users as of December 31, 2003,
making China the country with the second-largest number of
Internet users in the world. The number of Internet users in
China

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is expected to grow to 154 million by 2007,
according to IDC. As a leading online media company in China,
SINA is expected to benefit directly from growth in Chinas
Internet market.


As of December 31, 2003, China had
approximately 268.7 million mobile phone users, according
to statistics from Chinas Ministry of Information
Industry, making China the country with the largest number of
mobile phone users in the world. By 2007, the number is expected
to reach 415 million, according to Gartner Dataquest. Short
messaging services (SMS) as well as other forms of
mobile value-added services such as multimedia messaging
services (MMS), wireless application protocol
(WAP), and interactive voice response
(IVR) have grown as a result of the rapid adoption
of mobile phones. Over the past three years, we have leveraged
our network of websites and our large user base to become a
leading mobile value-added services provider in China. Revenues
from mobile-value added services were one of the major drivers
for our growth in the past 24 months. In January 2003, we
acquired Memestar Limited, a mobile value-added service provider
in China to expand our customer base and product offerings. In
February 2004, we entered into a definitive agreement to acquire
all outstanding shares of Crillion Corporation, a provider of
mobile value-added services in China.

We provide our services through five major
business lines including SINA.com (online news and content),
SINA Mobile (mobile value-added services), SINA Online
(community-based services and games), SINA.net (search and
enterprise services) and SINA E-Commerce (online shopping and
travel).

The following table presents an overview of our
financial reporting structure as well as our vertical properties
and services:

|                           |  |                                                                                                                                             
|-------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Revenue
    Classification |  | Advertising (online advertising)Non-advertising
    (Fee-based services, mobile value-added services, e-commerce,
    enterprise e-services)
|                           |  |                                                                                                                                             

|               |  |                                                       |  |                               |  |                                           |  |                                 |  |                                                      |  |  |  |  |  |  |  |  |  | 
|-------------- |  | ----------------------------------------------------- |  | ----------------------------- |  | ----------------------------------------- |  | ------------------------------- |  | ---------------------------------------------------- |  |  |  |  |  |  |  |  |  | 
|Properties and |  |                                                       |  |                               |  |                                           |  |                                 |  | SINA E-                                             
|Services       |  | SINA.com                                              |  | SINA Mobile                   |  | SINA Online                               |  | SINA.net                        |  | Commerce                                            
|               |  |                                                       |  |                               |  |                                           |  |                                 |  |                                                     
|               |  |  News and various online content Online advertising |  |  Mobile value-added services |  |  Community- based services Online games |  |  Search  Enterprise solutions |  |  Online shopping Travel and hotel booking services

Properties and Services

SINA.com

SINA
Portal Network

Our portal network consists of four destination
websites dedicated to users in Greater China including mainland
China (www.sina.com.cn), Taiwan (www.sina.com.tw), Hong Kong
(www.sina.com.hk), and overseas Chinese in North America
(www.sina.com). Each of our destination sites consists of
Chinese-language news and content organized into
interest-specific channels, extensive community and
communication services and sophisticated web navigation
capability through SINA search and directory services. As of
December 2003, SINA had approximately 94 million registered
users, or SINA Netizens.

Interest-Based
Channels

On all of our websites, SINA offers a variety of
interest-based channels that provide region-focused format and
content. Our most popular channels are listed below.



| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SINA News.SINA News
    aggregates feeds from hundreds of news providers, bringing
    together content from media companies such as China Central
    Television and Xinhua News Agency. Through SINA News, our users
    have access to breaking news coverage, from multiple sources and
    points of view.

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| |   |                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SINA Sports.SINA
    Sports provides access to up-to-the-minute news, real-time
    statistics and scores, text broadcast programming, local and
    global coverage.                                                                                                                                                                          
|
| |  | SINA Entertainment.SINA Entertainment contains extensive
    coverage of the local and international entertainment news and
    events that are of interest to our users, including dining,
    movies, television programs, plays, operas as well as popular
    and classical music.                                                         
|
| |  | SINA Technology.SINA Technology is a wide-ranging
    channel for news and information relating to the technology
    industry along with product reviews and software downloads.                                                                                                                                                              
|
| |  | SINA Finance.SINA
    Finance provides a comprehensive set of financial resources,
    from business news to personal finance columns. SINA Finance
    also offers stock quotes from the Shanghai and Shenzhen stock
    exchanges as well as breaking news from individual listed
    companies and market trends analysis.                  
|
| |  | SINA Search.SINA
    Search provides a web directory that allows the users to search
    the web by subjects or via a directory tree. It also features a
    web page search engine for users to obtain relevant web content
    based on the key words they enter.                                                                            
|
| |  | SINA Auto.SINA Auto
    is a comprehensive information source for car buyers and auto
    enthusiasts. The Auto channel covers the latest news from the
    industry, car reviews, comparison charts and a real-time
    interactive pricing and feature guide for car buyers.                                                                 
|
| |  | SINA Real Estate.SINA Real Estate provides the latest
    news, pricing and availability on new, used and rental housing.
    It also features interactive electronic maps, discussion forums
    and how-to guides for buyers, sellers and owners of properties
    on topics ranging from home buying, selling, furnishing and
    repairing.
|
| |  | SINA Gaming.One of
    the largest gaming information web sites in China, SINA Gaming
    provides news and updates on popular online and pc games as well
    as game hardware and accessories in China. SINA Gaming also
    provides downloads and entry points for users to popular online
    games in China.                             
|
| |  | SINA e-Ladies.SINA
    e-Ladies is a woman channel co-produced by SINA and
    LOreal. e-Ladies provides fashion and celebrity news,
    guides on make-up, clothing, fashion accessories as well as tips
    on health and relationship.                                                                                                     

Advertising
Services

We employ a multi-pronged sales strategy that
targets both short-term revenue opportunities such as banner
advertising campaigns, as well as longer-term, higher-value
contracts such as integrated marketing and communications
packages. Our advertising product offerings consist of banner
advertisements that appear on pages within the SINA network,
promotional sponsorships that are typically focused on a
particular event, such as the Olympics, and advertising campaign
design and management services.

Our primary target client base for advertisers
and sponsors consists of global corporations doing business in
Greater China and domestic companies in each of the regions we
operate in, to which we sell from both our corporate and
regional headquarters. Global corporations are typically Fortune
500 and Fortune 1000 companies with significant operations
worldwide that employ a global approach to their branding,
marketing and communications programs. Regional companies
consist of medium to large companies that are focused on
specific geographic as well as demographic markets, such as
Chinese Americans or Taiwanese, and smaller companies whose
markets are within a local territory, such as Beijing or Hong
Kong. For the year ended December 31, 2003, approximately
90% of our advertising revenues were derived from China and
approximately 582 clients advertised on our China web sites. A
partial list of our advertising clients includes: 999 Group,
China Mobile, China Telecom, Shanghai Volkswagen, Hewlett
Packard, BenQ, Microsoft, Dell, IBM, Johnson and Johnson,
Lenova, LOreal, Motorola, Nokia, Nike, Merchant Bank of
China, Samsung, and TCL.

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SINA
Mobile

SINA Mobile provides mobile value-added services
through the Monternet platform of China Mobile Communication
Corporation (China Mobile) and the UNI-Info platforms of
China Unicom Co., Ltd (China Unicom). We also work
closely with regional mobile operators to jointly promote our
mobile value-added service offerings. In 2003, we generated
$64.4 million in revenues from mobile value-added services,
accounting for 56% of our total revenues.

Our mobile value-added services allow users to
receive news and information, download ring tones and pictures,
and participate in dating and friendship communities. Users can
order these services through our website or through their mobile
phones on a monthly subscription basis or per-message basis. Our
mobile value-added service offerings are currently priced
between RMB 0.10 and RMB 2.00 per message and between RMB 2.00
and RMB 30.00 per monthly subscription. For the year ended
December 31, 2003, we generated over 80% of our mobile
value-added services revenues from monthly subscription
services. For the months of March, June, September and December
2003, we had 4.4 million, 6.8 million,
9.0 million and 10.5 million paid monthly
subscriptions for our mobile value-added services, respectively.
We receive payments from our users via China Mobile and China
Unicom, who bill the users on our behalf and deduct a percentage
of the revenue for providing the billing service. In addition,
we are charged a per-message transmission fee by China Mobile
and China Unicom, which varies depending on the type of message
and volume of messages sent. In 2003, we generally received 78%
and 73% of the amounts collected by China Mobile and China
Unicom, respectively, from users of our mobile value-added
services.

Our mobile value-added services can be
categorized into three main categories  news and
information, community, and multimedia downloads:

|                                                                                                    |  |                                                                            |  |                                                          
|--------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------- |  | ---------------------------------------------------------
|News and Information                                                                                |  | Community                                                                  |  | Multimedia Downloads                                     
|                                                                                                    |  |                                                                            |  |                                                          
| Headline news
     Financial news
     Technology news
     Sports news
     Weather forecast |  |  Dating and friendship
     Games and quizzes
     Educational products |  |  Ring tones
     Logos and pictures
     Screen savers

We provide our mobile data products through our
SMS, MMS, WAP and IVR services.

Short
Messaging Service (SMS)

As many mobile phones are able to display and
send text in Chinese, SINA developed a suite of services that
includes user-customized information subscription, personal
greetings, customized mobile phone screen decoration,
personalized ring tones, mobile dating service and mobile games.

Multimedia
Messaging Service (MMS)

Using general packet radio service
(GPRS) technology, MMS enables users to download color
pictures and sophisticated ring tones, as well as to transmit
more data per message. SINA currently provides MMS services in
five major categories: MMS downloads, MMS news, MMS love, MMS
jokes, and MMS dating/games.

Wireless
Application Protocol (WAP)

SINAs WAP services allow users to browse
content on their mobile phones similar to accessing information
on Internet web sites. SINAs WAP services use GPRS
technology to provide users with color pictures and graphics,
sophisticated ring tones, news, chatting and dating, games and
entertainment.

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Interactive
Voice Response System (IVR)

SINAs IVR service provides mobile phone
users with voice content, including chatting and dating, news
information and interactive games.

SINA
Online

SINA Online offers a variety of
community-building services designed to encourage users to
become active and loyal registered members, or SINA Netizens.
Our integrated SinaMail, Sina Instant Messenger, SinaChat,
SinaForum and SinaDating products and services enable SINA
Netizens to communicate with each other or with groups of others
in the SINA community. SINA Online also includes our online game
product offerings.

SinaMail.SinaMail
is our free email service. We operate one of the largest free
email systems in China.

Sina Instant Messenger.We have recently launched the SINA668
which is a free instant messaging service powered by our
proprietary technology. SINA668 features over one hundred
display pictures and many other innovative tools.

SinaChat and SinaForum.Through SinaChat and SinaForum,
members with similar interests can meet online and share their
thoughts and opinions on a variety of topics. We have also
integrated the SinaForum with our news service. Users can
comment on the particular news they are reading with one click
on the links to the related forum topic on SinaForum.

SinaDating.For
members seeking friends and personal relationships, our
SINADating service provides them with a community within a
community. Special features include the Drift Bottles,
Feature Match, Astrological Match Making, Love Express,
Community Court and Member Album.

Premium Email.We
introduced our paid email service in China in August 2001 and
have accumulated over 1.3 million registered users for the
service as of December 2003. Our paid email service provides
features such as anti-virus software, junk mail filter, and
unlimited attachment size for a small monthly fee.

Internet Access.Through partnerships in China, Taiwan and the US, we offer
dial-up Internet access to our web site users. Depending on the
terms of the partnership, we may act as a marketing partner to
market our partners services and share a percentage of the
revenue or we may offer SINA branded access to the end users by
buying the access at wholesale prices and reselling it to our
end users with a mark-up.

Online Games.Our
SINA Gaming channel has become one of the most popular gaming
websites in China and has provided us with an entry into the
growing online gaming market. Through our strategic alliances
with local online game publishers, we are working to become a
leading partner for online game operators. Our alliances usually
include arrangements for SINA to host servers and develop
websites organized under the SINA Games platform that provide
services such as software downloads, player reviews and forums.
In January 2003, we formed a joint venture with NC Soft, a
leading online game provider in Korea to launch the popular
online games Lineage and Lineage II in China. In January 2004,
we entered into a license agreement with Plenus Inc. to
introduce the NetMarble game portal service and casual games to
our registered user base. NetMarble is one of the most
successful game portals in Korea.

SINA.net

SINA.net provides enterprise solutions on an
integrated platform to government agencies and small to
medium-sized businesses in China. These solutions include search
and listings services, web hosting, corporate email, and
proprietary software products.

Search
and Listings

Our listing properties include a search engine, a
directory and classified information. Our search engine and
directory provide an intuitive and user-friendly online guide to
web navigation and a gateway to the vertical offerings on the
SINA network. Users can either browse the directory listings by
subject matter, or use

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SINA Search, a rapid keyword search function that
scans the contents of the entire directory. In addition to any
relevant listings from our directory, we provide users with
web-wide search results from search engines provided by our
partners. For browser-driven inquiries, our directory results
include Sponsored Sites, a SINA created fee-based program that
allows commercial sites to receive enhanced placement in the
directory. For keyword-search-driven inquiries, our search
results also include SINA Sponsor matches, site listings with
enhanced placement in search results that are bought by
businesses or organizations.


Corporate
Email

Leveraging our large-scale personal email system,
we offer a premium email service to small/medium size
businesses. This email service includes the bundling of a
pre-set number of email boxes with larger storage than SinaMail
as well as customized email addresses for business use.

Software
Products

We have developed proprietary software products
that allow users to view Chinese-language content and switch
between Chinese and English languages without regard to the
underlying operating system. Chief among these products is
RichWin. First launched in April 1994, it is an operating system
overlay that allows users to move between a Chinese and an
English operating environment. We sell the latest version of our
RichWin software product to businesses and consumers.

SINA
E-Commerce

Our e-commerce services are divided into two
areas: SinaMall, our online shopping website which links quality
vendors with our large user base and travel and hotel booking
services.

SinaMall

We currently offer SinaMall, an online shopping
website, on our China and North America web sites. Our
technology platform enables both multinational and local
merchants to transact business online. We generate revenue from
monthly hosting fees and through receiving a percentage of
online sales from our merchant partners. We work with merchants
to design customized marketing campaigns that involve both
advertising and sales of their products over our network.

Travel
and Hotel Booking

In December 2003, we entered into a definitive
agreement with a China company providing online and offline
hotel booking services under the brand name Fortune Trip.
Fortune Trip is a hotel booking services provider in China with
over 1,000 hotels in its nationwide hotel network. As
Chinas economy grows, the volume of business and leisure
travel is steadily increasing. However, the hotel booking market
is still relatively undeveloped, given the lack of a nationwide
hotel reservations system. We believe that Fortune Trips
market position and focus on customer service, combined with
SINAs leading online brand and user base, will allow us to
capture a portion of the hotel booking services market.

Strategic Relationships

We have developed strategic relationships with a
range of content, service, application and distribution partners
in order to serve users more effectively and to extend our brand
and services to a broader audience.

Content
Partnerships

The goal of our content partnerships is to
provide our users with the broadest offering of Chinese-language
content available. We contract with approximately 800 content
partners to display their content on one or more of our web
sites free of charge or in exchange for a share of revenue, a
licensing fee, access to our content or a combination of these
arrangements. Some of our leading content providers include
Xinhua News Agency, China Central Television, AFP, Reuters and
Shanghai Securities News. These content partnerships are usually
of one to two years duration with a one-year automatic
renewal.

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Application
and Service Partnerships

The goal of our application and service
partnerships is to ensure that our users have access to
user-friendly, reliable and scalable communication and search
tools. Because many of our prospective partners have
traditionally focused on non-Chinese speaking markets, our
internal engineering and development teams often work closely
with them to adapt their solutions to the Chinese-language
market.

Technology Infrastructure

Our operating infrastructure is designed to serve
and deliver hundreds of millions of page views per day to our
users. This scalable infrastructure allows our users to access
our products and services quickly and efficiently, regardless of
their geographical location. Our infrastructure is also designed
to provide high-speed access by forwarding queries to our web
hosting sites with greater resources or lower loads. Our web
pages are generated, served and cached by servers hosted at
various co-location web hosting sites in China, U.S., Taiwan and
Hong Kong.

Our servers run on RedHat Linux, FreeBSD, Solaris
and Windows platforms using Apache and IIS servers. These
servers are maintained at China Telecom Corporation and China
Netcom Corporation in China, Hinet and APOL in Taipei, Taiwan,
Qwest in Sunnyvale, California, as well as iAdvantage in Hong
Kong. We believe that these hosting partners provide operating
advantages, including an enhanced ability to protect our systems
from power loss, break-ins and other potential external causes
of service interruption. They provide continuous customer
service, multiple connections to the Internet and a continuous
power supply to our systems. In addition, we conduct online
monitoring of all our systems for accessibility, load, system
resources, network-server intrusion and timeliness of content.
SINAs mobile applications in China leverage the
aforementioned web operation resources by utilizing the wireless
infrastructure of China Mobile Communication Corporation and
China Unicom Co., Ltd to provide mobile value-added services to
SINAs users.

Competition

We operate in the market of online content and
services for the global Chinese community. The industry can be
classified as highly competitive and rapidly changing due to the
fact that the Internet is still at its nascent stage in China
and is experiencing fast growth. Other online content/services
companies such as Sohu.com, Netease, Tom.com and Yahoo! China
compete with SINA for user traffic, advertising revenue,
e-commerce transactions, mobile value-added services and other
fee-based services. Industry consolidation, however, may also
occur as the market for the Internet in China matures, which
could result in increased competition for us.

As we expand our vertical product offerings into
new areas such as travel, online games and e-commerce, we face
increasing competition from niche players that focus on these
same verticals. For example, Ctrip has attracted a significant
user base in online travel and eBay/eachnet has established a
market presence in online auctions in China. Similarly,
Yahoo!/3721, Baidu and Huicong focus on the growing search
market in China. On the mobile side, we are seeing competition
from non-portal service providers that specialize in mobile
value-added services such as MMS, WAP and IVR. As SINA continues
to broaden its range of product offerings, we expect increasing
competition from these category players in the coming years.

We also compete for advertisers with traditional
media companies, such as newspapers, television networks and
radio stations that have a longer history of use and greater
acceptance among advertisers. In addition, providers of Chinese
language Internet tools and services may be acquired by, receive
investments from, or enter into other commercial relationships
with large, well-established and well-financed Internet, media
or other companies.

Our ability to compete successfully depends on
many factors, including the quality of our content, the breadth,
depth and ease of use of our services, our sales and marketing
efforts, and the performance of our technology. See also
Risk Factors  The markets for mobile
value-added services and internet services are highly
competitive, and we may be unable to compete successfully
against new entrants and established

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industry competitors, some of which have greater
financial resources than we do or currently enjoy a superior
market position than we do.


Intellectual Property and Proprietary
Rights

We rely on a combination of copyright, trademark
and trade secret laws and restrictions on disclosure to protect
our intellectual property rights. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy
or otherwise obtain and use our technology. Monitoring
unauthorized use of our products is difficult and costly, and we
cannot be certain that the steps we have taken will prevent
misappropriations of our technology, particularly in foreign
countries where the laws may not protect our proprietary rights
as fully as in the United States. From time to time, we may have
to resort to litigation to enforce our intellectual property
rights, which could result in substantial costs and diversion of
our resources.

In addition, third parties may initiate
litigation against us alleging infringement of their proprietary
rights. In the event of a successful claim of infringement and
our failure or inability to develop non-infringing technology or
license the infringed or similar technology on a timely basis,
our business could be harmed. In addition, even if we are able
to license the infringed or similar technology, license fees
could be substantial and may adversely affect our results of
operations. See Risk Factors  We may not be able to
adequately protect our intellectual property, which could cause
us to be less competitive and  We may be
exposed to infringement claims by third parties, which, if
successful, could cause us to pay significant damage
awards.

Government Regulation and Legal
Uncertainties

The following description of PRC laws and
regulations is based upon the opinions of Jun He Law offices
Lawyers, our PRC counsel. For a description of legal risks
relating to our ownership structure and business, see Risk
Factors.

Overview

The Chinese government has enacted an extensive
regulatory scheme governing the operation of business with
respect to the Internet, such as telecommunications, Internet
information services, international connections to computer
information networks, information security and censorship.
Besides the Ministry of Information Industry, or MII, the
various services of the PRC Internet industry is also regulated
by various other governmental authorities, such as the State
Administration of Industry and Commerce, or SAIC, State Council
Information Office, or SCIO, the General Administration for
Press and Publication, or GAPP (formerly the State Press and
Publications Administration, or SPPA), the Ministry of
Education, or MOE, the Ministry of Culture of PRC, or MCPRC, the
Ministry of Health, or MOH. The Ministry of Public Security also
has the regulation jurisdiction on the Internet business.

Among all regulations, the Telecommunications
Regulations of the Peoples Republic of China, or
Telecom Regulations,promulgated on September 25,
2000, is the primary governing law. Telecom Regulations set out
the general framework under which domestic Chinese companies may
engage in various types of telecommunications services in the
PRC. It reiterated the long-standing principle that
telecommunications service providers need to obtain operating
licenses as a mandatory precondition to begin operation. The
Telecom Regulations differentiates the telecommunications
services into basic telecommunications services and value-added
telecommunications services. Value-added telecommunications
services are defined as telecommunications and information
services provided through public networks. The Catalogue
of Telecommunications Business, an attachment to the
Telecom Regulations and updated by MIIs Notice on
Adjusting the Catalogue of Telecommunications Business of
April 1, 2003, categorizes various types of
telecommunications and telecommunications-related activities
into basic or value-added services.

On December 20, 2001, after Chinas
formal entry into the WTO, the PRC State Council promulgated the
Regulations for the Administration of Foreign-Invested
Telecommunications Enterprises, or the FITE Regulations,
which became effective on January 1, 2002. The FITE
Regulations stipulates that foreign-invested telecommunications
enterprises, or FITEs, may undertake operations in basic telecom
services and value-added telecom services. Currently, The
foreign party to a value-added FITE may hold up to 50% equity,

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with no geographic restrictions on its
operations. Before that, foreign investor was prohibited to
invest in Internet content services. The PRC government has not
made any further commitment to loosen the regulation of FITEs.


According to the Measures for the
Administration of Internet Information Servicesdescribed
below, enterprises must obtain an ICP license in first place to
conduct Internet content service businesses. When the Internet
content involves areas of news, education, medical, health or
medicine, which are regulated by the MCPRC, the MOE, the MOH and
other governmental authorities respectively, the enterprise must
also obtain permission from responsible national authorities.

PRC Corporate Structure

SINA is a holding company, which owns the
following material wholly owned subsidiaries in China:



| |   |                                                           
| | - | ----------------------------------------------------------
| |  | Beijing SINA Information Technology Co. Ltd.
    (BSIT) 
|
| |  | Star-Village.com (Beijing) Internet Technology
    Limited
|
| |  | Beijing New Media Information Technology Co. Ltd.         
|
| |  | Beijing SINA Internet Technology Service Co. Ltd.         

In compliance with PRCs foreign investment
restriction in Internet information services and other laws and
regulations, we conduct all our Internet information services,
advertising and mobile value-added services in China via the
following domestic Variable Interest Entities, or VIEs:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Beijing SINA Internet Information Service Co.,
    Ltd. (the ICP Company), a China company controlled
    through business agreement. The ICP Company is responsible for
    operating www.sina.com.cn in connection with its Internet
    content company license and selling advertisements to
    advertisers directly under its online advertising license. It is
    also responsible for providing mobile value-added services in
    China via third party mobile operators to the users. It is 3%
    owned by Yan Wang, our Chief Executive Officer and director, and
    97% owned by six other of our non-executive PRC employees.
|
| |  | Beijing SINA Interactive Advertising Co., Ltd.
    (the Ad Company), a China company controlled through
    business agreement. The Ad Company was responsible for placing
    advertisements on www.sina.com.cn for its third party customers
    under its advertising license. It is 75% owned by Yan Wang and
    25% owned by BSIT. This entity has become inactive after the ICP
    Company obtained online advertising license in May 2002.                                                                                                                                                                                          
|
| |  | Guangdong SINA Internet Information Service Co.,
    Ltd. (the GDICP Company), a China company controlled
    through business agreement. The GDICP Company is responsible for
    providing mobile value-added services in China via third party
    mobile operators to the users under its Internet content company
    license. It is 10% owned by Yan Wang and 90% owned by five other
    of our non-executive PRC employees.                                                                                                                                                                                                          
|
| |  | Guangzhou Media Message Technologies, Inc.
    (Xunlong), a China company controlled through
    business agreement. Xunlong is responsible for providing mobile
    value-added services in China via third party mobile operators
    to the users under its Internet content company license. It is
    owned by five of our non-executive PRC employees.                                                                                                                                                                                                                                                                                 
|
| |  | Beijing Star-Village.com Cultural Development
    Co., Ltd. (StarVI), a China company controlled
    through business agreement. StarVI is responsible for providing
    mobile value-added services in China via third party mobile
    operators to the users under its Internet content company
    license. It is owned by five of our non-executive PRC employees.                                                                                                                                                                                                                                                                      

The capital investment in these VIEs is funded by
SINA and registered as interest-free loans to these PRC
employees. As of December 31, 2003, the amount of
interest-free loans to the employee shareholders of VIEs
amounted to $4.1 million. Under various contractual agreements,
employee shareholders of the VIEs are

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required to transfer their ownership in these
entities to our subsidiaries in China when permitted by PRC laws
and regulations or to our designees at any time for the amount
of loans outstanding; all voting rights of the VIEs are assigned
to SINA. SINA has the power to appoint all directors and senior
management personnel of the VIEs. SINA through its wholly-owned
subsidiaries in China has also entered into exclusive technical
and other service agreements with the VIEs, under which these
subsidiaries provide technical and other services to the VIEs in
exchange for substantially all net income of the VIEs. In
addition, SINAs employee shareholders of the VIEs have
pledged their shares in the VIEs as collateral for non-payment
of loans or for fees on technical and other services due SINA.


Classified
Regulations

Internet
Information Services

The Measures for the Administration of Internet
Information Services, or the ICP Measures, went into effect on
September 25, 2000, Under the ICP Measures, any entity that
provides information to online Internet users must obtain
operating license from the MII or its local branch at the
provincial level in accordance with the Telecom Regulations
described above. The ICP Measures further stipulates that
entities providing online information services in areas of news,
publishing, education, medicine, health, pharmaceuticals and
medical equipment must obtain permission from responsible
national authorities prior to applying for an operating license
from the MII or its local branch at the provincial or municipal
level. Moreover, ICPs must display their operating license
numbers in a conspicuous location on their websites. ICPs must
police their Web sites to remove categories of harmful content
that are broadly defined. This obligation reiterates Internet
content restrictions set by other ministries over the past few
years.

On December 29, 2000, the ICP Company
obtained an ICP license from the Beijing Telecommunications
Administration, or the BTA (the municipal branch of the MII) for
the first time. It also obtained a permit to operate its
bulletin board systems on July 16, 2001 pursuant to
additional ICP Measure regulations issued on October 8,
2000, which requires all companies that operate bulletin board
systems, or BBS, to obtain official permits. Currently, the ICP
Company has an updated ICP license issued on December 30,
2003 by the BTA with a 2-year validity term subject to annual
inspection.

Currently, StarVI holds an ICP license issued on
April 8, 2003 by the BTA with a validity term to
December 28, 2005 subject to annual inspection, Xunlong
holds an ICP license issued on March 21, 2003 by Guangdong
Telecommunications Administration, or GTA with a validity term
to June 3, 2007 subject to annual inspection. GDICP holds
an ICP license issued on December 8, 2003, by GTA with a
5-year validity term subject to annual inspection.

Online
News Publishing

On November 7, 2000, the Provisional
Regulations for the Administration of Web Site Operation of News
Publication Serviceswere jointly promulgated by SCIO and
MII. The regulations stipulate that general web sites set up by
non-news organizations may list news released by certain
governmental news agencies, if they satisfy the requirements set
forth in Article 9, but may not publish news items produced
by themselves or news sources from elsewhere.

Before commencing news-publishing services, the
above regulations also require the general websites of non-news
organizations to be approved by SCIO after securing permission
from SCIO at the provincial level. In addition, the general
websites intending to publish the news released by the
aforementioned news agencies must enter into agreements with the
respective organizations, and submit copies of the agreements to
the relevant administration department.

On December 27, 2000, SCIO approved The ICP
Company to develop online news publishing services.

Mobile
value-added services

On December 26, 2001, the MII published the
Administrative Measures for Telecommunications Business
Operating Licenses, or Telecom License Measures to
supplement the FITE Regulations. The

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Telecom License Measures confirm that the MII is
the competent approval authority for foreign-invested telecom
enterprises. Two types of telecom operating licenses exist in
China (including FITEs): license for basic telecom services and
license for value-added telecom services. Furthermore, a
distinction is made as to whether a license is granted for
intra-provincial or trans-regional
(inter-provincial) activities. An appendix to the license will
detail the permitted activities granted to the enterprise. An
approved telecom service operator must conduct its business
(basic or value-added) in accordance with specifications
recorded on its Telecom Service Operating License. However,
there are still ambiguities regarding the interpretation and
application of the FITE Regulations.


The ICP Company is currently holding a
Value-Added Telecommunications Services Operating License issued
on February 18, 2004 by the MII with a 5-year validity term
subject to annual inspection, authorizing nationwide provision
of information service in value-added telecommunications
services.

Xunlong is currently holding a Value-Added
Telecommunications Services Operating License issued on
February 26, 2003 by the GTA with a validity term to
November 18, 2007 subject to annual inspection, authorizing
the provision of call center service. StarVi is currently
holding a Value-Added Telecommunications Services Operating
License issued on January 17, 2004 by the BTA with a 5-year
validity term subject to annual inspection, authorizing the
provision of mobile value-added telecom services. Xunlong,
StarVi, GDICP are in process of applying trans-regional
Value-Added Telecommunications Services Operating License at
present.

Internet
Publishing

On June 27, 2002, the SPPA and MII jointly
released the Provisional Rules for the Administration of
Internet Publishing, or Internet Publishing Rules, which
define Internet publications as works that are
either selected or edited to be published on the Internet or
transmitted to end-users through the Internet for the purposes
of browsing, reading, using or downloading by the general
public. Such works mainly include content or articles formally
published by press media such as: (a) books, newspapers,
periodicals, audio-visual products and electronic publications;
and (b) literature, art and articles on natural science,
social science, engineering and other topics that have been
edited.

According to the Internet Publishing Rules, Web
portals like SINA are required to apply to and register with the
GAPP before distributing Internet publications. In accordance
with this rule, the ICP Company obtained a license from the GAPP
on October 30, 2003 with a 10-year validity term subject to
annual inspection to distribute Internet publications.

Online
Games

On December 30, 1997, the Rules for the
Administration of Electronic Publications, or Electronic
Publication Rules, was published by the SPPA, and went into
effect as of January 1, 1998. The Electronic Publication
Rules outline a licensing system for business operations
involving electronic publications, which has been interpreted by
the GAPP to include online games. Under the Electronic
Publication Rules, if a PRC company is contractually authorized
to publish foreign electronic publications, it must obtain the
approval and register the copyright licensing contract with the
GAPP.

On March 4, 2003, the Provisional
Regulations for the Administration of Online Culturewas
issued by the MCPRC and went into effect on July 1, 2003.
According to this regulation, commercial entities are required
to apply to the relevant local branch of the MCPRC for an Online
Culture Operating Permit to engage in online games services. On
September 5, 2003, the MCPRC issued an Online Culture
Operating Permit subject to annual inspection to the ICP
Company, which authorize the ICP Company to provide online games
service.

In order to meet the legal requirements, SINA
entrusted a licensed agency to obtain the GAPPs approval
and register the copyright licensing contract. The agency has
completed these procedures, and obtained the relevant licensing
and approval codes relating to this specific online game.

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Internet
Medical, Health and Drug Information Services

Pursuant to the Measures for the
Administration of Internet Medical and Health Information
Servicesissued on January 8, 2001, MOH, is responsible
for reviewing the qualifications of Web sites and approving
their publication of health-related information. According to
the Provisional Regulations for the Administration of
Internet Drug Information Services, issued by the State Drug
Administration, or SDA, on January 11, 2001, websites
publishing drug-related information must obtain approval from
the SDA or one of its local branches.

The ICP Company has obtained the aforementioned
approvals from Beijing Health Bureau and Beijing Drug
Administration on May 27, 2002 and January 17, 2002
respectively.

Online
Cultural Products

The Provisional Regulations for the
Administration of Online Cultureas described above applies
to entities engaging in activities related to online
cultural products, including music and video files,
network games, animation features, audiovisual products,
performing arts and artworks converted for publishing via the
Internet. Pursuant to this legislation, commercial entities are
required to apply to the relevant local branch of the MCPRC for
an Online Culture Operating Permit if they engage in any of the
following types of activities:



| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | production, duplication, import, wholesale,
    retail, leasing or broadcasting of online cultural products;                                                                                                                                                     
|
| |  | publishing of online cultural products on the
    Internet or transmission thereof to computers, fixed-line or
    mobile phones, radios, television sets or gaming consoles for
    the purpose of browsing, reading, using or downloading such
    products; or
|
| |  | exhibitions or contests related to online
    cultural products.                                                                                                                                                                                                 

On September 5, 2003, the MCPRC issued an
Online Culture Operating Permit with a 3-year validity term
subject to annual inspection to the ICP Company.

Online
Advertising

Currently, there is no national legislation
governing the online advertising. The Beijing Administration of
Industry and Commerce, or BAIC has released and adopted
regulations with respect to online advertising, including the
Notice Regarding the Standardization for Qualifications for
the Operation of Online Advertising, Notice Regarding
Applications by Network Economic Organizations for an
Advertising Business License, Mandatory Regulations for the
Administration Systems of Advertising Enterprisesand
Qualification Standards for the Registration of Online
Advertising Business.

According to the Notice Regarding the
Standardization for Qualifications for the Operation of Online
Advertising,companies that have already obtained
advertising operating licenses may undertake design, production
and agency work in relation to online advertising and may carry
out advertising publication business via their own Web sites.

On May 18, 2002, the State AIC issued an
advertising operating license to the ICP Company. This license
is subject to annual inspection.

International
Connections for Computer Information Networks

Regulations governing international connections
for PRC computer networks include:



| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Measures for the Administration of
    International Connections to Chinas Public Computer
    Interconnected Networks(1996);                                                                          
|
| |  | Provisional Regulations of the Peoples
    Republic of China for the Administration of International
    Connections to Computer Information Networks(1997) and their Implementing
    Measures (1998);

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| |   |                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reply Concerning the Verification and Issuance
    of Operating Permits for Business Relating to International
    Connections for Computer Information Networks and for Public
    Multimedia Telecommunications Business(1998); and
|
| |  | Administrative Measures for International
    Communications Gateways(2002).                                                                                                                                                         

According to the above regulations, any entity
wishing to access international network connections for their
computer information networks in the PRC must comply with the
following requirements:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | be a PRC legal person;                                                                                                                
|
| |  | have the appropriate equipment, facilities and
    technical and administrative personnel;                                            
|
| |  | have implemented and registered a system of
    information security and censorship; and                                              
|
| |  | effect all international connections through an
    international communications gateway established with the
    approval of the MII.

We believe that the companies as described in
PRC corporate structureare in proper compliance with
these requirements.

Information
Security and Censorship

Regulations governing information security and
censorship include:



| |   |                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Law of the Peoples Republic of China
    on the Preservation of State Secrets(1988) and its Implementing Rules
    (1990);                                                                                                                                                   
|
| |  | The Law of the Peoples Republic of China
    Regarding State Security(1993) and its Implementing Rules
    (1994);                                                                                                                                                               
|
| |  | Rules of the Peoples Republic of China
    for Protecting the Security of Computer Information Systems(1994);                                                                                                                                                                    
|
| |  | Notice Concerning Work Relating to the Filing
    of Computer Information Systems with International Connections(1996);                                                                                                                                                           
|
| |  | Administrative Regulations for the Protection
    of Secrecy on Computer Information Systems Connected to
    International Networks(1999);                                                                                                                                       
|
| |  | Regulations for the Protection of State
    Secrets for Computer Information Systems on the Internet(2000);                                                                                                                                                                       
|
| |  | Notice issued by the Ministry of Public
    Security of the Peoples Republic of China Regarding Issues
    Relating to the Implementation of the Administrative Measure for
    the Security Protection of International Connections to Computer
    Information Networks (2000);
|
| |  | The Decision of the Standing Committee of the
    National Peoples Congress Regarding the Safeguarding of
    Internet Security(2000); and                                                                                                                                       
|
| |  | Measures for the Administration of Commercial
    Web Site Filings for the Record(2002) and their Implementing
    Rules (2002).                                                                                                                                                  

These legislations specifically prohibit the use
of Internet infrastructure where it may breach public security,
provide socially destabilizing content or disclose state
secrets. According to these legislations, it is mandatory for
Internet companies in the PRC to complete security-filing
procedures and regularly update information security and
censorship systems for their Web sites with the local public
security bureau. .

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According to the Detailed Implementing Rules
for the Measures for the Administration of Commercial Web Site
Filings for the Record, promulgated in July 2002 by the
BAIC, websites must comply with the following requirements:



| |   |                                                                    
| | - | -------------------------------------------------------------------
| |  | file with the BAIC and obtain electronic
    registration marks;   
|
| |  | place the registration marks on their Web
    sites homepages; and
|
| |  | register their Web site names with the BAIC.                       

The ICP Company has successfully registered their
websites with the BAIC on December 23, 2003. Consequently,
SINAs electronic registration mark is prominently placed
on its homepage.

In addition, the State Security Bureau has issued
regulations authorizing the blocking of access to any site it
deems to be leaking State secrets or failing to comply with the
relevant legal legislation regarding the protection of State
secrets during online information distribution. Specifically,
Internet companies in China with bulletin boards, chat rooms or
similar services must apply for the approval of the State
Secrets Bureau prior to operating such services. The ICP Company
has established an internal security committee, adopted security
maintenance measures, employed full-time BBS supervisors and has
been exchanging information on a regular basis with the local
public security bureau with regard to sensitive or censored
information and Web sites. It is in full compliance with the
governing legislation.

Encryption
Software

On October 7, 1999, the State Encryption
Administration Commission published the Regulations for the
Administration of Commercial Encryption, followed by the
First Notice of the General Office of the State Encryption
Administration Commissionon November 8, 1999. Both of
these regulations address the use of software in China with
encryption functions. According to these regulations, encryption
product purchases must be reported. Violation of the encryption
regulations may result in warning, penalty, confiscation of the
encryption product, or criminal liabilities.

On March 18, 2000, the Office of the State
Commission for the Administration of Cryptography issued a
public announcement regarding the implementation of those
regulations. The announcement clarifies the encryption
regulations as below:



| |   |                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Only specialized hardware and software, the core
    functions of which are encryption and decoding, fall within the
    administrative scope of the regulations as encryption
    products and equipment containing encryption technology.
    Other products such as wireless telephone, Windows software and
    browsers do not fall within this scope.
|
| |  | The PRC government has already begun to research
    the laws in question in accordance with WTO rules and
    Chinas external commitments, and will make revisions
    wherever necessary. The Administrative Regulations on Commercial
    Encryption will also be subject to such scrutiny and revision.                                                 

We believe that the companies described in PRC
corporate structure are in proper compliance with these
requirements.

Online
education

According to the Measures for the
Administration of Educational websites and Online Education
Schoolreleased on July 5, 2000, to open educational
websites and online education schools, application must be made
to the administrative department overseeing education. Operation
may begin only when inspected and approved by the administrative
department. Educational websites and online education schools
shall not operate without approval by the administrative
department overseeing education.

In compliance with the above regulation, the ICP
Company has obtained the aforementioned approvals from Beijing
Education Committee on March 26, 2002.

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For a description of how the unsettled nature of
Chinese regulations may affect our business, please see
Risk Factors  Even if we are in compliance with
Chinese governmental regulations relating to licensing and
foreign investment prohibitions, the Chinese government may
prevent us from distributing content that it believes is
inappropriate and we may be liable for such content.

Web Site Access to Our Periodic SEC
Reports

Our corporate Internet address is
http://corp.sina.com. We make available free of charge on or
through our web site our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 as soon as reasonably
practicable after we electronically file such material with, or
furnish it to, the SEC. We may from time to time provide
important disclosures to investors by posting them in the
investor relations section of our web site, as allowed by SEC
rules Information contained on SINAs web site is not part
of this report or any other report filed with the SEC. You may
read and copy any materials we filed with the SEC at the
SECs Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site
http://www.sec.gov that contains reports, proxy and information
statements, and other information that we filed electronically.

Employees

As of December 31, 2003, we had 785
full-time employees, of whom 727 were employed in China, 21 were
employed in the United States of America, 12 were employed in
Hong Kong and 25 were employed in Taiwan. From time to time we
employ independent contractors to support our production,
engineering, marketing, and sales departments. Our Chinese
employees are members of a labor association that represents
employees with respect to labor disputes and other employee
matters. We have never experienced a work stoppage or a labor
dispute that has interfered with our operations.

Financial Information about Geographic
Areas

The following is a summary of our geographic
operation:

|                                                        |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |         | 
|------------------------------------------------------- | ----------------- | -------------- | - | ----- |  | --------- | - | ------- |  | ----- | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|                                                        |                   | U.S.           |   | China |  | Hong Kong |   | Taiwan  |  | Total
|                                                        |                   |                |   |       |  |           |   |         |  |      
|                                                        |                   |               
|                                                        |                   | (In thousands)
|Year ended and as of December 31,
    2003:             |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 2,398 |  |           | $ | 108,507 |  |       | $ | 1,854 |  |  | $ | 1,526 |  |  | $ | 114,285 | 
|                                                        | Long-lived assets |                |   | 66    |  |           |   | 7,592   |  |       |   | 132   |  |  |   | 856   |  |  |   | 8,646   | 
|Year ended and as of December 31, 2002
    (unaudited): |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 2,772 |  |           | $ | 32,502  |  |       | $ | 1,715 |  |  | $ | 1,905 |  |  | $ | 38,894  | 
|                                                        | Long-lived assets |                |   | 362   |  |           |   | 5,453   |  |       |   | 452   |  |  |   | 1,332 |  |  |   | 7,599   | 
|Six months ended and as of December 31,
    2002:       |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 1,427 |  |           | $ | 19,675  |  |       | $ | 1,060 |  |  | $ | 1,054 |  |  | $ | 23,216  | 
|                                                        | Long-lived assets |                |   | 362   |  |           |   | 5,453   |  |       |   | 452   |  |  |   | 1,332 |  |  |   | 7,599   | 
|Year ended and as of June 30,
    2002:                 |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 2,524 |  |           | $ | 22,832  |  |       | $ | 1,542 |  |  | $ | 1,610 |  |  | $ | 28,508  | 
|                                                        | Long-lived assets |                |   | 666   |  |           |   | 5,079   |  |       |   | 824   |  |  |   | 1,671 |  |  |   | 8,240   | 
|Year ended and as of June 30,
    2001:                 |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 6,866 |  |           | $ | 17,190  |  |       | $ | 1,002 |  |  | $ | 1,625 |  |  | $ | 26,683  | 
|                                                        | Long-lived assets |                |   | 1,754 |  |           |   | 6,103   |  |       |   | 1,317 |  |  |   | 2,737 |  |  |   | 11,911  | 

Revenues are attributed to the countries in which
the invoices are issued. Long-lived assets comprise the net book
value of property and equipment.

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Risk Factors

Because
our operating history is limited and the revenue and income
potential of our business and markets are unproven, we cannot
predict whether we will meet internal or external expectations
of future performance.

We believe that our future success depends on our
ability to significantly increase revenue from our operations,
for which we have a limited operating history. Accordingly, our
prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in an early
stage of development. These risks include our ability to:



| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | offer new and innovative products;                                                                                                                      
|
| |  | attract buyers for our mobile value-added
    services;                                                                                                 
|
| |  | attract advertisers;                                                                                                                                    
|
| |  | attract a larger audience to our network;                                                                                                               
|
| |  | derive revenue from our users from fee-based
    Internet services;                                                                                     
|
| |  | respond effectively to competitive pressures and
    address the effects of strategic relationships or corporate
    combinations among our competitors;
|
| |  | maintain our current, and develop new, strategic
    relationships;                                                                                     
|
| |  | increase awareness of our brand and continue to
    build user loyalty;                                                                                 
|
| |  | attract and retain qualified management and
    employees;                                                                                              
|
| |  | upgrade our technology to support increased
    traffic and expanded services; and                                                                      
|
| |  | expand the content and services on our network.                                                                                                         

Until
recently, we had incurred net losses since inception and we may
incur future losses.

We recorded a net income of approximately
$31.4 million for the twelve months ended December 31,
2003. However, as of December 31, 2003, we had an
accumulated deficit of approximately $83.1 million. We have
only recently attained profitability and we cannot be certain we
will sustain profitability. If we do not sustain profitability,
the market price of our ordinary shares may decline.

We
are relying on advertising sales as a significant part of our
future revenue, but the Internet has not been proven as a source
of significant advertising revenue in Greater
China.

In 2003, advertising revenue constituted 36% of
our total net revenue and our net advertising revenue grew from
approximately $24.7 million in 2002 to approximately
$41.2 million in 2003. Our revenue growth is dependent on
increased revenue from the sale of advertising space on our
network. Online advertising in Greater China is an unproven
business and many of our current and potential advertisers have
limited experience with the Internet as an advertising medium,
have not traditionally devoted a significant portion of their
advertising expenditures or other available funds to web-based
advertising, and may not find the Internet to be effective for
promoting their products and services relative to traditional
print and broadcast media. Our ability to generate and maintain
significant advertising revenue will depend on a number of
factors, many of which are beyond our control, including:



| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | the development of a large base of users
    possessing demographic characteristics attractive to advertisers;  
|
| |  | increased competition and potential downward
    pressure on online advertising prices;                         
|
| |  | the development of independent and reliable means
    of verifying levels of online advertising and traffic; and

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| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | the effectiveness of our advertising delivery,
    tracking and reporting systems.

If the Internet does not become more widely
accepted as a medium for advertising, our ability to generate
increased revenue could be negatively affected.

Our growth in advertising revenues, to a certain
extent, will also depend on our ability to increase the
advertising space on our network. If we fail to increase our
advertising space at a sufficient rate, our growth in
advertising revenues could be hampered. Further, the expansion
of Internet advertising blocking software may result in a
decrease of our advertising revenues as the advertisers may
choose not to advertise on Internet if the third parties
Internet advertising blocking software is widely used.

We
are relying on mobile value-added services for a significant
portion of our future revenue, and we rely on China Mobile and
China Unicom for service delivery and fee
collection.

The majority of our recent revenue growth was
from the development of our mobile value-added services. Our
revenues from mobile value-added services accounted for 85%,
86%, 89% and 90% of our total non-advertising revenues for the
three months ended March 31, June 30,
September 30 and December 31, 2003, respectively, and
we are deriving an increasing portion of our revenues from these
services. If users do not adopt our mobile value-added services,
at a sufficient rate, our revenue growth could be negatively
affected.

Our mobile value-added services offerings depend
mainly on the cooperation of China Mobile Communication
Corporation (China Mobile) and its subsidiaries and
to a lesser extent China Unicom Co., Ltd (China
Unicom) and its subsidiaries. We have established
cooperation arrangements with China Mobile and China Unicom and
their subsidiaries. As of January 31, 2004, we had entered
into cooperation and revenue sharing contracts with 29
provincial and local subsidiaries of China Mobile and 11
provincial subsidiaries of China Unicom for various mobile
value-added services. The term of these contracts is generally
for one year with a few exceptions in which the term is for six
months or for two years. The contract is typically renewed on an
annual basis.

We rely on China Mobile and China Unicom in the
following ways:



| |   |                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | utilizing their network and gateway to provide
    mobile value-added services to subscribers;                           
|
| |  | utilizing their billing systems to charge the
    fees to our subscribers through the subscribers mobile
    phone bill;
|
| |  | utilizing their collection services to collect
    payments from subscribers;                                            
|
| |  | relying on their infrastructure development to
    further develop our new products and services.                        

Under the agreements with China Mobile and its
subsidiaries, China Mobile generally retains 15% of the fee for
content value-added services we provide to our users via their
platform for fee collection. In addition, China Mobile deducts
transmission fees from our portion of the service fees. The
amount of such transmission fee is charged on a per message
basis and varies for different products and the message volume.
For the year ended December 31, 2003, on average we
received 78% of the amount we charged to our users from China
Mobile platform after China Mobile deducted the fees for
collection and transmission. Under the agreements with China
Unicom and its subsidiaries, China Unicom typically retains 12%
of the fee for content value-added services we provide to our
users via their platform if they charge us for transmission cost
or between 21% and 29% if they do not charge us for transmission
cost. For the year ended December 31, 2003, on average we
received 73% of the amount we charged to our users from China
Unicom platform after China Unicom deducted the fees for
collection and transmission.

Our fee arrangements with China Mobile and China
Unicom could change at any time due to the dominance of these
two mobile service providers, the large number of providers of
mobile value-added services, and the consequent power of the
mobile service providers to dictate the terms of such fee
arrangements. If China Mobile and China Unicom choose to
increase fees charged for providing their services, our gross
margin for mobile value-added services and our operating
profitability could be negatively affected.

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China Mobile and China Unicom could change their
operating policy at any time, which might result in
discontinuation of some our mobile value added services, which
in turn, could result in material reduction of our revenues
derived from mobile value added services. In April 2003, China
Mobile announced or reinforced the policy which prohibited
utilizing its billing gateway for services that are not directly
related to the mobile value-added service and prohibited billing
for monthly services that have not been used by a subscriber for
more than three months. These policy changes did not have a
material impact on our mobile value-added services revenues but
did have an impact on our planned product offerings in the
subsequent periods. In July 2003, China mobile disallowed mobile
value-added service providers from utilizing third party web
sites which do not possess ICP license or Web Union to promote
their mobile value-added service products. Our online promotions
for our mobile value-added services were mainly relying on our
own web sites and hence the Web Union issue did not have a
significant impact on us.

Over 80% of our mobile value-added service
revenues are derived from services charged on a monthly
subscription basis. If China Mobile or China Unicom restricts or
disallows some or all of mobile value-added services to be
charged on a monthly subscription basis, our revenues from
mobile value-added services will be severely impacted. We
currently charge our users who have registered to be billed on a
monthly basis even if they do not use the service in a
particular month. If China Mobile or China Unicom does not allow
us to charge monthly fee for users who do not use our service in
a particular month, our mobile value-added service revenues will
be negatively impacted.

Further if China Mobiles or China
Unicoms systems encounter technical problems or they
refuse to cooperate with us, our mobile value-added services
offerings may cease or be severely disrupted, which could have a
significant and adverse impact on our operating results. China
mobile and its subsidiaries have recently started transitioning
mobile value-added service providers to a new billing platform
and they may require us to switch to the new billing platform in
the future. The new billing platform may result in higher
failure rate for fee collection from our users and hence reduce
our revenues from mobile value-added services significantly.

Our
investment in online game, travel and online auctions may not be
successful.

Online game and travel are currently some of the
fastest growing online services in China. We have invested and
intend to expand in these areas. For example, we have formed a
joint venture in China with NCSoft to pursue online game; we
recently entered into a definitive agreement with a China
company to acquire Fortune Trip to enter into the online travel
business. Some of our competitors have entered these markets
ahead of us and have achieved significant market positions. We
cannot assure you that we will succeed in these markets despite
our investments of time and funds to address these markets. If
we fail to achieve a significant position in these markets, we
will fail to realize our intended returns in these investments.
Moreover, our competitors who succeed may enjoy increased
revenues and profit, and our results and share price could
suffer as a result.

We recently entered into a joint venture
agreement with Yahoo! to provide online auctions in China. The
market for these services is unproven in China and we currently
have no experience in this industry.

If
we fail to successfully develop and introduce new products and
services, our competitive position and ability to generate
revenues could be harmed.

We are developing new products and services. The
planned timing or introduction of new products and services is
subject to risks and uncertainties. Actual timing may differ
materially from original plans. Unexpected technical,
operational, distribution or other problems could delay or
prevent the introduction of one or more of our new products or
services. Moreover, we cannot be sure that any of our new
products and services will achieve widespread market acceptance
or generate incremental revenue.

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We
may have to register our encryption software with Chinese
regulatory authorities, and if they request that we change our
encryption software, our business operations could be disrupted
as we develop or license replacement software.

Pursuant to the Regulations for the
Administration of Commercial Encryption promulgated at the end
of 1999, foreign and domestic Chinese companies operating in
China are required to register and disclose to Chinese
regulatory authorities the commercial encryption products they
use. Because these regulations have just recently been adopted
and because they do not specify what constitutes encryption
products, we are unsure as to whether or how they apply to us
and the encryption software we utilize. We may be required to
register, or apply for permits with the relevant Chinese
regulatory authorities for, our current or future encryption
software. If Chinese regulatory authorities request that we
change our encryption software, we may have to develop or
license replacement software, which could disrupt our business
operations.

The
markets for mobile value-added services and Internet services
are highly competitive, and we may be unable to compete
successfully against new entrants and established industry
competitors, some of which have greater financial resources than
we do or currently enjoy a superior market position than we
do.

Approximately 56% of our revenue in 2003 was from
our mobile value-added services. The competition among providers
of these services is highly competitive. A large number of
independent mobile value-added service providers compete against
us. We may be unable to continue to grow our revenues from these
services in this competitive environment. In addition, the major
mobile operators in China, China Mobile and China Unicom, may
potentially enter the business of content development. Any of
our present or future competitors may offer mobile value-added
services which provide significant technology, performance,
price, creativity or other advantages, over those offered by us,
and therefore achieve greater market acceptance than ours. In
addition, in February 2004, we entered into a definitive
agreement to acquire a value-added service provider Crillion
Corporation. If we are unable to compete and grow our mobile
value-added service business, the payments that we are required
to make under this agreement, or in our other investments in
this area, could adversely affect our results of operations and
profitability.

The Chinese market for Internet content and
services is competitive and rapidly changing. Barriers to entry
are minimal, and current and new competitors can launch new web
sites at a relatively low cost. Many companies offer Chinese
language content and services, including informational and
community features, fee-based services and email and electronic
commerce services in the Greater China market that may be
competitive with our offerings. We also face competition from
providers of software and other Internet products and services
that incorporate search and retrieval features into their
offerings. In addition, entities that sponsor or maintain
high-traffic web sites or provide an initial point of entry for
Internet users, such as ISPs, including large, well-capitalized
entities such as Microsoft (MSN), Yahoo! and AOL, currently
offer and could further develop or acquire content and services
that compete with those that we offer. We expect that as
Internet usage in Greater China increases and the Greater China
market becomes more attractive to advertisers and for conducting
electronic commerce, large global competitors may increasingly
focus their resources on the Greater China market. We also
compete for advertisers with traditional media companies, such
as newspapers, television networks and radio stations, that have
a longer history of use and greater acceptance among
advertisers. In addition, providers of Chinese language Internet
tools and services may be acquired by, receive investments from
or enter into other commercial relationships with large,
well-established and well-financed Internet, media or other
companies.

In the areas of online game, travel and auctions,
our other areas of focus for future business growth, there is
intense competition from domestic and international companies.
These include domestic companies focused on one sector and
large, international companies that want to extend their
businesses in the China market. The online game industry, for
example, is dominated by domestic independent online game
operators. In auctions, Ebay has acquired a domestic company to
address the auctions market. Many of our competitors have a
longer history of providing these online services and currently
offer a greater breadth of products which may be more popular
than our online offerings.

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A number of our current and potential future
competitors have greater financial and other resources than we
have, and may be able to more quickly react to changing consumer
requirements and demands, deliver competitive services at lower
prices and more effectively respond to new Internet technologies
or technical standards.

Increased competition could result in reduced
page views, loss of market share and revenues, and lower profit
margins from reduced pricing for Internet-based services.

Our
strategy of acquiring complementary assets, technologies and
businesses and entering into joint ventures may fail and may
result in equity or earnings dilution.

As part of our business strategy, we have
acquired and intend to identify and acquire assets, technologies
and businesses that are complementary to our existing business.
In January 2003 we acquired Memestar, a mobile value-added
service company, in December 2003 we entered into a definitive
agreement with a China company to acquire Fortune Trip, an
online and offline hotel booking service, in January 2004, we
entered into a joint venture agreement with Yahoo! to start an
online auction business in China, and in February 2004 we
entered into a definitive agreement to acquire Crillion
Corporation, a mobile value-added services company. We have
significant potential ongoing financial obligations with respect
to certain of these transactions. Acquired businesses or assets
may not yield the results we expected. In addition, acquisitions
could result in the use of substantial amounts of cash,
potentially dilutive issuances of equity securities, significant
amortization expenses related to goodwill and other intangible
assets and exposure to potential unknown liabilities of acquired
business. Moreover, the costs of identifying and consummating
acquisitions, and integrating the acquired business into ours,
may be significant. In addition, we may have to obtain approval
from the relevant PRC governmental authorities for the
acquisitions and have to comply with any applicable PRC rules
and regulations, which may be costly.

Wireless
technology changes rapidly, and we may not be successful in
working with new technology standards.

Wireless technology undergoes rapid changes. Our
current mobile value-added services business consists
principally of text messaging. As the technology evolves to
accommodate multi-media messaging services, wireless e-commerce
and music download, and other applications, we would need to
adapt to and support these services in order to be successful.
If we fail to anticipate and adapt to these and other
technological changes, our market share and our profitability
could suffer.

You
should not rely on our quarterly operating results as an
indication of our future performance because our results of
operations are subject to significant
fluctuations.

We may experience significant fluctuations in our
quarterly operating results due to a variety of factors, many of
which are outside our control. Factors that may cause our
quarterly operating results to fluctuate include: our ability to
retain existing users, attract new users at a steady rate and
maintain user satisfaction; the announcement or introduction of
new or enhanced services, content and products by us or our
competitors; significant news events that increase traffic to
our web sites; technical difficulties, system downtime or
Internet failures; demand for advertising space from
advertisers; seasonality of advertising market; the amount and
timing of operating costs and capital expenditures relating to
expansion of our business, operations and infrastructure;
governmental regulation; seasonal trends in Internet use; a
shortfall in our revenues relative to our forecasts and a
decline in our operating results due to our inability to adjust
our spending quickly; and general economic conditions and
economic conditions specific to the Internet, electronic
commerce and the Greater China market.

As a result of these and other factors, you
should not rely on quarter-to-quarter comparisons of our
operating results as indicators of likely future performance.
Our operating results may be below the expectations of public
market analysts and investors in one or more future quarters. If
that occurs, the price of our ordinary shares could decline and
you could lose part or all of your investment.

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Our
business and growth could suffer if we are unable to hire and
retain key personnel that are in high demand.

We depend upon the continued contributions of our
senior management and other key personnel, many of whom are
difficult to replace. The loss of the services of any of our
executive officers or other key employees could harm our
business. We have experienced recent changes to our executive
management team. Our future success will also depend on our
ability to attract and retain highly skilled technical,
managerial, editorial, marketing, sales and customer service
personnel, especially qualified personnel for our international
operations in Greater China. Qualified individuals are in high
demand, and we may not be able to successfully attract,
assimilate or retain the personnel we need to succeed.

We
may not be able to manage our expanding operations effectively,
which could harm our business.

We expanded rapidly in 2003 and 2004 by acquiring
two new mobile value-added services providers and one online
hotel booking company, and entering into two new joint ventures,
including the Yahoo! joint venture. These new business and joint
ventures provide various services such as mobile value-added
services, online and offline hotel booking, and online auctions.
We anticipate significant continued expansion of our business,
both through further acquisitions and internal growth, as we
address growth in our customer base and market opportunities. In
addition, the geographic dispersion of our operations as a
result of acquisitions and overall internal growth requires
significant management resources that our locally-based
competitors do not need to devote to their operations. In order
to manage the expected growth of our operations and personnel,
we will be required to improve and implement operational and
financial systems, procedures and controls, and expand, train
and manage our growing employee base. Further, our management
will be required to maintain and expand our relationships with
various other web sites, Internet and other online service
providers and other third parties necessary to our business. We
cannot assure you that our current and planned personnel,
systems, procedures and controls will be adequate to support our
future operations.

We
may be adversely affected by complexity, uncertainties and
changes in PRC regulation of Internet business and companies,
including limitations on our ability to own key assets such as
our web site.

The Chinese government heavily regulates its
Internet sector including the legality of foreign investment in
the Chinese Internet sector, the existence and enforcement of
content restrictions on the Internet and the licensing and
permit requirements for companies in the Internet industry.
Because these laws, regulations and legal requirements with
regard to the Internet are relatively new and evolving, their
interpretation and enforcement involve significant uncertainty.
In addition, the Chinese legal system is a civil law system in
which decided legal cases may be cited for reference but have
little precedential value. As a result, in many cases it is
difficult to determine what actions or omissions may result in
liability. Issues, risks and uncertainties relating to China
government regulation of the Chinese Internet sector include the
following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SINA only has contractual control over its web
    site in China; it does not own it due to the restriction of
    foreign investment in businesses providing value-added
    telecommunication services, including computer information
    services, mobile value-added services or electronic mail box
    services.                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | In addition, uncertainties relating to the
    regulation of the Internet business in China, including evolving
    licensing practices, gives rise to the risk that permits,
    licenses or operations at some of our companies may be subject
    to challenge, which may be disruptive to our business, or
    subject us to sanctions, requirements to increase capital or
    other conditions or enforcement, or compromise enforceability of
    related contractual arrangements, or have other harmful effect
    on us.                                                                                                                                                                                                                 
|
| |  | On December 11, 2001, the day China formally
    joined the WTO, the PRC State Council promulgated the
    Regulations for the Administration of Foreign-Invested
    Telecommunications Enterprises, or the FI Telecom Regulations,
    which became effective on January 1, 2002. The FI Telecom
    Regulations stipulate that the foreign party to a
    foreign-invested telecommunications enterprise can hold equity
    share in such foreign-invested telecommunications enterprise
    that provides basic telecom services or value-added telecom
    services, ultimately not to exceed 49% or 50% respectively. The
    Administrative Measures for Telecommunications Business
    Operating License were promulgated by MII on Janu-

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | ary 4, 2002 to supplement the FI Telecom
    Regulations. However, there are still uncertainties regarding
    the interpretation and application of the FI Telecom Regulations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The numerous and often vague restrictions on
    acceptable content in China subject us to potential civil and
    criminal liability, temporary blockage of our web site or
    complete cessation of our web site. For example, the State
    Secrecy Bureau, which is directly responsible for the protection
    of state secrets of all Chinese government and Chinese Communist
    Party organizations, is authorized to block any web site it
    deems to be leaking state secrets or failing to meet the
    relevant regulations relating to the protection of state secrets
    in the distribution of online information.                                 
|
| |  | Certain Chinese governmental authorities have
    stated publicly that they are in the process of preparing new
    laws and regulations that will govern Internet activities. The
    areas of regulation currently include online advertising, online
    news reporting, online publishing, and the provision of
    industry-specific (e.g., drug-related) information over the
    Internet. Other aspects of our online operations may be subject
    to regulation in the future. Our operations may not be
    consistent with these new regulations when put into effect and,
    as a result, we could be subject to severe penalties as
    discussed above.

The interpretation and application of existing
Chinese laws, regulations and policies, the stated positions of
the MII and possible new laws, regulations or policies have
created substantial uncertainties regarding the legality of
existing and future foreign investments in, and the businesses
and activities of, Internet businesses in China, including our
business.

In
order to comply with PRC regulatory requirements, we operate our
main businesses through companies in which we do not have
controlling ownership. If the PRC government determines that
these agreements are not in compliance with applicable
regulations, our business in the PRC could be adversely
affected.

The Chinese government restricts foreign
investment in Internet-related, mobile value-added services and
advertising businesses, including Internet access, distribution
of content over the Internet and mobile value-added services,
and advertising via the Internet. Accordingly, we operate our
Internet-related and mobile value-added service businesses in
China through several variable interest entities that are owned
principally or completely by certain of our PRC employees or PRC
employees of our subsidiaries. We control these companies and
operate these business through contractual arrangements with the
respective companies and their individual owners but we have no
equity control over these companies. Such restrictions and
arrangements are prevalent in other PRC companies we acquired.

Although we believe we are in compliance with
current PRC regulations, we cannot be sure that the PRC
government would view these operating arrangements to be in
compliance with PRC licensing, registration or other regulatory
requirements, with existing policies or with requirements or
policies that may be adopted in the future. If we are determined
not to be in compliance, the PRC government could revoke our
business and operating licenses, require us to discontinue or
restrict our operations, restrict our right to collect revenues,
block our web site, require us to restructure our operations,
impose additional conditions or requirements with which we may
not be able to comply, impose restrictions on our business
operations or on our customers, or take other regulatory or
enforcement actions against us that could be harmful to our
business. We may also encounter difficulties in obtaining
performance under or enforcement of related contracts.

We
rely on contractual arrangements with our variable interest
entities for our China operations, which may not be as effective
in providing control over these entities as direct
ownership.

Because PRC regulations restrict our ability to
provide Internet content, mobile value-added services and
advertising services directly in China, we are dependent on our
variable interest entities in which we have little or no equity
ownership interest and must reply on contractual arrangements to
control and operate these businesses. These contractual
arrangements may not be as effective in providing control over
these entities as direct ownership. For example, the variable
interest entities could fail to take actions required for our
business or fail to maintain our China web sites despite their
contractual obligation to do so. These companies are able to
transact business with parties not affiliated with us. If these
companies fail to perform under their agreements with us, we may
have to rely on legal remedies under Chinese law, which we
cannot be sure would

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be effective. In addition, we cannot be certain
that the individual equity owners of the variable interest
entities would always act in the best interests of the Company,
especially if they leave the Company.


Substantially all profits generated from our
variable interest entities are paid to the subsidiaries of ours
in China through related party transactions under contractual
agreements. We believe that the terms under these contractual
agreements are in compliance with the laws in China. The tax
authorities in China have examined some of these contractual
agreements in the past and have not raised any comment. However,
due to the uncertainties surrounding the interpretation of the
transfer pricing rules relating to related party transactions in
China, it is possible that tax authorities in China may
challenge the transfer prices that we have used for related
party transactions among our entities in China in the future.

Even
if we are in compliance with Chinese governmental regulations
relating to licensing and foreign investment prohibitions, the
Chinese government may prevent us from distributing content that
it believes is inappropriate and we may be liable for such
content.

China has enacted regulations governing Internet
access and the distribution of news and other information. In
the past, the Chinese government has stopped the distribution of
information over the Internet or through mobile value-added
services that it believes to violate Chinese law, including
content that it believes is obscene, incites violence, endangers
national security, is contrary to the national interest or is
defamatory. In addition, we may not publish certain news items,
such as news relating to national security, without permission
from the Chinese government. Furthermore, the Ministry of Public
Security has the authority to cause any local Internet service
provider to block any web site maintained outside China at its
sole discretion. Even if we comply with Chinese governmental
regulations relating to licensing and foreign investment
prohibitions, if the Chinese government were to take any action
to limit or prohibit the distribution of information through our
network or via our mobile value-added services, or to limit or
regulate any current or future content or services available to
users on our network, our business could be significantly harmed.

We are also subject to potential liability for
content on our web sites that is deemed inappropriate and for
any unlawful actions of our subscribers and other users of our
systems. Furthermore, we are required to delete content that
clearly violates the laws of China and report content that we
suspect may violate Chinese law. It is difficult to determine
the type of content that may result in liability for us, and if
we are wrong, we may be prevented from operating our web sites.

We
have contracted with third parties to provide content and
services for our portal network and to distribute our software,
and we may lose users and revenue if these arrangements are
terminated.

We have arrangements with a number of third
parties to provide content and services to our web sites and to
distribute our software. In the area of content, we have relied
and will continue to rely almost exclusively on third parties
for content that we publish under the SINA brand. Although no
single third party content provider is critical to our
operations, if these parties fail to develop and maintain
high-quality and successful media properties, or if a large
number of our existing relationships are terminated, we could
lose users and advertisers and our brand could be harmed. We
have recently experienced fee increases from some of our content
providers. If this trend continues, our gross profit from online
advertising may be adversely affected. In addition, Chinese
government has the ability to restrict or prevent state-owned
media from cooperating with us in providing certain content to
us which will result in a significant decrease of the amount of
content we can publish on our website. We may lose users if
Chinese government chooses to restrict or prevent state-owned
media from cooperating with us and in which case our revenues
will be impacted negatively.

In the area of web-based services, we have
contracted with Google and Huicong International for integrated
web search technology to complement our directory and
navigational guide, and with various third-party providers for
our principal Internet connections. If we experience significant
interruptions or delays in service, or if these agreements
terminate or expire, we may incur additional costs to develop or
secure replacement services and our relationship with our users
could be harmed.

A substantial part of our non-advertising
revenues is generated through mobile value-added services where
we depend on mobile network operators for services delivery and
payment collection. If we were unable

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to continue these arrangements, our mobile
value-added services could be severely disrupted or
discontinued. Furthermore, we are highly dependent on these
mobile service providers for our profitability, in that they can
choose to increase their service fees at will.


We depend on a third partys proprietary and
licensed advertising serving technology to deliver
advertisements to our network. If the third party fails to
continue to support its technology or if its services fail to
meet the advertising needs of our customers and we cannot find
an alternative solution on a timely basis, our advertising
revenue could decline.

In order to create traffic for our online
properties and make them more attractive to advertisers and
consumers, we have entered into distribution agreements and
informal relationships with ISPs and personal computer
manufacturers for the distribution of our software. These
distribution arrangements typically are non-exclusive, and may
be terminated upon little or no notice. If our software
distributors were to terminate or modify their distribution
arrangements, our ability to promote our network and generate
revenue could be harmed.

Our
operations could be disrupted by unexpected network
interruptions caused by system failures, natural disasters or
unauthorized tamperings with our systems.

The continual accessibility of our web sites and
the performance and reliability of our network infrastructure
are critical to our reputation and our ability to attract and
retain users, advertisers and merchants. Any system failure or
performance inadequacy that causes interruptions in the
availability of our services or increases the response time of
our services could reduce our appeal to advertisers and
consumers. Factors that could significantly disrupt our
operations include: system failures and outages caused by fire,
floods, earthquakes, power loss, telecommunications failures and
similar events; software errors; computer viruses, break-ins and
similar disruptions from unauthorized tampering with our
computer systems; and security breaches related to the storage
and transmission of proprietary information, such as credit card
numbers or other personal information.

We have limited backup systems and redundancy.
Recently, we experienced an unauthorized tampering of the mail
server of our China web site which briefly disrupted our
operations. Future disruptions or any of the foregoing factors
could damage our reputation, require us to expend significant
capital and other resources and expose us to a risk of loss or
litigation and possible liability. We do not carry sufficient
business interruption insurance to compensate for losses that
may occur as a result of any of these events. Accordingly, our
revenues and results of operations may be adversely affected if
any of the above disruptions should occur.

The
law of the Internet remains largely unsettled, which subjects
our business to legal uncertainties that could harm our
business.

Due to the increasing popularity and use of the
Internet and other online services, it is possible that a number
of laws and regulations may be adopted with respect to the
Internet or other online services covering issues such as user
privacy, pricing, content, copyrights, distribution, antitrust
and characteristics and quality of products and services.
Furthermore, the growth and development of the market for
electronic commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on companies
conducting business online. The adoption of any additional laws
or regulations may decrease the growth of the Internet or other
online services, which could, in turn, decrease the demand for
our products and services and increase our cost of doing
business.

Moreover, the applicability to the Internet and
other online services of existing laws in various jurisdictions
governing issues such as property ownership, sales and other
taxes, libel and personal privacy is uncertain and may take
years to resolve. For example, new tax regulations may subject
us or our customers to additional sales and income taxes. Any
new legislation or regulation, the application of laws and
regulations from jurisdictions whose laws do not currently apply
to our business, or the application of existing laws and
regulations to the Internet and other online services could
significantly disrupt our operations.

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We
may be subject to claims based on the content we provide over
our network and the products and services sold on our network,
which, if successful, could cause us to pay significant damage
awards.

As a publisher and distributor of content and a
provider of services over the Internet, we face potential
liability for: defamation, negligence, copyright, patent or
trademark infringement and other claims based on the nature and
content of the materials that we publish or distribute; the
selection of listings that are accessible through our branded
products and media properties, or through content and materials
that may be posted by users in our classifieds, message board
and chat room services; losses incurred in reliance on any
erroneous information published by us, such as stock quotes,
analyst estimates or other trading information; unsolicited
email, lost or misdirected messages, illegal or fraudulent use
of email or interruptions or delays in email service; and
product liability, warranty and similar claims to be asserted
against us by end users who purchase goods and services through
our SinaMall and any future electronic commerce services we may
offer.

We may incur significant costs in investigating
and defending any potential claims, even if they do not result
in liability. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or be
adequate enough to indemnify us against all potential
liabilities.

Underdeveloped
telecommunications infrastructure has limited, and may continue
to limit, the growth of the Internet market in China which, in
turn, could limit our ability to grow our
business.

The telecommunications infrastructure in China is
not well developed. Although private sector ISPs exist in China,
almost all access to the Internet is accomplished through
ChinaNet, Chinas primary commercial network, which is
owned and operated by China Telecom and China Netcom under the
administrative control and regulatory supervision of Chinese
Ministry of Information Industry (MII). The
underdeveloped Internet infrastructure in China has limited the
growth of Internet usage in China. If the necessary Internet
infrastructure is not developed, or is not developed on a timely
basis, future growth of the Internet in China could be limited
and our business could be harmed.

We
must rely on the Chinese government to develop Chinas
Internet infrastructure and if it does not develop this
infrastructure our ability to grow our business could be
hindered.

The Chinese governments interconnecting,
national networks connect to the Internet through
government-owned international gateways, which are the only
channels through which a domestic Chinese user can connect to
the international Internet network. We rely on this backbone and
China Telecom and China Netcom to provide data communications
capacity primarily through local telecommunications lines.
Although the Chinese government has announced plans to
aggressively develop the national information infrastructure, we
cannot assure you that this infrastructure will be developed. In
addition, we have no guarantee that we will have access to
alternative networks and services in the event of any disruption
or failure. If the necessary infrastructure standards or
protocols or complementary products, services or facilities are
not developed by the Chinese government, the growth of our
business could be hindered.

Privacy
concerns may prevent us from selling demographically targeted
advertising in the future and make us less attractive to
advertisers.

We collect personal data from our user base in
order to understand better our users and their needs and to help
our advertisers target specific demographic groups. If privacy
concerns or regulatory restrictions prevent us from selling
demographically targeted advertising, we may become less
attractive to advertisers. For example, as part of our future
advertisement delivery system, we may integrate user information
such as advertisement response rate, name, address, age or email
address, with third-party databases to generate comprehensive
demographic profiles for individual users. In Hong Kong,
however, we would be in violation of the Hong Kong Personal Data
Ordinance unless individual users expressly consented to this
integration of their personal information. The Ordinance
provides that an Internet company may not collect information on
its users, analyze the information for a profile of the
users interests and sell or transmit the profiles to third
parties for direct marketing purposes without the users
consent. If we are unable to construct demographic

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profiles for Internet users because they refuse
to give consent, we will be less attractive to advertisers and
our business could suffer.


We
may not be able to adequately protect our intellectual property,
which could cause us to be less competitive.

We rely on a combination of copyright, trademark
and trade secret laws and restrictions on disclosure to protect
our intellectual property rights. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy
or otherwise obtain and use our technology. Monitoring
unauthorized use of our products is difficult and costly, and we
cannot be certain that the steps we have taken will prevent
misappropriations of our technology, particularly in foreign
countries where the laws may not protect our proprietary rights
as fully as in the United States. From time to time, we may have
to resort to litigation to enforce our intellectual property
rights, which could result in substantial costs and diversion of
our resources.

We
may be exposed to infringement claims by third parties, which,
if successful, could cause us to pay significant damage
awards.

Third parties may initiate litigation against us
alleging infringement of their proprietary rights. In the event
of a successful claim of infringement and our failure or
inability to develop non-infringing technology or license the
infringed or similar technology on a timely basis, our business
could be harmed. In addition, even if we are able to license the
infringed or similar technology, license fees could be
substantial and may adversely affect our results of operations.

Concerns
about the security of electronic commerce transactions and
confidentiality of information on the Internet may reduce use of
our network and impede our growth.

A significant barrier to electronic commerce and
communications over the Internet in general has been a public
concern over security and privacy, especially the transmission
of confidential information. If these concerns are not
adequately addressed, they may inhibit the growth of the
Internet and other online services generally, especially as a
means of conducting commercial transactions. If a
well-publicized Internet breach of security were to occur,
general Internet usage could decline, which could reduce traffic
to our destination sites and impede our growth.

If
tax benefits currently available to us in China were no longer
available, our effective income tax rates for our China
operations could increase to 33%.

We are incorporated in Cayman Islands where no
income taxes are imposed. We have operations in four tax
jurisdictions including China, the United States of America,
Hong Kong and Taiwan. For the United States of America, Hong
Kong and Taiwan, we have incurred net accumulated operating
losses for income tax purposes. We believe that it is more
likely than not that these net accumulated operating losses will
not be utilized in the future and hence we have not recorded
income tax provisions or benefits for these locations. We do not
expect that we will record any income tax provisions for our
operations in United States, Hong Kong and Taiwan in foreseeable
future.

We generated substantially all our net income
from our China operations for the year ended December 31,
2003. Our China operations are conducted through various
subsidiaries and VIEs. Pursuant to the PRC Income Tax Laws, our
subsidiaries and VIEs are generally subject to Enterprise Income
Taxes (EIT) at a statutory rate of 33%, which
comprises 30% national income tax and 3% local income tax.
However, some of our subsidiaries and VIEs are qualified new
technology enterprises and under PRC Income Tax Laws, they are
subject to preferential tax rate of 15%. In addition, some of
our subsidiaries are Foreign Investment Enterprise and under PRC
Income Tax Laws, they are entitled to either a three-year tax
exemption followed by three years with a 50% reduction in the
tax rate, commencing from the first operating year; or a
two-year tax exemption followed by three years with a 50%
reduction in the tax rate, commencing from the first profitable
year. We expect that based on our current operating structure
and preferential tax treatments available to us in China, our
effective income tax rates will be approximately 5%, 10% and 15%
for the years

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ending 2004, 2005 and 2006, respectively. We are
in the process of applying for new preferential tax treatments
for certain of our subsidiaries and VIEs in China and our
projected effective tax rates will be reduced further if these
applications are approved. Over the longer term, if the Chinese
government phases out preferential tax treatment for foreign
investment enterprise or for new technology enterprise, our
effective tax rates can be increased to as high as 33%.


We
may be classified as a Passive Foreign Investment Company which
could result in adverse U.S. tax consequences to U.S.
investors.

Based upon the nature of our income and assets,
we may be classified as a passive foreign investment company, or
PFIC, by the United States Internal Revenue Service for U.S.
federal income tax purposes. This characterization could result
in adverse U.S. tax consequences to you. For example, if we are
a PFIC, our U.S. investors will become subject to increased tax
liabilities under U.S. tax laws and regulations and will become
subject to more burdensome reporting requirements. The
determination of whether or not we are a PFIC is made on an
annual basis, and those determinations depend on the composition
of our income and assets, including goodwill, from time to time.
Although in the past we have operated our business, and in the
future we intend to operate our business so as to minimize the
risk of PFIC treatment, you should be aware that certain factors
that could affect our classification as PFIC are out of our
control. For example, the calculation of assets for purposes of
the PFIC rules depends in large part upon the amount of our
goodwill, which in turn is based, in part, on the then market
value of our shares, which is subject to change. Similarly, the
composition of our income and assets is affected by the extent
to which we spend the cash we have raised on acquisitions and
capital expenditures. In addition, the relevant authorities in
this area are not clear and so we operate with less than clear
guidance in our effort to minimize the risk of PFIC treatment.
Therefore, we cannot be sure whether we were not and will not be
a PFIC for the current or any future taxable year.

Our
stock price has been volatile historically, which may make it
more difficult for you to resell shares when you want at prices
you find attractive.

The trading price of our ordinary shares has been
and may continue to be subject to wide fluctuations. During the
twelve months ended December 31, 2003, the closing sale
prices of our common stock on the Nasdaq Stock Market ranged
from $5.63 to $43.57 and the sale price of our common stock
closed at $42.46 on March 9, 2004. Our stock price may
fluctuate in response to a number of events and factors, such as
quarterly variations in operating results, announcements of
technological innovations or new products and media properties
by us or our competitors, changes in financial estimates and
recommendations by securities analysts, the operating and stock
price performance of other companies that investors may deem
comparable, and news reports relating to trends in our markets.
In addition, the stock market in general, and the market prices
for China-related and Internet-related companies in particular,
have experienced extreme volatility that often has been
unrelated to the operating performance of such companies. These
broad market and industry fluctuations may adversely affect the
price of our stock, regardless of our operating performance.

Future
outbreaks of Severe Acute Respiratory Syndrome (SARS) and
other widespread public health problems could adversely affect
our business.

Future outbreaks of SARS and other widespread
public health problems in China and surrounding areas, where
most of our employees work, could negatively impact our business
in ways that are hard to predict. Prior experience with the SARS
virus suggests that a future outbreak of SARS may lead public
health authorities to enforce SARS quarantines, which could
result in closures of some of our offices and other disruptions
of our operations. A future SARS outbreak or other widespread
public health problems could result in reduction of our
advertising and fee-based revenues.

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We
issued $100 million of zero coupon convertible subordinated
convertible notes due 2023, or possibly earlier upon a change of
control, which we may not be able to repay in cash and could
result in dilution of our basic earnings per
share.

In July 2003, we issued $100 million of zero
coupon convertible subordinated notes due July 15, 2023,
first putable to us on July 15, 2007. Each $1,000 principal
amount of the notes is convertible into 38.7741 shares of our
ordinary shares prior to July 15, 2023 if the sale price of
our ordinary shares issuable upon conversion of the notes
reaches a specified threshold or specified corporate
transactions have occurred. On July 15 annually from 2007
to 2013, and on July 15, 2018, or upon a change of control,
holders of the notes may require us to repurchase all or a
portion of the notes for cash. Upon a conversion, we may choose
to pay the purchase price of the notes in cash, ordinary shares,
or a combination of cash and ordinary shares. We may not have
enough cash on hand or have the ability to access cash to pay
the notes if holders ask for repayment on the various put dates,
or upon a change of control, or at maturity. In addition, the
purchase of our notes with our ordinary shares or the conversion
of the notes into our ordinary shares could result in dilution
of our basic earnings per share.

Anti-takeover
provisions in our charter documents may discourage our
acquisition by a third party, which could limit our
shareholders opportunity to sell their shares at a
premium.

Our Memorandum and Articles of Association
include provisions that could limit the ability of others to
acquire control of us, modify our structure or cause us to
engage in change-of-control transactions. These provisions could
have the effect of depriving shareholders of an opportunity to
sell their shares at a premium over prevailing market prices by
discouraging third parties from seeking to obtain control of us
in a tender offer or similar transaction.

For example, our Board of Directors has the
authority, without further action by our shareholders, to issue
up to 3,750,000 preference shares in one or more series and to
fix the powers and rights of these shares, including dividend
rights, conversion rights, voting rights, terms of redemption
and liquidation preferences, any or all of which may be greater
than the rights associated with our ordinary shares. Preference
shares could thus be issued quickly with terms calculated to
delay or prevent a change in control or make removal of
management more difficult. In addition, if the Board of
Directors issues preference shares, the market price of our
ordinary shares may fall and the voting and other rights of the
holders of our ordinary shares may be adversely affected.

Currency
fluctuations and restrictions on currency exchange may adversely
affect our business, including limiting our ability to convert
Chinese renminbi into foreign currencies and, if renminbi were
to decline in value, reducing our revenues in U.S. dollar
terms.

We generate revenues and incur expenses and
liabilities in Chinese renminbi, Taiwan dollars, Hong Kong
dollars, and U.S. dollars. As a result, we are subject to
the effects of exchange rate fluctuations with respect to any of
these currencies. For example, the value of the renminbi depends
to a large extent on Chinese government policies and
Chinas domestic and international economic and political
developments, as well as supply and demand in the local market.
Since 1994, the official exchange rate for the conversion of
renminbi to U.S. dollars has generally been stable and the
renminbi has appreciated slightly against the U.S. dollar.
However, we can offer no assurance that the renminbi will
continue to remain stable against the U.S. dollar or any
other foreign currency. Our results of operations and financial
condition may be affected by changes in the value of renminbi
and other currencies in which our earnings and obligations are
denominated. We have not entered into agreements or purchased
instruments to hedge our exchange rate risks, although we may do
so in the future.

Although Chinese governmental policies were
introduced in 1996 to allow the convertibility of renminbi into
foreign currency for current account items, conversion of
renminbi into foreign exchange for capital items, such as
foreign direct investment, loans or securities, requires the
approval of the State Administration of Foreign Exchange, or
SAFE, which is under the authority of the Peoples Bank of
China. These approvals,

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however, do not guarantee the availability of
foreign currency. We cannot be sure that we will be able to
obtain all required conversion approvals for our operations or
that Chinese regulatory authorities will not impose greater
restrictions on the convertibility of the renminbi in the
future. Because a significant amount of our future revenues may
be in the form of renminbi, our inability to obtain the
requisite approvals or any future restrictions on currency
exchanges could limit our ability to utilize revenue generated
in renminbi to fund our business activities outside China, or to
repay foreign currency obligations , including our debt
obligations.


Restrictions
on paying dividends or making other payments to us bind our
subsidiaries and variable interest entities in
China.

We are a holding company and do not have any
assets or conduct any business operations in China other than
our investments in our subsidiaries in China, including BSIT,
Star-Village.com (Beijing) Internet Technology Limited, Beijing
New Media Information Technology Co. Ltd., Beijing SINA Internet
Technology Service Co. Ltd. and others; and our variable
interest entities. As a result, we depend on dividends payments
from our subsidiaries in China for our revenues after they
receive payments from our variable interest entities in China
under various services and other arrangements. We cannot make
any assurance that our subsidiaries in China can continue to
receive the payments as arranged under our contracts with those
variable interest entities. In addition, under Chinese law, our
subsidiaries are only allowed to pay dividends to us out of
their accumulated profits, if any, as determined in accordance
with Chinese accounting standards and regulations. Moreover, our
Chinese subsidiaries are required to set aside at least 10% of
their respective accumulated profits, if any, up to 50% other
registered capital to fund certain mandated reserve funds that
are not payable or distributable as cash dividends.

The
Chinese legal system has inherent uncertainties that could limit
the legal protections available to you.

Our contractual arrangements with our variable
interest entities in China are governed by the laws of the
Peoples Republic of China. Chinas legal system is
based upon written statutes. Prior court decisions may be cited
for reference but are not binding on subsequent cases and have
limited value as precedents. Since 1979, the Chinese legislative
bodies have promulgated laws and regulations dealing with such
economic matters such as foreign investment, corporate
organization and governance, commerce, taxation and trade.
However, because these laws and regulations are relatively new,
and because of the limited volume of published decisions and
their non-binding nature, the interpretation and enforcement of
these laws and regulations involve uncertainties.

You
may experience difficulties in effecting service of legal
process, enforcing foreign judgments or bringing original
actions in China based on United States or other foreign laws
against us.

We conduct our operations in China and a
significant portion of our assets is located in China. In
addition, some of our directors and executive officers reside
within China, and substantially all of the assets of these
persons are located within China. As a result, it may not be
possible to effect service of process within the United States
or elsewhere outside China upon those directors or executive
officers, including with respect to matters arising under
U.S. federal securities laws or applicable state securities
laws. Moreover, our Chinese counsel has advised us that China
does not have treaties with the United States or many other
countries providing for the reciprocal recognition and
enforcement of judgment of courts. As a result, recognition and
enforcement in China of judgments of a court of the United
States or any other jurisdiction in relation to any matter may
be difficult or impossible.

Political
and economic conditions in Greater China are unpredictable and
may disrupt our operations if these conditions become
unfavorable to our business.

We expect to derive a substantial percentage of
our revenues from the Greater China market. Changes in political
or economic conditions in the region are difficult to predict
and could adversely affect our operations or cause the Greater
China market to become less attractive to advertisers, which
could reduce our revenues. We maintain a strong local identity
and presence in each of the regions in the Greater China market
and we cannot be sure that we will be able to effectively
maintain this local identity if political conditions were to

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change. Furthermore, many countries in Asia have
experienced significant economic downturns since the middle of
1997, resulting in slower real gross domestic product growth for
the entire region as a result of higher interest rates and
currency fluctuations. If declining economic growth rates
persist in these countries, expenditures for Internet access,
infrastructure improvements and advertising could decrease,
which could negatively affect our business and our profitability
over time.


Economic reforms in the region could also affect
our business in ways that are difficult to predict. For example,
since the late 1970s, the Chinese government has been reforming
the Chinese economic system to emphasize enterprise autonomy and
the utilization of market mechanisms. Although we believe that
these reform measures have had a positive effect on the economic
development in China, we cannot be sure that they will be
effective or that they will benefit our business.




Item 2:     Properties

In San Mateo, California, we have entered into a
sublease agreement that expires in September 2005. In Hong Kong,
we have entered into a two-year lease agreement that expires in
December 2004. In Taipei, we have entered into a one-year lease
agreement that expires in December 2004. In Beijing, we have
offices under three lease agreements that expire in June 2007,
January and August 2008, respectively. In Shanghai, we have
entered into a three-year lease agreement that expires in August
2005. In Guangzhou, we have entered into a three-year lease
agreement that expires in September 2006. We have also leased
sales and marketing spaces in certain provinces of China. We
believe that our existing facilities are adequate to meet our
current requirements, and that future growth can be accommodated
by leasing additional or alternative space.




Item 3:     Legal
Proceedings

From time to time, the Company is subject to
legal proceedings and claims in the ordinary course of business,
including claims of alleged infringement of copyrights and other
intellectual property rights in connection with the content
published on our web sites.

The Company is not currently aware of any legal
proceedings or claims that the Company believes are likely to
have a material adverse effect on the Companys financial
position, results of operations or cash flows. However, the
Company may incur substantial expenses in defending against
third party claims. In the event of a determination adverse to
the Company, the Company may incur substantial monetary
liability, and be required to change its business practices.
Either of these could have a material adverse effect on the
Companys financial position, results of operations, or
cash flows.




Item 4:     Submission
of Matters to a Vote of Security Holders

No matters were submitted to a vote of security
holders during the quarter ended December 31, 2003.

31



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##### Table of Contents






PART II





|        |                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------
|Item 5: | Market for the Registrants Common
    Equity, Related Shareholder Matters and Issuer Purchases of
    Equity Securities

(a) Market
Information

SINA Corporations ordinary shares have been
quoted on the Nasdaq National Market system under the symbol
SINA since April 13, 2000. The following table sets forth
the high and low closing sales prices of the Companys
ordinary shares for each period indicated as reported on the
Nasdaq Stock Market:

|                                           |                |      |       |       |  |  |      |       | 
|------------------------------------------ | -------------- | ---- | ----- | ----- |  |  | ---- | ----- | 
|                                           |                | High |       | Low  
|                                           |                |      |       |      
|Year Ended June 30, 2001                   |                |      |       |       |  |  |      |      
|                                           | First Quarter  |      |       | 31.00 |  |  |      | 14.13 | 
|                                           | Second Quarter |      |       | 12.38 |  |  |      | 3.13  | 
|                                           | Third Quarter  |      |       | 4.31  |  |  |      | 1.50  | 
|                                           | Fourth Quarter |      |       | 2.35  |  |  |      | 1.50  | 
|Year Ended June 30, 2002                   |                |      |       |       |  |  |      |      
|                                           | First Quarter  |      |       | 1.90  |  |  |      | 1.08  | 
|                                           | Second Quarter |      |       | 1.68  |  |  |      | 1.06  | 
|                                           | Third Quarter  |      |       | 1.72  |  |  |      | 1.48  | 
|                                           | Fourth Quarter |      |       | 1.75  |  |  |      | 1.40  | 
|Six Months Ended December 31, 2002         |                |      |       |       |  |  |      |      
|                                           | First Quarter  |      |       | 2.44  |  |  |      | 1.73  | 
|                                           | Second Quarter |      |       | 7.25  |  |  |      | 1.89  | 
|Year Ended December 31, 2003 First Quarter |                |      | 10.38 |       |  |  | 5.63 |      
|                                           | Second Quarter |      |       | 20.25 |  |  |      | 8.42  | 
|                                           | Third Quarter  |      |       | 43.30 |  |  |      | 21.60 | 
|                                           | Fourth Quarter |      |       | 43.57 |  |  |      | 30.97 | 

The closing price of the Companys ordinary
share on the Nasdaq National Market on March 9, 2004 was
$42.46.

(b) Holders

As of March 9, 2004, the Company had
approximately 150 shareholders of record, although the Company
believes there is a significantly larger number of beneficial
owners of its ordinary shares.

(c) Dividends

The Company has not declared or paid any cash
dividends on its Ordinary Shares at any time and has no present
plans to do so in the future.

32



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##### Table of Contents



(d)Securities
authorized for issuance under equity compensation plans

The following table sets forth information for
our equity compensation plans as of December 31, 2003:

|                                                               |  |                            |           |                      |  |                           |      |  |  |  |           |       
|-------------------------------------------------------------- |  | -------------------------- | --------- | -------------------- |  | ------------------------- | ---- |  |  |  | --------- | ------
|                                                               |  |                            |           |                      |  | Number of securities     
|                                                               |  |                            |           |                      |  | remaining available for  
|                                                               |  | Number of securities to be |           | Weighted average     |  | future issuance under    
|                                                               |  | issued upon exercise of    |           | exercise price of    |  | equity compensation plans
|                                                               |  | outstanding options,       |           | outstanding options, |  | (excluding securities    
|                                                               |  | warrants and rights        |           | warrants and rights  |  | reflected in column (a)) 
|Plan Category                                                  |  | (a)                        |           | (b)                  |  | (c)                      
|                                                               |  |                            |           |                      |  |                          
|Equity compensation plans approved by security
    holders     |  |                            | 6,270,000 | (1)                  |  | $                         | 7.00 |  |  |  | 5,537,000 | (2)(3)
|Equity compensation plans not approved by
    security holders |  |                            |          |                      |  |                           | N/A  |  |  |  |          |       
|Total                                                          |  |                            | 6,270,000 |                      |  | $                         | 7.00 |  |  |  | 5,537,000 |       



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes purchase rights accruing under the 1999
    Employee Stock Purchase Plan (the Purchase Plan).
    Under the Purchase Plan, eligible employees may purchase
    ordinary shares at semi-annual intervals at a purchase price per
    share equal to 85% of the lower of (i) the fair market
    value of the ordinary shares on an employees entry date
    into an offering period in which that semi-annual purchase date
    occurs or (ii) the closing selling price per share on the
    semi-annual purchase date.                     
|   
|(2) | Includes shares available for future issuance
    under the Purchase Plan. The Purchase Plan, designed to comply
    with Internal Revenue Code Section 423, includes an
    evergreen feature, which provides for an automatic
    annual increase in the number of shares available under the plan
    equal to the lesser of 600,000 shares, 0.5 % of the ordinary
    shares outstanding on the last day of the immediately preceding
    fiscal year, or such lesser number of shares as is determined by
    the Board of Directors.            
|   
|(3) | Includes shares available for future issuance
    under the 1999 Stock Plan (the 1999 Plan). The 1999
    Plan includes an evergreen feature, which provides
    for an automatic annual increase in the number of ordinary
    shares available under the plan on the first day of each of the
    fiscal years through 2005, equal to the lesser of 750,000
    shares, 3% of our outstanding ordinary shares on the last day of
    the immediately preceding fiscal year, or a lesser number of
    shares determined by the Board of Directors.

33



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##### Table of Contents








|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

The selected consolidated financial data below
should be read in conjunction with Managements
Discussion and Analysis of Financial Condition and Results of
Operations, the consolidated financial statements and
notes thereto and the other information contained in this
Form 10-K. In November 2002, we changed our fiscal year-end
from June 30 to December 31. The consolidated
statement of operations presents the twelve month results for
the year ended December 31, 2003, the six month results for
the six months ended December 31, 2002, as well as the
twelve month results for the years ended June 30, 2002,
2001, 2000 and 1999. The unaudited consolidated statement of
operations of the twelve months results for the year ended
December 31, 2002 is also presented.

|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |       | 
|--------------------------------------------------------------------- | --------------------------------- | ---------------------------------------- | ------- | ------------ |  | -------------------- | ------ | ------ |  | ---- | ------ | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ |  | - | ------ | ----- | 
|                                                                      |                                   |                                          |         | Six Months   |  |                     
|                                                                      |                                   | Years Ended December 31,                 |         | Ended        |  | Years Ended June 30,
|                                                                      |                                   |                                          |         | December 31, |  |                     
|                                                                      |                                   | 2003                                     |         | 2002         |  | 2002                 |        | 2002   |  | 2001 |        | 2000   |  | 1999
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |     
|                                                                      |                                   |                                          |         | (unaudited)  |  |                      |        |        |  |      |        |        |  |     
|                                                                      |                                   |                                         
|                                                                      |                                   | (In thousands, except per share amounts)
|Consolidated Statement of Operations
    Data:                        |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Net revenues:                                                         |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|                                                                      | Advertising                       |                                          | $       | 41,173       |  |                      | $      | 24,703 |  |      | $      | 13,869 |  |      | $       | 21,105 |  |   | $       | 23,393 |  |   | $       | 11,013 |  |   | $      | 561   | 
|                                                                      | Non-advertising                   |                                          |         | 73,112       |  |                      |        | 14,191 |  |      |        | 9,347  |  |      |         | 7,403  |  |   |         | 3,290  |  |   |         | 3,157  |  |   |        | 2,266 | 
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|                                                                      |                                   |                                          | 114,285 |              |  |                      | 38,894 |        |  |      | 23,216 |        |  |      | 28,508  |        |  |   | 26,683  |        |  |   | 14,170  |        |  |   | 2,827  |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Cost of revenues:                                                     |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|                                                                      | Advertising                       |                                          |         | 14,001       |  |                      |        | 11,267 |  |      |        | 5,824  |  |      |         | 11,537 |  |   |         | 13,771 |  |   |         | 8,950  |  |   |        | 1,156 | 
|                                                                      | Non-advertising                   |                                          |         | 20,405       |  |                      |        | 4,140  |  |      |        | 2,676  |  |      |         | 1,938  |  |   |         | 1,169  |  |   |         | 1,965  |  |   |        | 1,317 | 
|                                                                      | Stock-based compensation          |                                          |         | 31           |  |                      |        | 102    |  |      |        | 42     |  |      |         | 133    |  |   |         | 414    |  |   |         | 605    |  |   |        | 32    | 
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|                                                                      |                                   |                                          | 34,437  |              |  |                      | 15,509 |        |  |      | 8,542  |        |  |      | 13,608  |        |  |   | 15,354  |        |  |   | 11,520  |        |  |   | 2,505  |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Gross profit                                                          |                                   |                                          | 79,848  |              |  |                      | 23,385 |        |  |      | 14,674 |        |  |      | 14,900  |        |  |   | 11,329  |        |  |   | 2,650   |        |  |   | 322    |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Operating expenses:                                                   |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|                                                                      | Sales and marketing               |                                          |         | 21,741       |  |                      |        | 12,419 |  |      |        | 6,457  |  |      |         | 12,468 |  |   |         | 21,694 |  |   |         | 17,476 |  |   |        | 1,405 | 
|                                                                      | Product development               |                                          |         | 6,340        |  |                      |        | 5,916  |  |      |        | 2,755  |  |      |         | 6,666  |  |   |         | 9,648  |  |   |         | 7,358  |  |   |        | 1,512 | 
|                                                                      | General and administrative        |                                          |         | 11,551       |  |                      |        | 8,896  |  |      |        | 4,480  |  |      |         | 8,237  |  |   |         | 8,918  |  |   |         | 6,951  |  |   |        | 2,085 | 
|                                                                      | Stock-based compensation          |                                          |         | 523          |  |                      |        | 1,692  |  |      |        | 699    |  |      |         | 2,208  |  |   |         | 7,097  |  |   |         | 18,460 |  |   |        | 3,360 | 
|                                                                      | Amortization of intangible assets |                                          |         | 1,749        |  |                      |        | 1,777  |  |      |        | 90     |  |      |         | 5,063  |  |   |         | 6,765  |  |   |         | 6,807  |  |   |        | 1,745 | 
|                                                                      | Write-off of intangible assets    |                                          |         | 903          |  |                      |        |       |  |      |        |       |  |      |         |       |  |   |         |       |  |   |         |       |  |   |        |      | 
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|                                                                      |                                   |                                          | 42,807  |              |  |                      | 30,700 |        |  |      | 14,481 |        |  |      | 34,642  |        |  |   | 54,122  |        |  |   | 57,052  |        |  |   | 10,107 |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Income (loss) from operations                                         |                                   |                                          | 37,041  |              |  |                      | (7,315 | )      |  |      | 193    |        |  |      | (19,742 | )      |  |   | (42,793 | )      |  |   | (54,402 | )      |  |   | (9,785 | )    
|Interest income                                                       |                                   |                                          | 2,757   |              |  |                      | 2,819  |        |  |      | 1,034  |        |  |      | 4,212   |        |  |   | 7,336   |        |  |   | 3,801   |        |  |   | 442    |      
|Other expenses                                                        |                                   |                                          | (162    | )            |  |                      |       |        |  |      |       |        |  |      |        |        |  |   |        |        |  |   |        |        |  |   |       |      
|Amortization of convertible debt issuance cost                        |                                   |                                          | (341    | )            |  |                      |       |        |  |      |       |        |  |      |        |        |  |   |        |        |  |   |        |        |  |   |       |      
|Impairment of investments in Sun Media Group                          |                                   |                                          | (6,063  | )            |  |                      |       |        |  |      |       |        |  |      |        |        |  |   |        |        |  |   |        |        |  |   |       |      
|Loss on equity investment                                             |                                   |                                          | (914    | )            |  |                      | (453   | )      |  |      | (311   | )      |  |      | (562    | )      |  |   | (894    | )      |  |   | (501    | )      |  |   |       |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Income (loss) before income taxes                                     |                                   |                                          | 32,318  |              |  |                      | (4,949 | )      |  |      | 916    |        |  |      | (16,092 | )      |  |   | (36,251 | )      |  |   | (51,102 | )      |  |   | (9,343 | )    
|Provision for income taxes                                            |                                   |                                          | (895    | )            |  |                      |       |        |  |      |       |        |  |      |        |        |  |   |        |        |  |   |        |        |  |   |       |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Income (loss) before minority interest                                |                                   |                                          | 31,423  |              |  |                      |       |        |  |      | 916    |        |  |      |        |        |  |   |        |        |  |   | (51,102 | )      |  |   | (9,343 | )    
|Minority interest                                                     |                                   |                                          |        |              |  |                      |       |        |  |      |       |        |  |      |        |        |  |   |        |        |  |   | 119     |        |  |   | 47     |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Net income (loss)                                                     |                                   |                                          | 31,423  |              |  |                      | (4,949 | )      |  |      | 916    |        |  |      | (16,092 | )      |  |   | (36,351 | )      |  |   | (50,983 | )      |  |   | (9,296 | )    
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Accretion on Mandatorily Redeemable Convertible
    Preference Shares |                                   |                                          |        |              |  |                      |       |        |  |      |       |        |  |      |        |        |  |   |        |        |  |   | (84     | )      |  |   | (98    | )    
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Net income (loss) attributable to ordinary
    shareholders           |                                   | $                                        | 31,423  |              |  | $                    | (4,949 | )      |  | $    | 916    |        |  | $    | (16,092 | )      |  | $ | (36,351 | )      |  | $ | (51,067 | )      |  | $ | (9,394 | )    
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Basic net income (loss) per share                                     |                                   | $                                        | 0.66    |              |  | $                    | (0.11  | )      |  | $    | 0.02   |        |  | $    | (0.36   | )      |  | $ | (0.91   | )      |  | $ | (3.44   | )      |  | $ | (1.72  | )    
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Shares used in computing basic net income(loss)
    per share         |                                   |                                          | 47,840  |              |  |                      | 45,629 |        |  |      | 45,725 |        |  |      | 44,315  |        |  |   | 40,110  |        |  |   | 14,836  |        |  |   | 5,466  |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Diluted net income (loss) per share                                   |                                   | $                                        | 0.58    |              |  | $                    | (0.11  | )      |  | $    | 0.02   |        |  | $    | (0.36   | )      |  | $ | (0.91   | )      |  | $ | (3.44   | )      |  | $ | (1.72  | )    
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      
|Shares used in computing diluted net income
    (loss) per share      |                                   |                                          | 54,794  |              |  |                      | 45,629 |        |  |      | 48,030 |        |  |      | 44,315  |        |  |   | 40,110  |        |  |   | 14,836  |        |  |   | 5,466  |      
|                                                                      |                                   |                                          |         |              |  |                      |        |        |  |      |        |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |        |      

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##### Table of Contents



|                                                                      |  |                    |         |                |  |      |         |      |  |      |         |      |  |   |         |  |  |   |         |  |  |   |        | 
|--------------------------------------------------------------------- |  | ------------------ | ------- | -------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- |  |  | - | ------ | 
|                                                                      |  |                    |         |               
|                                                                      |  | As of December 31, |         | As of June 30,
|                                                                      |  |                    |         |               
|                                                                      |  | 2003               |         | 2002           |  | 2002 |         | 2001 |  | 2000 |         | 1999
|                                                                      |  |                    |         |                |  |      |         |      |  |      |         |     
|                                                                      |  |                   
|                                                                      |  | (In thousands)    
|Consolidated Balance Sheet Data:                                      |  |                    |         |                |  |      |         |      |  |      |         |      |  |   |         |  |  |   |         |  |  |   |        | 
|Cash and cash equivalents                                             |  | $                  | 158,148 |                |  | $    | 53,262  |      |  | $    | 31,095  |      |  | $ | 52,505  |  |  | $ | 99,149  |  |  | $ | 20,571 | 
|Working capital                                                       |  |                    | 219,866 |                |  |      | 91,814  |      |  |      | 89,914  |      |  |   | 102,246 |  |  |   | 125,867 |  |  |   | 24,057 | 
|Total assets                                                          |  |                    | 289,897 |                |  |      | 130,479 |      |  |      | 121,355 |      |  |   | 133,122 |  |  |   | 156,038 |  |  |   | 47,582 | 
|Convertible debts                                                     |  |                    | 100,000 |                |  |      |        |      |  |      |        |      |  |   |        |  |  |   |        |  |  |   |       | 
|Mandatorily redeemable convertible preference
    shares and warrants |  |                    |        |                |  |      |        |      |  |      |        |      |  |   |        |  |  |   |        |  |  |   | 37,415 | 
|Total shareholders equity                                            |  |                    | 159,507 |                |  |      | 117,387 |      |  |      | 111,690 |      |  |   | 119,967 |  |  |   | 146,817 |  |  |   | 7,703  | 




Item 7:     Managements
Discussion and Analysis of Financial Condition and Results of
Operations

This report contains forward-looking
statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, without limitation, statements
regarding our expectations, beliefs, intentions or future
strategies that are signified by such words as
expect, anticipate, intend,
believe, or similar language. All forward-looking
statements included in this document are based on information
available to us on the date hereof, and we assume no obligation
to update any such forward-looking statements. Actual results
could differ materially from those projected in the
forward-looking statements. In evaluating our business, you
should carefully consider the information set forth in this
document under the caption Business  Risk
Factors set forth herein. We caution you that our
businesses and financial performance are subject to substantial
risks and uncertainties.

Overview

We are a leading online media company and
value-added information services provider for China and the
global Chinese communities. With a branded network of localized
websites, targeting Greater China and overseas Chinese, we
provide an array of services to our users including
region-focused online portals, mobile value-added services,
search and directory, free and premium email, online games,
virtual ISP, classified listings, e-commerce and enterprise
e-solutions. In turn, we generate revenue through advertising,
mobile value-added services, fee-based services, e-commerce and
enterprise services.

Our focus of business is our operation in China
where we derived approximately 95% of our net revenues for the
year ended December 2003. Our net revenues from China have
increased to $108.5 million for the year ended December
2003 as compared to the same period in 2002.

From 1999 to 2001, our growth was mainly driven
by online advertising business and revenues from online
advertising accounted for a majority of our total revenues. We
began offering mobile value-added services under arrangements
with third party mobile operators in China in late 2001 and have
since experienced significant growth in mobile value-added
services revenues. Our advertising revenues and mobile
value-added services revenues accounted for 36% and 56%,
respectively, of our net revenues for the year ended
December 31, 2003. We expect they will continue be the
major sources of our revenues in the future periods. With the
recent development in our travel and hotel booking services, we
expect to have a new stream of revenues. However, such revenues
are not expected to constitute a significant portion of our
future revenue in the near future in view of the relatively
undeveloped and competitive hotel booking market in China.

Our
revenues

We derive our revenues from advertising and
non-advertising sources.

Advertising
revenues

Advertising revenues are derived principally from
online advertising arrangements, sponsorship arrangements, or a
combination of them. Online advertising arrangements allow
advertisers to place advertisements

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on particular areas of our web sites, in
particular formats and over particular periods of time.
Sponsorship arrangements allow advertisers to sponsor a
particular area on our web sites in exchange for a fixed payment
over the contract period. We sell online advertisements through
our advertising agencies or through our direct sales force. For
the years ended December 31, 2003 and 2002, advertising
revenues accounted for 36% and 64% of our total net revenues,
respectively.


Non-advertising
revenues

Non-advertising revenues are derived primarily
from mobile value-added services, fee based services,
e-commerce, enterprise services and sale of software products.
For the years ended December 31, 2003 and 2002,
non-advertising revenues accounted for 64% and 36% of our total
net revenues, respectively.

Mobile value-added
services.Mobile value-added service
revenues are derived principally from providing mobile phone
users with SMS, MMS, WAP services and IVR services. These
services include news and other content subscriptions, mobile
dating service, picture and logo download, ring tones, ring back
tones, mobile games, chat rooms and access to music files. Such
services are charged on a monthly subscription or on a per
message basis.

We began offering our mobile value-added services
in China in late 2001. We expanded our market share in China by
acquiring Memestar Limited in January 2003. With the growth of
the market in China and the acquisition, our revenues from
mobile value-added services grew from $9.1 million for the
year ended December 31, 2002 to $64.4 million for the
year ended December 31, 2003. For the year ended
December 31, 2003 and 2002, revenues from mobile
value-added services accounted for 56% and 23% of our total
revenue, respectively.

We have established cooperation arrangements with
third party mobile operators China Mobile Communication
Corporation (China Mobile) and China Unicom Co.,
Ltd. (China Unicom) and their subsidiaries. As of
January 31, 2004, we had entered into cooperation and
revenue sharing contracts with 29 provincial subsidiaries of
China Mobile and 11 provincial subsidiaries of China Unicom for
various mobile value-added services. The term of these contracts
is generally for one year with a few exceptions in which the
term is for six months or for two years. The contract is
typically renewed on an annual basis.

We rely on China Mobile and China Unicom in the
following ways:



| |   |                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------
| |  | utilizing their network and gateway to provide
    mobile value-added services to subscribers;                           
|
| |  | utilizing their billing systems to charge the
    fees to our subscribers through the subscribers mobile
    phone bill;
|
| |  | utilizing their collection services to collect
    payments from subscribers;                                            
|
| |  | relying on their infrastructure development to
    further develop our new products and services.                        

Under the agreements with China Mobile and its
subsidiaries, China Mobile generally retains 15% of the fee for
content value-added services we provide to our users via their
platform for fee collection. In addition, China Mobile deducts
transmission fees from our portion of the service fees. The
amount of such transmission fee is charged on a per message
basis and varies for different products and the message volume.
For the year ended December 31, 2003, on average we
received 78% of the amount we charged to our users from China
Mobile platform after China Mobile deducted the fees for
collection and transmission. Under the agreements with China
Unicom and its subsidiaries, China Unicom typically retains 12%
of the fee for content value-added services we provide to our
users via their platform if they charge us for transmission cost
or between 21% and 29% if they do not charge us for transmission
cost. For the year ended December 31, 2003, on average we
received 73% of the amount we charged to our users from China
Unicom platform after China Unicom deducted the fees for
collection and transmission.

Our product offerings for the mobile value-added
service include SMS, MMS, WAP and IVR. SMS is our primary mobile
value-added service, accounting for a majority of our mobile
value-added service revenues for 2003 and 2002. We launched our
WAP services in December 2002, MMS in April 2003 and IVR services

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in December 2003. We expect that revenues from
these new products will account for a higher percentage of our
mobile related revenues for 2004.


Fee based service
revenues.Fee based service revenues
mainly include services fees received from offering information
subscriptions on our web sites, online games, virtual ISP and
paid email services.

E-commerce revenues.E-commerce revenues include
transaction and slotting fees paid by merchants for selective
positioning and promoting their goods or services within our
online mall, SinaMall. Our transaction based e-commerce revenues
have been minimal.

Enterprise service revenues.Enterprise service revenues mainly
include paid search and directory listings, corporate emails,
classified listings, e-learning and enterprise e-solutions. The
majority of enterprise service revenues are generated from paid
search and directory listing and for the fourth quarter ended
December 31, 2003, revenues from paid search and directory
listing amounted to $1.4 million and represented 5.6% of
our total non-advertising revenues for the quarter.

Software revenues.We sell certain software products
developed by us to distributors, resellers or original equipment
manufacturers. We are in the process of phasing out of this
business. For the year ended December 31, 2003, our
revenues from software sales amounted to $0.1 million.

Acquisitions
and investments

In March 1999, we acquired Sinanet.com, a leading
Chinese-language Internet content company with offices in
California and Taiwan and two distinct web sites targeting
Chinese users in North America and Taiwan. The fair value of the
total consideration paid in the acquisition, including assumed
liabilities of approximately $4.3 million and acquisition
costs of $0.1 million, was $21.7 million. The
$4.3 million in liabilities that we assumed included
$3.5 million of notes payable which were subsequently
converted into our preference shares. We accounted for the
acquisition as a purchase. We recorded goodwill and other
intangible assets of approximately $20.3 million as a
result of this transaction, which were amortized over a
three-year period. This amount were fully amortized by
March 31, 2002.

In September 2001, we completed the acquisition
of an approximately 27.6% equity interest in Sun Media Group
(Sun Media), a Hong Kong Stock Exchange listed
company, from Ms. Lan Yang, the chairperson and a major
shareholder of Sun Media for a consideration of
$7.9 million in cash and approximately 4.6 million of
our newly issued ordinary shares and transaction costs of
$0.7 million for a total purchase price of
$13.7 million. We originally accounted for our investment
in Sun Media using the equity method of accounting. We ceased to
maintain significant influence over Sun Medias operations
after our equity interest fell below 20% and our board
representation was decreased in the quarter ended
December 31, 2002. Accordingly, commencing October 1,
2002, we began accounting for our investment in Sun Media as an
investment in marketable equity securities under the provisions
of SFAS 115 Accounting for Certain Investments in
Debt and Equity Securities (SFAS 115).
Such investment is classified as available for sale and reported
at fair market value with unrealized gains (losses), if any,
recorded as accumulated other comprehensive income
(loss) in shareholders equity. We had recorded $0.9
million of equity loss from this investment through
September 30, 2002 so the carrying value of this investment
was $12.9 million at the time when the accounting method
changed. The fair market value of this investment began to drop
below the carrying value starting May 2003. At December 31,
2003, the fair market value of this investment was
$6.8 million. We considered the decline in the value of
this investment to be other than temporary and therefore
recognized $6.1 million as impairment of investment during
the three months ended December 31, 2003.

In November 2002, we completed the acquisition of
100% equity interest in Shanghai Techur Technology Developing
Co., Ltd. (Techur) for $1.9 million in cash.
The excess of the purchase price over the fair value of net
tangible assets was approximately $1.1 million,
representing intangible assets relating to customer
relationships, which was amortized over a period of three years.
Because the revenue and the gross margin of Techur did not grow
as expected, we reassessed the carrying value of the intangible
assets at June 30, 2003 and concluded that there would not
be significant future income generated from these customer
relationships. The

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carrying value of the intangible assets of
$0.9 million was therefore written off during the three
months ended June 30, 2003 due to the permanent impairment
of value.


In January 2003, we formed a joint venture named
Shanghai NC-SINA Information Technology Co. Ltd. (Shanghai
NC-SINA) in China with NC Soft, a Korean online game
company. We invested $2.6 million in cash for 51% of the
equity interest in the joint venture. We accounted for the
investment in the joint venture using the equity method of
accounting as NC Soft has certain participating rights as
defined in EITF 96-16. Shanghai NC-SINA is responsible for
operating online games developed by NC Soft in China. During the
year ended December 31, 2003, we recorded $1.0 million
of equity loss from this investment. As of December 31,
2003, the carrying value of this investment was
$1.6 million.

In January 2003, we completed the acquisition of
Memestar Limited, a British Virgin Islands limited liability
corporation, through a purchase of all of the outstanding shares
of Memestar. As a result of such acquisition, Memestar became a
wholly-owned subsidiary of SINA. Memestar, through its various
subsidiaries and exclusive contractual arrangements with two
local entities in the PRC, is engaged in the business of
providing mobile value-added services in the PRC. The primary
purposes of the acquisition were to enhance our mobile
value-added services as well as increase our market share in the
PRC mobile value-added services market. The aggregate purchase
price of $24,255,113 is comprised of five elements:
(a) $10,277,675 in cash paid at the closing of the
acquisition; (b) 560,369 newly issued SINA ordinary shares,
valued at $4,281,219 at the time of closing, delivered at the
closing of the acquisition; (c) $5,250,000 in cash to be
paid in four equal installments after the closing date of the
acquisition. The last payment would be forfeited if the
non-compete clauses of certain members of Memestars
management are violated; (d) 560,369 newly issued SINA
ordinary shares, valued at $4,281,219 at the time of closing, to
be delivered on the first anniversary of the closing date of the
acquisition, 383,733 of which were issued in August 2003, prior
to the first anniversary of the closing, as a result of an
amendment to the share purchase agreement, and
(e) approximately $165,000 in legal and professional fees
related to the acquisition. As a result of the acquisition, we
recorded intangible assets relating to customer lists and
non-competition clauses in the amount of $2.2 million,
which were amortized over periods ranging from fourteen to
eighteen months. The amortization expense for the year ended
December 31, 2003 amounted to $1.7 million. In
addition, we recorded goodwill in the amount of
$18.1 million representing the excess of the purchase price
over the fair value of the net tangible and identifiable
intangible assets acquired. In accordance with SFAS 142,
goodwill is not amortized but is tested for impairment. We
performed an impairment test relating to goodwill arising from
Memestar acquisition and concluded there was no impairment as to
the carrying value of the goodwill as of December 31, 2003.
The purchase price allocation for the Memestatr acquisition is
based on an appraisal performed by an independent appraisal firm
in the United States. Immediately after the signing of the
definitive agreement, we obtained effective control over
MemeStar; accordingly, the operating results of MemeStar have
been consolidated with our operating results starting
January 6, 2003.

In December 2003, we entered the China online
travel market by entering into a definitive agreement with a
China online travel company which provides both online and
offline hotel booking services under the brand Fortune Trip.
Users can access the site with a direct link from SINAs
home page or by simply typing the URL of
http://www.fortunetrip.com.

In January 2004, we entered into a definitive
agreement with Yahoo!, the leading provider of comprehensive
online products and services to consumers and businesses
worldwide, to form a joint venture for providing online auction
in China. According to the agreement, we will contribute certain
services, advertising spaces and cash to account for 33% equity
interest in the joint venture.

In February 2004, we entered into a definitive
agreement to acquire all outstanding shares of Crillion
Corporation (Crillion), a BVI company engaged in
mobile value-added services through its subsidiary and a
variable interest entity in China. The initial purchase price
consists of $9.9 million in cash and approximately 196,000
of our ordinary shares valued at $40.90 per share. Additional
payments will be made on an earn-out basis at approximately 1.5
to 2 times of Crillions 2004 and 2005 earnings if its
pretax income for 2004 and 2005 exceeds $6.7 million and
$13.3 million, respectively. The total consideration is
subject to a cap of

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$125 million and will be paid 60% in cash
and 40% in our ordinary shares valued at $40.90 per share. The
acquisition will be subject to customary closing conditions.


Financing

We had incurred net losses through
September 30, 2002. We had accumulated deficit of
approximately $83.1 million as of December 31, 2003.
We have funded our operations and capital expenditures primarily
using the net proceeds raised through the sale of preference
shares and the sale of our ordinary shares in the initial public
offering. At times when we have been profitable, we have also
financed our operations using our net income from operation. We
also issued zero coupon convertible subordinated notes in July
2003. We will continue our investment in the development and
enhancement of our products, contents and services, as well as
investment in sales and marketing. If we are unable to generate
sufficient net income from our operation in the future, we may
have to finance our operation from the current fund available.

Critical Accounting Policies and
Estimates

Our discussion and analysis of our financial
condition and results of operations are based upon our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial
statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates,
including those related to customer programs and incentives, bad
debts, investments, intangible assets, income taxes, financing
operations, restructuring, pensions and other post-retirement
benefits, and contingencies and litigation. We base our
estimates on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or
conditions.

We believe the following critical accounting
policies affect our more significant judgments and estimates
used in the preparation of our financial statements.

Revenue
recognition policies

Advertising revenues are derived principally from
online advertising arrangements, sponsorship arrangements, or a
combination of them. Online advertising arrangements allow
advertisers to place advertisements on particular areas of our
web sites, in particular formats and over particular periods of
time. Advertising revenues from online advertising arrangements
are recognized ratably over the displayed period of the contract
when the collectibility is reasonably assured. Multiple element
advertising arrangements are broken down to single element
arrangement based on relative fair value for revenue recognition
purpose. In some of our advertising contracts, we guarantee a
minimum number of impressions or pages to be delivered to users
over a specified period of time for a fixed fee. Advertising
revenues are recognized on the basis of the number of
impressions delivered or ratably over the period in which the
advertising is displayed, whichever amount is lower, when the
collectibility is reasonably assured. To the extent that minimum
guaranteed impression deliveries are not met, we defer
recognition of the corresponding revenues until the guaranteed
impressions deliveries are achieved. For the year ended
December 31, 2003, advertising revenues from contracts that
require guaranteed minimum impressions were minimal. Sponsorship
arrangements allow advertisers to sponsor a particular area on
our web sites in exchange for a fixed payment over the contract
period. Advertising revenues are recognized ratably over the
period of sponsorship. Advertising revenues derived from the
design, coordination and integration of online advertising and
sponsorship arrangements to be placed on our web sites are
recognized ratably over the term of such programs.

Revenues from barter transactions are recognized
during the period in which the advertisements are displayed in
our properties. Barter transactions are recorded at the lower of
the fair value of the goods or services received or the fair
value of the advertisement given, provided the fair value of the
transaction is reliably measurable. Revenues from barter
transactions were minimal for all periods presented.

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Non-advertising revenues are mainly derived from
mobile value-added services, fee-based services, e-commerce,
enterprise services and proprietary software products and
licenses.

Mobile value-added services revenues are derived
principally from providing mobile phone users with SMS, MMS, WAP
services and IVR services. These services include news and other
content subscriptions, mobile dating service, picture and logo
download, ring tones, ring back tones, mobile games, chat rooms
and access to music files. Revenues from mobile value-added
services are charged on monthly or on per usage basis. Such
revenues are recognized in the period in which the service is
performed, provided that no significant company obligations
remain, collection of the receivables is reasonably assured and
the amounts can be accurately estimated.

We contract with third party mobile operators for
billing and transmission services related to the mobile
value-added services transmitted to our users. We record the
gross amount we bill to our users for our mobile value-added
services as revenues and the fees charged or retained by the
third party mobile operators as cost of revenues. We considered
EITF 99-19 in determining whether we should recognize such
revenues at gross or net of revenue sharing by mobile operators
for billing and transmission services. We believe that based on
our arrangement with the third party mobile operators as
stipulated in our agreements with them, the gross approach is
appropriate as we are the primary obligor to the user with the
respect to the mobile value-added services.

Our estimation of revenue is based on our
internal records of billings and transmissions for the month,
adjusted by prior periods confirmation rates with the
third party mobile operators, and further adjusted by prior
periods discrepancies between our estimated revenue and
actual revenue confirmed by the third party mobile operators.
Historically, there were no significant true up adjustments to
our estimates. To the extent that such revenues cannot be
accurately estimated, we rely on the billing statements from the
third party mobile operators to record revenues. Due to the time
lag of receiving the billing statements from the third party
mobile operators, for revenues recorded based on the billing
statements from the third party mobile operators, we have
adopted a one month lag reporting policy. Such policy has been
applied on a consistent basis. For the year ended
December 31, 2003 and 2002, we recorded $64.4 million
and $9.1 million of revenues from our mobile value-added
services, respectively. If we had not used the one month lag
reporting policy, our revenues from our mobile value-added
services for those periods would have been $68.3 million
and $9.7 million, respectively. There was no significant
mobile value-added services revenue before the year ended
December 31, 2002.

We purchase certain content from third party
content providers for our mobile value-added services. Most of
these arrangements state that the fees payable to the third
party content providers are calculated based on certain
percentages of the revenue earned by their content after
deducting the fees paid to third party mobile operators. Our
mobile value-added service revenue is inclusive of such fees
since we act as the principal in these arrangements by having
the ability to determine the fees charged to end users and being
the primary obligor to the end users with respect to providing
such services.

Fee-based services allow our users to subscribe
for services on our web sites including online games, virtual
ISP and paid email services. Revenues from these services are
recognized in the period in which the service is performed,
provided that no significant company obligations remain,
collection of the receivables is reasonably assured and the
amounts can be accurately estimated.

E-commerce revenues are derived principally from
slotting fees charged to merchants for selective positioning and
promoting their goods or services within our online mall,
SinaMall, and from commissions calculated as a percentage of the
online sales transaction value of the merchants. Slotting fee
revenue is recognized ratably over the period the products are
shown on our web site while the commission revenue is recognized
on a net basis after both successful on-line verification of
customers credit cards and shipment of products. Product
returns have not been significant and are assumed by vendors.

Enterprise services mainly include paid search
and directory listings, corporate emails, classified listings
and enterprise e-solutions. Revenues are recognized in the
period in which the service is performed, provided

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that no significant company obligations remain,
collection of the receivables is reasonably assured and the
amounts can be accurately estimated.


Revenues from the sale of software products are
recognized primarily on the delivery of software products to end
users, resellers, distributors, retail merchants and original
equipment manufacturers (OEM). We deliver our
software products in packaged form or under software licenses.
Revenues from sales of software products in the packaged form
are recognized when persuasive evidence of an arrangement
exists, the price is fixed or determinable, shipment is made and
collectibility is reasonably assured. Software license
agreements are non-refundable and allow the OEM partners to
reproduce our software products for a specified period of time
for a fixed fee or a specified number of copies for a
predetermined unit price. Revenues from software license
agreements are recognized upon delivery of a master copy when
the fixed-fee agreements become effective or based upon activity
reports provided by the OEM partners under the per-copy
arrangements. Provision is made for expected sales returns and
allowances when revenue is recognized. Payments received in
advance of revenue recognition are recorded as deferred revenue.
We recognize revenues in accordance with Statement of Position
(SOP) 97-2, Software Revenue
Recognition, as amended by SOP 98-4 and
SOP 98-9. These Statements generally require revenue earned
on software arrangements involving multiple elements to be
allocated to each element based on the relative fair value of
the elements. Our software product agreements do not involve
multiple elements.

In accordance with generally accepted accounting
principles in the United States of America, the recognition of
these revenues is partly based on our assessment of the
probability of collection of the resulting accounts receivable
balance. As a result, the timing or amount of revenue
recognition may have been different if different assessments of
the probability of collection of accounts receivable had been
made at the time the transactions were recorded in revenue.

Allowances
for doubtful accounts

We use the rolling average bad debt rate for the
previous twelve months to estimate the provisions for accounts
receivable. We also provide specific provisions for bad debts
when facts and circumstances indicate that the receivable is
unlikely to be collected. If the financial condition of our
customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be
required.

Consolidation
of Variable Interest Entities

We have adopted FASB Interpretation No. 46
(FIN 46) Consolidation of Variable
Interest Entities (VIEs), an Interpretation of ARB
No. 51. FIN 46 requires a VIE to be consolidated
by a company if that company is subject to a majority of the
risk of loss for the variable interest entitys activities
or is entitled to receive a majority of the entitys
residual returns.

To comply with PRC laws and regulations, we
conduct substantially all our Internet content provision,
advertising and mobile value-added services in China via our
VIEs. These VIEs are wholly or partially owned by certain of our
PRC employees. The capital is funded by us and recorded as
interest-free loans to these PRC employees. These loans were
eliminated with the capital of the VIEs during consolidation.

Under various contractual agreements, employee
shareholders of the VIEs are required to transfer their
ownership in these entities to our subsidiaries in China when
permitted by PRC laws and regulations or to our designees at any
time for the amount of loans outstanding; all voting rights of
the VIEs are assigned to us and we have the right to appoint all
directors and senior management personnel of the VIEs. We have
also entered into exclusive technical service agreements with
the VIEs under which we provide technical and other services to
the VIEs in exchange for substantially all net income of the
VIEs. In addition, employee shareholders of the VIEs have
pledged their shares in the VIEs as collateral for the
non-payment of loans or for the fees for technical and other
services due to us. As of December 31, 2003, the amount of
interest-free loans to the employee shareholders of VIEs
amounted to $4.1 million.

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The following is a summary of our VIEs:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Beijing SINA Internet Information Service Co.,
    Ltd. (the ICP Company), a China company controlled
    through business agreement. The ICP Company is responsible for
    operating www.sina.com.cn in connection with its Internet
    content company license and selling the related advertising
    space to the Ad Company or to advertisers directly. It is also
    responsible for providing mobile value-added services in China
    via third party mobile operators to the users. It is 3% owned by
    Yan Wang, our Chief Executive Officer and director, and 97%
    owned by six other of our non-executive PRC employees. The
    registered capital of the ICP Company is $1.2 million.
|
| |  | Beijing SINA Interactive Advertising Co., Ltd.
    (the Ad Company), a China company controlled through
    business agreement. The Ad Company was responsible for placing
    advertisements on www.sina.com.cn for its third party customers
    under its advertising license. It is 75% owned by Yan Wang and
    25% owned by BSIT. This entity has become inactive after the ICP
    Company obtained online advertising license in May 2002. The
    registered capital of the Ad Company is $0.1 million.                                                                                                                                                                                          
|
| |  | Guangdong SINA Internet Information Service Co.,
    Ltd. (the GDICP Company), a China company controlled
    through business agreement. The GDICP Company is responsible for
    providing mobile value-added services in China via third party
    mobile operators to the users under its Internet content company
    license. It is 10% owned by Yan Wang and 90% owned by five other
    of our non-executive PRC employees. The registered capital of
    the GDICP Company is $0.4 million.                                                                                                                                                                                                       
|
| |  | Guangzhou Media Message Technologies, Inc.
    (Xunlong), a China company controlled through
    business agreement. Xunlong is responsible for providing mobile
    value-added services in China via third party mobile operators
    to the users under its Internet content company license. It is
    owned by five of our non-executive PRC employees. The registered
    capital of the Xunlong is $1.2 million.                                                                                                                                                                                                                                                                                    
|
| |  | Beijing Star-Village.com Cultural Development
    Co., Ltd. (StarVI), a China company controlled
    through business agreement. StarVI is responsible for providing
    mobile value-added services in China via third party mobile
    operators to the users under its Internet content company
    license. It is owned by five of our non-executive PRC employees.
    The registered capital of the StarVI is $1.2 million.                                                                                                                                                                                                                                                                          

We began to consolidate the Ad Company in April
2000 and the ICP Company in October 2001 (see Item 8, Note
7  Related party transactions). The GDICP Company was
established in 2002 but had not had activities until 2003 and
the operation results for the GDICP Company were consolidated
for the entire year ended December 31, 2003. Xunlong and
Star VI were acquired in Memestar acquisition (see Item 8,
Note 2  Acquisition of Memestar) in January 2003
and the operation results for these two companies were
consolidated in our consolidated statement of operations for the
entire year ended December 31, 2003.

As of December 31, 2003, the aggregate
accumulated losses of these VIEs were approximately
$4.9 million and have been included in the consolidated
financial statements. Further, as of December 31, 2003, we
did not have any assets that served as collateral for the
obligations of any of our VIEs. The creditors of our VIEs have
no recourse to our general credit.



| |                                             
| | --------------------------------------------
| | Available for sale securities
    investment

Investments classified as available for sale
securities are reported at fair value with unrealized gains
(losses), if any, recorded as accumulated other comprehensive
income in shareholders equity. Realized gains or losses
are charged to income during the period in which the gain or
loss is realized. If we determine a decline in fair value is
other-than-temporary, the cost basis of the individual security
shall be written down to fair value as a new cost basis and the
amount of the write-down will be accounted for a realized loss.
The new cost basis will not be changed for subsequent recoveries
in fair value. Determination of whether declines in value are
other-than-temporary requires significant judgment. Subsequent
increase in the fair value of available for sale securities will
be included in comprehensive income in shareholders equity
while subsequent decrease in fair value, if not an
other-than-temporary impairment, will also be included in
comprehensive income in shareholders equity.

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The investment in marketable equity securities of
Sun Media Group is classified as available for sale securities.
We recognized an other-than-temporary impairment charge of
$6.1 million for the investment in Sun Media Group during
the quarter ended December 31, 2003 based on our assessment
of (i) Sun Media financial position and operating prospects
and (ii) the duration and amount of the decline.

The investment in marketable debt securities is
classified as available for sale securities. We invest in these
securities with the intent to make such funds readily available
for operating or acquisition purposes and accordingly, classify
them as short-term investments. The aggregate fair value of
marketable debt securities was $69.0 million as of
December 31, 2003 and was $43.4 million as of
December 31, 2002. During the year ended December 31,
2003, we recorded $1.7 million of unrealized losses on our
marketable debt securities as a component of comprehensive
income. During the six months ended December 31, 2002, we
recorded $0.2 million of unrealized gains on our marketable
debt securities as a component of comprehensive income.



| |                                                 
| | ------------------------------------------------
| | Impairment of intangible assets and
    goodwill

We assess the carrying value of our intangible
assets and goodwill on an annual basis and when factors are
present that indicate an impairment may have occurred. During
the year ended December 31, 2003, we recorded an impairment
charge in the amount of $0.9 million to write off the
remaining value of the intangible assets relating to the
acquisition of Techur. At December 31, 2003, we had net
intangible assets of $0.6 million and goodwill of
$18.1 million, both of which relate to the Memestar
acquisition. We performed an impairment test based on future
discounted cash flow of related business segments and concluded
that there was no impairment as to the carrying value of these
assets at December 31, 2003.

We use estimates and judgments in our impairment
tests and if different estimates or judgments had been utilized,
the timing or the amount of the impairment charges could be
different.



| |                          
| | -------------------------
| | Purchase price allocation

We account for our acquisitions using purchase
method of accounting. This method requires that the acquisition
cost to be allocated to the assets and liabilities we acquired
based on their fair values. We make estimates and judgments in
determining the fair value of the acquired assets and
liabilities. We base our determination on independent appraisal
reports as well as our experience with similar assets and
liabilities in the similar industries. If we were to use
different judgments or assumptions, the amounts assigned to the
individual acquired assets or liabilities could be materially
different.



| |                         
| | ------------------------
| | Stock based compensation

Deferred stock compensation represents the
difference between the exercise price of options granted and the
fair market value of the underlying stock at the date of grant.
Deferred stock compensation is amortized on an accelerated basis
over the vesting period of the applicable options, which is
generally four years. The amortization of deferred compensation
was $0.6 million and $1.8 million for the years ended
December 31, 2003 and 2002, respectively. As of
December 31, 2003, deferred stock compensation had been
fully amortized.



| |                    
| | -------------------
| | Deferred tax assets

We record a valuation allowance for deferred tax
assets if any, based on our estimates of our future taxable
income as well as our tax planning strategies, it is more likely
than not that a portion or all of our deferred tax assets will
not be realized. If we are able to utilize more of our deferred
tax assets than the net amount previously recorded when
unanticipated events occur, an adjustment to deferred tax assets
would increase our net income when those events occur.

43



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##### Table of Contents



Results of Operations



| |                                           
| | ------------------------------------------
| | Years ended December 31, 2003 and
    2002



| |             
| | ------------
| | Net revenues

|                   |                             |                                    |         |                   |       |              |      |                   |    |        |        |        |       |  |      |     |     |  |      |      |     | 
|------------------ | --------------------------- | ---------------------------------- | ------- | ----------------- | ----- | ------------ | ---- | ----------------- | -- | ------ | ------ | ------ | ----- |  | ---- | --- | --- |  | ---- | ---- | --- | 
|                   |                             |                                   
|                   |                             | Years ended December 31,          
|                   |                             |                                   
|                   |                             |                                    |         |                   |       |             
|                   |                             | 2003                               |         | 2002 (unaudited)  |       |             
|                   |                             |                                    |         |                   |       |             
|                   |                             | U.S. Dollars                       |         | % of net revenues |       | U.S. Dollars |      | % of net revenues |    | Growth
|                   |                             |                                    |         |                   |       |              |      |                   |    |       
|                   |                             |                                   
|                   |                             | (in thousands, except percentages)
|Net Revenues       |                             |                                    |         |                   |       |              |      |                   |    |        |        |        |       |  |      |     |     |  |      |     
|                   | Advertising                 |                                    | $       | 41,173            |       |              |      | 36%               |    |        | $      | 24,703 |       |  |      | 64% |     |  |      | 67%  |    
|                   | Non-advertising             |                                    |         |                   |       |              |      |                   |    |        |        |        |       |  |      |     |     |  |      |      |    
|                   | Mobile value-added services |                                    |         | 64,377            |       |              |      | 56%               |    |        |        | 9,079  |       |  |      | 23% |     |  |      | 609% |    
|                   |                             | Other                              |         |                   | 8,735 |              |      |                   | 8% |        |        |        | 5,112 |  |      |     | 13% |  |      |      | 71% | 
|                   |                             |                                    |         |                   |       |              |      |                   |    |        |        |        |       |  |      |     |     |  |      |     
|                   | Non-advertising             |                                    |         | 73,112            |       |              |      | 64%               |    |        |        | 14,191 |       |  |      | 36% |     |  |      | 415% |    
|                   |                             |                                    |         |                   |       |              |      |                   |    |        |        |        |       |  |      |     |     |  |      |     
|Total net revenues |                             | $                                  | 114,285 |                   |       |              | 100% |                   |    | $      | 38,894 |        |       |  | 100% |     |     |  | 194% |     
|                   |                             |                                    |         |                   |       |              |      |                   |    |        |        |        |       |  |      |     |     |  |      |     

Our net revenues were $114.3 million for the
year ended December 31, 2003, representing growth of 194%
as compared to the same period in 2002. Our advertising revenues
for the year ended December 31, 2003 grew by 67% as
compared to the same period in 2002 and accounted for 36% of our
net revenues for the year ended December 31, 2003. Our
non-advertising revenues for the year ended December 31,
2003 grew by 415% as compared to the same period in 2002 and
accounted for 64% of our net revenues for the year ended
December 31, 2003. For the year ended December 31,
2002, advertising and non-advertising revenues accounted for 64%
and 36%, respectively, of our net revenues. The significant
change in the composition of our net revenues was primarily
driven by the increase in revenues from our mobile value-added
services, which benefited from the growth in China mobile
value-added services market and our acquisition of Memestar in
January 2003.

Advertising.Our
advertising revenues were $41.2 million for the year ended
December 31, 2003, representing growth of 67% as compared
to the same period in 2002. The increase in our advertising
revenues was primarily due to the growth in the number of
advertisers as well as per advertiser spending in the China
market as more advertisers began to accept the Internet as a
medium for advertisement. For the year ended December 31,
2003, advertising revenues from China accounted for 90% of our
total advertising revenues, compared to 79% of our total
advertising revenues for the same period in 2002. The number of
advertising customers in China was approximately 582 for the
year ended December 31, 2003 as compared to 503 for the
same period in 2002. Average revenues per advertising customer
in China were $63,000 for the year ended December 31, 2003
as compared to $39,000 for the same period in 2002.

Non-advertising.Our
non-advertising revenues were $73.1 million for the year
ended December 31, 2003, representing growth of 415% as
compared to the same period in 2002. The increases in
non-advertising revenues were primarily driven by the growth in
revenues from mobile value-added services in China.

Our mobile value-added services revenues for the
year ended December 31, 2003 were $64.4 million,
representing growth of 609% as compared to the same period in
2002. This was partially due to the growth in the China mobile
value-added services market and partially due to revenues
obtained as a result of the Memestar acquisition. Total mobile
value-added service revenues generated by Memestar for the year
ended December 31, 2003 were approximately
$30.6 million. For the year ended December 31, 2003,
mobile value-added services revenue accounted for 88% of our
total non-advertising revenues, compared to 64% of our total
non-advertising revenues for the same period in 2002.

Our other non-advertising revenues include
fee-based services such as virtual ISP, online games and paid
email services as well as e-commerce, paid search and directory
listings and other enterprise services. For the year ended
December 31, 2003, the increase in our other
non-advertising revenues was primarily due to the

44



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##### Table of Contents



increase in our paid search services and
directory listings. For the year ended December 31, 2003,
revenues from paid search and directory listings amounted to
$3.7 million, as compared to $0.5 million for the same
period in 2002. For the year ended December 31, 2003, such
other non-advertising revenues accounted for 12% of our total
non-advertising revenues, compared to 36% of our total
non-advertising revenues for the year ended December 31,
2002.




| |                 
| | ----------------
| | Cost of revenues

|                       |                 |                                 |        |                  |        |        |        |        |       |  |      |      |      | 
|---------------------- | --------------- | ------------------------------- | ------ | ---------------- | ------ | ------ | ------ | ------ | ----- |  | ---- | ---- | ---- | 
|                       |                 |                                
|                       |                 | Years ended December 31,       
|                       |                 |                                
|                       |                 | 2003                            |        | 2002 (unaudited) |        | Growth
|                       |                 |                                 |        |                  |        |       
|                       |                 |                                
|                       |                 | (in U.S. dollars, in thousands,
|                       |                 | except percentages)            
|Cost of revenues:      |                 |                                 |        |                  |        |        |        |        |       |  |      |     
|                       | Advertising     |                                 | $      | 14,001           |        |        | $      | 11,267 |       |  |      | 24%  |     
|                       | Non-advertising |                                 |        |                  |        |        |        |        |       |  |      |      |     
|                       |                 | Mobile value-added services     |        |                  | 19,455 |        |        |        | 3,267 |  |      |      | 496% | 
|                       |                 | Other                           |        |                  | 950    |        |        |        | 873   |  |      |      | 9%   | 
|                       |                 |                                 |        |                  |        |        |        |        |       |  |      |     
|                       | Non-advertising |                                 |        | 20,405           |        |        |        | 4,140  |       |  |      | 393% |     
|                       |                 |                                 |        |                  |        |        |        |        |       |  |      |     
|Total cost of revenues |                 | $                               | 34,406 |                  |        | $      | 15,407 |        |       |  | 123% |     
|                       |                 |                                 |        |                  |        |        |        |        |       |  |      |     

Our cost of revenues was $34.4 million for
the year ended December 31, 2003, representing an increase
of 123% as compared to the same period in 2002. The increase in
cost of revenues primarily resulted from the increase in the
cost of our mobile value-added services associated with higher
revenue of such services.

Advertising.Our
cost of advertising revenues was $14.0 million and
$11.3 million for the years ended December 31, 2003
and 2002, respectively. Our cost of advertising revenues
consists mainly of costs associated with the production of our
web sites, which includes fees paid to third parties for
Internet connection, content and services, personnel related
costs and equipment depreciation expenses associated with our
web site production. Cost of advertising revenues also includes
the business taxes relating to advertising sales in China. The
year-to-year increase in cost of advertising from the year ended
December 31, 2002 to the year ended December 31, 2003
was due to an increase in web production cost driven by an
increase in web production personnel and content fees as well as
an increase in business taxes associated with higher advertising
revenues.

Non-advertising.Our
cost of non-advertising revenues was $20.4 million and
$4.1 million for the years ended December 31, 2003 and
2002, respectively. Our cost of non-advertising revenues
consists mainly of fees paid to third party mobile operators for
their services relating to the collection of our mobile
value-added services fees and for using their transmission
gateways, and fees or royalties paid to third party content
providers for services and content associated with our mobile
value-added services, equipment depreciation and costs for
providing our enterprise services. Cost of non-advertising
revenues also includes the business taxes levied on
non-advertising sales in China. The year-to-year increase in
cost of non-advertising revenues from the year ended
December 31, 2002 to the year ended December 31, 2003
was mainly due to the increase in fees to mobile operators and
third party content providers as well as an increase in business
taxes associated with higher non-advertising revenues in China.
For the year ended December 31, 2003, non-advertising costs
included $17.9 million of fees retained by or paid to
mobile operators and third party content providers as compared
to $3.0 million for the same period in 2002.

45



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##### Table of Contents





| |                     
| | --------------------
| | Gross profit margins

|                      |                 |                             |     |                  |     |  |     |     |     | 
|--------------------- | --------------- | --------------------------- | --- | ---------------- | --- |  | --- | --- | --- | 
|                      |                 |                            
|                      |                 | Years ended December 31,   
|                      |                 |                            
|                      |                 | 2003                        |     | 2002 (unaudited)
|                      |                 |                             |     |                 
|                      |                 | %                           |     | %               
|                      |                 |                             |     |                 
|Gross profit margins: |                 |                             |     |                  |     |  |     |    
|                      | Advertising     |                             |     | 66%              |     |  |     | 54% |    
|                      | Non-advertising |                             |     |                  |     |  |     |     |    
|                      |                 | Mobile value-added services |     |                  | 70% |  |     |     | 64% | 
|                      |                 | Other                       |     |                  | 89% |  |     |     | 83% | 
|                      | Non-advertising |                             |     | 72%              |     |  |     | 71% |    
|Overall               |                 |                             | 70% |                  |     |  | 60% |    

Our overall gross profit margin increased from
60% for the year ended December 31, 2002 to 70% for the
year ended December 31, 2003. Both our advertising and
non-advertising activities contributed to the improvement in
gross profit margins.

Advertising.Our
gross profit margins for advertising revenues increased from 54%
for the year ended December 31, 2002 to 66% for the year
ended December 31, 2003. The increase in gross profit
margins was primarily due to the increase in advertising
revenues without significant increase in the costs associated
with our web site production.

Non-advertising.Our
gross profit margins for non-advertising revenues increased from
71% for the year ended December 31, 2002 to 72% for the
year ended December 31, 2003 driven by an improvement in
gross profit margin for mobile value-added service revenue. Our
gross profit margins for mobile value-added services revenue
increased from 64% for the year ended December 31, 2002 to
70% for the year ended December 31, 2003. The improvement
was primarily due to the increase in revenues from monthly
subscription services of our self-developed products, which have
higher gross margins. To a lesser extent, the improvement was
due to a decrease in business tax rate levied on mobile
value-added service revenues from 5% to 3% in China.



| |                   
| | ------------------
| | Operating expenses

|                                    |  |                                    |        |                   |  |              |    |                   |  |   |        |  |  |  |    |  
|----------------------------------- |  | ---------------------------------- | ------ | ----------------- |  | ------------ | -- | ----------------- |  | - | ------ |  |  |  | -- | -
|                                    |  |                                   
|                                    |  | Years ended December 31,          
|                                    |  |                                   
|                                    |  |                                    |        |                  
|                                    |  | 2003                               |        | 2002 (unaudited) 
|                                    |  |                                    |        |                  
|                                    |  | U.S. Dollars                       |        | % of net revenues |  | U.S. Dollars |    | % of net revenues
|                                    |  |                                    |        |                   |  |              |    |                  
|                                    |  |                                   
|                                    |  | (in thousands, except percentages)
|Sales and marketing expenses        |  | $                                  | 21,741 |                   |  |              | 19 | %                 |  | $ | 12,419 |  |  |  | 32 | %
|Product development expenses        |  | $                                  | 6,340  |                   |  |              | 6  | %                 |  | $ | 5,916  |  |  |  | 15 | %
|General and administrative expenses |  | $                                  | 11,551 |                   |  |              | 10 | %                 |  | $ | 8,896  |  |  |  | 23 | %



| |                             
| | ----------------------------
| | Sales and marketing expenses

Our sales and marketing expenses were
$21.7 million or 19% of total net revenues for the year
ended December 31, 2003, compared to $12.4 million or
32% of total net revenues for the same period in 2002. Sales and
marketing expenses consist primarily of compensation expenses,
sales commissions, advertising and promotion expenditures and
travel expenses. The period-to-period increase in the absolute
dollar amount was due to an increase in sales commission
expenses for advertising sales and increased promotion
expenditures for mobile value-added services. The year-to-year
decrease in sales and marketing expenses as a percentage of
total net revenues from the year ended December 31, 2002 to
the year ended December 31, 2003 was primarily due to the
rapid growth of revenues. We believe that the investment in
sales and marketing is critical to our revenue growth and expect
these expenses to increase in absolute dollar amount in the near
future.

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| |                             
| | ----------------------------
| | Product development expenses

Our product development expenses were
$6.3 million or 6% of total net revenues for the year ended
December 31, 2003, compared to $5.9 million or 15% of
total net revenues in the same period in 2002. Product
development expenses consist primarily of personnel related
expenses incurred for enhancement to and maintenance of our web
sites as well as costs related to the development of our mobile
services related and web-based products. The year-to-year
decrease in product development expenses as a percentage of
total net revenues from the year ended December 31, 2002 to
the year ended December 31, 2003 was primarily due to an
increase of labor productivity as well as the rapid growth of
revenues. We expect that our product development expenses will
continue to increase in absolute dollar amount in the near
future.



| |                                    
| | -----------------------------------
| | General and administrative expenses

Our general and administrative expenses were
$11.6 million or 10% of total net revenues for the year
ended December 31, 2003, compared to $8.9 million, or
23% of total net revenues for the same period in 2002. General
and administrative expenses consist primarily of compensation
for personnel, fees for professional services, and provisions
for doubtful accounts. Our general and administrative expenses
also include expenses relating to the transfer of the economic
benefits generated from our VIEs in China to our subsidiaries.
The year-to-year increase in the absolute dollar amount from the
year ended December 31, 2002 to the year ended
December 31, 2003 was mainly due to the severance benefit
of $0.6 million recorded in the month of May 2003, an
increase in professional service fees relating to our merger and
acquisition activities, the acquisition of Memestar and an
increase in expenses paid for transferring economic benefits
generated from our VIEs in China to our subsidiaries.



| |                                  
| | ---------------------------------
| | Stock-based compensation expenses

Deferred stock compensation represents the
difference between the exercise price of options granted and the
fair market value of the underlying stock at the date of grant.
Deferred stock compensation is amortized on an accelerated basis
over the vesting period of the applicable options, which is
generally four years. The amortization of deferred compensation
was $0.6 million and $1.8 million for the years ended
December 31, 2003 and 2002, respectively. As of
December 31, 2003, deferred stock compensation had been
fully amortized.



| |                                                    
| | ---------------------------------------------------
| | Amortization and write-off of intangible
    assets

Amortization of intangible assets of
$1.8 million for the year ended December 31, 2003
related to our acquisition of Memestar and Techur. Amortization
of intangible assets of $1.8 million for the year ended
December 31, 2002 related to our acquisition of Sinanet.com
and Techur.

As a result of the acquisition of Memestar in
January 2003, we recorded intangible assets of approximately
$2.2 million, which were being amortized over fourteen to
eighteen months. The amortization expense was approximately
$1.7 million for the year ended December 31, 2003.

As a result of the acquisition of Techur in
November 2002, we recorded intangible assets of approximately
$1.1 million, which were being amortized over a period of
three years. The amortization expense was approximately
$0.1 million and $0.1 million for the years ended
December 31, 2003 and 2002, respectively. The amortization
of the intangible assets ceased in the three months ended
June 30, 2003 when the carrying value of the intangible
assets of $0.9 million was written off due to the permanent
impairment of value.

As a result of the acquisition of Sinanet.com in
March 1999, we recorded goodwill and other intangible assets of
approximately $20.3 million, which were amortized over
three years. The amortization expense was $1.7 million for
the year ended December 31, 2002. The goodwill and other
intangible assets were fully amortized by March 31, 2002.



| |                
| | ---------------
| | Interest income

Interest income was $2.8 million for both
years ended December 31, 2003 and 2002. The interest income
did not increase as a result of higher balance of cash and cash
equivalent and short-term investments during

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##### Table of Contents



the year. This was primarily due to lower
applicable interest rates during the period. See Item 7A
Quantitative and Qualitative Disclosures about Market
Risk for a description of our investment policy.




| |                                                   
| | --------------------------------------------------
| | Amortization of convertible debt issuance
    cost

As a result of our sale of zero coupon
convertible subordinated notes in July 2003, we recorded
convertible debt issuance cost of approximately
$2.7 million, which are being amortized over four years.
The amortization expense was $0.3 million for the year
ended December 31, 2003.



| |                                                
| | -----------------------------------------------
| | Impairment of investment in Sun Media
    Group

In September 2001, we acquired an approximately
27.6% equity interest in Sun Media and accounted for the
investment using the equity method of accounting. We ceased to
maintain significant influence over Sun Medias operations
after our equity interest fell below 20% to 17.4% and our board
representation was decreased in the quarter ended
December 31, 2002. Accordingly, commencing October 1,
2002, we began accounting for our investment in Sun Media as an
investment in marketable equity securities under the provisions
of SFAS 115.

We had recorded $0.9 million of equity loss
from this investment through September 30, 2002. The fair
market value of Sun Media dropped below our carrying value
starting May 2003. As of December 31, 2003, the fair market
value of this investment was $6.8 million while the
carrying value of this investment was $12.9 million. We
considered the decline in the value of this investment to be
other than temporary and therefore recognized $6.1 million
as impairment of investment during the three months ended
December 31, 2003. We will continue to monitor the
developments of Sun Media closely. If the fair market value
continues to drop, we will need to recognize additional
impairment charges in the future periods.



| |                           
| | --------------------------
| | Loss on equity investments

Our loss on equity investment of
$0.9 million for the year ended December 31, 2003 was
mainly related to our investment in the Shanghai NC-SINA joint
venture, while our loss on equity investment of
$0.5 million for the year ended December 31, 2002 was
mainly related to our investment in Sun Media.



| |                           
| | --------------------------
| | Provision for income taxes

We are incorporated in Cayman Islands where no
income taxes are imposed. We have operations in four tax
jurisdictions including China, the United States of America,
Hong Kong and Taiwan. For the United States of America, Hong
Kong and Taiwan, we have incurred net accumulated operating
losses for income tax purposes. We believe that it is more
likely than not that these net accumulated operating losses will
not be utilized in the future and hence we have not recorded
income tax provisions or benefits for these locations. As of
December 31, 2003, we had deferred tax assets in the amount
of $20.0 million for these three locations primarily
relating to net operating loss carryforwards and we have
provided a full valuation allowance against these deferred tax
assets.

We generated substantially all our net income
from our China operations for the year ended December 31,
2003. Our China operations are conducted through various
subsidiaries and VIEs. Pursuant to the PRC Income Tax Laws, our
subsidiaries and VIEs are generally subject to Enterprise Income
Taxes (EIT) at a statutory rate of 33%, which
comprises 30% national income tax and 3% local income tax.
However, some of our subsidiaries and VIEs are qualified new
technology enterprises and under PRC Income Tax Laws, they are
subject to preferential tax rate of 15%. In addition, some of
our subsidiaries are Foreign Investment Enterprise and under PRC
Income Tax Laws, they are entitled to either a three-year tax
exemption followed by three years with a 50% reduction in the
tax rate, commencing from the first operating year; or a
two-year tax exemption followed by three years with a 50%
reduction in the tax rate, commencing from the first profitable
year. We expect that based on our current operating and tax
structure in China, our effective income tax rates will be
approximately 5%, 10% and 15% for the years ending 2004, 2005
and 2006, respectively. We are in the process of applying for
new preferential tax treatments for certain of our subsidiaries
and VIEs in China and our projected effective tax rates will be
reduced further if these applications are approved. Over the

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##### Table of Contents



longer term, if the Chinese government phases out
preferential tax treatment for foreign investment enterprise or
for new technology enterprise, our effective tax rates can be
increased to as high as 33%.


Due to our operating and tax structures in China,
we have entered into technical and other service agreements
between our subsidiaries and our VIEs in China pursuant to which
our subsidiaries provide technical and other services to our
VIEs in exchange for substantially all net income of these VIEs.
We incur 5% business tax when our subsidiaries receive the fees
from the VIEs which we include in our operating expenses as cost
of transferring economic benefit generated from these VIEs. We
believe that the terms of such service agreements are in
compliance with the laws in China. Some of these agreements were
reviewed by the tax authorities in China in the past and no
comments were raised. However, due to the uncertainties
surrounding the interpretation of the tax transfer pricing rules
relating to related party transactions in China, it is possible
that tax authorities in China might challenge the transfer
prices that we used for the related party transactions among our
entities in China in the future.

We have recorded a current income tax provision
in the amount of $1.8 million, net of an income tax benefit
of $0.9 million relating to the recognition of net deferred
tax assets, for the year ended December 31, 2003 relating
to our China operations.



| |                                             
| | --------------------------------------------
| | Years ended June 30, 2002, 2001 and
    2000



| |             
| | ------------
| | Net revenues

|                   |                 |                                    |        |          |       |         |     |          |    |         |        |          |       |        |     |        |    |   |        |        |       |  |     |    |    |   |   |     |     |   |    |     |   |  
|------------------ | --------------- | ---------------------------------- | ------ | -------- | ----- | ------- | --- | -------- | -- | ------- | ------ | -------- | ----- | ------ | --- | ------ | -- | - | ------ | ------ | ----- |  | --- | -- | -- | - | - | --- | --- | - | -- | --- | - | -
|                   |                 |                                   
|                   |                 | Years ended June 30,              
|                   |                 |                                   
|                   |                 |                                    |        |          |       |         |     |         
|                   |                 | 2002                               |        | 2001     |       | 2000    |     | 2002     |    | 2001   
|                   |                 |                                    |        |          |       |         |     |          |    |        
|                   |                 | U.S.                               |        | % to net |       | U.S.    |     | % to net |    | U.S.    |        | % to net |       |        |     |       
|                   |                 | Dollars                            |        | revenues |       | Dollars |     | revenues |    | Dollars |        | revenues |       | Growth |     | Growth
|                   |                 |                                    |        |          |       |         |     |          |    |         |        |          |       |        |     |       
|                   |                 |                                   
|                   |                 | (in thousands, except percentages)
|Net Revenues       |                 |                                    |        |          |       |         |     |          |    |         |        |          |       |        |     |        |    |   |        |        |       |  |     |    |    |   |   |     |     |   |    |    
|                   | Advertising     |                                    | $      | 21,105   |       |         |     | 74       | %  |         | $      | 23,393   |       |        |     | 88     | %  |   | $      | 11,013 |       |  |     | 78 | %  |   |   | (10 | %)  |   |    | 112 | %
|                   | Non-advertising |                                    |        |          |       |         |     |          |    |         |        |          |       |        |     |        |    |   |        |        |       |  |     |    |    |   |   |     |     |   |    |     |  
|                   |                 | Mobile value-added services        |        |          | 3,920 |         |     |          | 14 | %       |        |          |      |        |     |        |   |   |        |        |      |  |     |    |   |   |   |     | 100 | % |    |     |  |  
|                   |                 | Other                              |        |          | 3,483 |         |     |          | 12 | %       |        |          | 3,290 |        |     |        | 12 | % |        |        | 3,157 |  |     |    | 22 | % |   |     | 6   | % |    |     | 4 | %
|                   |                 |                                    |        |          |       |         |     |          |    |         |        |          |       |        |     |        |    |   |        |        |       |  |     |    |    |   |   |     |     |   |    |    
|                   | Non-advertising |                                    |        | 7,403    |       |         |     | 26       | %  |         |        | 3,290    |       |        |     | 12     | %  |   |        | 3,157  |       |  |     | 22 | %  |   |   | 125 | %   |   |    | 4   | %
|                   |                 |                                    |        |          |       |         |     |          |    |         |        |          |       |        |     |        |    |   |        |        |       |  |     |    |    |   |   |     |     |   |    |    
|Total net revenues |                 | $                                  | 28,508 |          |       |         | 100 | %        |    | $       | 26,683 |          |       |        | 100 | %      |    | $ | 14,170 |        |       |  | 100 | %  |    |   | 7 | %   |     |   | 88 | %  
|                   |                 |                                    |        |          |       |         |     |          |    |         |        |          |       |        |     |        |    |   |        |        |       |  |     |    |    |   |   |     |     |   |    |    

Our net revenues were $28.5 million and
$26.7 million for the years ended June 30, 2002 and
2001, respectively, representing growth of 7% and 88% as
compared to the same periods in 2001 and 2000, respectively. The
growth of our net revenues for the year ended June 30, 2002
as compared to the same period in 2001 was mainly attributable
to the introduction of our mobile value-added services. Revenue
from our mobile value-added services for the year ended
June 30, 2002 was $3.9 million. This was offset by the
decrease in advertising revenue of $2.3 million. The growth
of our net revenues for the year ended June 30, 2001 as
compared to the same period in 2000 was mainly attributable to
the increase in advertising revenues. For the year ended
June 30, 2002, advertising revenues dropped by 10% to
$21.1 million and accounted for 74% of our net revenues,
while non-advertising revenues grew by 125% to $7.4 million
and accounted for 26% of our net revenues. For the year ended
June 30, 2001, advertising revenues grew by 112% to
$23.4 million and accounted for 88% of our net revenues,
while non-advertising revenues grew by 4% to $3.3 million
and accounted for 12% of our net revenues. For the year ended
June 30, 2001, advertising and non-advertising revenues
accounted for 78% and 22%, respectively, of our net revenues.
The change in the composition of our net revenue for the year
ended June 30, 2002 was primarily driven by the
introduction of mobile value-added services in late 2001.

Advertising.Our
advertising revenues were $21.1 million for the year ended
June 30, 2002, as compared to $23.4 million and
$11.0 million for the years ended June 30, 2001 and
2000, respectively. During the year ended June 30, 2002,
the decrease from the same period in 2001 was mainly due to the
reduced spending in the online advertising market in the U.S.,
Taiwan and Hong Kong. During the year ended June 30, 2001,
the

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increase from the same period in 2000 was mainly
due to the increase in the number of advertisers. For the years
ended June 30, 2002, 2001 and 2000, advertising revenues
accounted for 74%, 88% and 78% of our net revenues, respectively.


Non-Advertising.Our
non-advertising revenues were $7.4 million,
$3.3 million and $3.2 million for the years ended
June 30, 2002, 2001 and 2000, respectively. For the year
ended June 30, 2002, non-advertising revenues consisted of
$3.9 million of revenues from mobile value-added services,
$1.1 million of revenues from our other fee-based services
including subscription service and paid email service,
$1.5 million of e-commerce sales and $0.9 million from
the sale of software products. For the year ended June 30,
2001, non-advertising revenues consisted mainly of
$2.3 million from the sale of software products and
$1.0 million of e-commerce sales. For the year ended
June 30, 2000, non-advertising revenues consisted mainly of
sales of software products. For the years ended June 30,
2002, 2001 and 2000, non-advertising revenues accounted for 26%,
12% and 22% of our net revenues, respectively.



| |                 
| | ----------------
| | Cost of revenues

|                        |                 |                                                     |        |        |       |      |        |        |       |        |        |       |       |  |     |     |     |    |    |     |     |   
|----------------------- | --------------- | --------------------------------------------------- | ------ | ------ | ----- | ---- | ------ | ------ | ----- | ------ | ------ | ----- | ----- |  | --- | --- | --- | -- | -- | --- | --- | --
|                        |                 |                                                    
|                        |                 | Years ended June 30,                               
|                        |                 |                                                    
|                        |                 | 2002                                                |        | 2001   |       | 2000 |        | 2002   |       | 2001  
|                        |                 |                                                     |        |        |       |      |        |        |       |       
|                        |                 |                                                     |        |        |       |      |        | Growth |       | Growth
|                        |                 |                                                     |        |        |       |      |        |        |       |       
|                        |                 |                                                    
|                        |                 | (in U.S. Dollars, in thousands, except percentages)
|Cost of revenues        |                 |                                                     |        |        |       |      |        |        |       |        |        |       |       |  |     |     |     |    |    |    
|                        | Advertising     |                                                     | $      | 11,537 |       |      | $      | 13,771 |       |        | $      | 8,950 |       |  |     | (16 | %)  |    |    | 54  | %  
|                        | Non-advertising |                                                     |        |        |       |      |        |        |       |        |        |       |       |  |     |     |     |    |    |     |    
|                        |                 | Mobile value-added services                         |        |        | 1,275 |      |        |        |      |        |        |       |      |  |     |     | 100 | %  |    |     |    |   
|                        |                 | Other                                               |        |        | 663   |      |        |        | 1,169 |        |        |       | 1,965 |  |     |     | (43 | %) |    |     | (41 | %)
|                        |                 |                                                     |        |        |       |      |        |        |       |        |        |       |       |  |     |     |     |    |    |    
|                        | Non-advertising |                                                     |        | 1,938  |       |      |        | 1,169  |       |        |        | 1,965 |       |  |     | 66  | %   |    |    | (41 | %) 
|                        |                 |                                                     |        |        |       |      |        |        |       |        |        |       |       |  |     |     |     |    |    |    
|Total cost for revenues |                 | $                                                   | 13,475 |        |       | $    | 14,940 |        |       | $      | 10,915 |       |       |  | (10 | %)  |     |    | 37 | %  
|                        |                 |                                                     |        |        |       |      |        |        |       |        |        |       |       |  |     |     |     |    |    |    

Our cost of revenues were $13.5 million and
$14.9 million for the years ended June 30, 2002 and
2001, respectively, representing a decrease of 10% and an
increase of 37% as compared to same periods in 2001 and 2000,
respectively.

Advertising.Our
cost of advertising revenues were $11.5 million,
13.8 million and $9.0 million for the years ended
June 30, 2002, 2001 and 2000, respectively. Our cost of
advertising revenues consists of costs associated with the
production of our web sites, which includes fees paid to third
parties for Internet connection, content and services, and
personnel-related costs and equipment depreciation expense
associated with our web site production. The year-to-year
decrease in cost of revenues from the year ended June 30,
2001 to the year ended June 30, 2002 was primarily due to
lower Internet connection costs as a result of a decrease in
bandwidth cost in China and lower personnel related costs as a
result of improved productivity and reduced headcount. The
year-to-year increase in cost of revenues from the year ended
June 30, 2000 to the year ended June 30, 2001 was due
to higher Internet connection costs, such as bandwidth expansion
and server co-location cost to support increased Internet
traffic on our web sites, and the increase in content and
service provider fees to expand our web site content and to
support the increased advertisement impressions.

Non-advertising.Our
cost of non-advertising revenues was $1.9 million
$1.2 million and $2.0 million for the years ended
June 30, 2002, 2001 and 2000, respectively. Our cost of
non-advertising revenues consists mainly of fees paid to third
party mobile operators for their services relating to the
collection of our mobile value-added services fees and for using
their transmission gateways, fees or royalties paid to third
party content providers for services and content associated with
our mobile value-added services and cost of our software
products. The year-to-year increase in cost of non-advertising
revenues from the year ended June 30, 2001 to the year
ended June 30, 2002 was mainly due to the increase in fees
to mobile phone operators in China for our mobile value-added
services. The year-to-year decrease in cost of revenues from the
year ended June 30, 2000 to the year ended June 30,
2001 was primarily due to the fact that a higher percentage of
our software revenues were derived from licensing arrangements
which involved minimal costs during 2001.

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| |                     
| | --------------------
| | Gross profit margins

|                     |                 |                             |    |      |    |      |    |    |    |   |    |    |    |  
|-------------------- | --------------- | --------------------------- | -- | ---- | -- | ---- | -- | -- | -- | - | -- | -- | -- | -
|                     |                 |                            
|                     |                 | Years ended June 30,       
|                     |                 |                            
|                     |                 | 2002                        |    | 2001 |    | 2000
|                     |                 |                             |    |      |    |     
|Gross profit margins |                 |                             |    |      |    |      |    |    |    |   |    |   
|                     | Advertising     |                             |    | 45   | %  |      |    | 41 | %  |   |    | 19 | % 
|                     | Non-advertising |                             |    |      |    |      |    |    |    |   |    |    |   
|                     |                 | Mobile value-added services |    |      | 68 | %    |    |    |   |   |    |    |   |  
|                     |                 | Other                       |    |      | 81 | %    |    |    | 65 | % |    |    | 38 | %
|                     | Non-advertising |                             |    | 74   | %  |      |    | 65 | %  |   |    | 38 | % 
|Overall              |                 |                             | 53 | %    |    |      | 44 | %  |    |   | 23 | % 

Our overall gross profit margins increased from
23% for the year ended June 30, 2000 to 44% for the year
ended June 30, 2001 and 53% for the year ended
June 30, 2002. Both our advertising and non-advertising
activities contributed to the improvements in gross profit
margins.

Advertising.Our
gross profit margins of advertising revenues increased from 19%
for the year ended June 30, 2000 to 41% for the year ended
June 30, 2001 and 45% for the year ended June 30,
2002. The increase in gross profit margin of advertising
revenues from the year ended June 30, 2001 to the year
ended June 30, 2002 was attributable to the decrease in
costs associated with our websites production. The increase in
gross profit margin of advertising revenues from the year ended
June 30, 2000 to the year ended June 30, 2001 was
attributable to the significant increase in advertising revenues.

Non-advertising.Our
gross profit margins of non-advertising revenues increased from
38% for the year ended June 30, 2000 to 65% for the year
ended June 30, 2001 and 74% for the year ended
June 30, 2002. The increase in gross profit margins of
non-advertising revenues from the year ended June 30, 2001
to the year ended June 30, 2002 was attributable to the
increase in revenues from mobile value-added services, other
fee-based services and our e-commerce. The increases in gross
profit margins of non-advertising revenues from the year ended
June 30, 2000 to the year ended June 30, 2001 were
attributable to the revenue from software licensing arrangements
which involved minimal costs.

Operating
expenses

|                                    |  |                                    |        |          |  |         |    |          |  |         |        |          |  |  |    |   |  |   |        |  |  |  |     |  
|----------------------------------- |  | ---------------------------------- | ------ | -------- |  | ------- | -- | -------- |  | ------- | ------ | -------- |  |  | -- | - |  | - | ------ |  |  |  | --- | -
|                                    |  |                                   
|                                    |  | Years ended June 30,              
|                                    |  |                                   
|                                    |  |                                    |        |          |  |        
|                                    |  | 2002                               |        | 2001     |  | 2000   
|                                    |  |                                    |        |          |  |        
|                                    |  | U.S.                               |        | % to net |  | U.S.    |    | % to net |  | U.S.    |        | % to net
|                                    |  | Dollars                            |        | revenues |  | Dollars |    | revenues |  | Dollars |        | revenues
|                                    |  |                                    |        |          |  |         |    |          |  |         |        |         
|                                    |  |                                   
|                                    |  | (in thousands, except percentages)
|Sales and marketing expenses        |  | $                                  | 12,468 |          |  |         | 44 | %        |  | $       | 21,694 |          |  |  | 81 | % |  | $ | 17,476 |  |  |  | 123 | %
|Product development expenses        |  | $                                  | 6,666  |          |  |         | 23 | %        |  | $       | 9,648  |          |  |  | 36 | % |  | $ | 7,358  |  |  |  | 52  | %
|General and administrative expenses |  | $                                  | 8,237  |          |  |         | 29 | %        |  | $       | 8,918  |          |  |  | 33 | % |  | $ | 6,951  |  |  |  | 49  | %

Sales
and marketing expenses

Our sales and marketing expenses were
$12.5 million, or 44% of total net revenues for the year
ended June 30, 2002, as compared to $21.7 million and
$17.5 million, or 81% and 123% of total net revenues, for
years ended June 30, 2001 and 2000, respectively. Sales and
marketing expenses consist primarily of compensation expenses,
sales commissions, advertising and promotion expenditures and
travel expenses. The year-to-year decrease in absolute dollar
amount from the year ended June 30, 2001 to the year ended
June 30, 2002 was primary due to the curtailment in
spending for market promotion of our web sites and cost savings
from workforce reductions. The year-to-year increase in absolute
dollar amount from the year ended June 30, 2000 to the year
ended June 30, 2001 was primarily attributable to an
increase in advertising expenses associated with our
brand-building strategy, and increase in compensation expense
associated with the growth

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in our direct sales force and marketing
personnel, and an increase in sales commissions associated with
the increased revenues.


Product
development expenses

Our product development expenses were
$6.7 million, or 23% of total net revenues for the year
ended June 30, 2002, as compared to $9.6 million and
$7.4 million, or 36% and 52% of total net revenues, for the
years ended June 30, 2001 and 2000, respectively. Product
development expenses consist primarily of personnel related
expenses incurred for enhancement to and maintenance of our web
sites as well as engineering costs related to the development of
our software products and web-based products. The year-to-year
decrease in absolute dollar amount from the year ended
June 30, 2001 to the year ended June 30, 2002 was
primarily attributable to our strategy of focusing new research
and development efforts in China, which has lower labor costs,
and reducing our engineering workforce in other locations. The
year-to-year increase in absolute dollar amount from the year
ended June 30, 2000 to the year ended June 30, 2001
was attributable to increased staffing and associated support
for engineers for developing and enhancing our online network.

General
and administrative expenses

Our general and administrative expenses were
$8.2 million, or 29% of total net revenues for the year
ended June 30, 2002, as compared to $8.9 million and
$7.0 million, or 33% and 49% of total net revenues in the
years ended June 30, 2001 and 2000, respectively. General
and administrative expenses consist primarily of compensation
for personnel, fees for professional services, and provisions
for doubtful accounts. The year-to-year decrease in absolute
dollar amount from the year ended June 30, 2001 to the year
ended June 30, 2002 was a result of our cost reduction
measures. The year-to-year increase in absolute dollar amount
from the year ended June 30, 2000 to the year ended
June 30, 2001 was mainly due to the increase in general
business activities as a result of business expansion and
building our administrative infrastructure.

Stock-based
compensation expenses

In connection with the grant of certain stock
options, we recorded net deferred stock compensation totaling
$33.4 million through June 30, 2002, which is being
amortized over the four-year vesting period of the options. Of
the total deferred stock compensation, approximately
$2.3 million, $7.5 million and $19.1 million was
amortized in the years ended June 30, 2002, 2001 and 2000,
respectively.

Amortization
of intangible assets

As a result of the acquisition of Sinanet.com in
March 1999, we recorded goodwill and other intangible assets of
approximately $20.3 million, which were amortized over the
three-year period ended June 30, 2002. The amortization
expense for the years ended June 30, 2002, 2001 and 2000
was $5.1 million, $6.8 million and $6.8 million,
respectively.

Interest
income

Interest income was $4.2 million for the
year ended June 30, 2002, as compared to $7.3 million
and $3.8 million for the years ended June 30, 2001 and
2000, respectively. During the year ended June 30, 2002,
the decrease from 2001 was primarily due to the lower average
cash and short-term investment balances and lower applicable
interest rates during the year. During the year ended 30, 2001,
the increase from 2000 was primarily due to higher cash and
short-term investment balances as a result of the proceeds from
our sale of Series C preference shares in October and
November 1999, and the initial public offering in April 2000.
See Item 7A Quantitative and Qualitative Disclosures
about Market Risk for a description of our investment
policy.

Loss
on equity investments

In September 2001, we acquired an approximately
27.6% equity interest in Sun Media and accounted for the
investment using the equity method of accounting. Our investment
in Sun Media was diluted to 21.8% as

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of June 30, 2002 as a result of Sun
Medias issuance of new shares. During the year ended
June 30, 2002, we recorded a loss of $0.6 million on
our investment in Sun Media, representing our share of Sun
Medias reported loss and amortization of intangible
assets, partially offset by a gain related to the issuance of
new shares by Sun Media to other investors at a price higher
than our investment cost.


In December 1999, we paid $1.4 million in
cash for a 35.4% interest in a joint venture with Adforce, Inc.
and Compuserve Consultants, Ltd. We accounted for our investment
in the joint venture using the equity method of accounting. We
recorded a $0.5 million loss from our investment in the
joint venture in the year ended June 30, 2000 and the
remaining investment of $0.9 million was fully written off
during the year ended June 30, 2001 upon the cessation of
operations of this joint venture company.

Liquidity and Capital Resources

We have funded our recent operations and capital
expenditures primarily using the net proceeds of
$97.5 million raised through the sale of preference shares,
$68.8 million raised from the sale of ordinary shares in
the initial public offering and $97.3 million raised from
the sale of zero coupon convertible subordinated notes in July
2003, as well as net income from our operations.

On July 7, 2003, we sold $100 million
aggregate amount of zero coupon convertible subordinated notes
(the Notes) due 2023 in a private offering, which
resulted in net proceeds to us of approximately
$97.3 million. The Notes were issued at par and will bear
no interest. The Notes will be convertible into our ordinary
shares, upon satisfaction of certain conditions, at an initial
conversion price of $25.79 per share, subject to adjustments for
certain events. Upon conversion, we have the right to deliver
cash in lieu of ordinary shares, or a combination of cash and
ordinary shares. We may redeem for cash all or part of the Notes
on or after July 15, 2012, at a price equal to 100% of the
principal amount of the Notes being redeemed. The purchasers may
require us to repurchase all or part of the Notes for cash on
July 15 annually from 2007 through 2013, and on
July 15, 2018, and upon a change of control, at a price
equal to 100% of the principal amount of the Notes. We filed a
Registration Statement on Form S-3 for the resale of the
Notes and the ordinary shares issuable upon conversion of the
notes. The SEC has declared the Registration Statement to be
effective.

One of the conditions for conversion of the Notes
to SINA ordinary shares is that the sale price (defined as
closing per share sales price) of SINA ordinary shares reaches a
specified threshold for a defined period of time. The specified
thresholds are i) during the period from issuance to
July 15, 2022, if the sale price of SINA ordinary shares,
for each of any five consecutive trading days in the immediately
preceding fiscal quarter, exceeds 115% of the conversion price
per ordinary share, and ii) during the period from July 15,
2022 to July 15, 2023, if the sale price of SINA ordinary
shares on the previous trading day is more than 115% of the
conversion price per ordinary share. For the two consecutive
fiscal quarters ended September 30 and December 31,
2003, the sale price of SINA ordinary shares exceeded 115% of
the conversion price per ordinary share for five consecutive
trading days. The Notes are therefore convertible into SINA
ordinary shares according to the threshold (i) described
above until it is not satisfied.

As of December 31, 2003, we did not receive
any request for conversion of the Notes to SINA ordinary shares.
Upon conversion in the future periods, we have the right to
deliver cash in lieu of ordinary shares, or a combination of
cash and ordinary shares.

In February 2004, we entered into a definitive
agreement to acquire all outstanding shares of Crillion. The
initial purchase price consists of $9.9 million in cash and
approximately 196,000 of our ordinary shares valued at $40.90
per share. Additional payments will be made on an earn-out basis
at approximately 1.5 to 2 times of Crillions 2004 and 2005
earnings if its pretax income for 2004 and 2005 exceeds
$6.7 million and $13.3 million, respectively. The
total consideration is subject to a cap of $125 million and
will be paid 60% in cash and 40% in our ordinary shares valued
at $40.90 per share.

We had also entered into various lease agreements
for our office premises in China, the United States of America,
Hong Kong and Taiwan. The obligations for the rental expenses
under these operating leases were

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totaling $3.6 million as of
December 31, 2003, or $1.4 million, $1.0 million,
$0.7 million, $0.5 million and $14,000 for the years
ending December 31, 2004, 2005, 2006, 2007 and 2008,
respectively.


As of December 31, 2003, we had
$227.2 million in cash and cash equivalents and short-term
investments to meet the future requirements on our operating,
investing and financing activities. We believe that our existing
cash, cash equivalents and short-term investments will be
sufficient to fund our operating activities, capital
expenditures and other obligations for at least the next twelve
months. However, we may sell additional equities or obtain
credit facilities to enhance our liquidity position and our cash
reserve for future acquisition. The sale of additional equity
would result in further dilution to our shareholders. The
incurrence of indebtedness would result in increased fixed
obligations and could result in operating covenants that would
restrict our operations. We cannot assure you that financing
will be available in amounts or on terms acceptable to us, if at
all.

The following tables set forth the movements of
our cash and cash equivalents for the periods presented.

|                                                         |  |                                 |         |                      |  |      |        |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------- |  | ------------------------------- | ------- | -------------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                         |  |                                 |         |                      |  |     
|                                                         |  | Years ended                     |         |                     
|                                                         |  | December 31                     |         | Years Ended June 30,
|                                                         |  |                                 |         |                     
|                                                         |  | 2003                            |         | 2002                 |  | 2002 |        | 2001
|                                                         |  |                                 |         |                      |  |      |        |     
|                                                         |  |                                
|                                                         |  | (In U.S. dollars, in thousands)
|Net cash provided by (used in) operating
    activities  |  | $                               | 47,246  |                      |  | $    | 4,551  |      |  | $ | (6,360  | ) |  | $ | (14,166 | )
|Net cash provided by (used in) investing
    activities  |  |                                 | (46,700 | )                    |  |      | 25,450 |      |  |   | (15,402 | ) |  |   | (34,540 | )
|Net cash provided by financing activities                |  |                                 | 104,340 |                      |  |      | 74     |      |  |   | 352     |   |  |   | 2,062   |  
|                                                         |  |                                 |         |                      |  |      |        |      |  |   |         |   |  |   |         |  
|Net increase (decrease) in cash and cash
    equivalents |  |                                 | 104,886 |                      |  |      | 30,075 |      |  |   | (21,410 | ) |  |   | (46,644 | )
|Cash and cash equivalents at beginning of period         |  |                                 | 53,262  |                      |  |      | 23,187 |      |  |   | 52,505  |   |  |   | 99,149  |  
|                                                         |  |                                 |         |                      |  |      |        |      |  |   |         |   |  |   |         |  
|Cash andcash equivalents at end of period                |  | $                               | 158,148 |                      |  | $    | 53,262 |      |  | $ | 31,095  |   |  | $ | 52,505  |  
|                                                         |  |                                 |         |                      |  |      |        |      |  |   |         |   |  |   |         |  

Operating
activities

Years
ended December 31, 2003 and 2002

Net cash provided by operating activities for the
year ended December 31, 2003 was $47.3 million. This
was primarily attributable to our net income of
$31.4 million, adjusted by non-cash related expenses
including impairment of investments in Sun Media Group of
$6.1 million, depreciation of $5.1 million,
amortization of intangible assets of $1.8 million, loss on
equity investments of $0.9 million, stock-based
compensation of $0.6 million, amortization of convertible
debt issuance cost of $0.3 million and write-off of
intangible assets of $0.9 million; an increase in accrued
liabilities of $11.8 million and an increase in income
taxes payable of $1.8 million. These increases to cash and
cash equivalents were partially offset by an increase in account
receivables of $8.8 million, an increase in prepaid
expenses and other current assets of $2.2 million, an
increase in deferred tax assets of $0.9 million, an
increase in other assets of $0.9 million and a decrease in
accounts payable of $0.8 million. The increase in accrued
liabilities was primarily due to the increase in accrual for
services fees or royalties paid to third party content providers
for services and content associated with our mobile-value added
services, accrual for payroll and related expenses, deferred
revenue, business taxes payable, sales rebates and future cash
payments for the Memestar acquisition. The increase in account
receivables was resulted from the significant increase in our
net revenues, especially our mobile value-added services during
the year ended December 31, 2003. The increase in prepaid
expenses and other current assets was mainly related to
prepayments for the rental of our office lease in Beijing.

Net cash provided by operating activities for the
year ended December 31, 2002 was $4.6 million. This
was primarily attributable to our net loss of $4.9 million,
adjusted by non-cash related expenses including depreciation of
$5.1 million, amortization of intangible assets of
$1.8 million, loss on equity investments of
$0.5 million and stock-based compensation of
$1.8 million; and an increase in accrued liabilities of
$3.1 million. The net increase to cash and cash equivalents
were partially offset by an increase in accounts receivables of
$2.2 million and an increase in prepaid expenses and other
current assets of $1.0 million.

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The year-to-year increase in net cash provided by
operating activities of $42.7 million from the year ended
December 31, 2002 to the year ended December 31, 2003
was primarily attributable to the increase in our net income and
the increase in accrued liabilities offset by the increase in
accounts receivables.

Years
ended June 30, 2002 and 2001

Net cash used in operating activities for the
year ended June 30, 2002 was $6.4 million. This was
primarily due to our loss of $16.1 million, adjusted by
non-cash related expenses including depreciation of
$5.2 million, amortization of intangible assets of
$5.1 million, loss on equity investments of
$0.6 million and stock-based compensation of
$2.3 million; a decrease in accrued liabilities of
$2.7 million, a decrease in accounts payable of
$0.5 million, an increase in accounts receivable of
$0.5 million and an increase in prepaid expenses and other
current assets of $0.4 million. The decrease in accrued
liabilities was primarily due to the decrease in accrual for
payroll and related expenses and accrual for marketing expenses
and deferred revenue.

Net cash used in operating activities for the
year ended June 30, 2001 was $14.2 million. This was
primarily attributable to our net loss of $36.4 million,
adjusted by non-cash related expenses including depreciation of
$3.6 million, amortization of intangible assets of
$6.8 million, loss on equity investments of
$0.9 million and stock-based compensation of
$7.5 million; and an increase in accounts receivable of
$0.3 million. The net decrease to cash and cash equivalents
was partially offset by the increase in accrued liabilities of
$3.5 million.

The year-to-year decrease in net cash used in
operating activities of $7.8 million from the year ended
June 30, 2001 to the year ended June 30, 2002 was
primarily attributable to the decrease in our net loss for the
year ended June 30, 2002 partially offset by the decrease in
accrued liabilities.

Investing
activities

Years
ended December 31, 2003 and 2002

Net cash used in investing activities for the
year ended December 31, 2003 was $46.7 million. This
was primarily due to the purchase of equipment of
$6.1 million, acquisition of Memestar (net of cash
acquired) of $10.5 million, investment in joint ventures of
$2.8 million and purchase of short-term investments of
$27.3 million.

Net cash provided by investing activities for the
year ended December 31, 2002 was $25.5 million. This
was primarily due to the proceeds from the sale of our
short-term investments of $29.5 million, partially offset
by the purchase of equipment of $2.6 million, acquisition
of Techur (net of cash acquired) of $1.1 million and
investment in joint ventures of $0.2 million.

The year-to-year increase in net cash used in
investing activities of $72.2 million from the year ended
December 31, 2002 to the year ended December 31, 2003
was primarily due to the increase in cash used for the purchase
of equipment, business acquisitions, investments in joint
ventures and purchase of short-term investments during the year
ended December 31, 2003.

Years
ended June 30, 2002 and 2001

Net cash used in investing activities for the
year ended June 30, 2002 was $15.4 million. This was
primarily attributable to the purchase of equipment of
$2.0 million, acquisition of the stock of Sun Media of
$8.6 million and purchase of short-term investments of
$4.8 million.

Net cash used in investing activities for the
year ended June 30, 2001was $34.5 million. This was
primarily attributable to the purchase of equipment of
$7.7 million and purchase of short-term investments of
$26.8 million.

The year-to-year decrease in net cash used in
investing activities of $19.1 million from year ended
June 30, 2001 to the year ended June 30, 2002 was
primarily attributable to the decrease in cash used for the
purchase of equipment and purchase of short-term investments,
partially offset by the net cash used in the acquisition of the
stock of Sun Media during the year ended June 30, 2002.

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Financing
activities

Years
ended December 31, 2003 and 2002

Net cash provided by financing activities for the
year ended December 31, 2003 was $104.3 million. This
was primarily attributable to the net proceeds of $97.3 from the
issuance of zero coupon convertible subordinated notes in 2003,
the proceeds from the exercise of stock options and the issuance
of ordinary shares pursuant to the Employee Stock Purchase Plan
totaling $6.0 million and the proceeds from the repayment
of shareholders notes of $1.0 million.

Net cash provided by financing activities for the
year ended December 31, 2002 was $74,000 representing the
proceeds from the exercise of stock options and the issuance of
ordinary shares pursuant to the Employee Stock Purchase Plan.

The year-to-year increase in net cash provided by
financing activities of $104.3 million from the year ended
December 31, 2002 to the year ended December 31, 2003 was
primarily attributable to the net proceeds from the issuance of
zero coupon convertible subordinated notes and the increase in
the proceeds from the exercise of stock options and the issuance
of ordinary shares pursuant to the Employee Stock Purchase Plan
during the year ended December 31, 2003.

Years
ended June 30, 2002 and 2001

Net cash provided by financing activities for the
year ended June 30, 2002 was $0.4 million. This was
primarily attributable to the repayment of shareholders
notes of $0.4 million.

Net cash provided by financing activities for the
year ended June 30, 2001 was $2.1 million. This was
primarily attributable to the proceeds from the exercise of
stock options and the issuance of ordinary shares pursuant to
the Employee Stock Purchase Plan totaling $1.5 million and
the repayments of shareholders notes of $0.6 million.

The year-to-year decrease in net cash provided by
financing activities of $1.7 million from the year ended
June 30, 2001 to the year ended June 30, 2002 was
primarily due to the decrease in the proceeds from the exercise
of stock options and the issuance of ordinary shares pursuant to
the Employee Stock Purchase Plan during the year ended
June 30, 2002.

Contractual Obligations

The following table sets forth our contractual
obligations as of December 31, 2003:

|                              |                             |                               |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |   | 
|----------------------------- | --------------------------- | ----------------------------- | ------- | --------- |  | ----------- | ----- | ---------- |  | ---------- | ----- | ----- |  | - | ------- | ------- |  | - | - | - | 
|                              |                             |                              
|                              |                             | Payments due by period       
|                              |                             |                              
|                              |                             |                               |         | Less than |  | One to      |       | Three to   |  | More than 
|                              |                             | Total                         |         | one year  |  | three years |       | five years |  | five years
|                              |                             |                               |         |           |  |             |       |            |  |           
|                              |                             |                              
|                              |                             | (in US Dollars, In thousands)
|Contractual obligations:      |                             |                               |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |  
|                              | Long-term debt obligations  |                               | $       | 100,000   |  |             | $     |           |  |            | $     |      |  |   | $       | 100,000 |  |   | $ |  | 
|                              | Operating lease obligations |                               |         | 3,594     |  |             |       | 1,405      |  |            |       | 1,726 |  |   |         | 463     |  |   | $ |  | 
|                              | Purchase obligations        |                               |         | 6,481     |  |             |       | 6,078      |  |            |       | 403   |  |   |         |        |  |   |   |  | 
|                              | Other long-term liabilities |                               |         | 2,175     |  |             |       | 1,118      |  |            |       | 1,057 |  |   |         |        |  |   |   |  | 
|                              |                             |                               |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |  
|Total contractual obligations |                             | $                             | 112,250 |           |  | $           | 8,601 |            |  | $          | 3,186 |       |  | $ | 100,463 |         |  | $ |  |  
|                              |                             |                               |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |  

Long-term debt obligations represent the zero
coupon convertible subordinated notes issued on July 7,
2003. Please see Note 15  Convertible
debts in the Financial Statements for further information.
Operating lease obligations include the commitments under the
lease agreements for our office premises. Purchase obligations
include the commitments for Internet connection fees associated
with the web site production, content fees associated with web
site production and mobile value-added services, advertising
serving and tracking services and marketing activities.

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Apart from the above, we did not have any other
material long-term debt obligations, capital lease obligations,
operating lease obligations or purchase obligations as of
December 31, 2003.

There are uncertainties regarding the legal basis
of our ability to operate an Internet business and telecom
value-added services in China. Although the country has
implemented a wide range of market-oriented economic reforms,
the telecommunication, information and media industries remain
highly regulated. Not only are restrictions currently in place,
but also regulations are unclear regarding in what specific
segments of these industries companies with foreign investors,
including us, may operate. Therefore, we might be required to
limit the scope of our operations in China, and this could have
a material adverse effect on our financial position, results of
operations and cash flows.

We are involved in certain lawsuits in the normal
course of our business operations in China, and we do not expect
that the outcome of these lawsuits will have material impact on
our financial positions or results of operations.

Off-Balance Sheet Commitments and
Arrangements

We have not entered into any financial guarantees
or other commitments to guarantee the payment obligations of any
third parties. In addition, we have not entered into any
derivative contracts that are indexed to our shares and
classified as shareholders equity, or that are not
reflected in our consolidated financial statements. Furthermore,
we do not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit,
liquidity or market risk support to such entity. Moreover, we do
not have any variable interest in any unconsolidated entity that
provides financing, liquidity, market risk or credit support to
us or engages in leasing, hedging or research and development
services with us.

Principal Accountant Fees and
Services

The following table sets forth the aggregate fees
by categories specified below in connection with certain
professional services rendered by our principal external
auditors for the periods presented.

|           |                    |                                 |     |                  |  |             |     |      |  |      |     |    |  |   |     |    |  |   |     |    | 
|---------- | ------------------ | ------------------------------- | --- | ---------------- |  | ----------- | --- | ---- |  | ---- | --- | -- |  | - | --- | -- |  | - | --- | -- | 
|           |                    |                                 |     |                  |  |            
|           |                    | Years Ended                     |     |                  |  | Years Ended
|           |                    | December 31                     |     | Six Months Ended |  | June 30,   
|           |                    |                                 |     | December 31      |  |            
|           |                    | 2003                            |     | 2002             |  | 2002        |     | 2002 |  | 2001
|           |                    |                                 |     |                  |  |             |     |      |  |     
|           |                    |                                
|           |                    | (In U.S. dollars, in thousands)
|Audit fees |                    | $                               | 275 |                  |  | $           | 300 | #    |  | $    | 200 |    |  | $ | 200 |    |  | $ | 200 |   
|           | Audit-related fees |                                 |     | 20               |  |             |     | 45   |  |      |     | 45 |  |   |     | 35 |  |   |     |   | 
|           | Other fees         |                                 |     | 32               |  |             |     | 28   |  |      |     | 13 |  |   |     | 19 |  |   |     | 23 | 
|           |                    |                                 |     |                  |  |             |     |      |  |      |     |    |  |   |     |    |  |   |     |   
|           |                    | $                               | 327 |                  |  | $           | 373 |      |  | $    | 258 |    |  | $ | 254 |    |  | $ | 223 |   
|           |                    |                                 |     |                  |  |             |     |      |  |      |     |    |  |   |     |    |  |   |     |   



---



|  |                                                                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|# | The amount of $300,000 included a $200,000 audit
    fee for the six months ended December 31, 2003 and a
    $100,000 pro-rated audit fee for the periods from January 1 to
    June 30, 2002 during the year ended June 30, 2002.

Apart from the above, we did not pay any other
fees to our principal external auditors during the periods
presented.

Recent Accounting Pronouncements

In November 2002, the EITF No. 00-21,
Revenue Arrangements with Multiple Deliverables
(EITF No. 00-21) was issued, addressing
accounting for revenue arrangements with multiple deliverables
and requiring that elements of an arrangement be separately
accounted based on the fair value of the individual elements.
EITF No. 00-21 is effective for fiscal periods beginning
after June 15, 2003. The adoption of EITF No. 00-21 did not
have a significant impact on our consolidated financial
statements.

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45) Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45

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elaborates on the existing disclosure
requirements for most guarantees, including loan guarantees. It
also clarifies that at the time a company issues a guarantee,
the company must recognize an initial liability for the fair
value, or market value, of the obligations it assumes under that
guarantee. However, the provisions related to recognizing a
liability at inception of the guarantee for the fair value of
the guarantors obligations does not apply to product
warranties or to guarantees accounted for as derivatives. The
initial recognition and initial measurement provisions apply on
a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of FIN 45
are effective for financial statements of interim or annual
periods ending after December 15, 2002. The adoption of
FIN 45 did not have a significant impact on our
consolidated financial statements.


In January 2003, the FASB issued Interpretation
No. 46 (FIN 46) Consolidation of
Variable Interest Entities. Until this interpretation, a
company generally included another entity in its consolidated
financial statements only if it controlled the entity through
voting interests. FIN 46 requires a Variable Interest Entity
(VIE), as defined, to be consolidated by a company
if that company is subject to a majority of the risk of loss
from the variable interest entitys activities or entitled
to receive a majority of the entitys residual returns.
Depends on the type and creation date of the VIEs, the effective
dates of FIN 46 and FIN 46-R for vary from the end of
the first interim or annual reporting period ending after
December 15, 2003 to the end of the first interim or annual
reporting period ending after March 15, 2004. Early
adoption is allowed. In December 2003, the FASB issued a
revision to Interpretation 46 (FIN 46R) to
clarify some of the provisions of FIN 46 Consolidation of
Variable Interest Entities, and to exempt certain entities
from its requirements. The adoption of FIN46 and FIN46R for VIEs
did not have any significant impacts on our consolidated
financial statements.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity (SFAS
150). SFAS 150 changes the accounting for certain
financial instruments that under previous guidance issuers could
account for as equity. It requires that those instruments be
classified as liabilities in balance sheets. The guidance in
SFAS 150 is generally effective for all financial instruments
entered into or modified after May 31, 2003, and otherwise
is effective on July 1, 2003. The adoption of SFAS 150
did not have a material impact on our financial position, cash
flows or results of operations.

Item 7A.     Quantitative
and Qualitative Disclosures about Market Risk

Interest Rate and Security Market
Risk

Our investment policy limits our investments of
excess cash to government or quasi-government securities and in
high-quality corporate securities and limits the amount of
credit exposure to any one issuer. We protect and preserve our
invested funds by limiting default, market and reinvestment
risk. Due to the fact that a majority of our investments are in
short-term instruments, we have concluded that there is no
material market risk exposure in this area. As of
December 31, 2003, we had unrealized losses of
$1.5 million included in accumulated other comprehensive
loss in shareholders equity.

Our convertible bonds issued in July 2003 in the
amount of $100 million bear no interest and are denominated
in U.S. dollar and therefore there is no interest or foreign
currency exchange risk associated with the outstanding
convertible bonds.

Foreign Currency Exchange Rate Risk

The majority of our revenues derived and expenses
and liabilities incurred were in Chinese renminbi, Taiwan
dollars and Hong Kong dollars. Thus, our revenues and operating
results may be impacted by exchange rate fluctuations in the
currencies of China, Taiwan and Hong Kong. See Risk
Factors  Currency fluctuations and restrictions on
currency exchange may adversely affect our business, including
limiting our ability to convert Chinese renminbi into foreign
currencies and, if renminbi were to decline in value, reducing
our revenue in U.S. dollar terms. We have not tried to
reduce our exposure to exchange rate fluctuations by using
hedging transactions. However, we may choose to do so in the
future. We may not be able to do this successfully. Accordingly,
we may experience economic losses and negative impacts on
earnings and equity as

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a result of foreign exchange rate fluctuations.
The effect of foreign exchange rate fluctuation during the year
ended December 31, 2003 was not material to us.


Investment Risk

On September 28, 2001, we acquired an
approximately 27.6% interest in the equity of Sun Media
(Sun Media) Group, a satellite TV broadcaster and a
cable TV program syndicator listed on the Hong Kong Stock
Exchange. As of December 31, 2002, our interest had been diluted
to 17.4% as a result of issuances of new shares by Sun Media. We
invested in this company for business and strategic purposes and
have classified this investment as a long-term investment, which
had been accounted for using the equity method until
September 30, 2002. We ceased to maintain significant
influence over Sun Medias operations after our equity
interest fell below 20% and our board representation was
decreased. Accordingly, commencing October 1, 2002, we
began accounting for our investment in Sun Media as an
investment in marketable equity securities under the provisions
of SFAS 115. Such investment is classified as available for sale
and reported at fair market value with unrealized gains
(losses), if any, recorded as a component of accumulated other
comprehensive income (loss) in shareholders equity.

We had recorded $0.9 million of equity loss
from this investment through September 30, 2002 so the
carrying value of this investment was $12.9 million at the
time when the accounting method changed. The fair market value
of this investment began to drop below the carrying value
starting May 2003. At December 31, 2003, the fair market
value of this investment was $6.8 million. We considered
the decline in the value of this investment to be other than
temporary and recognized $6.1 million as impairment of
investment during the three months ended December 31, 2003.
We will continue monitor the developments of Sun Media closely.
If the fair market value continues to drop, we will need to
recognize additional impairment charges in the future periods.

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Item 8:     Financial
Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                                                                                                                                               |  |      |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                                                                                                                               |  | Page
|                                                                                                                                                                                                                                               |  |     
|Consolidated Financial Statements:                                                                                                                                                                                                             |  |      |    | 
|Report of Independent Accountants                                                                                                                                                                                                              |  |      | 61 | 
|Consolidated Balance Sheet at December 31,
    2003 and 2002                                                                                                                                                                                   |  |      | 62 | 
|Consolidated Statement of Operations for each of
    the two years ended December 31, 2003 and 2002 (unaudited),
    six months ended December 31, 2002 and each of the two
    years in the period ended June 30, 2002 and 2001               |  |      | 63 | 
|Consolidated Statement of Shareholders
    Equity for each of the two years ended December 31, 2003
    and 2002 (unaudited), six months ended December 31, 2002
    and each of the two years in the period ended June 30, 2002
    and 2001 |  |      | 64 | 
|Consolidated Statement of Cash Flows for each of
    the two years ended December 31, 2003 and 2002 (unaudited),
    six months ended December 31, 2002 and each of the two
    years in the period ended June 30, 2002 and 2001               |  |      | 66 | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                                     |  |      | 67 | 
|Supplementary Financial Data:                                                                                                                                                                                                                  |  |      |    | 
|Quarterly Financial Results for the year ended
    December 31, 2003, six months ended December 31, 2002
    and each of the two years in the period ended June 30, 2002
    and 2001 (unaudited)                                              |  |      | 95 | 
|Movement of allowances for doubtful accounts
    (unaudited)                                                                                                                                                                                   |  |      | 96 | 
|Movement of valuation allowances for deferred
    assets (unaudited)                                                                                                                                                                           |  |      | 96 | 

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders 
 of SINA CORPORATION

In our opinion, the accompanying consolidated
balance sheet and the related consolidated statements of
operations, of shareholders equity and of cash flows
expressed in U.S. dollars present fairly, in all material
respects, the financial position of SINA CORPORATION and its
subsidiaries at December 31, 2003 and 2002, and the results
of their operations and their cash flows for the year ended
December 31, 2003, six months ended December 31, 2002
and each of the two years in the period ended June 30,
2002, in conformity with accounting principles generally
accepted in the United States of America. These financial
statements are the responsibility of the Companys
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.



| |                           
| | --------------------------
| | /s/ PRICEWATERHOUSECOOPERS

Beijing, China 
 February 4, 2004, except for Note 17

as to which the date is February 24, 2004


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SINA CORPORATION



CONSOLIDATED BALANCE SHEET


|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |          |       |         | 
|---------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------ | ------------ | ------ | ------- | ------ | -------- | ----- | ------- | 
|                                         |                                                                                                                                  | December 31,                                                      |                                            | December 31,
|                                         |                                                                                                                                  | 2003                                                              |                                            | 2002        
|                                         |                                                                                                                                  |                                                                   |                                            |             
|                                         |                                                                                                                                  |                                                                  
|                                         |                                                                                                                                  | (In U.S. dollars)                                                
|                                         |                                                                                                                                  | (In thousands)                                                   
|ASSETS                                  
|Current assets:                          |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         | Cash and cash equivalents                                                                                                        |                                                                   | $                                          | 158,148      |        |         | $      | 53,262   |      
|                                         | Short-term investments                                                                                                           |                                                                   |                                            | 69,016       |        |         |        | 43,474   |      
|                                         | Accounts receivable, net                                                                                                         |                                                                   |                                            | 17,606       |        |         |        | 5,847    |      
|                                         | Deferred tax assets                                                                                                              |                                                                   |                                            | 907          |        |         |        |         |      
|                                         | Prepaid expenses and other current assets                                                                                        |                                                                   |                                            | 4,579        |        |         |        | 2,323    |      
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         |                                                                                                                                  |                                                                   | Total current assets                       |              |        | 250,256 |        |          |       | 104,906 | 
|Investment in Sun Media Group            |                                                                                                                                  |                                                                   | 6,793                                      |              |        |         | 16,637 |         
|Property and equipment, net              |                                                                                                                                  |                                                                   | 8,646                                      |              |        |         | 7,599  |         
|Long-term investments                    |                                                                                                                                  |                                                                   | 2,085                                      |              |        |         |       |         
|Intangible assets, net                   |                                                                                                                                  |                                                                   | 569                                        |              |        |         | 993    |         
|Goodwill                                 |                                                                                                                                  |                                                                   | 18,091                                     |              |        |         |       |         
|Other assets                             |                                                                                                                                  |                                                                   | 3,457                                      |              |        |         | 344    |         
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         |                                                                                                                                  |                                                                   | Total assets                               |              | $      | 289,897 |        |          | $     | 130,479 | 
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                        
|LIABILITIES AND SHAREHOLDERS
    EQUITY
|Current liabilities:                     |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         | Accounts payable                                                                                                                 |                                                                   | $                                          | 1,147        |        |         | $      | 1,345    |      
|                                         | Accrued liabilities                                                                                                              |                                                                   |                                            | 27,442       |        |         |        | 11,747   |      
|                                         | Income taxes payable                                                                                                             |                                                                   |                                            | 1,801        |        |         |        |         |      
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         |                                                                                                                                  |                                                                   | Total current liabilities                  |              |        | 30,390  |        |          |       | 13,092  | 
|Convertible debt                         |                                                                                                                                  |                                                                   | 100,000                                    |              |        |         |       |         
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         |                                                                                                                                  |                                                                   | Total liabilities                          |              |        | 130,390 |        |          |       | 13,092  | 
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|Commitments and contingencies (Note 16)  |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|Shareholders equity:                    |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         | Ordinary Shares: $0.133 par value; 75,000,000
    shares authorized; 48,627,000 and 45,946,000 shares issued and
    outstanding |                                                                   |                                            | 6,471        |        |         |        | 6,114    |      
|                                         | Additional paid-in capital                                                                                                       |                                                                   |                                            | 236,222      |        |         |        | 223,358  |      
|                                         | Ordinary shares subject to subsequent issuance:
    177,000 shares                                                               |                                                                   |                                            | 1,349        |        |         |        |         |      
|                                         | Notes receivable from shareholders                                                                                               |                                                                   |                                            |             |        |         |        | (1,050   | )    
|                                         | Deferred stock compensation                                                                                                      |                                                                   |                                            |             |        |         |        | (554     | )    
|                                         | Accumulated deficit                                                                                                              |                                                                   |                                            | (83,054      | )      |         |        | (114,477 | )    
|                                         | Accumulated other comprehensive income (loss):                                                                                   |                                                                   |                                            |              |        |         |        |          |      
|                                         |                                                                                                                                  | Unrealized gain (loss) on investment in
    marketable securities |                                            |              | (1,510 | )       |        |          | 4,004 |        
|                                         |                                                                                                                                  | Cumulative translation adjustments                                |                                            |              | 29     |         |        |          | (8    | )      
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         |                                                                                                                                  |                                                                   | Total shareholders equity                 |              |        | 159,507 |        |          |       | 117,387 | 
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         
|                                         |                                                                                                                                  |                                                                   | Total liabilities and shareholders equity |              | $      | 289,897 |        |          | $     | 130,479 | 
|                                         |                                                                                                                                  |                                                                   |                                            |              |        |         |        |         

The accompanying notes are an integral part of
these consolidated financial statements.

62



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##### Table of Contents



SINA CORPORATION



CONSOLIDATED STATEMENT OF OPERATIONS


|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |        |        | 
|------------------------------------------------------------------------------------------ | --------------------------------- | ---------------------------------------- | ------- | ---------------- | ------ | ----------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                                                                           |                                   |                                          |         |                  |        |             |        |       
|                                                                                           |                                   |                                          |         |                  |        | Years Ended
|                                                                                           |                                   | Years Ended December 31,                 |         | Six Months Ended |        | June 30,   
|                                                                                           |                                   |                                          |         | December 31,     |        |            
|                                                                                           |                                   | 2003                                     |         | 2002             |        | 2002        |        | 2002   |        | 2001
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |     
|                                                                                           |                                   |                                          |         | (Unaudited)      |        |             |        |        |        |     
|                                                                                           |                                   |                                         
|                                                                                           |                                   | (In U.S. dollars)                       
|                                                                                           |                                   | (In thousands, except per share amounts)
|Net revenues:                                                                              |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           | Advertising                       |                                          | $       | 41,173           |        |             | $      | 24,703 |        |      | $      | 13,869 |        |   | $       | 21,105 |        |   | $       | 23,393 |       
|                                                                                           | Non-advertising                   |                                          |         | 73,112           |        |             |        | 14,191 |        |      |        | 9,347  |        |   |         | 7,403  |        |   |         | 3,290  |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           |                                   |                                          | 114,285 |                  |        |             | 38,894 |        |        |      | 23,216 |        |        |   | 28,508  |        |        |   | 26,683  |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Cost of revenues:                                                                          |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           | Advertising                       |                                          |         | 14,001           |        |             |        | 11,267 |        |      |        | 5,824  |        |   |         | 11,537 |        |   |         | 13,771 |       
|                                                                                           | Non-advertising                   |                                          |         | 20,405           |        |             |        | 4,140  |        |      |        | 2,676  |        |   |         | 1,938  |        |   |         | 1,169  |       
|                                                                                           | Stock-based compensation          |                                          |         | 31               |        |             |        | 102    |        |      |        | 42     |        |   |         | 133    |        |   |         | 414    |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           |                                   |                                          | 34,437  |                  |        |             | 15,509 |        |        |      | 8,542  |        |        |   | 13,608  |        |        |   | 15,354  |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Gross profit                                                                               |                                   |                                          | 79,848  |                  |        |             | 23,385 |        |        |      | 14,674 |        |        |   | 14,900  |        |        |   | 11,329  |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Operating expenses:                                                                        |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           | Sales and marketing               |                                          |         | 21,741           |        |             |        | 12,419 |        |      |        | 6,457  |        |   |         | 12,468 |        |   |         | 21,694 |       
|                                                                                           | Product development               |                                          |         | 6,340            |        |             |        | 5,916  |        |      |        | 2,755  |        |   |         | 6,666  |        |   |         | 9,648  |       
|                                                                                           | General and administrative        |                                          |         | 11,551           |        |             |        | 8,896  |        |      |        | 4,480  |        |   |         | 8,237  |        |   |         | 8,918  |       
|                                                                                           | Stock-based compensation*         |                                          |         | 523              |        |             |        | 1,692  |        |      |        | 699    |        |   |         | 2,208  |        |   |         | 7,097  |       
|                                                                                           | Amortization of intangible assets |                                          |         | 1,749            |        |             |        | 1,777  |        |      |        | 90     |        |   |         | 5,063  |        |   |         | 6,765  |       
|                                                                                           | Write-off of intangible assets    |                                          |         | 903              |        |             |        |       |        |      |        |       |        |   |         |       |        |   |         |       |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           |                                   | Total operating expenses                 |         |                  | 42,807 |             |        |        | 30,700 |      |        |        | 14,481 |   |         |        | 34,642 |   |         |        | 54,122 | 
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Income (loss) from operations                                                              |                                   |                                          | 37,041  |                  |        |             | (7,315 | )      |        |      | 193    |        |        |   | (19,742 | )      |        |   | (42,793 | )     
|Interest income                                                                            |                                   |                                          | 2,757   |                  |        |             | 2,819  |        |        |      | 1,034  |        |        |   | 4,212   |        |        |   | 7,336   |       
|Other expenses                                                                             |                                   |                                          | (162    | )                |        |             |       |        |        |      |       |        |        |   |        |        |        |   |        |       
|Amortization of convertible debt issuance cost                                             |                                   |                                          | (341    | )                |        |             |       |        |        |      |       |        |        |   |        |        |        |   |        |       
|Impairment of investments in Sun Media Group                                               |                                   |                                          | (6,063  | )                |        |             |       |        |        |      |       |        |        |   |        |        |        |   |        |       
|Loss on equity investments                                                                 |                                   |                                          | (914    | )                |        |             | (453   | )      |        |      | (311   | )      |        |   | (562    | )      |        |   | (894    | )     
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Income (loss) before income taxes                                                          |                                   |                                          | 32,318  |                  |        |             | (4,949 | )      |        |      | 916    |        |        |   | (16,092 | )      |        |   | (36,351 | )     
|Provision for income taxes                                                                 |                                   |                                          | (895    | )                |        |             |       |        |        |      |       |        |        |   |        |        |        |   |        |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Net income (loss)                                                                          |                                   | $                                        | 31,423  |                  |        | $           | (4,949 | )      |        | $    | 916    |        |        | $ | (16,092 | )      |        | $ | (36,351 | )     
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Basic net income (loss) per share                                                          |                                   | $                                        | 0.66    |                  |        | $           | (0.11  | )      |        | $    | 0.02   |        |        | $ | (0.36   | )      |        | $ | (0.91   | )     
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|Diluted net income (loss) per share                                                        |                                   | $                                        | 0.58    |                  |        | $           | (0.11  | )      |        | $    | 0.02   |        |        | $ | (0.36   | )      |        | $ | (0.91   | )     
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|*Stock-based compensation was related to the
    associated expense categories as follows: |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           |                                   | Sales and marketing                      |         | $                | 16     |             |        | $      | 51     |      |        | $      | 21     |   |         | $      | 66     |   |         | $      | 219    | 
|                                                                                           |                                   | Product development                      |         |                  | 168    |             |        |        | 541    |      |        |        | 223    |   |         |        | 707    |   |         |        | 2,295  | 
|                                                                                           |                                   | General and administrative               |         |                  | 339    |             |        |        | 1,100  |      |        |        | 455    |   |         |        | 1,435  |   |         |        | 4,583  | 
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       
|                                                                                           |                                   | $                                        | 523     |                  |        | $           | 1,692  |        |        | $    | 699    |        |        | $ | 2,208   |        |        | $ | 7,097   |       
|                                                                                           |                                   |                                          |         |                  |        |             |        |        |        |      |        |        |        |   |         |        |        |   |         |       

The accompanying notes are an integral part of
these consolidated financial statements.

63



---



##### Table of Contents



SINA CORPORATION



CONSOLIDATED STATEMENT OF SHAREHOLDERS
EQUITY


|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |         |         |  
|--------------------------------------------------------------------------- | ----------------------------------------------------------- | ----------------------------------------------------- | ------ | ---------- |  | ---------- | ----- | ---------- |  | -------------- | ------- | ------------ |  | ------- | ----- | ------------- |  | ------------- | ------ | ------ |  | - | ------- | - |  | - | -------- | ------- | - | - | ------ | ------ | - | - | ------- | ------- | - |  | - | ------- | ------- | -
|                                                                            |                                                             |                                                       |        |            |  |            |       | Ordinary   |  |                |         |              |  |         |       |               |  |               |        |       
|                                                                            |                                                             |                                                       |        |            |  | Shares     |       | Notes      |  |                |         |              |  |         |       |               |  | Other        
|                                                                            |                                                             | Ordinary Shares                                       |        | Additional |  | Subject to |       | Receivable |  |                |         |              |  |         |       | Total         |  | Comprehensive
|                                                                            |                                                             |                                                       |        | Paid-in    |  | Subsequent |       | from       |  | Deferred Stock |         | Accumulated  |  |         |       | Shareholders |  | Income       
|                                                                            |                                                             | Shares                                                |        | Amount     |  | Capital    |       | Issuance   |  | Shareholders   |         | Compensation |  | Deficit |       | Others        |  | Equity        |        | (Loss)
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |       
|                                                                            |                                                             |                                                      
|                                                                            |                                                             | (in U.S. dollars, in thousands, except share amounts)
|Balances at June 30, 2000.                                                  |                                                             |                                                       | 40,764 |            |  | $          | 5,425 |            |  | $              | 221,399 |              |  | $       |      |               |  | $             | (2,067 | )      |  | $ | (15,057 | ) |  | $ | (62,950  | )       |   | $ | 67     |        |   | $ | 146,817 |         |   |  |   |        
|Issuance of Ordinary Shares pursuant to stock
    plans, net of repurchases |                                                             |                                                       | 594    |            |  |            | 79    |            |  |                | 1,459   |              |  |         |      |               |  |               |       |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 1,538   |         |   |  |   |        
|Repayments of notes receivable from shareholders                            |                                                             |                                                       |       |            |  |            |      |            |  |                |        |              |  |         |      |               |  |               | 588    |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 588     |         |   |  |   |        
|Costs of initial public offering                                            |                                                             |                                                       |       |            |  |            |      |            |  |                | (64     | )            |  |         |      |               |  |               |       |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | (64     | )       |   |  |   |        
|Deferred stock compensation                                                 |                                                             |                                                       |       |            |  |            |      |            |  |                | (2,123  | )            |  |         |      |               |  |               |       |        |  |   | 2,123   |   |  |   |         |         |   |   |       |        |   |   |        |         |   |  |   |        
|Amortization of deferred stock-based compensation                           |                                                             |                                                       |       |            |  |            |      |            |  |                |        |              |  |         |      |               |  |               |       |        |  |   | 7,511   |   |  |   |         |         |   |   |       |        |   |   | 7,511   |         |   |  |   |        
|Comprehensive loss:                                                         |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            | Net loss                                                    |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          | (36,351 | ) |   |        |       |   |   |         | (36,351 | ) |  | $ | (36,351 | )      
|                                                                            | Currency translation adjustments                            |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          |        |   |   |        | (72    | ) |   |         | (72     | ) |  |   | (72     | )      
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            |                                                             | Comprehensive loss                                    |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   | $       | (36,423 | )
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|Balances at June 30, 2001.                                                  |                                                             |                                                       | 41,358 |            |  |            | 5,504 |            |  |                | 220,671 |              |  |         |      |               |  |               | (1,479 | )      |  |   | (5,423  | ) |  |   | (99,301  | )       |   |   | (5     | )      |   |   | 119,967 |         |   |  |   |        
|Issuance of Ordinary Shares pursuant to stock
    plans, net of repurchases |                                                             |                                                       | (61    | )          |  |            | (8    | )          |  |                | (69     | )            |  |         |      |               |  |               |       |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | (77     | )       |   |  |   |        
|Repayments of notes receivable from shareholders                            |                                                             |                                                       |       |            |  |            |      |            |  |                |        |              |  |         |      |               |  |               | 429    |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 429     |         |   |  |   |        
|Deferred stock compensation                                                 |                                                             |                                                       |       |            |  |            |      |            |  |                | (1,783  | )            |  |         |      |               |  |               |       |        |  |   | 1,783   |   |  |   |         |         |   |   |       |        |   |   |        |         |   |  |   |        
|Amortization of deferred stock-based compensation                           |                                                             |                                                       |       |            |  |            |      |            |  |                |        |              |  |         |      |               |  |               |       |        |  |   | 2,341   |   |  |   |         |         |   |   |       |        |   |   | 2,341   |         |   |  |   |        
|Acquisition of long- term investment                                        |                                                             |                                                       | 4,593  |            |  |            | 611   |            |  |                | 4,487   |              |  |         |      |               |  |               |       |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 5,098   |         |   |  |   |        
|Comprehensive loss:                                                         |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            | Net loss                                                    |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          | (16,092 | ) |   |        |       |   |   |         | (16,092 | ) |  | $ | (16,092 | )      
|                                                                            | Currency translation adjustments                            |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          |        |   |   |        | 24     |   |   |         | 24      |   |  |   | 24      |        
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            |                                                             | Comprehensive loss                                    |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   | $       | (16,068 | )
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|Balances at June 30, 2002.                                                  |                                                             |                                                       | 45,890 |            |  |            | 6,107 |            |  |                | 223,306 |              |  |         |      |               |  |               | (1,050 | )      |  |   | (1,299  | ) |  |   | (115,393 | )       |   |   | 19     |        |   |   | 111,690 |         |   |  |   |        
|Issuance of Ordinary Shares pursuant to stock
    plans, net of repurchases |                                                             |                                                       | 56     |            |  |            | 7     |            |  |                | 56      |              |  |         |      |               |  |               |       |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 63      |         |   |  |   |        
|Deferred stock compensation                                                 |                                                             |                                                       |       |            |  |            |      |            |  |                | (4      | )            |  |         |      |               |  |               |       |        |  |   | 4       |   |  |   |         |         |   |   |       |        |   |   |        |         |   |  |   |        
|Amortization of deferred stock-based compensation                           |                                                             |                                                       |       |            |  |            |      |            |  |                |        |              |  |         |      |               |  |               |       |        |  |   | 741     |   |  |   |         |         |   |   |       |        |   |   | 741     |         |   |  |   |        
|Comprehensive income:                                                       |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            | Net income                                                  |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          | 916     |   |   |        |       |   |   |         | 916     |   |  | $ | 916     |        
|                                                                            | Unrealized gain on investments in marketable
    securities |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          |        |   |   |        | 4,004  |   |   |         | 4,004   |   |  |   | 4,004   |        
|                                                                            | Currency translation adjustments                            |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          |        |   |   |        | (27    | ) |   |         | (27     | ) |  |   | (27     | )      
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            |                                                             | Comprehensive income                                  |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   | $       | 4,893   |  
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|Balances at December 31, 2002.                                              |                                                             |                                                       | 45,946 |            |  |            | 6,114 |            |  |                | 223,358 |              |  |         |      |               |  |               | (1,050 | )      |  |   | (554    | ) |  |   | (114,477 | )       |   |   | 3,996  |        |   |   | 117,387 |         |   |  |   |        
|Issuance of Ordinary Shares pursuant to stock
    plans, net of repurchases |                                                             |                                                       | 1,737  |            |  |            | 231   |            |  |                | 5,777   |              |  |         |      |               |  |               |       |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 6,008   |         |   |  |   |        
|Repayment of notes receivable from shareholders                             |                                                             |                                                       |       |            |  |            |      |            |  |                |        |              |  |         |      |               |  |               | 1,050  |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 1,050   |         |   |  |   |        
|Amortization of deferred stock-based compensation                           |                                                             |                                                       |       |            |  |            |      |            |  |                |        |              |  |         |      |               |  |               |       |        |  |   | 554     |   |  |   |         |         |   |   |       |        |   |   | 554     |         |   |  |   |        
|Business acquisition                                                        |                                                             |                                                       | 944    |            |  |            | 126   |            |  |                | 7,087   |              |  |         | 1,349 |               |  |               |       |        |  |   |        |   |  |   |         |         |   |   |       |        |   |   | 8,562   |         |   |  |   |        
|Comprehensive income:                                                       |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            | Net income                                                  |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          | 31,423  |   |   |        |       |   |   |         | 31,423  |   |  | $ | 31,423  |        
|                                                                            | Unrealized loss on investments in marketable
    securities |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          |        |   |   |        | (5,514 | ) |   |         | (5,514  | ) |  |   | (5,514  | )      
|                                                                            | Currency translation adjustments                            |                                                       |        |           |  |            |       |           |  |                |         |             |  |         |       |              |  |               |        |       |  |   |         |  |  |   |          |        |   |   |        | 37     |   |   |         | 37      |   |  |   | 37      |        
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|                                                                            |                                                             | Comprehensive income                                  |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   | $       | 25,946  |  
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        
|Balances at December 31, 2003.                                              |                                                             |                                                       | 48,627 |            |  | $          | 6,471 |            |  | $              | 236,222 |              |  | $       | 1,349 |               |  | $             |       |        |  | $ |        |   |  | $ | (83,054  | )       |   | $ | (1,481 | )      |   | $ | 159,507 |         |   |  |   |        
|                                                                            |                                                             |                                                       |        |            |  |            |       |            |  |                |         |              |  |         |       |               |  |               |        |        |  |   |         |   |  |   |          |         |   |   |        |        |   |   |         |         |   |  |   |        

The accompanying notes are an integral part of
these consolidated financial statements.

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##### Table of Contents



UNAUDITED STATEMENT OF CHANGE IN
SHAREHOLDERS EQUITY

|                                                                            |                                                             |                    |        |            |  |            |       |            |  |                |         |              |  |         |   |               |  |               |        |        |  |   |        |   |  |   |          |        |   |   |       |       |  |   |         |        |   |  |   |        |      |  
|--------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------ | ------ | ---------- |  | ---------- | ----- | ---------- |  | -------------- | ------- | ------------ |  | ------- | - | ------------- |  | ------------- | ------ | ------ |  | - | ------ | - |  | - | -------- | ------ | - | - | ----- | ----- |  | - | ------- | ------ | - |  | - | ------ | ---- | -
|                                                                            |                                                             |                    |        |            |  |            |       | Ordinary   |  |                |         |              |  |         |   |               |  |               |        |       
|                                                                            |                                                             |                    |        |            |  | Shares     |       | Notes      |  |                |         |              |  |         |   |               |  | Other        
|                                                                            |                                                             | Ordinary Shares    |        | Additional |  | Subject to |       | Receivable |  |                |         |              |  |         |   | Total         |  | Comprehensive
|                                                                            |                                                             |                    |        | Paid-in    |  | Subsequent |       | from       |  | Deferred Stock |         | Accumulated  |  |         |   | Shareholders |  | Income       
|                                                                            |                                                             | Shares             |        | Amount     |  | Capital    |       | Issuance   |  | Shareholders   |         | Compensation |  | Deficit |   | Others        |  | Equity        |        | (Loss)
|                                                                            |                                                             |                    |        |            |  |            |       |            |  |                |         |              |  |         |   |               |  |               |        |       
|Balances at December 31, 2001                                               |                                                             |                    | 45,877 |            |  | $          | 6,105 |            |  | $              | 223,311 |              |  | $       |  |               |  | $             | (1,050 | )      |  | $ | (2,366 | ) |  | $ | (109,528 | )      |   | $ | (25   | )     |  | $ | 116,447 |        |   |  |   |       
|Issuance of Ordinary Shares pursuant to stock
    plans, net of repurchases |                                                             |                    | 69     |            |  |            | 9     |            |  |                | 65      |              |  |         |  |               |  |               |       |        |  |   |       |   |  |   |         |        |   |   |      |       |  |   | 74      |        |   |  |   |       
|Deferred stock compensation                                                 |                                                             |                    |       |            |  |            |      |            |  |                | (18     | )            |  |         |  |               |  |               |        |        |  |   | 18     |   |  |   |         |        |   |   |      |       |  |   |        |        |   |  |   |       
|Amortization of deferred stock-based compensation                           |                                                             |                    |       |            |  |            |      |            |  |                |        |              |  |         |  |               |  |               |       |        |  |   | 1,794  |   |  |   |         |        |   |   |      |       |  |   | 1,794   |        |   |  |   |       
|Comprehensive loss:                                                         |                                                             |                    |        |            |  |            |       |            |  |                |         |              |  |         |   |               |  |               |        |        |  |   |        |   |  |   |          |        |   |   |       |       |  |   |         |        |   |  |   |       
|                                                                            | Net loss                                                    |                    |        |           |  |            |       |           |  |                |         |             |  |         |   |              |  |               |        |       |  |   |        |  |  |   |          | (4,949 | ) |   |       |      |  |   |         | (4,949 | ) |  | $ | (4,949 | )   
|                                                                            | Unrealized gain on investments in marketable
    securities |                    |        |           |  |            |       |           |  |                |         |             |  |         |   |              |  |               |        |       |  |   |        |  |  |   |          |       |   |   |       | 4,004 |  |   |         | 4,004  |   |  |   | 4,004  |     
|                                                                            | Currency translation adjustments                            |                    |        |           |  |            |       |           |  |                |         |             |  |         |   |              |  |               |        |       |  |   |        |  |  |   |          |       |   |   |       | 17    |  |   |         | 17     |   |  |   | 17     |     
|                                                                            |                                                             |                    |        |            |  |            |       |            |  |                |         |              |  |         |   |               |  |               |        |        |  |   |        |   |  |   |          |        |   |   |       |       |  |   |         |        |   |  |   |       
|                                                                            |                                                             | Comprehensive loss |        |            |  |            |       |            |  |                |         |              |  |         |   |               |  |               |        |        |  |   |        |   |  |   |          |        |   |   |       |       |  |   |         |        |   |  |   | $      | (928 | )
|                                                                            |                                                             |                    |        |            |  |            |       |            |  |                |         |              |  |         |   |               |  |               |        |        |  |   |        |   |  |   |          |        |   |   |       |       |  |   |         |        |   |  |   |       
|Balances at December 31, 2002.                                              |                                                             |                    | 45,946 |            |  | $          | 6,114 |            |  | $              | 223,358 |              |  | $       |  |               |  | $             | (1,050 | )      |  | $ | (554   | ) |  | $ | (114,477 | )      |   | $ | 3,996 |       |  | $ | 117,387 |        |   |  |   |       
|                                                                            |                                                             |                    |        |            |  |            |       |            |  |                |         |              |  |         |   |               |  |               |        |        |  |   |        |   |  |   |          |        |   |   |       |       |  |   |         |        |   |  |   |       

The accompanying notes are an integral part of
these consolidated financial statements.

65



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##### Table of Contents



SINA CORPORATION



CONSOLIDATED STATEMENT OF CASH FLOWS


|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |         |       |       |         |  
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ----------------------------------------- | ------------------------------------------------------- | ----- | ------------------- | ------- | ------ | ----- | ------ | ------ | ------ | ----- | ------ | ------- | ------- | ----- | ------ | ------- | ------- | ----- | ----- | ------- | -
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |       
|                                                             |                                                                                                            | Years Ended                                                           |                                           |                                                         |       |                    
|                                                             |                                                                                                            | December 31,                                                          |                                           | Six Months Ended                                        |       | Year Ended June 30,
|                                                             |                                                                                                            |                                                                       |                                           | December 31,                                            |       |                    
|                                                             |                                                                                                            | 2003                                                                  |                                           | 2002                                                    |       | 2002                |         | 2002   |       | 2001  
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |       
|                                                             |                                                                                                            |                                                                       |                                           | (unaudited)                                             |       |                     |         |        |       |       
|                                                             |                                                                                                            |                                                                      
|                                                             |                                                                                                            | (In U.S. dollars, in thousands)                                      
|Cash flows from operating activities:                        |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Net income (loss)                                                                                          |                                                                       | $                                         | 31,423                                                  |       |                     | $       | (4,949 | )     |        | $      | 916    |       |        | $       | (16,092 | )     |        | $       | (36,351 | )    
|                                                             | Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating
    activities: |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |         |      
|                                                             |                                                                                                            | Loss on equity investments                                            |                                           |                                                         | 914   |                     |         |        | 453   |        |        |        | 311   |        |         |         | 562   |        |         |         | 894   |      
|                                                             |                                                                                                            | Loss on disposal of fixed assets                                      |                                           |                                                         | 160   |                     |         |        | 368   |        |        |        | 101   |        |         |         | 267   |        |         |         |      |      
|                                                             |                                                                                                            | Impairment of investments in Sun Media Group                          |                                           |                                                         | 6,063 |                     |         |        |      |        |        |        |      |        |         |         |      |        |         |         |      |      
|                                                             |                                                                                                            | Depreciation                                                          |                                           |                                                         | 5,113 |                     |         |        | 5,097 |        |        |        | 2,513 |        |         |         | 5,186 |        |         |         | 3,566 |      
|                                                             |                                                                                                            | Stock-based compensation                                              |                                           |                                                         | 554   |                     |         |        | 1,794 |        |        |        | 741   |        |         |         | 2,341 |        |         |         | 7,511 |      
|                                                             |                                                                                                            | Amortization of convertible debt issuance cost                        |                                           |                                                         | 341   |                     |         |        |      |        |        |        |      |        |         |         |      |        |         |         |      |      
|                                                             |                                                                                                            | Amortization of intangible assets                                     |                                           |                                                         | 1,749 |                     |         |        | 1,777 |        |        |        | 90    |        |         |         | 5,063 |        |         |         | 6,765 |      
|                                                             |                                                                                                            | Write-off of intangible assets                                        |                                           |                                                         | 903   |                     |         |        |      |        |        |        |      |        |         |         |      |        |         |         |      |      
|                                                             |                                                                                                            | Changes in assets and liabilities (net of effect
    of acquisition): |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |         |       |      
|                                                             |                                                                                                            |                                                                       | Accounts receivable, net                  |                                                         |       | (8,813              | )       |        |       | (2,205 | )      |        |       | (1,075 | )       |         |       | (460   | )       |         |       | (341  | )      
|                                                             |                                                                                                            |                                                                       | Prepaid expenses and other current assets |                                                         |       | (2,166              | )       |        |       | (957   | )      |        |       | (550   | )       |         |       | (356   | )       |         |       | 184   |        
|                                                             |                                                                                                            |                                                                       | Receivable from related parties           |                                                         |       |                    |         |        |       |       |        |        |       |       |         |         |       | 556    |         |         |       | (288  | )      
|                                                             |                                                                                                            |                                                                       | Deferred tax assets                       |                                                         |       | (907                | )       |        |       |       |        |        |       |       |         |         |       |       |         |         |       |      |        
|                                                             |                                                                                                            |                                                                       | Other assets                              |                                                         |       | (918                | )       |        |       | (6     | )      |        |       | 206    |         |         |       | (178   | )       |         |       | 32    |        
|                                                             |                                                                                                            |                                                                       | Accounts payable                          |                                                         |       | (792                | )       |        |       | 98     |        |        |       | 212    |         |         |       | (514   | )       |         |       | 410   |        
|                                                             |                                                                                                            |                                                                       | Income taxes payable                      |                                                         |       | 1,801               |         |        |       |       |        |        |       |       |         |         |       |       |         |         |       |      |        
|                                                             |                                                                                                            |                                                                       | Accrued liabilities                       |                                                         |       | 11,821              |         |        |       | 3,081  |        |        |       | 2,836  |         |         |       | (2,735 | )       |         |       | 3,452 |        
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             |                                                                                                            |                                                                       |                                           | Net cash provided by (used in) operating
    activities |       |                     | 47,246  |        |       |        | 4,551  |        |       |        | 6,301   |         |       |        | (6,360  | )       |       |       | (14,166 | )
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|Cash flows from investing activities:                        |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Acquisition of property and equipment                                                                      |                                                                       |                                           | (6,058                                                  | )     |                     |         | (2,629 | )     |        |        | (1,701 | )     |        |         | (2,035  | )     |        |         | (7,740  | )    
|                                                             | Cash paid for business acquisition, net of cash
    acquired                                               |                                                                       |                                           | (10,548                                                 | )     |                     |         | (1,121 | )     |        |        | (1,121 | )     |        |         |        |       |        |         |        |      
|                                                             | Investment in joint ventures                                                                               |                                                                       |                                           | (2,818                                                  | )     |                     |         | (181   | )     |        |        | (181   | )     |        |         |        |       |        |         |        |      
|                                                             | Acquisition of long-term investment                                                                        |                                                                       |                                           |                                                        |       |                     |         | (154   | )     |        |        |       |       |        |         | (8,595  | )     |        |         |        |      
|                                                             | Sale (purchase) of short-term investments                                                                  |                                                                       |                                           | (27,276                                                 | )     |                     |         | 29,535 |       |        |        | 18,806 |       |        |         | (4,772  | )     |        |         | (26,800 | )    
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             |                                                                                                            |                                                                       |                                           | Net cash provided by (used in) investing
    activities |       |                     | (46,700 | )      |       |        | 25,450 |        |       |        | 15,803  |         |       |        | (15,402 | )       |       |       | (34,540 | )
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|Cash flows from financing activities:                        |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Proceeds from issuance of Convertible debt, net                                                            |                                                                       |                                           | 97,282                                                  |       |                     |         |       |       |        |        |       |       |        |         |        |       |        |         |        |      
|                                                             | Proceeds from issuance of Ordinary Shares, net                                                             |                                                                       |                                           | 6,008                                                   |       |                     |         | 74     |       |        |        | 63     |       |        |         | 30      |       |        |         | 1,474   |      
|                                                             | Repurchase of ordinary shares                                                                              |                                                                       |                                           |                                                        |       |                     |         |       |       |        |        |       |       |        |         | (107    | )     |        |         |        |      
|                                                             | Repayments of notes receivable from shareholders                                                           |                                                                       |                                           | 1,050                                                   |       |                     |         |       |       |        |        |       |       |        |         | 429     |       |        |         | 588     |      
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             |                                                                                                            |                                                                       |                                           | Net cash provided by financing activities               |       |                     | 104,340 |        |       |        | 74     |        |       |        | 63      |         |       |        | 352     |         |       |       | 2,062   |  
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|Net increase (decrease) in cash and cash
    equivalents     |                                                                                                            |                                                                       | 104,886                                   |                                                         |       |                     | 30,075  |        |       |        | 22,167 |        |       |        | (21,410 | )       |       |        | (46,644 | )      
|Cash and cash equivalents at beginning of year               |                                                                                                            |                                                                       | 53,262                                    |                                                         |       |                     | 23,187  |        |       |        | 31,095 |        |       |        | 52,505  |         |       |        | 99,149  |        
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|Cash and cash equivalents at end of year                     |                                                                                                            | $                                                                     | 158,148                                   |                                                         |       | $                   | 53,262  |        |       | $      | 53,262 |        |       | $      | 31,095  |         |       | $      | 52,505  |        
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|Supplemental disclosure of investing activities:             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Cash paid for business acquisition                                                                         |                                                                       | $                                         | (12,904                                                 | )     |                     | $       | (1,874 | )     |        | $      | (1,874 | )     |        |         |        |       |        |         |        |      
|                                                             | Cash acquired                                                                                              |                                                                       |                                           | 2,356                                                   |       |                     |         | 753    |       |        |        | 753    |       |        |         |        |       |        |         |        |      
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Cash paid for business acquisition, net                                                                    |                                                                       | $                                         | (10,548                                                 | )     |                     | $       | (1,121 | )     |        | $      | (1,121 | )     |        | $       |        |       |        | $       |        |      
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|Supplemental disclosure of noncash financing
    activities: |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Ordinary shares issued for business acquisition                                                            |                                                                       | $                                         | 7,213                                                   |       |                     | $       |       |       |        | $      |       |       |        | $       |        |       |        | $       |        |      
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Ordinary shares subject to subsequent issuance
    for business acquisition                                |                                                                       | $                                         | 1,349                                                   |       |                     | $       |       |       |        | $      |       |       |        | $       |        |       |        | $       |        |      
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        
|                                                             | Ordinary shares issued for acquisition of long
    term investment                                         |                                                                       | $                                         |                                                        |       |                     | $       |       |       |        | $      |       |       |        | $       | 5,098   |       |        | $       |        |      
|                                                             |                                                                                                            |                                                                       |                                           |                                                         |       |                     |         |        |       |        |        |        |       |        |         |         |       |        |         |        

The accompanying notes are an integral part of
these consolidated financial statements.

66



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##### Table of Contents



SINA CORPORATION



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


(In U.S. dollars)


1.     The Company
and Summary of Significant Accounting Policies

The
Company

SINA CORPORATION (SINA or the
Company), a Cayman Islands Corporation, is a leading
online media company and value-added information service
provider for China and the global Chinese communities. With a
branded network of localized websites targeting Greater China
and overseas Chinese, the Company provides an array of services
to its users including region-focused online portals, mobile
value-added services, search and directory listings, free and
premium email, online games, virtual ISP, classified listings,
e-commerce, e-learning and enterprise e-solutions.

Principles of
consolidation and basis of presentation

The consolidated financial statements include the
accounts of the Company, its subsidiaries and variable interest
entities (VIEs) for which the Company is the primary
beneficiary. All significant intercompany accounts and
transactions have been eliminated. Investments in entities in
which the Company can exercise significant influence, but which
are less than majority owned and not otherwise controlled by the
Company, are accounted for under the equity method.

The Company changed its financial year end from
June 30 to December 31 in 2002.

The Company has adopted FASB Interpretation
No. 46 (FIN 46) Consolidation of
Variable Interest Entities (VIEs), an Interpretation
of ARB No. 51. FIN 46 requires a VIE to be
consolidated by a company if that company is subject to a
majority of the risk of loss for the variable interest
entitys activities or is entitled to receive a majority of
the entitys residual returns.

To comply with PRC laws and regulations the
Company conducts substantially all its Internet content
provision, advertising and mobile value-added services in China
via its VIEs. These VIEs are wholly or partially owned by
certain employees of the Company. The capital are funded by the
Company and recorded as interest-free loans to these PRC
employees. These loans were eliminated with the capital of the
VIEs during consolidation.

Under various contractual agreements, employee
shareholders of the VIEs are required to transfer their
ownership in these entities to the Companys subsidiaries
in China when permitted by PRC laws and regulations or to
designees of the Company at any time for the amount of loans
outstanding; all voting rights of the VIEs are assigned to the
Company and the Company has the right to appoint all directors
and senior management personnel of the VIEs. The Company has
also entered into exclusive technical service agreements with
the VIEs under which the Company provides technical and other
services to the VIEs in exchange for substantially all net
income of the VIEs. In addition, employee shareholders of the
VIEs have pledged their shares in the VIEs as collateral for the
non-payment of loans or for the fees for technical and other
services due to the Company. As of December 31, 2003, the
amount of interest-free loans to the employee shareholders of
VIEs amounted to $4.1 million.

The following is a summary of the VIEs of the
Company:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Beijing SINA Internet Information Service Co.,
    Ltd. (the ICP Company), a China company controlled
    through business agreement. The ICP Company is responsible for
    operating www.sina.com.cn in connection with its Internet
    content company license and selling the advertising space to the
    Ad Company or to advertisers directly. It is also responsible
    for providing mobile value-added services in China via third
    party mobile operators to the users. It is 3% owned by Yan Wang,
    the Companys Chief Executive Officer and director, and 97%
    owned by six other non-executive PRC employees of the Company.
    The registered capital of the ICP Company is $1.2 million.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Beijing SINA Interactive Advertising Co.,
    Ltd. (the Ad Company), a China company controlled
    through business agreement. The Ad Company was responsible for
    placing advertisements on www.sina.com.cn for its third party
    customers under its advertising license. It is 75% owned by Yan
    Wang and 25% owned by Beijing SINA Information Technology Co.
    Ltd., one of the Companys subsidiaries in China. This
    entity has become inactive after the ICP Company obtained online
    advertising license in May 2002. The registered capital of the
    Ad Company is $0.1 million.
|
| |  | Guangdong SINA Internet Information Service Co.,
    Ltd. (the GDICP Company), a China company controlled
    through business agreement. The GDICP Company is responsible for
    providing mobile value-added services in China via third party
    mobile operators to the users under its Internet content company
    license. It is 10% owned by Yan Wang and 90% owned by five other
    non-executive PRC employees of the Company. The registered
    capital of the GDICP Company is $0.4 million.                                                                                                 
|
| |  | Guangzhou Media Message Technologies, Inc.
    (Xunlong), a China company controlled through
    business agreement. Xunlong is responsible for providing mobile
    value-added services in China via third party mobile operators
    to the users under its Internet content company license. It is
    owned by five non-executive PRC employees of the Company. The
    registered capital of the Xunlong is $1.2 million.                                                                                                                                                                              
|
| |  | Beijing Star-Village.com Cultural Development
    Co., Ltd. (StarVI), a China company controlled
    through business agreement. StarVI is responsible for providing
    mobile value-added services in China via third party mobile
    operators to the users under its Internet content company
    license. It is owned by five non-executive PRC employees of the
    Company. The registered capital of the StarVI is
    $1.2 million.                                                                                                                                                                

The Company began to consolidate the Ad Company
in April 2000 and the ICP Company in October 2001 (see
Note 7  Related party transactions). The GDICP
Company was established in 2002 but had not had activities until
2003 and the operation results for the GDICP Company were
consolidated for the entire year ended December 31, 2003.
Xunlong and StarVI were acquired in Memestar acquisition (see
Note 2  Acquisition of Memestar) in January 2003
and the operation results for these two companies were
consolidated by the Company for the entire year ended
December 31, 2003.

As of December 31, 2003, the aggregate
accumulated losses of the above VIEs were approximately
$4.9 million and have been reflected in the consolidated
financial statements. Further, as of December 31, 2003, the
Company did not have any assets that are collateral for the
above VIEs obligations. The creditors of the above VIEs
have no recourse to the general credit of the Company.

Use of
estimates

The preparation of the consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Cash and cash
equivalents

The Company considers all highly liquid
investments with original maturities of three months or less
when purchased to be cash equivalents. At December 31, 2003
and 2002, cash equivalents were comprised primarily of
investments in commercial paper and money market accounts stated
at cost plus accrued interest, which approximated fair value.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


Allowances
for doubtful accounts

The Company uses the rolling average bad debt
rate for the previous twelve months to estimate the provisions
for accounts receivable. The Company also provides specific
provisions for bad debts when facts and circumstances indicate
that the receivable is unlikely to be collected. If the
financial condition of its customers were to deteriorate,
resulting in an impairment of their ability to make payments,
additional allowances may be required.

Deferred tax
assets

The Company records a valuation allowance for
deferred tax assets if any, based on its estimates of its future
taxable income as well as its tax planning strategies, it is
more likely than not that a portion or all of its deferred tax
assets will not be realized. If the Company is able to utilize
more of its deferred tax assets than the net amount previously
recorded when unanticipated events occur, an adjustment to
deferred tax assets would increase the Company net income when
those events occur.

Available for
sale securities investment

Investments classified as available for sale
securities are reported at fair value with unrealized gains
(losses), if any, recorded as accumulated other comprehensive
income in shareholders equity. Realized gains or losses
are charged to income during the period in which the gain or
loss is realized. If the Company determines a decline in fair
value is other-than-temporary, the cost basis of the individual
security shall be written down to fair value as a new cost basis
and the amount of the write-down will be accounted for a
realized loss. The new cost basis will not be changed for
subsequent recoveries in fair value. Determination of whether
declines in value are other-than-temporary requires significant
judgment. Subsequent increase in the fair value of available for
sale securities will be included in comprehensive income in
shareholders equity while subsequent decrease in fair
value, if not an other-than-temporary impairment, will also be
included in comprehensive income in shareholders equity.

The investment in marketable equity securities of
Sun Media Group is classified as available for sale securities.
The Company recognized an other-than-temporary impairment charge
of $6.1 million for the investment in Sun Media Group
during the quarter ended December 31, 2003 based on its
assessment of (i) Sun Media financial position and
operating prospects and (ii) the duration and amount of the
decline.

The investment in marketable debt securities is
classified as available for sale securities. The Company invests
in these securities with the intent to make such funds readily
available for operating or acquisition purposes and accordingly,
classifies them as short-term investments. The aggregate fair
value of marketable debt securities was $69.0 million as of
December 31, 2003 and was $43.4 million as of
December 31, 2002. During the year ended December 31,
2003, the Company recorded $1.7 million of unrealized
losses on its marketable debt securities as a component of
comprehensive income. During the six months ended
December 31, 2002, the Company recorded $0.2 million
of unrealized gains on its marketable debt securities as a
component of comprehensive income.

Property and
equipment

Property and equipment, including leasehold
improvements, are stated at historical cost less accumulated
depreciation and amortization. Depreciation is computed using
the straight-line method over the estimated useful lives of the
assets, generally from three to five years. Leasehold
improvements are amortized over the shorter of the estimated
useful lives of the assets or the remaining lease term.
Depreciation expenses were $5.1 million, $2.5 million,
$5.2 million and $3.6 million for the year ended
December 31, 2003, six months ended December 31, 2002
and the two years ended June 30, 2002 and 2001,
respectively.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


The expenditures for repair and maintenance are
expensed as incurred. The gain or loss on disposal of property
and equipment is the difference between the net sales proceeds
and the carrying amount of the relevant assets, and is
recognized in the consolidated statement of operations.

Long-term
investments

Long-term investments comprise investments in
joint ventures which were accounted for using equity method of
accounting. As of December 31, 2003, the carrying value of
long-term investments comprises investment in Shanghai NC-SINA
of $1.6 million (see Notes 3  Investment in
Shanghai NC-SINA) and investments in other joint ventures of
$0.5 million.

Intangible
assets, net

Intangible assets, which primarily include
purchased technology, trademark, work force, customer list, user
base and non-compete agreements arising from the acquisitions of
subsidiaries and variable interest entities were initially
recognized and measured at fair value upon acquisition.
Intangible assets are amortized over their estimated useful
lives of one to three years. The amortization methods and
estimated useful lives of intangible assets are reviewed
regularly.

Identifiable intangible assets are required to be
determined separately from goodwill based on fair value. SFAS
No. 141 Business Combinations
(SFAS 141) specifies criteria that must be
applied to determine whether an intangible should be recognized
separately from goodwill. In particular, an intangible asset
which is acquired in a business combination should be recognized
as an asset separate from goodwill if it satisfies either the
contractual-legal or separability
criterion.

Prior to January 1, 2002, intangible assets
were reviewed for impairment whenever events or changes in
circumstances indicated that the carrying amount of such
intangible assets might not be recoverable. Upon the
Companys adoption of SFAS 142 on January 1,
2002, intangible assets were tested for impairment and tested
annually thereafter or more frequently if events or changes in
circumstances indicate the intangibles might be impaired. The
Company evaluates recoverability of an intangible to be held and
used by comparing the carrying amount of the intangible to its
future net undiscounted cash flows. If the intangible is
considered to be impaired, the impairment loss is measured as
the amount by which the carrying amount of the intangible
exceeds the fair value of the intangible calculated using a
discounted future cash flow analysis.

Goodwill,
net

Goodwill represents the excess of the purchase
price over the fair value of the identifiable assets and
liabilities acquired as a result of the Companys
acquisitions of interests in its subsidiaries and variable
interest entities.

Prior to January 1, 2002, goodwill was
amortized on a straight-line basis over the expected future
economic life of three years and is reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Recoverability of
goodwill is measured by a comparison of the carrying amount of
goodwill and the future net discounted cash flows. If goodwill
is considered to be impaired, the impairment to be recognized is
measured as the amount by which the carrying amount of the
goodwill exceeds its fair value.

The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 142
Goodwill and Intangible Assets (SFAS
142) on January 1, 2002. Under SFAS 142,
goodwill is no longer amortized, but tested for impairment upon
first adoption and annually thereafter, or more frequently if
events or changes in circumstances indicate that it might be
impaired.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


Purchase
price allocation

The Company accounts for its acquisitions using
purchase method of accounting. This method requires that the
acquisition cost to be allocated to the assets and liabilities
the Company acquired based on their fair values. The Company
makes estimates and judgments in determining the fair value of
the acquired assets and liabilities. The Company bases its
determination on independent appraisal reports as well as its
experience with similar assets and liabilities in the similar
industries. If different judgments or assumptions were used, the
amounts assigned to the individual acquired assets or
liabilities could be materially different.

Revenue
recognition

The Company derives its revenues from advertising
and non-advertising sources.

Advertising

Advertising revenues are derived principally from
online advertising arrangements, sponsorship arrangements, or a
combination of them. Online advertising arrangements allow
advertisers to place advertisements on particular areas of the
Companys web sites, in particular formats and over
particular periods of time. Advertising revenues from online
advertising arrangements are recognized ratably over the
displayed period of the contract when the collectibility is
reasonable assured. Multiple element advertising arrangements
were broken down to single element arrangement based on relative
fair value for revenue recognition purpose. In some of the
advertising contracts, the Company guarantees a minimum number
of impressions or pages to be delivered to users over a
specified period of time for a fixed fee. Advertising revenues
are recognized on the basis of the number of impressions
delivered or ratably over the period in which the advertising is
displayed, whichever amount is lower, when the collectibility is
reasonably assured. To the extent that minimum guaranteed
impression deliveries are not met, the Company defers
recognition of the corresponding revenues until the guaranteed
impressions deliveries are achieved. For the year ended
December 31, 2003, advertising revenues from contracts that
require guaranteed minimum impressions were minimal. Sponsorship
arrangements allow advertisers to sponsor a particular area on
its web sites in exchange for a fixed payment over the contract
period. Advertising revenues are recognized ratably over the
period of sponsorship. Advertising revenues derived from the
design, coordination and integration of online advertising and
sponsorship arrangements to be placed on its web sites are
recognized ratably over the term of such programs.

Revenues from barter transactions are recognized
during the period in which the advertisements are displayed in
the Companys properties. Barter transactions are recorded
at the lower of the fair value of the goods or services received
or the fair value of the advertisement given, provided the fair
value of the transaction is reliably measurable. Revenues from
barter transactions were minimal for all periods presented.

Non-advertising revenues are mainly derived from
mobile value-added services, fee-based services, e-commerce,
enterprise services and proprietary software products and
licenses.

Mobile value-added services revenues are derived
principally from providing mobile phone users with SMS, MMS, WAP
services and IVR services. These services include news and other
content subscriptions, mobile dating service, picture and logo
download, ring tones, ring back tones, mobile games, chat rooms
and access to music files. Revenues from mobile value-added
services are charged on monthly or on per usage basis. Such
revenues are recognized in the period in which the service is
performed, provided that no significant company obligations
remain, collection of the receivables is reasonably assured and
the amounts can be accurately estimated.

The Company contracts with third party mobile
operators for billing and transmission services related to the
mobile value-added services transmitted to its users. The
Company records the gross amount it bills to users for its
mobile value-added services as revenues and the fees charged or
retained by the third party mobile

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


operators as cost of revenues. The Company
considered EITF 99-19 in determining whether it should
recognize such revenues at gross or net of revenue sharing by
mobile operators for billing and transmission services. The
Company believes that based on its arrangement with the third
party mobile operators as stipulated in its agreements with
them, the gross approach is appropriate as the Company is the
primary obligor to the user with respect to the mobile
value-added services.

Estimation of revenue is based on the
Companys internal records of billings and transmissions
for the month, adjusted by prior periods confirmation
rates with the third party mobile operators, and further
adjusted by prior periods discrepancies between its
estimated revenue and actual revenue confirmed by the third
party mobile operators. Historically, there were no significant
true up adjustments to the estimates. To the extent that such
revenues cannot be accurately estimated, the Company relies on
the billing statements from the third party mobile operators to
record revenues. Due to the time lag of receiving the billing
statements from the third party mobile operators, for revenues
recorded based on the billing statements from the third party
mobile operators, the Company has adopted a one month lag
reporting policy. Such policy has been applied on a consistent
basis. For the years ended December 31, 2003 and 2002, the
Company recorded $64.4 million and $9.1 million of
revenues from its mobile value-added services, respectively. If
the Company had not used one month lag reporting policy,
revenues from its mobile value-added services for those periods
would have been $68.3 million and $9.7 million,
respectively. There was no significant mobile value-added
services revenue before the year ended December 31, 2002.

The Company purchases certain contents from third
party content providers for its mobile value-added services.
Most of these arrangements state that the fees payable to the
third party content providers are calculated based on certain
percentages of the revenue earned by their contents after
deducting the fees paid to the third party mobile operators. The
Companys mobile value-added service revenue is inclusive
of such fees since the Company acts as the principal in these
arrangements by having the ability to determine the fees charged
to end users and being the primary obligor to the end users with
respect to providing such services.

Fee based services allow the Companys users
to subscribe for services on its web sites including online
games, virtual ISP and paid email services. Revenues from these
services are recognized in the period in which the service is
performed, provided that no significant company obligations
remain, collection of the receivables is reasonably assured and
the amounts can be accurately estimated.

E-commerce revenues are derived principally from
slotting fees charged to merchants for selective positioning and
promoting their goods or services within its online mall,
SinaMall, and from commissions calculated as a percentage of the
online sales transaction value of the merchants. Slotting fee
revenue is recognized ratably over the period the products are
shown on its web site while the commission revenue is recognized
on a net basis after both successful on-line verification of
customers credit cards and shipment of products. Product
returns have not been significant and are assumed by vendors.

Enterprise services mainly include paid search
and directory listings, corporate emails, classified listings
and enterprise e-solutions. Revenues are recognized in the
period in which the service is performed, provided that no
significant company obligations remain, collection of the
receivables is reasonably assured and the amounts can be
accurately estimated.

Revenue from the sale of software products is
recognized primarily upon delivery of software products to end
users, resellers, distributors, retail merchants and original
equipment manufacturers (OEM). The Company delivers
its software products in packaged form or under software
licenses. Revenues from sales of software products in the
packaged form are recognized when persuasive evidence of an
arrangement exists, the price is fixed or determinable, shipment
is made and collectibility is reasonably assured. Software
license agreements are non-refundable and allow the OEM partners
to reproduce the Companys software products for a
specified period of time for a fixed fee or a specified number
of copies for a predetermined unit price.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


Revenues from software license agreements are
recognized upon delivery of a master copy when the fixed-fee
agreements become effective or based upon activity reports
provided by the OEM partners under the per-copy arrangements.
Provision is made for expected sales returns and allowances when
revenue is recognized. Payments received in advance of revenue
recognition are recorded as deferred revenue. The Company
recognizes revenues in accordance with Statement of Position
(SOP) 97-2, Software Revenue
Recognition, as amended by SOP 98-4 and
SOP 98-9. These Statements generally require revenue earned
on software arrangements involving multiple elements to be
allocated to each element based on the relative fair value of
the elements. The Companys software product agreements do
not involve multiple elements.

In accordance with generally accepted accounting
principles in the United States of America, the recognition of
these revenues is partly based on the Companys assessment
of the probability of collection of the resulting accounts
receivable balance. As a result, the timing or amount of revenue
recognition may have been different if different assessments of
the probability of collection of accounts receivable had been
made at the time the transactions were recorded in revenue.

Cost of
revenues

Advertising

Cost of advertising revenues consists mainly of
costs associated with the production of web sites, which
includes fees paid to third parties for Internet connection,
content and services, personnel related costs and equipment
depreciation associated with our web site production. Cost of
advertising revenues also includes the business taxes levied on
advertising sales in China.

Non-advertising

Cost of non-advertising revenues consists mainly
of fees paid to or retained by the third party mobile operators
for their services relating to the collection of the
Companys mobile value-added services fees and for using
their transmission gateways, and fees or royalties paid to third
party content providers for services and content associated with
the mobile value-added services, depreciation and costs for
providing the enterprise services. Cost of non-advertising
revenues also includes the business taxes levied on
non-advertising sales in China.

Product
development expenses

Product development costs include expenses
incurred by the Company to maintain, monitor and manage the
Companys web site. The Company recognizes website
development costs in accordance with SOP 98-1, Accounting
for the Costs of Computer Software Developed or Obtained for
Internal Use. As such, the Company expenses all costs
incurred that relate to the planning and post implementation
phases of development and costs associated with repair or
maintenance of the existing site or the development of website
content. Costs incurred in the development phase are capitalized
and amortized on a straight-line basis over the estimated
product life or on the ratio of current revenues to total
projected product revenue, whichever is greater. Since
inception, the amount of costs qualifying for capitalization has
been immaterial and as a result, all product development costs
have been expensed as incurred.

Advertising
expenses

Advertising expenses generally represent the cost
of promotions for corporate image or for product marketing and
are expensed as incurred. Advertising expenses totaled
$6.3 million, $1.8 million, $4.7 million and
$12.1 million for the year ended December 31, 2003,
six months ended December 31, 2002 and for the two years
ended June 30, 2002 and 2001 respectively.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


Stock-based
compensation

The Company accounts for stock-based employee
compensation arrangements in accordance with provisions of
Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to
Employees, as amended by FASB Interpretation
No. (FIN) 44 and Emerging Issues Task
Force (EITF) No. 00-23 and complies with the
disclosure provisions of SFAS No. 123 Accounting for
Stock-Based Compensation as amended by SFAS No. 148
Accounting for Stock-Based Compensation 
Transition and Disclosure. Under APB No. 25, as
amended, compensation cost is, in general, recognized based on
the difference, if any, on the date of grant between the fair
value of the Companys stock and the amount an employee
must pay to acquire the stock. Total compensation cost as
determined at the grant date of option is recorded in
shareholders equity as additional paid-in capital with an
offsetting entry recorded to deferred stock compensation.
Deferred stock compensation is amortized over the vesting period
of 4 years on an accelerated basis using the model
presented in paragraph 24 of FIN 28. Accordingly, the
percentages of the deferred compensation amortized in the first,
second, third and fourth years following the option grant date
are approximately 52%, 27%, 15% and 6%, respectively. SFAS
No. 148 amends SFAS No. 123 to provide alternative
methods of transition for companies that voluntarily change to
the fair value based method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the
disclosure provisions of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results.

Prior to the Companys initial public
offering, the fair value of each option grant was determined
using the minimum value method. Options granted subsequent to
the initial public offering have been valued using the
Black-Scholes model considering the expected volatility of our
stock price, determined in accordance with SFAS 123, in arriving
at an option valuation. The minimum value method does not
consider stock price volatility. Had compensation cost for the
Companys stock-based compensation plans been determined
based

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


on the fair value at the grant dates for the
awards under a method prescribed by SFAS No. 123, the
Companys net loss per share would have been adjusted to
the pro forma amounts as follows:

|                                                    |                                                                                                                 |                                          |   |                  |   |                     |   |        |   |  |   |         |   |  |   |         |  
|--------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | - | ---------------- | - | ------------------- | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                    |                                                                                                                 |                                          |   |                  |   |                    
|                                                    |                                                                                                                 | Year Ended                               |   | Six Months Ended |   | Years Ended June 30
|                                                    |                                                                                                                 | December 31,                             |   | December 31,     |   |                    
|                                                    |                                                                                                                 | 2003                                     |   | 2002             |   | 2002                |   | 2001  
|                                                    |                                                                                                                 |                                          |   |                  |   |                     |   |       
|                                                    |                                                                                                                 |                                         
|                                                    |                                                                                                                 | (In thousands, except per share amounts)
|Net income (loss):                                  |                                                                                                                 |                                          |   |                  |   |                     |   |        |   |  |   |         |   |  |   |        
|                                                    | As reported                                                                                                     |                                          | $ | 31,423           |   |                     | $ | 916    |   |  | $ | (16,092 | ) |  | $ | (36,351 | )
|                                                    | Added: Stock-based employee compensation expenses
    included in reported net income                           |                                          |   | 554              |   |                     |   | 741    |   |  |   | 2,341   |   |  |   | 7,511   |  
|                                                    | Deduct: Employee stock purchase plan related
    compensation expenses determined under fair value based method |                                          |   | (119             | ) |                     |   | (30    | ) |  |   | (4      | ) |  |   | (190    | )
|                                                    | Deduct: Stock-based employee compensation
    expenses determined under fair value based method                 |                                          |   | (7,712           | ) |                     |   | (1,406 | ) |  |   | (2,558  | ) |  |   | (7,848  | )
|                                                    |                                                                                                                 |                                          |   |                  |   |                     |   |        |   |  |   |         |   |  |   |        
|                                                    | Pro forma                                                                                                       |                                          | $ | 24,146           |   |                     | $ | 221    |   |  | $ | (16,313 | ) |  | $ | (36,878 | )
|                                                    |                                                                                                                 |                                          |   |                  |   |                     |   |        |   |  |   |         |   |  |   |        
|Net income (loss) per share, basic and
    diluted: |                                                                                                                 |                                          |   |                  |   |                     |   |        |   |  |   |         |   |  |   |        
|                                                    | As reported                                                                                                     |                                          | $ | 0.58             |   |                     | $ | 0.02   |   |  | $ | (0.36   | ) |  | $ | (0.91   | )
|                                                    |                                                                                                                 |                                          |   |                  |   |                     |   |        |   |  |   |         |   |  |   |        
|                                                    | Pro forma                                                                                                       |                                          | $ | 0.44             |   |                     | $ | 0.00   |   |  | $ | (0.37   | ) |  | $ | (0.92   | )
|                                                    |                                                                                                                 |                                          |   |                  |   |                     |   |        |   |  |   |         |   |  |   |        

The Company calculated the fair value of each
option grant on the date of grant using the Black-Scholes
pricing method with the following assumptions:

|                         |  |              |               |                  |  |                      |               |      |  |  |               |  |  |  |               | 
|------------------------ |  | ------------ | ------------- | ---------------- |  | -------------------- | ------------- | ---- |  |  | ------------- |  |  |  | ------------- | 
|                         |  |              |               |                  |  |                     
|                         |  | Year Ended   |               | Six Months Ended |  | Years Ended June 30,
|                         |  | December 31, |               | December 31,     |  |                     
|                         |  | 2003         |               | 2002             |  | 2002                 |               | 2001
|                         |  |              |               |                  |  |                      |               |     
|Risk-free interest rate  |  |              | 2.04%  3.47% |                  |  |                      | 2.44%  3.07% |      |  |  | 3.70%  4.36% |  |  |  | 4.64%  6.15% | 
|Expected life (in years) |  |              | 1  4         |                  |  |                      | 1  4         |      |  |  | 1  4         |  |  |  | 1  4         | 
|Expected dividend yield  |  |              |              |                  |  |                      |              |      |  |  |              |  |  |  |              | 
|Volatility               |  |              | 93%           |                  |  |                      | 92%           |      |  |  | 49%           |  |  |  | 108%          | 

Income
taxes

Income taxes are accounted for using an asset and
liability approach which requires the recognition of income
taxes payable or refundable for the current year and deferred
tax liabilities and assets for the future tax consequences of
events that have been recognized in the Companys
consolidated financial statements or tax returns. The
measurement of current and deferred tax liabilities and assets
is based on provisions of the enacted tax law; the effects of
future changes in tax laws or rates are not anticipated. The
measurement of deferred tax assets is reduced, if necessary, by
the amount of any tax benefits that, based on available evidence
assessed using the criteria in SFAS No. 109,
Accounting for Income Taxes, will not
more-likely-than-not be realized.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


Foreign
currency

The Companys reporting currency is the US
dollar. The Companys operations in China, Hong Kong and
Taiwan use the local currencies as their functional currencies.
Accordingly, all assets and liabilities of the entities in
China, Hong Kong and Taiwan are translated at the exchange rates
in effect at the balance sheet date and revenues and expenses
are translated at the average exchange rates in effect during
the reporting period. Gains and losses resulting from foreign
currency translation are recorded in accumulated other
comprehensive income (loss) as a component of
shareholders equity.

Net gains and losses resulting from foreign
exchange transactions are included in the consolidated statement
of operations and were not significant during the periods
presented.

Net income
(loss) per share

Basic net income (loss) per share is
computed using the weighted average number of the ordinary
shares outstanding during the period. Diluted net income
(loss) per share is computed using the weighted average
number of ordinary share and ordinary share equivalents
outstanding during the period.

Comprehensive
income (loss)

Comprehensive income (loss) is defined as
the change in equity of a company during a period from
transactions and other events and circumstances excluding
transactions resulting from investments from owners and
distributions to owners. For the Company, comprehensive income
(loss) for the periods presented includes net income
(loss), foreign currency translation adjustments and unrealized
gains (losses) on marketable securities classified as
available for sale.

Recent
accounting pronouncements

In November 2002, the EITF No. 00-21,
Revenue Arrangements with Multiple Deliverables
(EITF No. 00-21) was issued, addressing
accounting for revenue arrangements with multiple deliverables
and requiring that elements of an arrangement be separately
accounted based on the fair value of the individual elements.
EITF No. 00-21 is effective for fiscal periods beginning
after June 15, 2003. The adoption of EITF No. 00-21
did not have a significant impact on the Companys
consolidated financial statements.

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45) Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45
elaborates on the existing disclosure requirements for most
guarantees, including loan guarantees. It also clarifies that at
the time a company issues a guarantee, the company must
recognize an initial liability for the fair value, or market
value, of the obligations it assumes under that guarantee.
However, the provisions related to recognizing a liability at
inception of the guarantee for the fair value of the
guarantors obligations does not apply to product
warranties or to guarantees accounted for as derivatives. The
initial recognition and initial measurement provisions apply on
a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of FIN 45 are
effective for financial statements of interim or annual periods
ending after December 15, 2002. The adoption of FIN 45
did not have a significant impact on the Companys
consolidated financial statements.

In January 2003, the FASB issued Interpretation
No. 46 (FIN 46) Consolidation of
Variable Interest Entities. Until this interpretation, a
company generally included another entity in its consolidated
financial statements only if it controlled the entity through
voting interests. FIN 46 requires a Variable Interest
Entity (VIE), as defined, to be consolidated by a
company if that company is subject to a majority of the risk of
loss from the variable interest entitys activities or
entitled to receive a majority of the entitys residual
returns. Depends on the type and creation date of the VIEs, the
effective dates of FIN 46 and FIN 46-R for vary from

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


the end of the first interim or annual reporting
period ending after December 15, 2003 to the end of the
first interim or annual reporting period ending after
March 15, 2004. Early adoption is allowed. In December
2003, the FASB issued a revision to Interpretation 46
(FIN 46-R) to clarify some of the provisions of
FIN 46 Consolidation of Variable Interest
Entities, and to exempt certain entities from its
requirements. The adoption of FIN 46 and FIN 46-R for
VIEs did not have any significant impacts on the Companys
consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity
(SFAS 150). SFAS 150 changes the
accounting for certain financial instruments that under previous
guidance issuers could account for as equity. It requires that
those instruments be classified as liabilities in balance
sheets. The guidance in SFAS 150 is generally effective for
all financial instruments entered into or modified after
May 31, 2003, and otherwise is effective on July 1,
2003. The adoption of SFAS 150 did not have a material
impact on the Companys financial position, cash flows or
results of operations.

2.     Acquisition of
Memestar

In January 2003, the Company completed the
acquisition of Memestar Limited, a British Virgin Islands
limited liability corporation (Memestar), through a
purchase of all of the outstanding shares of Memestar. As a
result of such acquisition, Memestar became a wholly-owned
subsidiary of SINA. Memestar, through its various subsidiaries
and exclusive contractual arrangements with two local entities
in the PRC (Xunlong and StarVI) is engaged in the business of
providing mobile value-added services in the PRC. The primary
purposes of the acquisition were to enhance the Companys
mobile value-added services as well as increase its market share
in the PRC mobile value-added services market.

The aggregate purchase price of $24,255,113 is
comprised of five elements: (a) $10,277,675 in cash paid at
the closing of the acquisition; (b) 560,369 newly issued
SINA ordinary shares, valued at $4,281,219 at the time of
signing the definitive agreement, delivered at the closing of
the acquisition; (c) $5,250,000 in cash to be paid in four
equal installments after the closing date of the acquisition.
The last payment would be forfeited if the non-compete clauses
of certain members of Memestars management are violated;
(d) 560,369 newly issued SINA ordinary shares, valued at
$4,281,219 at the time of signing the definitive agreement, to
be delivered on the first anniversary of the closing date of the
acquisition, 383,733 of which were issued in August 2003, prior
to the first anniversary of the closing, as a result of an
amendment to the share purchase agreement, and
(e) approximately $165,000 in legal and professional fees
related to the acquisition.

The purchase price was allocated as follows (in
thousands):

|                    |  |   |        |  
|------------------- |  | - | ------ | -
|Cash                |  | $ | 2,356  |  
|Accounts receivable |  |   | 2,946  |  
|Other assets        |  |   | 351    |  
|Intangible assets   |  |   | 2,228  |  
|Goodwill            |  |   | 18,091 |  
|Current liabilities |  |   | (1,717 | )
|                    |  |   |        |  
|Purchase price      |  | $ | 24,255 |  
|                    |  |   |        |  

Amortizable intangible assets acquired, including
customer lists and non-compete arrangements with certain
Memestar executives, have estimated useful lives ranging from
fourteen to eighteen months. The amortization expense for the
year ended December 31, 2003 was $1.7 million.
Goodwill of $18.1 million represents the excess of the
purchase price over the fair value of the net tangible and
identifiable intangible

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


assets acquired, and is not deductible for tax
purposes. In accordance with SFAS 142, goodwill is not
amortized but is tested for impairment. The Company performed an
impairment test relating to goodwill arising from Memestar
acquisition and concluded there was no impairment as to the
carrying value of the goodwill as of December 31, 2003. The
purchase allocation for Memestar acquisition is based on an
appraisal performed by an independent appraisal firm in the
United States.

Immediately after the signing of the definitive
agreement, the Company obtained effective control over Memestar;
accordingly, the operating results of Memestar have been
consolidated with those of the Company starting January 6,
2003. The following unaudited pro forma information presents a
summary of the results of operations of the Company assuming the
acquisition of Memestar had occurred on January 1, 2002 (in
thousands, except per share amounts):

|                                    |  |              |         |      |  |   |        |  
|----------------------------------- |  | ------------ | ------- | ---- |  | - | ------ | -
|                                    |  |             
|                                    |  | Years Ended 
|                                    |  | December 31,
|                                    |  |             
|                                    |  | 2003         |         | 2002
|                                    |  |              |         |     
|Net revenues:                       |  | $            | 114,534 |      |  | $ | 48,604 |  
|Net income (loss)                   |  | $            | 31,523  |      |  | $ | (4,236 | )
|Basic net income (loss) per share   |  | $            | 0.66    |      |  | $ | (0.09  | )
|Diluted net income (loss) per share |  | $            | 0.58    |      |  | $ | (0.09  | )

3.     Investment in
Shanghai NC-SINA

In January 2003, the Company formed a joint
venture named Shanghai NC-SINA Information Technology Co. Ltd.
(Shanghai NC-SINA) in China with  Soft, a
Korean online game company. The Company invested
$2.6 million in cash for 51% of the equity interest in the
joint venture. The Company accounted for the investment in the
joint venture using the equity method of accounting as
NC Soft has certain participating rights as defined in
EITF 96-16. During the twelve months ended
December 31, 2003, the Company recorded $1.0 million
of equity loss from this investment. As of December 31,
2003, the carrying value of this investment was
$1.6 million and was included in long-term investments.

4.     Intangible
assets

As a result of the acquisition of Memestar, the
Company recorded intangible assets including customer list and
non-competition arrangements with certain Memestar executives in
the amount of $2.2 million, which were amortized over
periods ranging from fourteen to eighteen months. The
amortization expense for the year ended December 31, 2003
was $1.7 million. As of December 31, 2003, the
carrying value of the intangible assets was $0.6 million
which will be amortized in the first and second quarter during
the year ending December 31, 2004.

In October 2002, the Company acquired Shanghai
Techur Technology Developing Co., Ltd. (Techur)
for $1.9 million in cash. As a result of the acquisition of
the Company recorded intangible assets relating to customer
relationships in the amount of $1.1 million, which was
amortized over a period of three years. Because the revenue and
the gross margin of Techur did not grow as expected, the
Companys management reassessed the carrying value of the
intangible assets and concluded that there would not be
significant future income generated from these customer
relationships. The carrying value of the intangible assets of
$0.9 million was therefore written off during the three
months ended June 30, 2003 due to the permanent impairment
of value.

As a result of the acquisition of Sinanet.com in
March 1999, the Company recorded goodwill and other intangible
assets of approximately $20.3 million, which were amortized
over the three-year period ended

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


June 30, 2002. The amortization expenses for
the years ended June 30, 2002 and 2001 was
$5.1 million and $6.8 million, respectively. The
intangible assets had been fully amortized by March 31,
2002.

5.     Investment in
Sun Media Group

In September 2001, the Company completed the
acquisition of an approximately 27.6% equity interest in Sun
Media Group (Sun Media), a Hong Kong Stock Exchange
listed company, from Ms. Lan Yang, the chairperson and a
major shareholder of Sun Media for consideration of
$7.9 million in cash and approximately 4.6 million of
the Companys newly issued ordinary shares and transaction
costs of $731,000 for a total purchase price of
$13.7 million.

The above investment was accounted for using the
equity method of accounting until September 30, 2002 when
the Companys equity interest in Sun Media dropped to below
20% and the Company ceased to maintain significant influence
over its operations. Commencing October 1, 2002, such
investment was accounted for as an investment in marketable
equity securities under the provisions of SFAS 115 and was
classified as available for sale and reported at fair value with
unrealized gains (losses), if any, recorded as a component of
comprehensive income (loss) included in shareholders
equity. For the six months ended December 31, 2002, the
Company recorded $3.8 million of unrealized gains on the
Sun Media investment as a component of comprehensive income in
shareholders equity. The fair market value of such
investment was $16.7 million as of December 31, 2002.

The Company had recorded $0.9 million of
equity loss from this investment through September 30, 2002
and the carrying value of this investment was $12.9 million
at the time when the accounting method changed. The fair market
value of this investment began to drop below the carrying value
starting May 2003. At December 31, 2003, the fair market
value of this investment was $6.8 million. The Company
considered the decline in the value of this investment to be
other than temporary and recognized $6.1 million as
impairment of investment during the three months ended
December 31, 2003.

6.     Balance Sheet
Components

|                           |                                                      |                                                                      |         |         |        |   |        |        |        | 
|-------------------------- | ---------------------------------------------------- | -------------------------------------------------------------------- | ------- | ------- | ------ | - | ------ | ------ | ------ | 
|                           |                                                      |                                                                     
|                           |                                                      | December 31                                                         
|                           |                                                      |                                                                     
|                           |                                                      | 2003                                                                 |         | 2002   
|                           |                                                      |                                                                      |         |        
|                           |                                                      |                                                                     
|                           |                                                      | (In U.S. dollars, in                                                
|                           |                                                      | thousands)                                                          
|Cash and cash equivalents: |                                                      |                                                                      |         |         |        |   |        |       
|                           | Cash and investment in money market accounts         |                                                                      | $       | 153,149 |        |   | $      | 43,268 |       
|                           | Commercial paper                                     |                                                                      |         | 4,999   |        |   |        | 9,994  |       
|                           |                                                      |                                                                      |         |         |        |   |        |       
|                           |                                                      | $                                                                    | 158,148 |         |        | $ | 53,262 |       
|                           |                                                      |                                                                      |         |         |        |   |        |       
|Short-term investments:    |                                                      |                                                                      |         |         |        |   |        |       
|                           | Time deposits                                        |                                                                      | $       | 35      |        |   | $      | 34     |       
|                           | Marketable debt securities *                         |                                                                      |         | 68,981  |        |   |        | 43,440 |       
|                           |                                                      |                                                                      |         |         |        |   |        |       
|                           |                                                      | $                                                                    | 69,016  |         |        | $ | 43,474 |       
|                           |                                                      |                                                                      |         |         |        |   |        |       
|                           | * Marketable debt securities due within one
    year |                                                                      | $       | 13,094  |        |   | $      | 28,585 |       
|                           |                                                      | Marketable debt securities due after one
    year through five years |         |         | 55,887 |   |        |        | 14,855 | 
|                           |                                                      |                                                                      |         |         |        |   |        |       
|                           |                                                      | $                                                                    | 68,981  |         |        | $ | 43,440 |       
|                           |                                                      |                                                                      |         |         |        |   |        |       

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


|                             |                                                 |                                       |        |         |      |   |        |         |   | 
|---------------------------- | ----------------------------------------------- | ------------------------------------- | ------ | ------- | ---- | - | ------ | ------- | - | 
|                             |                                                 |                                      
|                             |                                                 | December 31                          
|                             |                                                 |                                      
|                             |                                                 | 2003                                  |        | 2002   
|                             |                                                 |                                       |        |        
|                             |                                                 |                                      
|                             |                                                 | (In U.S. dollars, in                 
|                             |                                                 | thousands)                           
|Accounts receivable, net:    |                                                 |                                       |        |         |      |   |        |        
|                             | Accounts receivable                             |                                       | $      | 19,183  |      |   | $      | 7,426   |  
|                             | Less: Allowance for doubtful accounts           |                                       |        | (1,577  | )    |   |        | (1,579  | )
|                             |                                                 |                                       |        |         |      |   |        |        
|                             |                                                 | $                                     | 17,606 |         |      | $ | 5,847  |        
|                             |                                                 |                                       |        |         |      |   |        |        
|Property and equipment, net: |                                                 |                                       |        |         |      |   |        |        
|                             | Computer equipment and software                 |                                       | $      | 19,340  |      |   | $      | 16,764  |  
|                             | Furniture and fixtures                          |                                       |        | 1,295   |      |   |        | 903     |  
|                             | Automobiles                                     |                                       |        | 231     |      |   |        |        |  
|                             | Leasehold improvements                          |                                       |        | 1,499   |      |   |        | 1,199   |  
|                             |                                                 |                                       |        |         |      |   |        |        
|                             |                                                 |                                       | 22,365 |         |      |   | 18,866 |        
|                             | Less: Accumulated depreciation and amortization |                                       |        | (13,719 | )    |   |        | (11,267 | )
|                             |                                                 |                                       |        |         |      |   |        |        
|                             |                                                 | $                                     | 8,646  |         |      | $ | 7,599  |        
|                             |                                                 |                                       |        |         |      |   |        |        
|Intangible assets, net:      |                                                 |                                       |        |         |      |   |        |        
|(i) Memestar                 |                                                 |                                       |        |         |      |   |        |        
|                             | Non-Compete agreements                          |                                       | $      | 1,256   |      |   | $      |        |  
|                             | Customer lists                                  |                                       |        | 972     |      |   |        |        |  
|                             |                                                 |                                       |        |         |      |   |        |        
|                             |                                                 |                                       | 2,228  |         |      |   |       |        
|                             | Less: Accumulated amortization                  |                                       |        | (1,659  | )    |   |        |        |  
|                             |                                                 |                                       |        |         |      |   |        |        
|                             | Net                                             |                                       |        | 569     |      |   |        |        |  
|                             |                                                 |                                       |        |         |      |   |        |        
|(ii) Techur                  |                                                 |                                       |        |         |      |   |        |        
|                             | Non-Compete agreements                          |                                       |        | 181     |      |   |        | 181     |  
|                             | Customer lists                                  |                                       |        | 902     |      |   |        | 902     |  
|                             |                                                 |                                       |        |         |      |   |        |        
|                             |                                                 |                                       | 1,083  |         |      |   | 1,083  |        
|                             | Less: Accumulated amortization                  |                                       |        | (180    | )    |   |        | (90     | )
|                             |                                                 | Write-off due to permanent impairment |        |         | (903 |   |        |         |  | 
|                             |                                                 |                                       |        |         |      |   |        |        
|                             | Net                                             |                                       |        |        |      |   |        | 993     |  
|                             |                                                 |                                       |        |         |      |   |        |        
|(iii) Sinanet.com            |                                                 |                                       |        |         |      |   |        |        
|                             | Purchased technology                            |                                       |        | 1,638   |      |   |        | 1,638   |  
|                             | Trade name                                      |                                       |        | 931     |      |   |        | 931     |  
|                             | Work force                                      |                                       |        | 762     |      |   |        | 762     |  
|                             | Content relationship                            |                                       |        | 1,197   |      |   |        | 1,197   |  
|                             | Goodwill                                        |                                       |        | 15,895  |      |   |        | 15,895  |  
|                             |                                                 |                                       |        |         |      |   |        |        
|                             |                                                 |                                       | 20,423 |         |      |   | 20,423 |        
|                             | Less: Accumulated amortization                  |                                       |        | (20,423 | )    |   |        | (20,423 | )
|                             |                                                 |                                       |        |         |      |   |        |        
|                             | Net                                             |                                       |        |        |      |   |        |        |  
|                             |                                                 |                                       |        |         |      |   |        |        
|Total intangible assets, net |                                                 | $                                     | 569    |         |      | $ | 993    |        
|                             |                                                 |                                       |        |         |      |   |        |        

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


|                     |                                                                |                      |        |       |  |   |        |       | 
|-------------------- | -------------------------------------------------------------- | -------------------- | ------ | ----- |  | - | ------ | ----- | 
|                     |                                                                |                     
|                     |                                                                | December 31         
|                     |                                                                |                     
|                     |                                                                | 2003                 |        | 2002 
|                     |                                                                |                      |        |      
|                     |                                                                |                     
|                     |                                                                | (In U.S. dollars, in
|                     |                                                                | thousands)          
|Accrued liabilities: |                                                                |                      |        |       |  |   |        |      
|                     | Payroll and related expenses                                   |                      | $      | 6,147 |  |   | $      | 2,627 | 
|                     | Deferred revenues and customer advances                        |                      |        | 4,253 |  |   |        | 3,346 | 
|                     | Business taxes                                                 |                      |        | 2,485 |  |   |        | 654   | 
|                     | Sales rebates                                                  |                      |        | 3,222 |  |   |        | 1,328 | 
|                     | Content fees                                                   |                      |        | 1,970 |  |   |        | 488   | 
|                     | Withholding tax from employees for stock options
    exercised |                      |        | 1,547 |  |   |        |      | 
|                     | Payment for Memestar acquisition                               |                      |        | 2,625 |  |   |        |      | 
|                     | Others                                                         |                      |        | 5,193 |  |   |        | 3,304 | 
|                     |                                                                |                      |        |       |  |   |        |      
|                     |                                                                | $                    | 27,442 |       |  | $ | 11,747 |      
|                     |                                                                |                      |        |       |  |   |        |      

7.     Related Party
Transactions

Transactions with ICP Company and Ad Company.To comply with Chinese regulations, in
April 2000, Beijing SINA Information Technology Co. Ltd. or
BSIT, the Companys subsidiary in China, entered into
agreements with two limited liability companies incorporated in
China: Beijing SINA Interactive Advertising Co., Ltd. (the
Ad Company) and Beijing SINA Internet Information
Services Co., Ltd. (the ICP Company.) The Ad
Company is a Chinese advertising company that is 75% owned by
Yan Wang, the Companys Chief Executive Officer, and 25%
owned by BSIT. The ICP Company is a Chinese Internet content
provider that is 3% owned by Yan Wang and 97% by six other PRC
employees of the Company. All individual shareholders of the Ad
Company and the ICP Company are required under their agreements
with BSIT to transfer their interest in the Ad Company or ICP
Company to BSIT or to any person specified by BSIT at any time
at BSITs request, provided that such transfer is not in
violation of Chinese laws and regulations. In the opinion of
SINAs Chinese counsel, the ownership of BSIT and its
businesses comply with existing Chinese laws and regulations.

Pursuant to these agreements, the ICP Company is
responsible for operating www.sina.com.cn in connection with its
Internet content company license and sells advertising space on
the China web site to the Ad Company. The Ad Company, in turn,
places advertisements in this space for third parties under its
advertising license. The Ad Company has become inactive after
the ICP Company obtained online advertising license in May 2002
and the ICP Company began to sell advertising directly to
advertisers. In addition, BSIT licensed intellectual property
and transferred equipment to the ICP Company and acts as the ICP
Companys provider of technical services, all in exchange
for fees or other payments. BSIT is also a consultant and
service provider to the Ad Company for its domestic Chinese
customers. Substantially all of the income received from sales
by the Ad Company and ICP Company from third parties is paid to
BSIT.

Through ten-year proxies ending in the years 2011
and 2010, BSIT has complete voting control over the ICP Company
and the Ad Company. The employee owners of the ICP Company and
the Ad Company do not have participating rights as defined in
EITF 96-16 with respect to the management of the ICP
Company and the Ad Company. Therefore, the financial position
and results of operations of the ICP Company and the Ad Company
are consolidated with the financial statements of SINA, and
intercompany transactions and balances are eliminated in the
consolidation.

Prior to October 1, 2001, when BSIT obtained
the proxy for the ICP Company, the financial position and
results of operations of the ICP Company were not consolidated
in the Companys financial statements. During the quarter
ended September 30, 2001 and the year ended June 30,
2001, BSIT recorded $614,000 and

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


$924,000, respectively, of revenue from technical
support service provided to the ICP Company, which amounts were
equal to the revenue the ICP Company received from unrelated
parties during the same periods. During the quarter ended
September 30, 2001 and the year ended June 30, 2001,
the Ad Company paid the ICP Company $72,000 and $338,000,
respectively, for advertising space. As a result of the
transactions, BSIT recorded a receivable from the ICP Company of
$436,000 at June 30, 2001. The amount plus loans by BSIT to
certain employees for the purpose of setting up the ICP Company
totaled to $556,000, which were reported as receivables from
related parties as of June 30, 2001. Also, BSIT accrued for
the costs and expenses of the ICP Company in excess of its
revenues as the costs are incurred by the ICP Company. For the
quarter ended September 30, 2001 and the year ended
June 30, 2001, BSIT accrued $662,000 and $1.6 million,
respectively, for the ICP Companys losses. BSIT obtained
the proxy for the Ad Company earlier, and the results of the Ad
Company have been consolidated for all periods presented.

BSIT was formerly known as Beijing Stone Rich
Sight Information Technology Co. Ltd., or BSRS.

Joint venture investment.In December 1999, the Company
contributed $1.4 million in cash for a 35.4% interest in a
joint venture with Adforce, Inc. and Compuserve Consultants,
Ltd. The investment in the joint venture was accounted for under
the equity method. The total expenses incurred from service
provided by the joint venture for the year ended June 30,
2001 amounted to $309,000. The payable to the joint venture as
of June 30, 2001 was $309,000. The investment was written
off due to the joint ventures cessation of operation
during the year ended June 30, 2001.

Shareholder notes.In 1999, certain officers of the
Company exercised stock options prior to being vested with notes
payable to the Company. The notes have a five-year term expiring
in 2004 with full recourse and bear interest at rates ranging
from 5.74% to 5.87%. Ordinary shares issued with notes payable
are subject to rights of repurchase by the Company until such
shares are vested. During the year ended December 31, 2003,
six months ended December 31, 2002, and years ended
June 30, 2002 and 2001, notes of $1.1 million, nil,
$0.4 million and $0.6 million were repaid
respectively. As of December 31, 2003, there were no
outstanding notes receivable from shareholders.

8.     Income
Taxes

The Company is registered in Cayman Islands and
has operations in four tax jurisdictions including China, the
United States of America, Hong Kong and Taiwan. Taiwan is a
branch office of the subsidiary in the United States.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


The components of income before income taxes are
as follows:

|                                                   |  |                                                    |         |                  |  |                      |        |      |  |   |         |   |  |   |         |  
|-------------------------------------------------- |  | -------------------------------------------------- | ------- | ---------------- |  | -------------------- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                   |  |                                                    |         |                  |  |                     
|                                                   |  | Year Ended                                         |         | Six Months Ended |  | Years Ended June 30,
|                                                   |  | December 31,                                       |         | December 31,     |  |                     
|                                                   |  | 2003                                               |         | 2002             |  | 2002                 |        | 2001
|                                                   |  |                                                    |         |                  |  |                      |        |     
|                                                   |  |                                                   
|                                                   |  | (In U.S. dollars, in thousands, except percentage)
|Loss subject to non China operation                |  | $                                                  | (11,864 | )                |  | $                    | (2,770 | )    |  | $ | (12,155 | ) |  | $ | (24,180 | )
|Income (loss) subject to China operation           |  |                                                    | 44,182  |                  |  |                      | 3,686  |      |  |   | (3,937  | ) |  |   | (12,171 | )
|                                                   |  |                                                    |         |                  |  |                      |        |      |  |   |         |   |  |   |         |  
|Income (loss) before taxes                         |  | $                                                  | 32,318  |                  |  | $                    | 916    |      |  | $ | (16,092 | ) |  | $ | (36,351 | )
|                                                   |  |                                                    |         |                  |  |                      |        |      |  |   |         |   |  |   |         |  
|Income tax expenses subject to non China operation |  | $                                                  |        |                  |  | $                    |       |      |  | $ |        |   |  | $ |        |  
|Effective tax rate for non China operation         |  |                                                    |        |                  |  |                      |       |      |  |   |        |   |  |   |        |  
|Income tax expenses subject to China operation     |  | $                                                  | 895     |                  |  | $                    |       |      |  | $ |        |   |  | $ |        |  
|Effective tax rate for China operation             |  |                                                    | 2       | %                |  |                      |       |      |  |   |        |   |  |   |        |  

Cayman
Islands

Under the current tax laws of Cayman Islands, the
Company is not subject to tax on income or capital gain. In
addition, upon payments of dividends by the Company to its
shareholders, no Cayman Islands withholding tax will be imposed.

United States
of America

As of December 31, 2003, the Companys
subsidiary in the United States of America had approximately
$50.0 million of federal and $21.6 million of state
net operating loss carryforwards available to offset future
taxable income. The federal net operating loss carryforwards
will expire, if unused, in the years ending December 31,
2012 through 2024, and the state net operating loss
carryforwards will expire, if unused, in the years ending
December 31, 2005 through 2014. Included in the net
operating loss carryforwards is $7.5 million and
$2.7 million of federal and state net operating loss
carryforwards relating to employee stock options, the benefit of
which will be credited to equity when realized. The Tax Reform
Act of 1986 limits the use of net operating loss and tax credit
carryforwards in certain situations when changes occur in the
stock ownership of a company. In the event the Company has a
change in ownership, utilization of carryforwards could be
restricted. The deferred tax assets for the United States
subsidiary at December 31, 2003 consists mainly of net
operating loss carryforwards and were fully reserved as the
management believes it is more likely than not that these assets
will not be realized in the future.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


The following table set forth the significant
components of the net deferred tax assets for operation in the
United States of America as of December 31, 2003 and 2002,
and June 30, 2002 and 2001:

|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |         |  
|-------------------- | -------------------------------- | ------------------------------- | - | ------------ | - | -------- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                     |                                  |                                 |   |              |   |         
|                     |                                  |                                 |   |              |   | June 30,
|                     |                                  | December 31,                    |   | December 31, |   |         
|                     |                                  | 2003                            |   | 2002         |   | 2002     |   | 2001   
|                     |                                  |                                 |   |              |   |          |   |        
|                     |                                  |                                
|                     |                                  | (In U.S. dollars, in thousands)
|Deferred tax assets: |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        
|                     | Net operating loss carryforwards |                                 | $ | 18,251       |   |          | $ | 15,323  |   |  | $ | 14,805  |   |  | $ | 12,301  |  
|                     | Other accruals and liabilities   |                                 |   | 139          |   |          |   | 248     |   |  |   | 282     |   |  |   | 407     |  
|                     | Depreciation and amortization    |                                 |   |             |   |          |   | 117     |   |  |   | 113     |   |  |   | 113     |  
|                     | Other tax credits                |                                 |   | 564          |   |          |   | 592     |   |  |   | 622     |   |  |   | 578     |  
|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        
|                     | Total deferred tax assets        |                                 |   | 18,954       |   |          |   | 16,280  |   |  |   | 15,822  |   |  |   | 13,399  |  
|                     | Less: valuation allowance        |                                 |   | (18,954      | ) |          |   | (16,280 | ) |  |   | (15,822 | ) |  |   | (13,399 | )
|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        
|                     | Deferred tax assets              |                                 | $ |             |   |          | $ |        |   |  | $ |        |   |  | $ |        |  
|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        

Hong
Kong

As of December 31, 2003, the Companys
Hong Kong subsidiary had approximately $10.4 million net
operating loss carryforwards which can be carried forward
indefinitely to offset future taxable income. The deferred tax
assets for Hong Kong subsidiary at December 31, 2003
consists mainly of net operating loss carryforwards and were
fully reserved as the management believes it is more likely than
not that these assets will not be realized in the future.

The following table set forth the significant
components of the net deferred tax assets for Hong Kong
operation as of December 31, 2003 and 2002, and
June 30, 2002 and 2001:

|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |        |  
|-------------------- | -------------------------------- | ------------------------------- | - | ------------ | - | -------- | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                     |                                  |                                 |   |              |   |         
|                     |                                  |                                 |   |              |   | June 30,
|                     |                                  | December 31,                    |   | December 31, |   |         
|                     |                                  | 2003                            |   | 2002         |   | 2002     |   | 2001  
|                     |                                  |                                 |   |              |   |          |   |       
|                     |                                  |                                
|                     |                                  | (In U.S. dollars, in thousands)
|Deferred tax assets: |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       
|                     | Net operating loss carryforwards |                                 | $ | 1,778        |   |          | $ | 1,624  |   |  | $ | 1,524  |   |  | $ | 1,268  |  
|                     | Other accruals and liabilities   |                                 |   | 16           |   |          |   |       |   |  |   |       |   |  |   |       |  
|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       
|                     | Total deferred tax assets        |                                 |   | 1,794        |   |          |   | 1,624  |   |  |   | 1,524  |   |  |   | 1,268  |  
|                     | Less: valuation allowance        |                                 |   | (1,794       | ) |          |   | (1,624 | ) |  |   | (1,524 | ) |  |   | (1,268 | )
|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       
|                     | Deferred tax assets              |                                 | $ |             |   |          | $ |       |   |  | $ |       |   |  | $ |       |  
|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       

China

The Companys subsidiaries and VIEs that are
incorporated in China are subject to Enterprise Income Tax
(EIT) on the taxable income as reported in their
respective statutory financial statements adjusted in accordance
with the Enterprise Income Tax Law and the Income tax Law of the
Peoples Republic of China concerning Foreign Investment
Enterprise and Foreign Enterprises (collectively the PRC
Income Tax Laws), respectively. Pursuant to the PRC Income
Tax Laws, the Companys subsidiaries and VIEs are generally
subject to EIT at a statutory rate of 33%, which comprises 30%
national income tax and 3% local income tax. However, some of
the Companys subsidiaries and VIEs are qualified new
technology enterprises and under PRC Income Tax Laws, they are
subject to preferential tax rate of 15%. In addition, some of
the Companys subsidiaries are Foreign Investment
Enterprise and under PRC Income Tax Laws, they are

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


entitled to either a three-year tax exemption
followed by three years with a 50% reduction in the tax rate,
commencing from the first operating year; or a two-year tax
exemption followed by three years with a 50% reduction in the
tax rate, commencing from the first profitable year. As of
December 31, 2003, the Companys China subsidiaries
and VIEs on a combined basis had net operating losses
carryforwards of approximately $2.1 million expiring from
the year 2004 to 2007.

Composition of income tax expenses for China
operation

The following table set forth current and
deferred portion of income tax expenses of the Companys
China subsidiaries and VIEs, which were included in the
consolidated statements for the periods presented:

|                                         |  |                                 |        |                  |  |                      |      |      |  |   |      |   |  |   |      |  
|---------------------------------------- |  | ------------------------------- | ------ | ---------------- |  | -------------------- | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                         |  |                                 |        |                  |  |                     
|                                         |  | Year Ended                      |        | Six Months Ended |  | Years Ended June 30,
|                                         |  | December 31,                    |        | December 31,     |  |                     
|                                         |  | 2003                            |        | 2002             |  | 2002                 |      | 2001
|                                         |  |                                 |        |                  |  |                      |      |     
|                                         |  |                                
|                                         |  | (In U.S. dollars, in thousands)
|Current income taxes benefits (expenses) |  | $                               | (1,802 | )                |  | $                    |     |      |  | $ |     |   |  | $ |     |  
|Change in deferred tax assets            |  |                                 | 1,545  |                  |  |                      | (190 | )    |  |   | 274  |   |  |   | 824  |  
|Change in valuation allowance            |  |                                 | (638   | )                |  |                      | 190  |      |  |   | (274 | ) |  |   | (824 | )
|                                         |  |                                 |        |                  |  |                      |      |      |  |   |      |   |  |   |      |  
|Income tax expenses                      |  | $                               | (895   | )                |  | $                    |     |      |  | $ |     |   |  | $ |     |  
|                                         |  |                                 |        |                  |  |                      |      |      |  |   |      |   |  |   |      |  

Reconciliation
of the differences between statutory tax rate and the effective
tax rate for China operation

The following table set forth reconciliation
between the statutory EIT rate and the effective tax rate for
China operation for the periods presented:

|                                                                                 |  |              |     |                  |  |             |     |      |  |  |     |    |  |  |     |   
|-------------------------------------------------------------------------------- |  | ------------ | --- | ---------------- |  | ----------- | --- | ---- |  |  | --- | -- |  |  | --- | --
|                                                                                 |  |              |     |                  |  |            
|                                                                                 |  |              |     |                  |  | Years Ended
|                                                                                 |  | Year Ended   |     | Six Months Ended |  | June 30,   
|                                                                                 |  | December 31, |     | December 31,     |  |            
|                                                                                 |  | 2003         |     | 2002             |  | 2002        |     | 2001
|                                                                                 |  |              |     |                  |  |             |     |     
|Statutory EIT rate                                                               |  |              | 33  | %                |  |             | 33  | %    |  |  | 33  | %  |  |  | 33  | % 
|Tax differential from statutory rate applicable
    to the subsidiaries and VIEs |  |              | (1  | )%               |  |             | (23 | )%   |  |  | (7  | )% |  |  | (22 | )%
|Effect on tax holiday                                                            |  |              | (30 | )%               |  |             |    |      |  |  |    |    |  |  |    |   
|Permanent differences                                                            |  |              | 2   | %                |  |             | 1   | %    |  |  | (20 | )% |  |  | (4  | )%
|Change in valuation allowance                                                    |  |              | (2  | )%               |  |             | (5  | )%   |  |  | (7  | )% |  |  | (7  | )%
|Others                                                                           |  |              |    |                  |  |             | (6  | )%   |  |  | 1   | %  |  |  |    |   
|                                                                                 |  |              |     |                  |  |             |     |      |  |  |     |    |  |  |     |   
|Effective tax rate for China operations                                          |  |              | 2   | %                |  |             |    |      |  |  |    |    |  |  |    |   
|                                                                                 |  |              |     |                  |  |             |     |      |  |  |     |    |  |  |     |   

85



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##### Table of Contents



SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


The following table set forth the significant
components of the net deferred tax assets for China operation as
of December 31, 2003 and 2002, and June 30, 2002 and
2001:

|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |        |  
|-------------------- | -------------------------------- | ------------------------------- | - | ------------ | - | -------- | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                     |                                  |                                 |   |              |   |         
|                     |                                  |                                 |   |              |   | June 30,
|                     |                                  | December 31,                    |   | December 31, |   |         
|                     |                                  | 2003                            |   | 2002         |   | 2002     |   | 2001  
|                     |                                  |                                 |   |              |   |          |   |       
|                     |                                  |                                
|                     |                                  | (In U.S. dollars, in thousands)
|Deferred tax assets: |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       
|                     | Net operating loss carryforwards |                                 | $ | 566          |   |          | $ | 1,394  |   |  | $ | 1,691  |   |  | $ | 1,655  |  
|                     | Other accruals and liabilities   |                                 |   | 1,048        |   |          |   | 192    |   |  |   | 202    |   |  |   | 114    |  
|                     | Depreciation and amortization    |                                 |   | 619          |   |          |   | 378    |   |  |   | 261    |   |  |   | 111    |  
|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       
|                     | Total deferred tax assets        |                                 |   | 2,233        |   |          |   | 1,964  |   |  |   | 2,154  |   |  |   | 1,880  |  
|                     | Less: valuation allowance        |                                 |   | (1,326       | ) |          |   | (1,964 | ) |  |   | (2,154 | ) |  |   | (1,880 | )
|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       
|                     | Deferred tax assets              |                                 | $ | 907          |   |          | $ |       |   |  | $ |       |   |  | $ |       |  
|                     |                                  |                                 |   |              |   |          |   |        |   |  |   |        |   |  |   |       

Aggregate net
deferred tax assets

The following table set forth the significant
components of the aggregate net deferred tax assets of the
Company as of December 31, 2003 and 2002, and June 30,
2002 and 2001:

|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |         |  
|-------------------- | -------------------------------- | ------------------------------- | - | ------------ | - | -------- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                     |                                  |                                 |   |              |   |         
|                     |                                  |                                 |   |              |   | June 30,
|                     |                                  | December 31,                    |   | December 31, |   |         
|                     |                                  | 2003                            |   | 2002         |   | 2002     |   | 2001   
|                     |                                  |                                 |   |              |   |          |   |        
|                     |                                  |                                
|                     |                                  | (In U.S. dollars, in thousands)
|Deferred tax assets: |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        
|                     | Net operating loss carryforwards |                                 | $ | 20,595       |   |          | $ | 18,341  |   |  | $ | 18,020  |   |  | $ | 15,224  |  
|                     | Other accruals and liabilities   |                                 |   | 1,203        |   |          |   | 440     |   |  |   | 484     |   |  |   | 521     |  
|                     | Depreciation and amortization    |                                 |   | 619          |   |          |   | 495     |   |  |   | 374     |   |  |   | 224     |  
|                     | Other tax credits                |                                 |   | 564          |   |          |   | 592     |   |  |   | 622     |   |  |   | 578     |  
|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        
|                     | Total deferred tax assets        |                                 |   | 22,981       |   |          |   | 19,868  |   |  |   | 19,500  |   |  |   | 16,547  |  
|                     | Less: valuation allowance        |                                 |   | (22,074      | ) |          |   | (19,868 | ) |  |   | (19,500 | ) |  |   | (16,547 | )
|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        
|                     | Deferred tax assets              |                                 | $ | 907          |   |          | $ |        |   |  | $ |        |   |  | $ |        |  
|                     |                                  |                                 |   |              |   |          |   |         |   |  |   |         |   |  |   |        

9.     Net income
(loss) Per Share

Basic net income (loss) per share is
computed using the weighted average number of the ordinary
shares outstanding during the period. Diluted net income
(loss) per share is computed using the weighted average
number of ordinary share and ordinary share equivalents
outstanding during the period.

86



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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


The following table sets forth the computation of
basic and diluted net income (loss) per share for the
periods indicated:

|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |         |   | 
|------------ | --------------------------------------------------------------------------- | --------------------------------------------------------- | ----- | ------------ | ----- | -------------------- | - | ------ | - | ---- | ----- | ------ | ----- |  | - | ------- | - |  | - | ------- | - | 
|             |                                                                             |                                                           |       | Six months   |       |                     
|             |                                                                             | Years ended December 31,                                  |       | ended        |       | Years ended June 30,
|             |                                                                             |                                                           |       | December 31, |       |                     
|             |                                                                             | 2003                                                      |       | 2002         |       | 2002                 |   | 2002   |   | 2001
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |     
|             |                                                                             |                                                           |       | (unaudited)  |       |                      |   |        |   |     
|             |                                                                             |                                                          
|             |                                                                             | (in U.S. dollars, in thousands, except per share amounts)
|Numerator:   |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Net income (loss)                                                           |                                                           | $     | 31,423       |       |                      | $ | (4,949 | ) |      | $     | 916    |       |  | $ | (16,092 | ) |  | $ | (36,351 | )
|             | Amortization of convertible debt issuance cost                              |                                                           |       | 341          |       |                      |   |       |   |      |       |       |       |  |   |        |   |  |   |        |  
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Net income (loss) used in computing diluted
    net income (loss) per share |                                                           | $     | 31,764       |       |                      | $ | (4,949 | ) |      | $     | 916    |       |  | $ | (16,092 | ) |  | $ | (36,351 | )
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|Denominator: |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Weighted average ordinary shares outstanding                                |                                                           |       | 47,518       |       |                      |   | 45,629 |   |      |       | 45,725 |       |  |   | 44,315  |   |  |   | 40,110  |  
|             | Ordinary shares to be issued for business
    acquisition                   |                                                           |       | 322          |       |                      |   |       |   |      |       |       |       |  |   |        |   |  |   |        |  
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Shares used in computing basic net income
    (loss) per share              |                                                           |       | 47,840       |       |                      |   | 45,629 |   |      |       | 45,725 |       |  |   | 44,315  |   |  |   | 40,110  |  
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Weighted average ordinary share equivalents:                                |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |         |  
|             |                                                                             | Stock options                                             |       |              | 4,994 |                      |   |        |  |      |       |        | 2,113 |  |   |         |  |  |   |         |  | 
|             |                                                                             | Unvested restricted shares                                |       |              | 21    |                      |   |        |  |      |       |        | 192   |  |   |         |  |  |   |         |  | 
|             |                                                                             | Convertible debt                                          |       |              | 1,939 |                      |   |        |  |      |       |        |      |  |   |         |  |  |   |         |  | 
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             |                                                                             |                                                           | 6,954 |              |       |                      |  |        |   |      | 2,305 |        |       |  |  |         |   |  |  |        
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Shares used in computing diluted net income
    (loss) per share            |                                                           |       | 54,794       |       |                      |   | 45,629 |   |      |       | 48,030 |       |  |   | 44,315  |   |  |   | 40,110  |  
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Basic net income (loss) per share                                           |                                                           | $     | 0.66         |       |                      | $ | (0.11  | ) |      | $     | 0.02   |       |  | $ | (0.36   | ) |  | $ | (0.91   | )
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        
|             | Diluted net income (loss) per share                                         |                                                           | $     | 0.58         |       |                      | $ | (0.11  | ) |      | $     | 0.02   |       |  | $ | (0.36   | ) |  | $ | (0.91   | )
|             |                                                                             |                                                           |       |              |       |                      |   |        |   |      |       |        |       |  |   |         |   |  |   |        

10.     Employee
Benefit Plans

410(k)
Savings Plan

The Companys U.S. subsidiary has a savings
plan that qualifies as a deferred salary arrangement under
Section 401(k) of the Internal Revenue Code (the
401(k) Plan). Under the 401(k) Plan, participating
employees may defer 100% of their eligible pretax earnings up to
the Internal Revenue Services annual contribution limit.
All employees on the United States payroll of the Company age
21 years or older are eligible to participate in the 401(k)
Plan. The Company has not been required to contribute to the
401(k) Plan.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


China
Contribution Plan

The Companys subsidiaries and VIEs in China
participate in a government-mandated multi-employer defined
contribution plan pursuant to which certain retirement, medical
and other welfare benefits are provided to employees. Chinese
labor regulations require the Companys subsidiary to pay
to the local labor bureau a monthly contribution at a stated
contribution rate based on the monthly basic compensation of
qualified employees. The relevant local labor bureau is
responsible for meeting all retirement benefit obligations; the
Company has no further commitments beyond its monthly
contribution. During the year ended December 31, 2003, six
months ended December 31, 2002 and the years ended
June 30, 2002 and 2001, the Company contributed a total of
$2.3 million, $0.7 million, $0.8 million and $0.7
million, respectively, to these funds.

11.     Profit
Appropriation

The Companys subsidiaries and VIEs in China
are required to make appropriations to certain non-distributable
reserve funds. Its subsidiaries, in accordance with the laws
applicable to Chinas Foreign Investment Enterprises, must
make appropriations from its after-tax profit (as determined
under PRC GAAP) to non-distributable reserve funds including
(i) general reserve fund, (ii) enterprise expansion
fund and (iii) staff bonus and welfare fund. General
reserve fund is at least 10% of the after-tax profits calculated
in accordance with the PRC GAAP. Appropriation is not required
if the reserve fund has reached 50% of the registered capital of
the respective company. The appropriation of the other two
reserve funds is at the Companys discretion. At the same
time, the Companys VIEs, in accordance with the China
Company Laws, must make appropriations from its after-tax profit
(as determined under PRC GAAP) to non-distributable reserve
funds including (i) statutory surplus fund, (ii) statutory
public welfare fund and (iii) discretionary surplus fund.
Statutory surplus fund is at least 10% of the after-tax profits
calculated in accordance with the PRC GAAP. Appropriation is not
required if the reserve fund has reached 50% of the registered
capital of the respective company. Appropriation to the
statutory public welfare fund is 5% to 10% of the after-tax
profits calculated in accordance with the PRC GAAP.
Appropriation to discretionary surplus fund is made at the
discretion of the Company.

General reserve fund and statutory surplus fund
are restricted for set off against losses, expansion of
production and operation or increase in register capital of the
respective company. Statutory public welfare fund is restricted
to the capital expenditures for the collective welfare of
employees. These reserves are not transferable to the Company in
the form of cash dividends, loans or advances. These reserves
are therefore not available for distribution except in
liquidation. As of December 31, 2003, the Company had
appropriated totaling $4.3 million to these
non-distributable reserve funds.

12.     Stock
Plans

1999 Stock
Plan

In May 1999, the Company adopted the 1999 Stock
Plan (the 1999 Plan). The 1999 Plan provides for the
granting of stock options to employees, consultants and
directors of the Company. Options granted under the Plan may be
either incentive stock options or nonqualified stock options.
Incentive stock options (ISO) may be granted only to
Company employees (including officers and directors who are also
employees). Nonqualified stock options (NSO) may be
granted to Company employees and consultants. As of
December 31, 2003, the Company has cumulatively reserved
12,858,000 ordinary shares for issuance under the 1999 Plan,
including a previous plan carried over from 1997 and options
assumed in the Sinanet acquisition. The 1999 Plan provides for
an annual automatic increase in the number of ordinary shares
reserved for issuance under the plan on the first day of 2001,
2002, 2003, 2004 and 2005 fiscal years equal to the lesser of
(1) 750,000 shares, (2) 3% of the ordinary shares
outstanding on the last day of the immediately

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


proceeding fiscal year, or (3) such lesser
number of shares as is determined by the Board. The 1999 Plan
will continue in effect until May 2009, unless terminated
earlier in accordance with the terms of the Plan. As of
December 31, 2003, there were a total of 4,370,000 options
outstanding and 1,556,000 options were available for grant under
the 1999 Plan.

Options under the Companys 1999 Plan may be
granted for a term of up to ten years and at prices no less than
85% of the estimated fair value of the shares on the date of
grant as determined by the Board of Directors, provided,
however, that the exercise price of an ISO and NSO shall not be
less than 100% and 85% of the estimated fair value of the shares
on the date of grant, respectively. The exercise price of an ISO
and NSO granted to a 10% shareholder should not be less than
110% of the estimated fair value of the shares on the date of
grant. Options granted under the Plan through December 31,
2002 generally vest 25% after the first year and then 2.083%
each month thereafter. Certain options vest monthly over a four
year term or a one year term. Certain grants are exercisable
immediately under such terms and conditions as determined by the
Board of Directors. Ordinary Shares issued upon such early
exercises are subject to rights of repurchases by the Company
until such shares become fully vested. At December 31,
2003, 2002 and June 30, 2002, there were nil, 150,000 and
309,000, respectively, shares of such Ordinary Shares issued
that were subject to repurchase.

1999
Executive Stock Option Plan

In October 1999, the Board adopted the 1999
Executive Stock Option Plan (the Executive Plan). An
aggregate of 2,250,000 Ordinary Shares have been reserved for
issuance under the Executive Plan. The Executive Plan provides
for the granting of options to purchase Ordinary Shares and
Ordinary Share purchase rights to eligible employees and
consultants. As of December 31, 2003, there were a total of
1,574,000 options outstanding and 86,000 options were available
for grant under the Executive Plan. Options under Executive Plan
may be granted for a term of up to ten years and at prices no
less than 85% of the estimated fair value of the shares on the
date of grant as determined by the Board of Directors, provided,
however, that the exercise price of an ISO and NSO shall not be
less than 100% and 85% of the estimated fair value of the shares
on the date of grant, respectively. The exercise price of an ISO
and NSO granted to a 10% shareholder should not be less than
110% of the estimated fair value of the shares on the date of
grant. Options granted under the Executive Plan through
December 31, 2002 generally vest 25% after the first year
and then 2.083% each month thereafter. Certain options vest
monthly over a four-year term or a one year term. Certain grants
are exercisable immediately under such terms and conditions as
determined by the Board of Directors. Ordinary Shares issued
upon such early exercises are subject to rights of repurchases
by the Company until such shares become fully vested. The
Executive Plan will continue in effect until October 2009,
unless terminated earlier in accordance with the terms of the
Executive Plan.

Directors
Stock Option Plan

In October 1999, the Board approved the 1999
Directors Stock Option Plan (the Directors
Plan) covering an aggregate of 750,000 ordinary shares.
The Directors Plan became effective on the effective date
of the initial public offering and provides a non-employee
director after the completion of the offering (1) a non
statutory stock option to purchase 37,500 ordinary shares on the
date on which he or she first becomes a member of the Board of
Directors, and (2) an additional non statutory stock option
to purchase 15,000 shares on the date of each annual
shareholders meeting immediately thereafter, if on such
date he or she has served on the Board for at least six months.
All options granted under the Directors Plan shall not be
less than 100% of the estimated fair value of the shares on the
date of grant and shall have a maximum term of 10 years.
All options granted under the Directors Plan vest in full
immediately upon grant. As of December 31, 2003, 326,000
options were outstanding and 315,000 options were available for
grant under the Directors Plan.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


Activities of
All Stock Option Plans

The following table summarizes stock option
activity under the Companys stock option plans:

|                                                                   |  |                                          |        |                  |  |                      |       |          |  |             |       |          |  |             |      |          |  |  |        |   |  |   |      |  |  |  |        |   |  |   |      | 
|------------------------------------------------------------------ |  | ---------------------------------------- | ------ | ---------------- |  | -------------------- | ----- | -------- |  | ----------- | ----- | -------- |  | ----------- | ---- | -------- |  |  | ------ | - |  | - | ---- |  |  |  | ------ | - |  | - | ---- | 
|                                                                   |  |                                          |        |                  |  |                      |       |          |  |            
|                                                                   |  |                                          |        |                  |  | Years Ended June 30,
|                                                                   |  | Year Ended                               |        | Six Months Ended |  |                     
|                                                                   |  | December 31,                             |        | December 31,     |  |                      |       |         
|                                                                   |  | 2003                                     |        | 2002             |  | 2002                 |       | 2001    
|                                                                   |  |                                          |        |                  |  |                      |       |         
|                                                                   |  |                                          |        | Weighted         |  |                      |       | Weighted |  |             |       | Weighted |  |             |      | Weighted
|                                                                   |  |                                          |        | Average          |  |                      |       | Average  |  |             |       | Average  |  |             |      | Average 
|                                                                   |  | Options                                  |        | Exercise         |  | Options              |       | Exercise |  | Options     |       | Exercise |  | Options     |      | Exercise
|                                                                   |  | Outstanding                              |        | Price            |  | Outstanding          |       | Price    |  | Outstanding |       | Price    |  | Outstanding |      | Price   
|                                                                   |  |                                          |        |                  |  |                      |       |          |  |             |       |          |  |             |      |         
|                                                                   |  |                                         
|                                                                   |  | (In thousands, except per share amounts)
|Outstanding at beginning of period                                 |  |                                          | 6,583  |                  |  | $                    | 3.38  |          |  |             | 5,551 |          |  | $           | 3.75 |          |  |  | 4,469  |   |  | $ | 6.21 |  |  |  | 4,722  |   |  | $ | 7.02 | 
|Granted                                                            |  |                                          | 2,077  |                  |  |                      | 14.42 |          |  |             | 1,265 |          |  |             | 2.11 |          |  |  | 2,470  |   |  |   | 1.62 |  |  |  | 1,919  |   |  |   | 4.10 | 
|Exercised                                                          |  |                                          | (1,668 | )                |  |                      | 3.52  |          |  |             | (43   | )        |  |             | 1.07 |          |  |  | (37    | ) |  |   | 0.47 |  |  |  | (531   | ) |  |   | 1.66 | 
|Canceled                                                           |  |                                          | (722   | )                |  |                      | 3.30  |          |  |             | (190  | )        |  |             | 6.19 |          |  |  | (1,351 | ) |  |   | 8.08 |  |  |  | (1,641 | ) |  |   | 7.53 | 
|                                                                   |  |                                          |        |                  |  |                      |       |          |  |             |       |          |  |             |      |          |  |  |        |   |  |   |      |  |  |  |        |   |  |   |      | 
|Outstanding at period end                                          |  |                                          | 6,270  |                  |  |                      | 7.00  |          |  |             | 6,583 |          |  |             | 3.38 |          |  |  | 5,551  |   |  |   | 3.75 |  |  |  | 4,469  |   |  |   | 6.21 | 
|                                                                   |  |                                          |        |                  |  |                      |       |          |  |             |       |          |  |             |      |          |  |  |        |   |  |   |      |  |  |  |        |   |  |   |      | 
|Weighted average fair value of options granted
    during the year |  |                                          |        |                  |  | $                    | 8.56  |          |  |             |       |          |  | $           | 1.39 |          |  |  |        |   |  | $ | 0.71 |  |  |  |        |   |  | $ | 3.08 | 

At December 31, 2003, approximately
1,957,000 options were available for grant under the Plans.

|                |  |                        |       |                        |  |          |      |                |  |          |       |  |  |  |       |  |  |   |       | 
|--------------- |  | ---------------------- | ----- | ---------------------- |  | -------- | ---- | -------------- |  | -------- | ----- |  |  |  | ----- |  |  | - | ----- | 
|                |  |                        |       |                       
|                |  | Options Outstanding at |       | Options Exercisable at
|                |  | December 31, 2003      |       | December 31, 2003     
|                |  |                        |       |                       
|                |  |                        |       | Weighted               |  |          |      |               
|                |  |                        |       | Average                |  | Weighted |      |                |  | Weighted
|                |  |                        |       | Remaining              |  | Average  |      |                |  | Average 
|Range of        |  | Number                 |       | Contractual            |  | Exercise |      | Number         |  | Exercise
|Exercise Prices |  | Outstanding            |       | Life                   |  | Price    |      | Outstanding    |  | Price   
|                |  |                        |       |                        |  |          |      |                |  |         
|                |  | (In thousands)         |       |                        |  |          |      | (In thousands) |  |         
|$0.16  $ 1.68  |  |                        | 2,064 |                        |  |          | 7.95 |                |  | $        | 1.54  |  |  |  | 1,148 |  |  | $ | 1.47  | 
|$1.88  $ 3.125 |  |                        | 1,235 |                        |  |          | 8.24 |                |  |          | 2.19  |  |  |  | 384   |  |  |   | 2.42  | 
|$3.14  $ 7.33  |  |                        | 795   |                        |  |          | 6.17 |                |  |          | 7.02  |  |  |  | 754   |  |  |   | 7.07  | 
|$8.42  $37.59  |  |                        | 2,176 |                        |  |          | 9.07 |                |  |          | 14.91 |  |  |  | 524   |  |  |   | 18.41 | 
|                |  |                        |       |                        |  |          |      |                |  |          |       |  |  |  |       |  |  |   |       | 
|                |  |                        | 6,270 |                        |  |          |      |                |  |          |       |  |  |  | 2,810 |  |  |   |       | 
|                |  |                        |       |                        |  |          |      |                |  |          |       |  |  |  |       |  |  |   |       | 

Stock-based compensation.The Company recorded cumulative
deferred stock compensation, which represents the difference
between the exercise price of options granted and the fair
market value of the underlying stock at the date of grant.
Deferred stock compensation is amortized on an accelerated basis
over the vesting period of the applicable options, which is
generally four years. The amortization of deferred compensation
was $0.6 million and $0.7 million for the year ended
December 31, 2003 and six months ended December 31,
2002, respectively, and $2.3 million and $7.5 million
for the years ended June 30, 2002, and 2001, respectively.

Employee
Stock Purchase Plan

In October 1999, the Board adopted the 1999
Employee Stock Purchase Plan (the Purchase Plan). An
aggregate of 3,750,000 ordinary shares have been reserved for
issuance under the plan, plus annual increases equal to the
lesser of (1) 600,000 shares, (2) 0.5% of the ordinary
shares outstanding on the last day of the

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


immediately preceding fiscal year, or
(3) such lesser number of shares as is determined by the
Board. The Purchase Plan is implemented by a series of
overlapping periods of approximately 24 months
duration, with new offering periods (other than the first
offering period which will be approximately
9 1/2 months) commencing on February 1 and
August 1 of each year. The price at which stock is
purchased under the Purchase Plan is equal to the lower of 85%
of the fair market value of the Ordinary Shares at the beginning
of each offering period or at the end of each purchase period.
The eligible employees can have up to 20% of their earnings
withheld to be used to purchase shares of the Companys
Ordinary Share. The Purchase Plan offers automatic withdrawal
and reenrollment provision under which the participant in the
ongoing offering period shall automatically be deemed to have
withdrawn from the ongoing offering period and enrolled in such
new offering period under the same subscription agreement in
effect for such ongoing offering period if the fair market value
of the shares on the new offering period is lower than the in
progress offering period. The 1999 Employee Stock Purchase Plan
became effective on the effective date of the initial public
offering. As of December 31, 2003, total contributions by
employees to the Purchase Plan were $0.8 million and
170,000 shares had been issued under the Purchase Plan.

13.     Segment
Information

Based on the criteria established by Statement of
Financial Accounting Standards No. 131, Disclosures
about Segments of an Enterprise and Related Information,
the Company currently operates in two principal business
segments globally; advertising and non-advertising. The Company
does not allocate any operating costs or assets to its segments
as management does not use this information to measure the
performance of these operating segments. Management does not
believe that allocating these expenses or assets is meaningful
in evaluating these segments performance.

The following is a summary of revenues, cost of
revenues and gross profit margins:

|                      |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |        |  
|--------------------- | --------------------------- | ------------------------------- | ------- | ---------------- | - | -------------------- | ------ | ------ | - | ---- | ------ | ------ | - | - | ------ | ------ | - | - | ------ | ------ | -
|                      |                             |                                 |         |                  |   |                     
|                      |                             | Years Ended December 31         |         |                  |   | Years Ended June 30,
|                      |                             |                                 |         | Six Months Ended |   |                     
|                      |                             | 2003                            |         | 2002             |   | December 31 2002     |        | 2002   |   | 2001
|                      |                             |                                 |         |                  |   |                      |        |        |   |     
|                      |                             |                                 |         | (Unaudited)      |   |                      |        |        |   |     
|                      |                             |                                
|                      |                             | (In U.S. dollars, in thousands)
|Revenues:             |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |       
|                      | Advertising                 |                                 | $       | 41,173           |   |                      | $      | 24,703 |   |      | $      | 13,869 |   |   | $      | 21,105 |   |   | $      | 23,393 |  
|                      | Mobile value-added services |                                 |         | 64,377           |   |                      |        | 9,079  |   |      |        | 6,047  |   |   |        | 3,920  |   |   |        |       |  
|                      | Others                      |                                 |         | 8,735            |   |                      |        | 5,112  |   |      |        | 3,300  |   |   |        | 3,483  |   |   |        | 3,290  |  
|                      |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |       
|                      |                             | $                               | 114,285 |                  |   | $                    | 38,894 |        |   | $    | 23,216 |        |   | $ | 28,508 |        |   | $ | 26,683 |       
|                      |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |       
|Cost of revenues:     |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |       
|                      | Advertising                 |                                 | $       | 14,001           |   |                      | $      | 11,267 |   |      | $      | 5,824  |   |   | $      | 11,537 |   |   | $      | 13,771 |  
|                      | Mobile value-added services |                                 |         | 19,455           |   |                      |        | 3,267  |   |      |        | 2,258  |   |   |        | 1,275  |   |   |        |       |  
|                      | Others                      |                                 |         | 950              |   |                      |        | 873    |   |      |        | 418    |   |   |        | 663    |   |   |        | 1,169  |  
|                      |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |       
|                      |                             | $                               | 34,406  |                  |   | $                    | 15,407 |        |   | $    | 8,500  |        |   | $ | 13,475 |        |   | $ | 14,940 |       
|                      |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |       
|Gross profit margins: |                             |                                 |         |                  |   |                      |        |        |   |      |        |        |   |   |        |        |   |   |        |       
|                      | Advertising                 |                                 |         | 66               | % |                      |        | 54     | % |      |        | 58     | % |   |        | 45     | % |   |        | 41     | %
|                      | Mobile value-added services |                                 |         | 70               | % |                      |        | 64     | % |      |        | 63     | % |   |        | 68     | % |   |        |       |  
|                      | Others                      |                                 |         | 89               | % |                      |        | 83     | % |      |        | 87     | % |   |        | 81     | % |   |        | 65     | %
|Overall               |                             |                                 | 70      | %                |   |                      | 60     | %      |   |      | 63     | %      |   |   | 53     | %      |   |   | 44     | %     

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


The following is a summary of the Companys
geographic operation:

|                                                        |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |         | 
|------------------------------------------------------- | ----------------- | -------------- | - | ----- |  | --------- | - | ------- |  | ----- | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|                                                        |                   | U.S.           |   | China |  | Hong Kong |   | Taiwan  |  | Total
|                                                        |                   |                |   |       |  |           |   |         |  |      
|                                                        |                   |               
|                                                        |                   | (In thousands)
|Year ended and as of December 31,
    2003:             |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 2,398 |  |           | $ | 108,507 |  |       | $ | 1,854 |  |  | $ | 1,526 |  |  | $ | 114,285 | 
|                                                        | Long-lived assets |                |   | 66    |  |           |   | 7,592   |  |       |   | 132   |  |  |   | 856   |  |  |   | 8,646   | 
|Year ended and as of December 31, 2002
    (unaudited): |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 2,772 |  |           | $ | 32,502  |  |       | $ | 1,715 |  |  | $ | 1,905 |  |  | $ | 38,894  | 
|                                                        | Long-lived assets |                |   | 362   |  |           |   | 5,453   |  |       |   | 452   |  |  |   | 1,332 |  |  |   | 7,599   | 
|Six months ended and as of December 31,
    2002:       |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 1,427 |  |           | $ | 19,675  |  |       | $ | 1,060 |  |  | $ | 1,054 |  |  | $ | 23,216  | 
|                                                        | Long-lived assets |                |   | 362   |  |           |   | 5,453   |  |       |   | 452   |  |  |   | 1,332 |  |  |   | 7,599   | 
|Year ended and as of June 30,
    2002:                 |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 2,524 |  |           | $ | 22,832  |  |       | $ | 1,542 |  |  | $ | 1,610 |  |  | $ | 28,508  | 
|                                                        | Long-lived assets |                |   | 666   |  |           |   | 5,079   |  |       |   | 824   |  |  |   | 1,671 |  |  |   | 8,240   | 
|Year ended and as of June 30,
    2001:                 |                   |                |   |       |  |           |   |         |  |       |   |       |  |  |   |       |  |  |   |        
|                                                        | Revenues          |                | $ | 6,866 |  |           | $ | 17,190  |  |       | $ | 1,002 |  |  | $ | 1,625 |  |  | $ | 26,683  | 
|                                                        | Long-lived assets |                |   | 1,754 |  |           |   | 6,103   |  |       |   | 1,317 |  |  |   | 2,737 |  |  |   | 11,911  | 

Revenues are attributed to the countries in which
the invoices are issued. Long-lived assets comprise the net book
value of property and equipment.

14.     Certain risks
and Concentrations

Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist
primarily of cash and cash equivalents, marketable debt
securities and accounts receivable. The Company limits its
exposure to credit loss by depositing its cash and cash
equivalents with financial institutions in the U.S., China, Hong
Kong and Taiwan which management believes are of high credit
quality. The Company also limits investment in marketable debt
securities to debt securities with A ratings or above.

The Company believes that the risk associated
with accounts receivable is mitigated, to some extent, by the
fact that the Companys customer base is geographically
dispersed. Accounts receivable consist primarily of advertising
agencies, direct advertising customers and third party mobile
operators. Regarding its advertising revenues, one advertising
customer represented 11% of net revenues for the year ended
June 30, 2001. No individual advertising customer accounted
for more than 10% of total net revenues for the year ended
December 31, 2003, six months ended December 31, 2002
and the year ended June 30, 2002. Also, no individual
advertising customer accounted for more than 10% of accounts
receivables as of December 31, 2003 and 2002. For its
mobile value-added services revenues, the Company contracts with
third party mobile operators, China Mobile Communication
Corporation (China Mobile) and its subsidiaries and
to a lesser extent China Unicom Co., Ltd (Unicom)
and its subsidiaries, for utilizing their billing systems to
collect subscription or usage fees from its subscribers and
transmission gateway for message delivery. Mobile value-added
services fees charged to users via these third party mobile
operators accounted for 56%, 26%, 14% of the Companys net
revenues for the year ended December 31, 2003, six months
ended December 31, 2002 and the year ended June 30,
2002. There were no such revenues for the year ended
June 30, 2001. Accounts receivable

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


from these third party mobile operators represent
mobile value-added services fees collected on behalf of the
Company after deducting their billing services and transmission
charges. The Company maintains allowances for potential credit
losses and historically such losses have not been significant
and within the Companys expectation.

The following table summarizes accounts
receivable concentration from the Companys significant
accounts receivable:

|                                  |  |                                |    |                   |  |  |   |  
|--------------------------------- |  | ------------------------------ | -- | ----------------- |  |  | - | -
|                                  |  |                               
|                                  |  | % of Total Accounts Receivable
|                                  |  |                               
|                                  |  | As of                          |    | As of            
|Customer                          |  | December 31, 2003              |    | December 31, 2002
|                                  |  |                                |    |                  
|                                  |  |                               
|                                  |  | (unaudited)                   
|China Mobile and its subsidiaries |  |                                | 45 | %                 |  |  | 7 | %

The Company operates in business segments which
are characterized by rapid technological advances, changes in
customer requirements and evolving regulatory requirements and
industry standards. Any failure by the Company to anticipate or
to respond adequately to technological changes in its industry
segments, changes in customer requirements or changes in
regulatory requirements or industry standards, could have a
material adverse affect on the Companys business and
operating results. The Company relies on a number of third-party
suppliers for various other services, including web server
hosting, banner advertising delivery software, Internet traffic
measurement software and transmission and billing of mobile
value-added services. Any failure of these suppliers to provide
services to the Company or any termination of these services
with the Company could have a material adverse affect on the
Companys business and operating results.

The Compare prepared the consolidated financial
statements in accordance with the accounting principles
generally accepted in the United States of America which
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.

The majority of the Companys revenues
derived and expenses and liabilities incurred were in Chinese
renminbi, Taiwan dollars and Hong Kong dollars. Accordingly, the
Company may experience economic losses and negative impacts on
earnings and equity as a result of exchange rate fluctuations in
the currencies of China, Taiwan and Hong Kong.

The Company had recorded $6.1 million of as
impairment of Investment in Sun Media Group during the three
months ended December 31, 2003. If the fair market value
continues to drop, the Company will need to recognize additional
impairment charges in the future periods.

15.     Convertible
debts

As of December 31, 2003, the Company has
$100 million of zero coupon convertible subordinated notes
(the Notes) due 2023. The Notes were issued at par
and bears no interest. The Notes will be convertible into SINA
ordinary shares, upon satisfaction of certain conditions, at an
initial conversion price of $25.79 per share, subject to
adjustments for certain events.

One of the conditions for conversion of the Notes
to SINA ordinary shares is conversion upon satisfaction of
market price condition, when the sale price (defined as closing
per share sales price) of SINA ordinary shares reaches a
specified threshold for a defined period of time. The specified
thresholds are i) during the period from issuance to
July 15, 2022, if the sale price of SINA ordinary shares,
for each of any five consecutive trading days in the immediately
preceding fiscal quarter, exceeds 115% of the conversion price
per ordinary share, and ii) during the period from
July 15, 2022 to July 15, 2023, if the sale price of
SINA ordinary shares on the previous trading day is more than
115% of the conversion price per ordinary share. For

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


the two consecutive fiscal quarters ended
September 30 and December 31, 2003, the sale price of
SINA ordinary shares exceeded 115% of the conversion price per
ordinary share for five consecutive trading days. The Notes are
therefore convertible into SINA ordinary shares according to the
threshold (i) described above until it is not being
satisfied. As of December 31, 2003, the Company did not
receive any request for conversion of the Notes to SINA ordinary
shares.

Upon conversion, the Company has the right to
deliver cash in lieu of ordinary shares, or a combination of
cash and ordinary shares. The Company may redeem for cash all or
part of the Notes on or after July 15, 2012, at a price
equal to 100% of the principal amount of the Notes being
redeemed. The purchasers may require the Company to repurchase
all or part of the Notes for cash on July 15 annually from
2007 through 2013, and on July 15, 2018, or upon a change
of control, at a price equal to 100% of the principal amount of
the Notes.

16.     Commitments
and Contingencies

The following table sets forth the contractual
commitments and obligations of the Company as of
December 31, 2003:

|                              |                             |                                 |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |   | 
|----------------------------- | --------------------------- | ------------------------------- | ------- | --------- |  | ----------- | ----- | ---------- |  | ---------- | ----- | ----- |  | - | ------- | ------- |  | - | - | - | 
|                              |                             |                                
|                              |                             | Payments Due by Period         
|                              |                             |                                
|                              |                             |                                 |         | Less Than |  | One to      |       | Three to   |  | More Than 
|                              |                             | Total                           |         | One Year  |  | Three Years |       | Five Years |  | Five Years
|                              |                             |                                 |         |           |  |             |       |            |  |           
|                              |                             |                                
|                              |                             | (In U.S. Dollars, in thousands)
|Contractual obligations:      |                             |                                 |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |  
|                              | Long-term debt obligations  |                                 | $       | 100,000   |  |             | $     |           |  |            | $     |      |  |   | $       | 100,000 |  |   | $ |  | 
|                              | Operating lease obligations |                                 |         | 3,594     |  |             |       | 1,405      |  |            |       | 1,726 |  |   |         | 463     |  |   |   |  | 
|                              | Purchase obligations        |                                 |         | 6,481     |  |             |       | 6,078      |  |            |       | 403   |  |   |         |        |  |   |   |  | 
|                              | Other long-term liabilities |                                 |         | 2,175     |  |             |       | 1,118      |  |            |       | 1,057 |  |   |         |        |  |   |   |  | 
|                              |                             |                                 |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |  
|Total contractual obligations |                             | $                               | 112,250 |           |  | $           | 8,601 |            |  | $          | 3,186 |       |  | $ | 100,463 |         |  | $ |  |  
|                              |                             |                                 |         |           |  |             |       |            |  |            |       |       |  |   |         |         |  |   |   |  

Long-term debt obligations represent the zero
coupon convertible subordinated notes issued on July 7,
2003. Please see Note 15  Convertible
debts for further information. Operating lease obligations
include the commitments under the lease agreements for the
Companys office premises. Purchase obligations include the
commitments for Internet connection fees associated with web
site production, content fees associated with web site
production and mobile value-added services, advertising serving
and tracking services and marketing activities.

The Company leases office facilities under
noncancelable operating leases with various expiration dates
through 2008. Rental expenses for the year ended
December 31, 2003, six months ended December 31, 2002
and the years ended June 30, 2002 and 2001 totaled
$1.7 million, $0.7 million, $1.1 million and
$1.1 million, respectively.

Apart from the above, the Company did not have
any other material long-term debt obligations, capital lease
obligations, operating lease obligations or purchase obligations
as of December 31, 2003.

There are uncertainties regarding the legal basis
of the Companys ability to operate an Internet business
and provide telecom value-added services in China. Although the
country has implemented a wide range of market-oriented economic
reforms, the telecommunication, information and media industries
remain highly regulated. Not only are restrictions currently in
place, but also regulations are unclear regarding in what
specific segments of these industries companies with foreign
investors, including the Company, may operate. Therefore, the
Company might be required to limit the scope of its operations
in China, and this could have a material adverse effect on the
Companys financial position, results of operations and
cash flows.

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


17.     Subsequent
Events

In January 2004, the Company entered into a
definitive agreement with Yahoo!, the leading provider of
comprehensive online products and services to consumers and
businesses worldwide, to form a joint venture for providing
online auction in China. According to the agreement, the Company
will contribute certain services, advertising spaces and cash to
account for 33% equity interest in the joint venture.

In February 2004, the Company entered into a
definitive agreement to acquire all outstanding shares of
Crillion Corporation, a BVI company engaged in mobile
value-added services through its subsidiary and a VIE in China.
The initial purchase price consists of $9.9 million in cash
and approximately 196,000 of the Companys ordinary shares
valued at $40.90 per share. Additional payments will be made on
an earn-out basis at approximately 1.5 to 2 times of
Crillions 2004 and 2005 earnings if its pretax income for
2004 and 2005 exceeds $6.7 million and $13.3 million,
respectively. The total consideration is subject to a cap of
$125 million and will be paid 60% in cash and 40% in the
Companys ordinary shares valued at $40.90 per share. The
acquisition will be subject to customary closing conditions.

Supplementary Financial Data
(unaudited)

Quarterly
financial result

The following table reflects the Companys
unaudited quarterly consolidated statement of operations data
for the quarters presented. The Company believes that the
historical quarterly information has been prepared substantially
on the same basis as the audited consolidated financial
statements, and all necessary adjustments, consisting only of
normal recurring adjustments, have been included in the amounts
below to state fairly the unaudited quarterly results of
operations data. Please refer to the Companys consolidated
financial statements and the notes thereto for an explanation of
the computation of basic and diluted net income (loss) per
share.

|                                                          |  |                                 |        |           |  |          |        |           |  |   |        |  |  |   |        | 
|--------------------------------------------------------- |  | ------------------------------- | ------ | --------- |  | -------- | ------ | --------- |  | - | ------ |  |  | - | ------ | 
|                                                          |  |                                
|                                                          |  | Quarterly Results for the      
|                                                          |  | Year Ended December 31, 2003   
|                                                          |  |                                
|                                                          |  | Dec. 31,                        |        | Sept. 30, |  | June 30, |        | March 31,
|                                                          |  | 2003                            |        | 2003      |  | 2003     |        | 2003     
|                                                          |  |                                 |        |           |  |          |        |          
|                                                          |  |                                
|                                                          |  | (In U.S. dollars, in thousands,
|                                                          |  | except per share amounts)      
|Net revenues                                              |  | $                               | 38,270 |           |  | $        | 31,914 |           |  | $ | 25,987 |  |  | $ | 18,114 | 
|Gross profit                                              |  |                                 | 27,608 |           |  |          | 22,352 |           |  |   | 17,881 |  |  |   | 12,007 | 
|Net income                                                |  |                                 | 9,269  |           |  |          | 11,657 |           |  |   | 7,121  |  |  |   | 3,376  | 
|Basic net income per share                                |  | $                               | 0.19   |           |  | $        | 0.24   |           |  | $ | 0.15   |  |  | $ | 0.07   | 
|Shares used in computing basic net income per
    share   |  |                                 | 48,647 |           |  |          | 48,279 |           |  |   | 47,661 |  |  |   | 46,774 | 
|Diluted net income per share                              |  | $                               | 0.16   |           |  | $        | 0.21   |           |  | $ | 0.14   |  |  | $ | 0.07   | 
|Shares used in computing diluted net income per
    share |  |                                 | 57,784 |           |  |          | 57,622 |           |  |   | 51,971 |  |  |   | 50,844 | 

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


|                                                                 |  |                                 |        |                           |  |          |        |           |  |          |        |           |  |   |        |   |  |   |        |   |  |   |        |  
|---------------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------- |  | -------- | ------ | --------- |  | -------- | ------ | --------- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                                 |  |                                 |        |                           |  |          |        |           |  |         
|                                                                 |  | Quarterly Results               |        |                           |  |          |        |           |  |         
|                                                                 |  | for the                         |        |                          
|                                                                 |  | Six Months Ended                |        | Quarterly Results for the
|                                                                 |  | December 31, 2002               |        | Year Ended June 30, 2002 
|                                                                 |  |                                 |        |                          
|                                                                 |  | Dec. 31,                        |        | Sept. 30,                 |  | June 30, |        | March 31, |  | Dec. 31, |        | Sept. 30,
|                                                                 |  | 2002                            |        | 2002                      |  | 2002     |        | 2002      |  | 2001     |        | 2001     
|                                                                 |  |                                 |        |                           |  |          |        |           |  |          |        |          
|                                                                 |  |                                
|                                                                 |  | (In U.S. dollars, in thousands,
|                                                                 |  | except per share amounts)      
|Net revenues                                                     |  | $                               | 12,870 |                           |  | $        | 10,346 |           |  | $        | 8,563  |           |  | $ | 7,115  |   |  | $ | 6,769  |   |  | $ | 6,061  |  
|Gross profit                                                     |  |                                 | 8,409  |                           |  |          | 6,265  |           |  |          | 5,014  |           |  |   | 3,697  |   |  |   | 3,272  |   |  |   | 2,917  |  
|Net income (loss)                                                |  |                                 | 1,475  |                           |  |          | (559   | )         |  |          | (1,894 | )         |  |   | (3,971 | ) |  |   | (4,933 | ) |  |   | (5,294 | )
|Basic net income (loss) per share                                |  | $                               | 0.03   |                           |  | $        | (0.01  | )         |  | $        | (0.04  | )         |  | $ | (0.09  | ) |  | $ | (0.11  | ) |  | $ | (0.13  | )
|Shares used in computing basic net income
    (loss) per share   |  |                                 | 45,780 |                           |  |          | 45,671 |           |  |          | 45,579 |           |  |   | 45,488 |   |  |   | 45,396 |   |  |   | 40,798 |  
|Diluted net income (loss) per share                              |  | $                               | 0.03   |                           |  | $        | (0.01  | )         |  | $        | (0.04  | )         |  | $ | (0.09  | ) |  | $ | (0.11  | ) |  | $ | (0.13  | )
|Shares used in computing diluted net income
    (loss) per share |  |                                 | 48,868 |                           |  |          | 45,671 |           |  |          | 45,579 |           |  |   | 45,488 |   |  |   | 45,396 |   |  |   | 40,798 |  

|                                                        |  |                                 |        |           |  |          |        |           |  |   |        |   |  |   |         |  
|------------------------------------------------------- |  | ------------------------------- | ------ | --------- |  | -------- | ------ | --------- |  | - | ------ | - |  | - | ------- | -
|                                                        |  |                                
|                                                        |  | Quarterly Results for the      
|                                                        |  | Year Ended June 30, 2001       
|                                                        |  |                                
|                                                        |  | June 30,                        |        | March 31, |  | Dec. 31, |        | Sept. 30,
|                                                        |  | 2001                            |        | 2001      |  | 2000     |        | 2000     
|                                                        |  |                                 |        |           |  |          |        |          
|                                                        |  |                                
|                                                        |  | (In U.S. dollars, in thousands,
|                                                        |  | except per share amounts)      
|Net revenues                                            |  | $                               | 5,779  |           |  | $        | 6,129  |           |  | $ | 7,622  |   |  | $ | 7,153   |  
|Gross profit                                            |  |                                 | 2,470  |           |  |          | 2,472  |           |  |   | 3,378  |   |  |   | 3,009   |  
|Net loss                                                |  |                                 | (8,217 | )         |  |          | (9,010 | )         |  |   | (8,875 | ) |  |   | (10,249 | )
|Basic net loss per share                                |  | $                               | (0.20  | )         |  | $        | (0.22  | )         |  | $ | (0.22  | ) |  | $ | (0.26   | )
|Shares used in computing basic net loss per share       |  |                                 | 40,453 |           |  |          | 40,300 |           |  |   | 40,123 |   |  |   | 39,565  |  
|Diluted net loss per share                              |  | $                               | (0.20  | )         |  | $        | (0.22  | )         |  | $ | (0.22  | ) |  | $ | (0.26   | )
|Shares used in computing diluted net loss per
    share |  |                                 | 40,453 |           |  |          | 40,300 |           |  |   | 40,123 |   |  |   | 39,565  |  

Movement of
allowances for doubtful accounts

The following is a summary of movement of
allowance for doubtful accounts:

|                             |  |                                 |        |                          |  |                     |        |      |  |   |        |   |  |   |       |  
|---------------------------- |  | ------------------------------- | ------ | ------------------------ |  | ------------------- | ------ | ---- |  | - | ------ | - |  | - | ----- | -
|                             |  |                                 |        |                          |  |                    
|                             |  |                                 |        |                          |  | For the Years Ended
|                             |  |                                 |        |                          |  | June 30,           
|                             |  | For the Year Ended              |        | For the Six Months Ended |  |                    
|                             |  | December 31, 2003               |        | December 31, 2002        |  | 2002                |        | 2001
|                             |  |                                 |        |                          |  |                     |        |     
|                             |  |                                
|                             |  | (In U.S. dollars, in thousands)
|Balance at beginning of year |  | $                               | 1,579  |                          |  | $                   | 1,996  |      |  | $ | 1,581  |   |  | $ | 756   |  
|Charge to expenses           |  |                                 | 1,348  |                          |  |                     | 1,091  |      |  | $ | 1,777  |   |  | $ | 1,438 |  
|Write-offs net of recoveries |  |                                 | (1,350 | )                        |  |                     | (1,508 | )    |  | $ | (1,362 | ) |  | $ | (613  | )
|                             |  |                                 |        |                          |  |                     |        |      |  |   |        |   |  |   |       |  
|Balance at end of year       |  | $                               | 1,577  |                          |  | $                   | 1,579  |      |  | $ | 1,996  |   |  | $ | 1,581 |  
|                             |  |                                 |        |                          |  |                     |        |      |  |   |        |   |  |   |       |  

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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)


Movement of
valuation allowances for deferred tax assets

The following table set forth the movement of the
aggregate valuation allowances for deferred assets for the
periods presented:

|                                  |  |                                 |        |                    |  |                     |        |      |  |   |        |  |  |   |        | 
|--------------------------------- |  | ------------------------------- | ------ | ------------------ |  | ------------------- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                  |  |                                 |        |                    |  |                    
|                                  |  |                                 |        |                    |  | For the Years Ended
|                                  |  |                                 |        |                    |  | June 30,           
|                                  |  | For the Year Ended              |        | For the Six Months |  |                    
|                                  |  | December 31, 2003               |        | December 31, 2002  |  | 2002                |        | 2001
|                                  |  |                                 |        |                    |  |                     |        |     
|                                  |  |                                
|                                  |  | (In U.S. dollars, in thousands)
|Balance at beginning of the year  |  | $                               | 19,868 |                    |  | $                   | 19,500 |      |  | $ | 16,547 |  |  | $ | 10,302 | 
|Provision for the year            |  |                                 | 3,348  |                    |  |                     | 1,075  |      |  |   | 2,953  |  |  |   | 6,245  | 
|Recoveries of deferred tax assets |  |                                 | (1,142 | )                  |  |                     | (707   | )    |  |   |       |  |  |   |       | 
|                                  |  |                                 |        |                    |  |                     |        |      |  |   |        |  |  |   |        | 
|Balance at end of the year        |  | $                               | 22,074 |                    |  | $                   | 19,868 |      |  | $ | 19,500 |  |  | $ | 16,547 | 
|                                  |  |                                 |        |                    |  |                     |        |      |  |   |        |  |  |   |        | 

97



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SINA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(In U.S. dollars)




Item 9:     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.




Item 9A:     Controls
and Procedures

Our management, with the participation of our
Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rule 15d-15(e) under the
Securities Exchange Act of 1934) as of the end of the period
covered by this report. Based on such evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded
that our disclosure controls and procedures as of the end of the
period covered by this report were designed and functioning
effectively to provide reasonable assurance that the information
required to be disclosed by us in reports filed under the
Securities Exchange Act of 1934 is recorded, processed,
summarized, and reported within the time periods specified in
the SECs rules and forms. We believe that a controls
system, no matter how well designed and operated, cannot provide
absolute assurance that the objectives of the controls system
are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if
any, within a company have been detected.

As required by Rule 15d-15(e) under the
Securities Exchange Act of 1934, our management, including our
Chief Executive Officer and Chief Financial Officer, have
evaluated our internal control over financial reporting to
determine whether any changes occurred during the most recent
fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting. Based on this evaluation, no such change in our
internal control over financial reporting occurred during the
most recent fiscal quarter.




PART III




Item 10.     Directors
and Executive Officers of the Registrant

Incorporated by reference from the information
under the captions Proposal No. 1 
Election of Directors, Executive Officers of
Registrant, Protocol  Code of
Ethics, and Section 16 Beneficial Ownership
Reporting Compliance in the Registrants Proxy
Statement for its 2004 Annual Meeting of Shareholders to be
filed with the SEC within 120 days after the end of the
fiscal year ended December 31, 2003.




Item 11.     Executive
Compensation

Incorporated by reference from the information
under the captions Compensation of Executive
Officers, Compensation Committee Report on Executive
Compensation, Compensation Committee Interlocks and
Insider Participation, and Stock Performance
Graph in the Registrants Proxy Statement for its
2004 Annual Meeting of Shareholders to be filed with the SEC
within 120 days after the end of the fiscal year ended
December 31, 2003.






|         |                                                                                                       
|-------- | ------------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Shareholder
    Matters

Incorporated by reference from the information
under the captions Record Date; Voting Securities
and Information Regarding Beneficial Ownership of
Principal Shareholders and Management in the
Registrants Proxy Statement for its 2004 Annual
Meeting of Shareholders to be filed with the SEC within
120 days after the end of the fiscal year ended
December 31, 2003.




Item 13.     Certain
Relationships and Related Transactions

Incorporated by reference from the information
under the captions Certain Transactions and
Compensation Committee Interlocks and Insider
Participation in the Registrants Proxy Statement for
its 2004

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Annual Meeting of Shareholders to be filed with
the SEC within 120 days after the end of the fiscal year
ended December 31, 2003.





Item 14.     Principal
Accounting Fees and Services

Incorporated by reference from the information
under the caption Principal Accounting Fees and
Services in the Registrants Proxy Statement for its
2004 Annual Meeting of Shareholders to be filed with the SEC
within 120 days after the end of the fiscal year ended
December 31, 2003.




PART IV




Item 15.     Exhibits,
Financial Statement Schedules, and Reports on
Form 8-K

(a) The following documents are filed as
part of this report:



| |                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Consolidated Financial Statements: See
    Index to Consolidated Financial Statements at Item 8 on
    page 60 of this report.                                                                           
|
| | (2) Financial Statement Schedules: See Index
    to Consolidated Financial Statements at Item 8 on
    page 60 of this report.                                                                               
|
| | (3) Exhibits are incorporated herein by
    reference or are filed with this report at Exhibit Index on
    page 100 to page 103 of this report (numbered in
    accordance with Item 601 of Regulation S-K).

(b) On October 27, 2003, the Registrant
filed a Current Report on Form 8-K announcing the
Registrants financial results for the quarterly period
ended September 30, 2003.

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SIGNATURES

Pursuant to the requirements of Section 13
or 15 (d) of the Securities Exchange Act of 1934, SINA
Corporation has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.



| |                 
| | ----------------
| | SINA CORPORATION



| |     |                 
| | --- | ----------------
| | By: | /s/ CHARLES CHAO

| |                        
| | -----------------------
| |                        
| | Charles Chao           
| | Chief Financial Officer

Date: March 15, 2004

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below constitutes and appoints
Yan Wang and Charles Chao, jointly and severally, as his
attorneys-in-fact, each with the power of substitution, for him
in any and all capacities, to sign any amendments to this Report
on Form 10-K and to file the same, with exhibits thereto
and other documents in connection therewith with the Securities
and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or
substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this Form 10-K has been signed by the
following persons in the capacities and on the dates indicated:

|                               |  |                                                                          |  |      |                |  |  | 
|------------------------------ |  | ------------------------------------------------------------------------ |  | ---- | -------------- |  |  | 
|                               |  |                                                                          |  |     
|Signature                      |  | Title                                                                    |  | Date
|                               |  |                                                                          |  |     
|                              
|/s/ YAN WANGYan Wang           |  | Chief Executive Officer and Director (Principal
    Executive Officer)   |  |      | March 15, 2004 | 
|                              
|                              
|/s/ CHARLES CHAOCharles Chao   |  | Chief Financial Officer
    (Principal Financial and Accounting Officer) |  |      | March 15, 2004 | 
|                              
|                              
|/s/ DANIEL CHIANGDaniel Chiang |  | Co-Chairman of the Board                                                 |  |      | March 15, 2004 | 
|                              
|                              
|/s/ YONGJI DUANYongji Duan     |  | Co-Chairman of the Board                                                 |  |      | March 15, 2004 | 
|                              
|                              
|/s/ PEHONG CHENPehong Chen     |  | Director                                                                 |  |      | March 15, 2004 | 
|                              
|                              
|/s/ LIP-BU TANLip-Bu Tan       |  | Director                                                                 |  |      | March 15, 2004 | 
|                              
|                              
|/s/ TER-FUNG TSAOTer-Fung Tsao |  | Director                                                                 |  |      | March 15, 2004 | 
|                              
|                              
|/s/ YICHEN ZHANGYichen Zhang   |  | Director                                                                 |  |      | March 15, 2004 | 

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EXHIBIT INDEX

|        |      |             |  |                                                                                                                                                                                                                                                                                                                                                                        
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 2.1  |             |  | Agreement and Plan of Reorganization by and among
    SRS International Ltd., SINO Acquisition Corporation and
    Sinanet.com dated January 19, 1999 (Filed as
    Exhibit 2.1 to the Companys Registration Statement on
    Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)               
|        | 2.2  |             |  | Share Purchase Agreement dated January 3,
    2003 among SINA.com, Memestar Limited and the Shareholders of
    Memestar Limited (Filed as Exhibit 10.64 to the
    Companys Report on Form 10-K for the transition
    period ended December 31, 2002, as amended, and
    incorporated herein by reference.)                                                        
|        | 2.3  |             |  | Letter dated January 6, 2003 regarding
    Amendment to Share Purchase Agreement dated January 3, 2003
    among SINA.com, Memestar Limited and the Shareholders of
    Memestar Limited (Filed as Exhibit 10.70 to the
    Companys Report on Form 10-K for the transition
    period ended December 31, 2002, as amended, and
    incorporated herein by reference.)
|        | 2.4  |             |  | Letter dated January 7, 2003 regarding
    Amendment to Share Purchase Agreement dated January 3, 2003
    among SINA.com, Memestar Limited and the Shareholders of
    Memestar Limited (Filed as Exhibit 10.71 to the
    Companys Report on Form 10-K for the transition
    period ended December 31, 2002, as amended, and
    incorporated herein by reference.)
|        | 3.1  |             |  | Amended and Restated Articles of Association of
    SINA Corporation (Filed as Exhibit 3.5 to the
    Companys Report on Form 10-K for the transition
    period ended December 31, 2002, as amended, and
    incorporated herein by reference.)                                                                                                                      
|        | 3.2  |             |  | Amended and Restated Memorandum of Association of
    SINA.com (Filed as Exhibit 3.4 to the Companys
    Registration Statement on Form F-1, Registration
    No. 333-11718, filed on March 27, 2000, as amended,
    and incorporated herein by reference.)                                                                                                          
|        | 4.1  |             |  | Amended and Restated Investors Rights
    Agreement dated October 19, 1999 among SINA.com and certain
    holders of SINA.coms securities (Filed as Exhibit 4.2
    to the Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                             
|        | 4.2  |             |  | Form of Subordinated Note due July 15, 2023
    (Filed as Exhibit 4.1 to the Companys Report on
    Form 10-Q for the three month period ended June 30,
    2003, and incorporated herein by reference).                                                                                                                                                              
|        | 4.3  |             |  | Indenture, dated as of July 7, 2003, by and
    between the Company and the Bank of New York (Filed as
    Exhibit 4.2 to the Companys Report on Form 10-Q
    for the three month period ended June 30, 2003, and
    incorporated herein by reference).                                                                                                             
|        | 4.4  |             |  | Registration Rights Agreement, dated as of
    July 7, 2003, by and between the Company and Credit Suisse
    First Boston LLC (Filed as Exhibit 4.3 to the
    Companys Report on Form 10-Q for the three month
    period ended June 30, 2003, and incorporated herein by
    reference).                                                                           
|        | 10.1 |             |  | Form of Indemnification Agreement between
    SINA.com and each of its officers and directors (Filed as
    Exhibit 10.1 to the Companys Registration Statement
    on Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)                                                                      
|        | 10.2 |             |  | SRS International Ltd. 1997 Stock Option
    Plan and form of incentive stock option agreement (Filed as
    Exhibit 10.2 to the Companys Registration Statement
    on Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)                                                                     
|        | 10.3 |             |  | Sinanet.com 1997 Stock Plan and form of
    stock option agreement (Filed as Exhibit 10.3 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                                                                                                     
|        | 10.4 |             |  | Amended SINA.com 1999 Stock Plan and form of
    share option agreement (Filed as Exhibit 10.4 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                                                                                                
|        | 10.5 |             |  | 1999 Employee Stock Purchase Plan and form of
    subscription agreement (Filed as Exhibit 10.5 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                                                                                               

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|        |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | ------ | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 10.6   |             |  | 1999 Directors Stock Option Plan and form
    of nonstatutory stock option agreement (Filed as
    Exhibit 10.6 to the Companys Registration Statement
    on Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.7*  |             |  | Lease Contract dated September 2003 between
    Guangzhou Urban Construction & Development Co., Ltd and
    Guangzhou Media Message Technologies, Inc. for offices located
    at Floor 10, No. 123, Tiyu West Street, Tianhe District,
    Guangzhou.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.8*  |             |  | Supplements to Lease Contract dated
    September 2003 between Guangzhou Urban Construction &
    Development Co., Ltd and Guangzhou Media Message Technologies,
    Inc. for offices located at Floor 10, No. 123, Tiyu
    West Street, Tianhe District, Guangzhou.                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10.9*  |             |  | Lease Contract dated September 29, 2003
    between Beijing Wanyujiaye Real Estate Agency Co., Ltd and
    Beijing Sina Information Technology Co., Ltd for offices located
    at Floor 16, Building C, Area A, SOHO,
    No. 88, Jianguo Street, Chaoyang District, Beijing.                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10.10* |             |  | Office Lease dated December 31, 2003 between
    Lee, Po-Hu and SINA.Com Online for offices located at 3F, No.29
    An Ho Road, Section 1, Ta An District, Taipei, Taiwan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10.11* |             |  | First Amendment to Sublease dated
    November 24, 2003 between E.PIPHANY, Inc. and SINA.com
    Online for offices located at 2988 Campus Drive, Suite 100, San
    Mateo, California.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10.12  |             |  | Sublease dated January 11, 2002 between
    E.PIPHANY, Inc. and SINA.com Online for offices located at 2988
    Campus Drive, Suite 100, San Mateo, California (Filed as
    Exhibit 10.56 to the Companys Report on
    Form 10-Q for the three month period ended March 31,
    2002, and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                               
|        | 10.13  |             |  | Office Lease dated July 18, 2002 between
    Shanghai Four Seasons Tong Ren Real Estate Developing Co., Ltd
    and Beijing Stone Rich Sight Information Technology Co., Ltd for
    office located at Suite 1802-5 United Plaza,
    1468 Nanjing West Street, Jingan District, Shanghai, China
    (Filed as Exhibit 10.61 to the Companys Report on
    Form 10-K for year ended June 30, 2002, and
    incorporated herein by reference.)                                                                                                                                                                                                                                                
|        | 10.14  |             |  | Lease Agreement and supplemental agreements of
    Modern City dated June 6, 2003 and July 23, 2003 among
    Li Yanping, Wei Yingkui and Beijing Sina Information Technology
    Co., Ltd. for offices located at 18th Floor, Block C, SOHO
    Modern City, 88 Jianguo Road, Chaoyang District, Beijing, China
    (Filed as Exhibit 10.2 to the Companys Report on
    Form 10-Q for the three month period ended June 30,
    2003, and incorporated herein by reference.)                                                                                                                                                                                                               
|        | 10.15  |             |  | Office Lease dated December 19, 2002 between
    Man Hing Hong Land Investment Company Limited and Sina.com (Hong
    Kong) Limited for the office located at Room 1003-4, 10/ F,
    Manyee Building, 68 Des Voeux Road Central, Hong Kong (Filed as
    Exhibit 10.69 to the Companys Report on
    Form 10-K for the transition period ended December 31,
    2002, as amended, and incorporated herein by reference.)                                                                                                                                                                                                                                                                    
|        | 10.16  |             |  | Lease agreements between Beijing Stone Rich Sight
    Information Technology Co. Ltd. and the following entities:
    a) Beijing Shilihe Property Management Company Ltd dated
    October 16, 1997, b) Beijing Wanquan Hope Technology
    Development Center dated April 2, 1998, and c) Wanquan
    Primary School, Haidian District, Beijing dated
    December 15, 1998. All agreements are for office space
    located in Beijing Wanquan Primary School, Haidian District,
    Beijing (Filed as Exhibit 10.9 to the Companys
    Registration Statement on Form F-1, Registration
    No. 333-11718, filed on March 27, 2000, as amended,
    and incorporated herein by reference.)
|        | 10.17  |             |  | SINA.com 1999 Executive Stock Plan (Filed as
    Exhibit 10.19 to the Companys Registration Statement
    on Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10.18  |             |  | Purchase Agreement, dated as of June 30,
    2003, by and between the Company and Credit Suisse First Boston
    LLC (Filed as Exhibit 10.3 to the Companys Report on
    Form 10-Q for the three month period ended June 30,
    2003, and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10.19  |             |  | Business Cooperation Agreement dated
    March 7, 2000 between Beijing SINA Internet Information
    Services Co., Ltd. and BSRS (Filed as Exhibit 10.23 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                             

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|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | ----- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.20 |             |  | Equipment and Leased Line Transfer Agreement
    dated March 7, 2000 between Beijing SINA Internet
    Information Services Co., Ltd. and BSRS (Filed as
    Exhibit 10.23 to the Companys Registration Statement
    on Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)                                                                         
|        | 10.21 |             |  | Advertising Agency Agreement dated March 7,
    2000 between Beijing SINA Internet Information Services Co.,
    Ltd. and SINA.com (Filed as Exhibit 10.26 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                                                                                         
|        | 10.22 |             |  | Advertisement Production and Technical Service
    Agreement dated March 7, 2000 between Beijing Stone Rich
    Sight Information Technology Co., Ltd. and Beijing SINA
    Interactive Advertising Co. Ltd (Filed as Exhibit 10.27 to
    the Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                
|        | 10.23 |             |  | Advertising Publication and Cooperation Agreement
    dated March 7, 2000 between Beijing SINA Internet
    Information Services Co., Ltd. and Beijing SINA Interactive
    Advertising Co., Ltd (Filed as Exhibit 10.28 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                           
|        | 10.24 |             |  | Amendment to Advertising Agency Agreement dated
    April 1, 2000 between Beijing SINA Interactive Advertising
    Co., Ltd. and SINA.com (Filed as Exhibit 10.37 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                                                                                  
|        | 10.25 |             |  | Amendment to Advertisement Publication and
    Cooperation Agreement dated April 1, 2000 between Beijing
    SINA Interactive Advertising Co., Ltd. and Beijing SINA
    Internet Information Services Co., Ltd (Filed as
    Exhibit 10.38 to the Companys Registration Statement
    on Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)        
|        | 10.26 |             |  | Amendment to Advertising Production and Technical
    Service Agreement dated April 1, 2000 between Beijing Stone
    Rich Sight Information Technology Co., Ltd. and Beijing
    SINA Interactive Advertising Co., Ltd (Filed as
    Exhibit 10.39 to the Companys Registration Statement
    on Form F-1, Registration No. 333-11718, filed on
    March 27, 2000, as amended, and incorporated herein by
    reference.)
|        | 10.27 |             |  | E-Commerce Cooperation Agreement dated
    April 1, 2000 between Beijing Stone Rich Sight Information
    Technology Co., Ltd. and Beijing SINA Internet Information
    Services Co., Ltd (Filed as Exhibit 10.40 to the
    Companys Registration Statement on Form F-1,
    Registration No. 333-11718, filed on March 27, 2000,
    as amended, and incorporated herein by reference.)                                 
|        | 10.28 |             |  | Loan agreement dated November 18, 1999 with
    Wang Yan for purposes of providing capital to the ICP Company
    (Filed as Exhibit 10.36 to the Companys Registration
    Statement on Form F-1, Registration No. 333-11718,
    filed on March 27, 2000, as amended, and incorporated
    herein by reference.)                                                                                                          
|        | 10.29 |             |  | Agreement on Exercising Voting Right by Proxy
    dated October 1, 2001 among Beijing Stone Rich Sight
    Information Technology Co., Ltd., Daniel Mao, Yan Wang and four
    other Employees of BSRS (Filed as Exhibit 10.55 to the
    Companys Report on Form 10-Q for the three month
    period ended December 31, 2001, and incorporated herein by
    reference.)                                                  
|        | 10.30 |             |  | Change of Control Agreement dated
    November 27, 2000 with Daniel Mao (Filed as
    Exhibit 10.44 to the Companys Report on
    Form 10-Q for the three month period ended
    December 31, 2000, and incorporated herein by reference.)                                                                                                                                                                                 
|        | 10.31 |             |  | Change of Control Agreement dated
    November 27, 2000 with Hurst Lin (Filed as
    Exhibit 10.46 to the Companys Report on
    Form 10-Q for the three month period ended
    December 31, 2000, and incorporated herein by reference.)                                                                                                                                                                                  
|        | 10.32 |             |  | Change of Control Agreement dated
    November 27, 2000 with Yan Wang (Filed as
    Exhibit 10.47 to the Companys Report on
    Form 10-Q for the three month period ended
    December 31, 2000, and incorporated herein by reference.)                                                                                                                                                                                   

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|        |        |             |  |                                                                                                                                                                                                                                                                              
|------- | ------ | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 10.33  |             |  | Change of Control Agreement dated
    February 1, 2001 with Charles Chao (Filed as
    Exhibit 10.48 to the Companys Report on
    Form 10-Q for the three month period ended March 31,
    2001, and incorporated herein by reference.)                                    
|        | 10.34  |             |  | Employment Agreement dated June 1, 2002
    between Daniel Mao and SINA.com (Filed as Exhibit 10.59 to
    the Companys Report on Form 10-K for the year ended
    June 30, 2002, and incorporated herein by reference.)                                                    
|        | 10.35  |             |  | Employment Agreement dated June 1, 2002
    between Charles Chao and SINA.com (Filed as Exhibit 10.60
    to the Companys Report on Form 10-K for the year
    ended June 30, 2002, and incorporated herein by reference.)                                                  
|        | 10.36  |             |  | Agreement and Mutual Release, dated as of
    May 11, 2003, by and between the Company and Daniel Mao
    (Filed as Exhibit 10.1 to the Companys Report on
    Form 10-Q for the three month period ended June 30,
    2003, and incorporated herein by reference.).        
|        | 10.37* |             |  | Agreement on Short Message Service Cooperation
    dated November 12, 2002 between Guangzhou Media Message
    Technologies Inc. and Guangdong Mobile Communications
    Corporation.                                                                                        
|        | 10.38* |             |  | Monternet Short Message Cooperation Agreement
    dated April 28, 2003 between Beijing SINA Internet
    Information Services Co., Ltd. and Beijing Mobile Communications
    Corporation.                                                                                   
|        | 10.39* |             |  | Form of Loan Agreement between Beijing Sina
    Information Technology Co., Ltd (a subsidiary of the Company)
    and the Companys employees for funding the Variable
    Interest Entities controlled by the Company.                                                      
|        | 10.40* |             |  | Form of Agreement on Authorization to Exercise
    Shareholders Voting Power between Beijing Sina Information
    Technology Co., Ltd (a subsidiary of the Company) and the
    Companys employees in relation to Variable Interest
    Entities controlled by the Company.
|        | 10.41* |             |  | Technical Services Agreement dated
    September 1, 2003 between Beijing New Media Information
    Technology Co., Ltd. and Guangzhou Media Message Technologies
    Inc.                                                                                                    
|        | 10.42* |             |  | Technical Cooperation Agreement dated
    September 28, 2003 between Beijing New Media Information
    Technology Co., Ltd. and Guangzhou Media Message Technologies
    Inc.                                                                                                
|        | 10.43* |             |  | Technical Services Agreement dated
    September 1, 2003 between Beijing New Media Information
    Technology Co., Ltd. and Guangdong SINA Internet Information
    Services Co., Ltd.                                                                                       
|        | 10.44* |             |  | Technical Services Agreement dated
    January 10, 2003 between Star-Village.com (Beijing)
    Internet Technology Limited and Guangzhou Media Message
    Technologies Inc.                                                                                                 
|        | 10.45* |             |  | Technical Services Agreement dated
    January 1, 2003 between Beijing SINA Internet Technology
    Services Co., Ltd. and Beijing SINA Internet Information
    Services Co., Ltd.                                                                                          
|        | 21.1*  |             |  | List of Subsidiaries.                                                                                                                                                                                                                                                        
|        | 23.1*  |             |  | Consent of Independent Accountants.                                                                                                                                                                                                                                          
|        | 23.2*  |             |  | Consent of Jun He Law offices.                                                                                                                                                                                                                                               
|        | 24.1*  |             |  | Power of Attorney (appears on the signature page
    of this report).                                                                                                                                                                                                        
|        | 31.1*  |             |  | Certificate of Chief Executive Officer pursuant
    to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.                                                                                   
|        | 31.2*  |             |  | Certificate of Chief Financial Officer pursuant
    to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.                                                                                   
|        | 32.1*  |             |  | Certificate of Chief Executive Officer pursuant
    to 18 U.S.C. section 1350.                                                                                                                                                                                               
|        | 32.2*  |             |  | Certificate of Chief Financial Officer pursuant
    to 18 U.S.C. section 1350.                                                                                                                                                                                               



---



|  |                
|- | ---------------
|* | Filed herewith.

104