SINA CORP (Form: 6-K, Received: 12/23/2009 16:32:48)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of December 2009

Commission File Number: 000-30698

SINA Corporation

(Registrant’s Name)

37F, Jin Mao Tower
88 Century Boulevard, Pudong
Shanghai 200121, China
(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F þ Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Voting Results of the Annual General Meeting of Shareholders

On December 7, 2009, SINA Corporation (the “Company”) held its annual general meeting of shareholders in Hong Kong. Results of the shareholders’ votes were as follows:

•

All Class I Directors of the Company were re-elected—Directors Yan Wang (with 38.5 million shares voted for and 2.8 million shares withheld) and Song-Yi Zhang (with 41.0 million shares voted for and 0.3 million shares withheld).

•

The appointment of PricewaterhouseCoopers Zhong Tian CPAs Limited Company as the Company’s independent auditors for the fiscal year ending December 31, 2009 was ratified (with 41.2 million shares voted for, seventy six thousand shares voted against and twenty six thousand shares abstained).

•

The amendment of the current Amended and Restated Articles of Association of the Company by adopting Articles 1, 90, 91, 104, 122, 131, 161, 165 and 167 set forth in the Amended and Restated Articles of Association of the Company was approved (with 41.1 million shares voted for, 0.1 million shares voted against and ninety two thousand shares abstained).

•

The amendment of the current Amended and Restated Articles of Association of the Company by adopting Articles 1, 5, 69, 72, 74, 76, 117, 118, 128 and 163 set forth in the Amended and Restated Articles of Association of the Company was approved (with 37.1 million shares voted for, 4.2 million shares voted against and 0.1 million shares abstained).

•

The amendment of the current Amended and Restated Articles of Association of the Company by deleting Article 98 of the current Amended and Restated Articles of Association of the Company and adopting Articles 105, 106, 108, 111, 112, 113, 114, 121, 122 and 131 set forth in the Amended and Restated Articles of Association of the Company was approved (with 40.9 million shares voted for, 0.3 million shares voted against and 0.1 million shares abstained).

•

The amendment of the current Amended and Restated Articles of Association of the Company by adopting Article 71 set forth in the Amended and Restated Articles of Association of the Company was not approved (with 15.5 million shares voted for, 25.8 million shares voted against and 0.1 million shares abstained).

•

The restatement of the Amended and Restated Articles of Association of the Company to reflect the amendments (if any) approved was approved (with 34.4 million shares voted for, 6.8 million shares voted against and 0.1 million shares abstained).

A copy of the Amended and Restated Articles of Association of the Company, as approved by the shareholders of the Company, is included as Exhibit 3.1.

China Real Estate Information Corporation/China Online Housing Transaction

On February 24, 2008, the Company entered into an agreement with E-House (China) Holdings Limited (“E-House”) to form China Online Housing Technology Corporation (“China Online Housing”), a joint venture to operate SINA’s real estate channel operations. The joint venture investment in China Online Housing was subsequently consummated on April 1, 2008. SINA contributed to China Online Housing $2.5 million in cash, certain assets and liabilities and the rights to operate its real estate channel operations for a period of ten years. The licenses granted to China Online Housing included the rights to use SINA’s trademark, domain name, portal technologies and certain software. In addition, SINA signed an advertising agency agreement (the “old advertising agency agreement”) with China Online Housing, under which China Online Housing would be the exclusive agent for selling advertising to real estate customers on SINA’s other channels for three years starting from April 1, 2008, and China Online Housing would be entitled to receive 15% of the sales contract amount as agency fee. Additionally, China Online Housing guaranteed a certain amount of advertising revenue to be placed on SINA’s non-real estate channels from real estate customers during the agreement period. Thirty-four percent of China Online Housing shares were then issued to E-House in exchange for payment of $2.5 million cash and 10-year exclusive, business-to-consumer usage of the database from E-House’s subsidiary China Real Estate Information Corporation (“CRIC”).

On July 23, 2009, SINA announced that it entered into a definitive agreement (the “Agreement”) with E-House to merge E-House’s real estate information and consulting services and China Online Housing (the “Transaction”). E-House’s real estate information and consulting services business is operated by CRIC. Under the Agreement, SINA would contribute its online real estate business to its majority-owned subsidiary China Online Housing, and CRIC would issue 47,666,667ordinary shares to SINA to acquire SINA’s equity interest in China Online Housing upon and conditioned on the completion of the initial public offering of CRIC (the “CRIC IPO”).

On September 2, 2009, SINA entered into an amended and restated advertising agency agreement, a domain name and content license agreement, a trademark license agreement and a software license and support services agreement with China Online Housing as part of its consideration for the interest in CRIC.

On October 16, 2009, the Transaction was consummated following the listing of CRIC’s American depositary shares on the NASDAQ Global Select Market. As of the closing of the Transaction, E-House is the majority shareholder of CRIC with approximately 50% interest in CRIC, and SINA is the second largest shareholder of CRIC with approximately 33% interest in CRIC.

The disposal of SINA’s interest in China Online Housing represents a significant disposition, and the acquisition of its equity interest in CRIC represents a significant acquisition. Consequently, SINA is furnishing the following exhibits:

	•		audited consolidated financial statements of CRIC for the three years ended December 31, 2008 and unaudited condensed consolidated financial statements for the six months ended June 30, 2008 and 2009, pursuant to Item 3-05 of Regulation S-X as Exhibit 99.3 and Exhibit 99.4.

	•		unaudited pro forma condensed consolidated financial information of SINA prepared in accordance with Article 11 of Regulation S-X as Exhibit 99.1. The unaudited pro forma condensed consolidated financial information gives effect to the disposition of China Online Housing and the acquisition of CRIC, as if both had occurred at the balance sheet date or the beginning of the periods presented.

Provision of SINA 2009 Interim Financial Statements

In this Form 6-K, SINA is also including the following exhibits:

	•		unaudited interim condensed consolidated financial statements of SINA for the six months ended June 30, 2008 and 2009 as Exhibit 99.2.

	•		operating and financial review and prospects for the six months ended June 30, 2009 as Exhibit 99.9.

Revision of SINA Historical Financial Statements

This Form 6-K includes certain sections of the Company’s Annual Report on Form 20-F for the year ended December 31, 2008, filed on June 29, 2009 (the “2008 Form 20-F”), that have been revised to reflect the Company’s retrospective adoption of guidance on accounting for convertible debt instrument and noncontrolling interest issued by the Financial Accounting Standards Board (“FASB”) which became effective January 1, 2009.

Guidance on accounting for convertible debt instrument requires issuers of convertible debt that may be settled wholly or partly in cash when converted to account for the debt and equity components separately. The revised guidance must be applied retrospectively to all periods

and requires the Company to estimate the fair value of its convertible notes as of the date of issuance, and as if the instrument was issued without the conversion feature. The difference between the fair value and the principal amount of the instrument was retrospectively recorded as debt discount and as a component of equity. The amortization of the debt discount was recognized over the expected four-year life of the convertible notes as a non-cash increase to interest expense in the historical periods. In 2003, the Company issued $100 million of zero-coupon, convertible, subordinated notes (the “Notes”) due 2023, and subsequently in 2007, $1 million of the Notes were converted to SINA ordinary shares upon the purchaser’s request. The adoption of the revised guidance resulted in a net increase in SINA’s shareholders’ equity of $3.6 million, $10.6 million and $17.0 million at December 31, 2006, 2005 and 2004, respectively, and a $25.8 million reclassification in SINA’s shareholders’ equity decreasing retained earnings and increasing additional paid-in capital at December 31, 2007 and 2008. SINA’s income before income tax expense, net income and net income attributable to SINA were reduced by $3.6 million, $7.0 million, $6.4 million and $5.9 million for the fiscal years 2007, 2006, 2005 and 2004 respectively as a result of additional non-cash interest expense arising from the application of this guidance. Prior period information presented in the Exhibits 99.5, 99.6 and 99.7 to this Form 6-K has been revised, where required.

Guidance on noncontrolling interests establishes accounting and reporting standards for noncontrolling interests (i.e., minority interests) in a subsidiary, including changes in a parent’s ownership interest in a subsidiary, and requires, among other things, that noncontrolling interests in subsidiaries be classified as shareholders’ equity. Prior period information presented in the Exhibits 99.5, 99.6 and 99.7 to this Form 6-K has been reclassified, where required.

The following Items of the 2008 Form 20-F are being revised retrospectively to reflect the adoption of the accounting guidance described above (those items as revised are attached as Exhibits hereto and hereby incorporated by reference herein):

Item 3 — Key Information — A. Selected Financial Data
Item 5 — Operating and Financial Review and Prospects
Item 8 — Financial Information
Item 18 — Financial Statements

No Items of the 2008 Form 20-F other than those identified above are being revised by this filing. Information in the 2008 Form 20-F is generally stated as of December 31, 2008 and this filing does not reflect any subsequent information or events other than the adoption of the accounting pronouncements described above. Without limitation of the foregoing, this filing does not purport to update the Operating and Financial Review and Prospects contained in the 2008 Form 20-F for any information, uncertainties, transactions, risks, events or trends occurring, or known to management. More current information is contained in the Company’s filings with the Securities and Exchange Commission. This Current Report on Form 6-K should be read in conjunction with the 2008 Form 20-F and other filings. Other filings contain important information regarding events, developments and updates to certain expectations of the Company that have occurred since the filing of the 2008 Form 20-F.

Risk Factors Relating to SINA and CRIC

Majority ownership and control of the board of directors of CRIC by affiliates of E-House may limit our ability to influence CRIC.

In October 2009, we contributed our online real estate business to CRIC in exchange for approximately 33% of the total outstanding ordinary shares of CRIC. E-House owns approximately 50% of total outstanding ordinary shares of CRIC. As a result, for the foreseeable future, E-House will have the ability to elect a majority of the directors to the board of directors of CRIC. In such cases, the directors designated by E-House have the power to approve a particular matter requiring a majority vote despite the fact that our representatives may vote against the matter. Conversely, with respect to any matter requiring a majority vote, the directors designated by E-House may disapprove a particular matter despite the fact that our representatives may vote in favor of that matter.

Our operating results could be adversely affected by the results of CRIC’s operations.

We will report our ownership in CRIC using the equity method of accounting starting from October 1, 2009, and, as such, our net income will be impacted by CRIC’s performance. If CRIC’s financial results decline, it will negatively impact our financial results. Furthermore, we will not be able to report our quarter and annual results

until we have obtained CRIC’s results, and a delay in CRIC’s reporting could adversely affect our reporting schedule and cause the market to react negatively to our stock.

In December 2007, the FASB revised the guidance on accounting for business combinations, which changed how business acquisitions are accounted for. Based on the revised guidance, which is effective for SINA starting January 1, 2009, we expect to recognize a material one-time gain from the closing of the Transaction with CRIC. Under the revised guidance, the valuations of China Online Housing and CRIC are expected to be marked to fair value at CRIC’s IPO date, and we expect to absorb significant amortization of intangible assets from the step up in valuation over the lives of these intangible assets. In the event of a material reduction in the market value of CRIC’s American depositary receipts, we could be required to record an impairment charge in intangible assets and goodwill, which would adversely affect our consolidated financial position and results of operation. Our interest in the equity of CRIC is valued at approximately $572 million based on the initial IPO offering price, which would have represented approximately 43% of our total assets on a pro forma basis as of June 30, 2009.

Risks Associated with CRIC

CRIC’s real estate business is subject to risks that may be different than those that affect our business. For a description of the risks associated with CRIC, see Exhibit 99.8 attached to this Form 6-K.


Exhibits

3.1		Amended and Restated Articles of Association of SINA Corporation

99.1		Unaudited Pro Forma Condensed Consolidated Financial Information of SINA Corporation

99.2		Unaudited Interim Condensed Consolidated Financial Statements of SINA Corporation for the six months ended June 30, 2008 and 2009

99.3		Audited Consolidated Financial Statements of China Real Estate Information Corporation for the years ended December 31, 2006, 2007 and 2008

99.4		Unaudited Condensed Consolidated Financial Statements of China Real Estate Information Corporation for the six months ended June 30, 2008 and 2009

99.5		Revised Item 3 — Key Information — A. Selected Financial Data to the Company’s Annual Report on Form 20-F for the year ended December 31, 2008, filed on June 29, 2009

99.6		Revised Item 5 — Operating and Financial Review and Prospects to the Company’s Annual Report on Form 20-F for the year ended December 31, 2008, filed on June 29, 2009

99.7		Revised Item 8 — Financial Information and Item 18 — Financial Statements to the Company’s Annual Report on Form 20-F for the year ended December 31, 2008, filed on June 29, 2009

99.8		Risks associated with China Real Estate Information Corporation

99.9		Operating and Financial Review and Prospects for the six months ended June 30, 2009

99.10		Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company, an Independent Registered Public Accounting Firm

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	SINA CORPORATION (Registrant)
Date: December 23, 2009	By:	/s/ Herman Yu
		Herman Yu
		Chief Financial Officer

Exhibit 3.1

Sina Corporation

(the “Company”)

WE, on behalf of Maples Corporate Services Limited, HEREBY CERTIFY THAT the following Resolutions were passed as Special Resolutions by the shareholders of the Company on 7 December 2009:

AS A SPECIAL RESOLUTION, RESOLVED : That the amendment of the current Amended and Restated Articles of Association of the Company by adopting Articles 1, 90, 91, 104, 122, 131, 161, 165 and 167 set forth in the Second Amended and Restated Articles of Association of the Company is hereby approved.

AS A SPECIAL RESOLUTION, RESOLVED : That the amendment of the current Amended and Restated Articles of Association of the Company by adopting Articles 1, 5, 69, 72, 74, 76, 117, 118, 128 and 163 set forth in the Second Amended and Restated Articles of Association of the Company is hereby approved.

AS A SPECIAL RESOLUTION, RESOLVED : That the amendment of the current Amended and Restated Articles of Association of the Company by deleting Article 98 of the current Amended and Restated Articles of Association of the Company and adopting Articles 105, 106, 108, 111, 112, 113, 114, 121, 122 and 131 set forth in the Second Amended and Restated Articles of Association of the Company is hereby approved.

AS A SPECIAL RESOLUTION, RESOLVED : That the restatement of the Amended and Restated Articles of Association of the Company to reflect the amendments (if any) approved pursuant to Proposal Nos. 3 to 6 is hereby approved.



Maples and Calder
		CERTIFIED TO BE A TRUE AND CORRECT COPY
15 December 2009
		SIG. /s/ D. EVADNE EBANKS
		D. EVADNE EBANKS
		Assistant Registrar

		Date. 15 December, 2009

CAYMAN ISLANDS

The Companies Law (2007 Revision) (Cap. 22)

Company Limited by Shares

AMENDED AND RESTATED ARTICLES OF ASSOCIATION

SINA CORPORATION

(adopted by special resolution passed on 7 December 2009)

TABLE A

EXCLUSION OF TABLE A

The regulations contained in Table A in the First Schedule to the Companies Law shall not apply to the Company.

INTERPRETATION

INTERPRETATION

The marginal notes to these Articles shall not affect the interpretation hereof. In these Articles, unless there be something in the subject or context inconsistent therewith:


THESE ARTICLES		“these Articles” shall mean the present Articles of Association and all supplementary, amended or substituted Articles for the time being in force;

AUDITORS		“Auditors” shall mean the persons appointed by the Company from time to time to perform the duties of auditors of the Company;

BOARD		“Board” shall mean the majority of the Directors present and voting at a meeting of Directors at which a quorum is present;

CAPITAL		“capital” shall mean the share capital from time to time of the Company;

THE CHAIRMAN		“the Chairman” shall mean the Chairman presiding at any meeting of members or of the Board;


THE COMPANY		“the Company” or “this Company” shall mean Sina Corporation;

THE COMPANIES LAW/THE LAW		“the Companies Law” or “the Law” shall mean the Companies Law (2007 Revision), Cap. 22 of the Cayman Islands and any amendments thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor;

DIRECTORS		“Directors” shall mean the directors from time to time of the Company;

DIVIDEND		“dividend” shall include bonus dividends and distributions permitted by the Law to be categorised as dividends;

ELECTRONIC RECORD		“Electronic Record” shall have the same meaning ascribed to such term in the Electronic Transactions Law;

ELECTRONIC TRANSACTIONS LAW		“Electronic Transactions Law” shall mean the Electronic Transactions Law (2003 Revision) of the Cayman Islands, and any amendments thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor;

HONG KONG		“Hong Kong” shall mean the Hong Kong Special Administrative Region of the People’s Republic of China;

MONTH		“month” shall mean a calendar month;

ORDINARY RESOLUTION		“ordinary resolution” shall mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorised representatives, at a general meeting held in accordance with these Articles and includes an ordinary resolution passed pursuant to Article 83;

PRINCIPAL REGISTER		“principal register” shall mean the register of members of the Company maintained at such place within or outside the Cayman Islands as the Board shall determine from time to time;

PUBLISHED IN THE NEWSPAPERS		“published in the newspapers” means published as a paid advertisement in English in at least one English language newspaper and in Chinese in at least one Chinese language newspaper;

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RECOGNISED CLEARING HOUSE		“recognised clearing house” shall mean a depository recognized by the laws of the jurisdiction in which the shares of the Company are listed or quoted on a stock exchange in such jurisdiction;

THE REGISTER		“the register” shall mean the principal register and any branch registers;

REGISTRATION OFFICE		“registration office” shall mean in respect of the shares of the Company, such place or places where the Board from time to time determines to keep a branch register of holders in respect of such shares and where (except in cases where the Board otherwise determines) transfers of documents of title for such shares are to be lodged for registration and are to be registered;

SEAL		“seal” shall include the common seal of the Company, the securities seal or any duplicate seal adopted by the Company pursuant to Article 135;

SECRETARY		“Secretary” shall mean the person appointed as company secretary by the Board from time to time;

SHARE		“share” shall mean a share in the capital of the Company and includes stock except where a distinction between stock and shares is expressed or implied;

SHAREHOLDERS/MEMBERS		“shareholders” or “members” shall mean the persons who are duly registered as the holders from time to time of shares in the register including persons who are jointly so registered;

SPECIAL RESOLUTION		“special resolution” shall have the same meaning as ascribed thereto in the Law and shall include a unanimous written resolution of all members: for this purpose, the requisite majority shall be not less than two-thirds of the votes of such members of the Company as, being entitled to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorised representatives, at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been duly given and includes a special resolution passed pursuant to Article 83;

SUBSIDIARY AND HOLDING COMPANY		“subsidiary” and “holding company” shall have the meanings ascribed to such terms in the Companies Ordinance;

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TRANSFER OFFICE		“transfer office” shall mean the place where the principal register is situate for the time being;

WORDS IN LAW TO BEAR SAME MEANING IN ARTICLES		subject as aforesaid, any words defined in the Law shall, if not inconsistent with the subject and/or context, bear the same meanings in these Articles;

WRITING/PRINTING		“writing” or “printing” shall include writing, printing, lithograph, photograph, type-writing and every other mode of representing words or figures in a legible and non-transitory form, including any Electronic Record;

GENDER		words importing either gender shall include the other gender and the neuter;

PERSONS/ COMPANIES		words importing persons and the neuter shall include companies and corporations and vice versa;

SINGULAR AND PLURAL		words denoting the singular shall include the plural and words denoting the plural shall include the singular;

ELECTRONIC TRANSACTIONS LAW		Sections 8 and 19 of the Electronic Transactions Law shall not apply to these Articles.

SHARE CAPITAL AND MODIFICATION OF RIGHTS

CAPITAL
App 3 r.9

The capital of the Company is US$23,700,000 divided into 150,000,000 ordinary shares of US$0.133 each and 3,750,000 preference shares of US$1.00 each.

ISSUE OF SHARES
App 3 r. 12

(a)

Subject to the provisions of these Articles, any share, including preference shares, may be issued with or have attached thereto such preferred, deferred, qualified or other special rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise, and to such persons at such times and for such consideration as the Board may determine. No powers shall be taken to freeze or otherwise impair any of the rights attaching to any share by reason only that the person or

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			persons who are interested directly or indirectly therein have failed to disclose their interests to the Company.

	(b)		The preference shares may be issued from time to time in one or more series. The Board is hereby authorized to determine or alter the number of shares constituting any such series of preference shares and the designation thereof, or any of them, and to increase or decrease the number of shares of any such series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.

	(c)		Subject to the Law and to any special rights conferred on any shareholders or attaching to any class of shares, any share may, with the sanction of a special resolution, be issued on terms that it is, or at the option of the Company or the holder thereof is, liable to be redeemed. No shares shall be issued to bearer for so long as a recognised clearing house (in its capacity as such) is a member of the Company.

ISSUE OF WARRANTS
App 3 r.2(2)

The Board may issue warrants to subscribe for any class of shares or other securities of the Company on such terms as it may from time to time determine. No warrants shall be issued to bearer for so long as a recognised clearing house (in its capacity as such) is a member of the Company. Where warrants are issued to bearer, no new warrant shall be issued to replace one that has been lost unless the Board is satisfied beyond reasonable doubt that the original has been destroyed and the Company has received an indemnity in such form as the Board shall think fit with regard to the issue of any such new warrant.

HOW CLASS RIGHTS MAY BE MODIFIED
App 3 r.6(2)

(a)

If at any time the share capital of the Company is divided into different classes of shares, all or any of the rights attached to any class of shares for the time being issued (unless otherwise provided for in the terms of issue of the shares of that class) may, subject to the provisions of the Law, be varied or abrogated with the consent in writing of the holders of not less than two-thirds in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of shares of that class. To every such separate meeting all the provisions of these Articles relating to general meetings shall mutatis mutandis apply, but so that the quorum for the purposes of any such separate meeting and of any adjournment thereof shall be a person or persons together holding (or representing by proxy) at the date of the relevant meeting not

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			less than one-third in nominal value of the issued shares of that class, and that any holder of shares of the class present in person (or in the case of a member being a corporation, by its duly authorized representative) or by proxy may demand a poll.

	(b)		The special rights conferred upon the holders of shares of any class shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking PARI PASSU therewith.

COMPANY MAY PURCHASE AND FINANCE THE PURCHASE OF OWN SHARES AND WARRANTS

(a)

Subject to the provisions of the Companies Law and subject as hereinafter in these Articles provided, the Board may from time to time, authorize the Company to repurchase all or any portion of the Shares held by any member provided that:

	(i)		on any such repurchase the Board shall have the power to divide the whole or any part of the assets of the Company and appropriate such assets in satisfaction or part satisfaction of the repurchase price and any other sums payable on repurchase as is herein provided;

	(ii)		no repurchase of part of the member’s holding of shares may be made if as a result thereof the member would hold fewer shares than such minimum number of shares as may from time to time be specified (either generally or in any particular case or cases) by the Board;

	(iii)		subject as hereinafter in these Articles provided, the member shall not be entitled to withdraw an agreement duly made in accordance with these Articles;

	(iv)		whenever any request for repurchase provides for the repurchase proceeds to be paid by telegraphic transfer or to a person other than the holder of the shares to be repurchased, the signature of the holder on such request and details of that bank account shall, unless the Board (or such other person duly appointed by the Board for this purpose) otherwise determines, be verified in such manner as the Board (or such person as aforesaid) may from time to time determine.

(b)

Payment in respect of the repurchase of the relevant Shares shall be made to the member in United States dollars. Any amount payable to the member upon the repurchase of his Shares shall be payable within one month after the applicable repurchase date. Payment for shares repurchased hereunder shall be made in accordance with written instructions of the member by a cheque, draft, telegraphic transfer or other means of payment posted (at the risk of the member) or otherwise

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			paid to the member in the manner, and subject to the fulfilment of such conditions as may be, determined by the Board from time to time.

	(c)		The Repurchase Price for each share shall be the closing price per share of the Company’s shares on the Nasdaq Stock Market rounded to the nearest US$0.01 (with US$0.005 being rounded up to US$0.01).

	(d)		On a repurchase of a share:

	(i)		the nominal or par value shall be redeemed out of profits of the Company or at the discretion of the Board in such other manner (including out of capital) as is permitted by the Companies Law; and

	(ii)		the premium (if any) on such participating share shall be paid from the share premium account or out of profits of the Company or at the discretion of the Board in such other manner (including out of capital) as is permitted by the Companies Law.

(e)

Upon the repurchase of a share being effected pursuant to these Articles the holder thereof shall cease to be entitled to any rights in respect of that share and accordingly his name shall be removed from the Register with respect thereto and such share shall be cancelled, but shall be available as a share for re-issue and until re-issue shall form part of the unissued share capital of the Company.

POWER TO INCREASE CAPITAL

The Company in general meeting may, from time to time, whether or not all the shares for the time being authorised shall have been issued and whether or not all the shares for the time being issued shall have been fully paid up, by ordinary resolution, increase its share capital by the creation of new shares, such new capital to be of such amount and to be divided into shares of such respective amounts as the resolution shall prescribe.

REDEMPTION

(a)

Subject to the provisions of the Law and the Memorandum of Association of the Company, and to any special rights conferred on the holders of any shares or attaching to any class of shares, shares may be issued on the terms that they may be, or at the option of the Company or the holders are, liable to be redeemed on such terms and in such manner, including out of capital, as the Board may deem fit.

App 3 r.8(1) & (2)

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(b)

Where the Company purchases for redemption a redeemable share, purchases not made through the market or by tender shall be limited to a maximum price, and if purchases are by tender, tenders shall be available to all shareholders alike.

PURCHASE OR REDEMPTION NOT TO GIVE RISE TO OTHER PURCHASES OR REDEMPTIONS

(a)

The purchase or redemption of any share shall not be deemed to give rise to the purchase or redemption of any other share.

CERTIFICATES TO BE SURRENDERED FOR CANCELLATION

(b)

The holder of the shares being purchased, surrendered or redeemed shall be bound to deliver up to the Company at its principal place of business in Hong Kong or such other place as the Board shall specify the certificate(s) thereof for cancellation and thereupon the Company shall pay to him the purchase or redemption monies in respect thereof.

SHARES AT THE DISPOSAL OF THE BOARD

10.

Subject to the provisions of the Law, of the Memorandum of Association of the Company, and of these Articles relating to new shares, the unissued shares in the Company (whether forming part of its original or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration, and upon such terms, as the Board shall determine.

COMPANY MAY PAY COMMISSIONS

11.

The Company may, unless prohibited by law, at any time pay a commission to any person for subscribing or agreeing to subscribe (whether absolutely or conditionally) for any shares in the Company or procuring or agreeing to procure subscriptions (whether absolute or conditional) for any shares in the Company, but so that the conditions and requirements of the Law shall be observed and complied with, and in each case the commission shall not exceed 10% of the price at which the shares are issued.

COMPANY NOT TO RECOGNISE TRUSTS IN RESPECT OF SHARES

12.

Except as otherwise expressly provided by these Articles or as required by law or as ordered by a court of competent jurisdiction, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any shares or any interest in any fractional part of a share or any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

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REGISTER OF MEMBERS AND SHARE CERTIFICATES

SHARE REGISTER

13.	(a)	The Board shall cause to be kept at such place within or outside the Cayman Islands as it deems fit a principal register of the members and there shall be entered therein the particulars of the members and the shares issued to each of them and other particulars required under the Law.

	(b)	If the Board considers it necessary or appropriate, the Company may establish and maintain a branch register or registers of members at such location or locations within or outside the Cayman Islands as the Board thinks fit. The principal register and the branch register(s) shall together be treated as the register for the purposes of these Articles.

	(c)	The Board may, in its absolute discretion, at any time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

App 3 r.1(1)

	(d)	Notwithstanding anything contained in this Article, the Company shall as soon as practicable and on a regular basis record in the principal register all transfers of shares effected on any branch register and shall at all times maintain the principal register in such manner as to show at all times the members for the time being and the shares respectively held by them, in all respects in accordance with the Companies Law.

14.	(a)	Except when a register is closed and, if applicable, subject to the additional provisions of paragraph (d) of this Article, the principal register and any branch register shall during business hours be kept open to the inspection of any member without charge.

	(b)	The reference to business hours in paragraph (a) of this Article is subject to such reasonable restrictions as the Company in general meeting may impose, but so that not less than two hours in each business day is to be allowed for inspections.

	(c)	The register may, on 14 days’ notice being given by advertisement published in the newspapers, be closed at such times and for such periods as the Board may from time to time determine, either generally or in respect of any class of shares, provided that the register shall not be closed for more than 30 days in any year (or such longer period as the members may by ordinary resolution determine provided that such period shall not be extended beyond 60 days in any year). The Company shall, on demand, furnish any person seeking to inspect the register or part thereof

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			which is closed by virtue of this Article with a certificate under the hand of the Secretary stating the period for which, and by whose authority, it is closed.

	(d)		Any register held in Hong Kong shall during normal business hours (subject to such reasonable restrictions as the Board may impose) be open to inspection by a member without charge and any other person on payment of a reasonable fee as the Board may determine for each inspection. Any member may require a copy of the register, or any part thereof, on payment of HK$0.25, or such lesser sum as the Company may prescribe, for every 100 words or fractional part thereof required to be copied. The Company shall cause any copy so required by any person to be sent to that person within a period of 10 days commencing on the date next after the day on which the request is received by the Company.

SHARE CERTIFICATES

App 3 r.1(1)

15.

Every person whose name is entered as a member in the register shall be entitled without payment to receive, within the relevant time limit as prescribed in the Law, after allotment or lodgement of transfer (or within such other period as the conditions of issue shall provide), one certificate for all his shares of each class provided that in respect of a share or shares held jointly by several persons the Company shall not be bound to issue a certificate or certificates to each such person, and the issue and delivery of a certificate or certificates to one of several joint holders shall be sufficient delivery to all such holders.

SHARE CERTIFICATES TO BE SEALED

App 3 r.2(1)

16.

Every certificate for shares or debentures or representing any other form of security of the Company shall be issued under the seal of the Company, which shall only be affixed with the authority of the Board.

EVERY CERTIFICATE TO SPECIFY NUMBER OF SHARES

17.

Every share certificate shall specify the number and class of shares in respect of which it is issued and the amount paid thereon or the fact that they are fully paid, as the case may be, and may otherwise be in such form as the Board may from time to time prescribe.

JOINT HOLDERS

App 3 r.1(3)

18.

The Company shall not be bound to register more than four persons as joint holders of any share. If any share shall stand in the names of two or more persons, the person first named in the register shall be deemed the sole holder thereof as regards service of notices and, subject to the provisions of these Articles, all or any other matters connected with the Company, except the transfer of the share.

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REPLACEMENT OF SHARE CERTIFICATES

App 3 r.1(1)

19.

If a share certificate is defaced, lost or destroyed, it may be replaced on payment of such fee, if any, not exceeding such amount as the Board may from time to time require and on such terms and conditions, if any, as to publication of notices, evidence and indemnity, as the Board thinks fit and where it is defaced or worn out, after delivery up of the old certificate to the Company for cancellation.

LIEN

COMPANY’S LIEN

App 3 r.1(2)

20.

(a)

The Company shall have a first and paramount lien on every share (not being a fully paid up share) for all moneys, whether presently payable or not, called or payable at a fixed time in respect of such share; and the Company shall also have a first and paramount lien and charge on all shares (other than fully paid up shares) standing registered in the name of a member (whether solely or jointly with others) for all the debts and liabilities of such member or his estate to the Company and whether the same shall have been incurred before or after notice to the Company of any equitable or other interest of any person other than such member, and whether the period for the payment or discharge of the same shall have actually arrived or not, and notwithstanding that the same are joint debts or liabilities of such member or his estate and any other person, whether such person is a member of the Company or not.

LIEN EXTENDS TO DIVIDENDS AND BONUSES

(b)

The Company’s lien (if any) on a share shall extend to all dividends and bonuses declared in respect thereof. The Board may resolve that any share shall for some specified period be exempt wholly or partially from the provisions of this Article.

SALE OF SHARES SUBJECT TO LIEN

21.

The Company may sell in such manner as the Board thinks fit any shares on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable or the liability or engagement in respect of which such lien exists is liable to be presently fulfilled or discharged, nor until the expiration of 14 days after a notice in writing, stating and demanding payment of the sum presently payable or specifying the liability or engagement and demanding fulfilment or discharge thereof and giving notice of intention to sell in default, shall have been given to the registered holder for the time being of the shares or the person, of which the Company has notice, entitled to the shares by reason of such holder’s death, mental disorder or bankruptcy.

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APPLICATION OR PROCEEDS OF SUCH SALE

22.

The net proceeds of such sale by the Company after the payment of the costs of such sale shall be applied in or towards payment or satisfaction of the debt or liability or engagement in respect whereof the lien exists, so far as the same is presently payable, and any residue shall (subject to a like lien for debts or liabilities not presently payable as existed upon the shares prior to the sale and upon surrender, if required by the Company, for cancellation of the certificate for the share sold) be paid to the holder immediately before such sale of the share. For giving effect to any such sale, the Board may authorise any person to transfer the shares sold to the purchaser thereof and may enter the purchaser’s name in the register as holder of the shares, and the purchaser shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

CALLS ON SHARES

CALLS, HOW MADE

23.

The Board may from time to time make such calls as it may think fit upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal amount of the shares or by way of premium or otherwise) and not by the conditions of allotment thereof made payable at fixed times. A call may be made payable either in one sum or by instalments. A call may be revoked or postponed as the Board may determine.

NOTICE OF CALL

24.

At least 14 days’ notice of any call shall be given to each member specifying the time and place of payment and to whom such payment shall be made.

COPY OF NOTICE TO BE SENT

25.

A copy of the notice referred to in Article 24 shall be sent in the manner in which notices may be sent to members by the Company as herein provided.

EVERY MEMBER LIABLE TO PAY CALL AT APPOINTED TIME AND PLACE

26.

Every member upon whom a call is made shall pay the amount of every call so made on him to the person and at the time or times and place or places as the Board shall specify. A person upon whom a call is made shall remain liable on such call notwithstanding the subsequent transfer of the shares in respect of which the call was made.

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NOTICE OF CALL MAY BE PUBLISHED IN NEWSPAPERS

27.

In addition to the giving of notice in accordance with Article 25, notice of the person appointed to receive payment of every call and of the times and places appointed for payment may be given to the members affected by notice published in the newspapers.

WHEN CALL DEEMED TO HAVE BEEN MADE

28.

A call shall be deemed to have been made at the time when the resolution of the Board authorising such call was passed.

LIABILITY OF JOINT HOLDERS

29.

The joint holders of a share shall be severally as well as jointly liable for the payment of all calls and instalments due in respect of such share or other moneys due in respect thereof.

BOARD MAY EXTEND TIME FIXED FOR CALL

30.

The Board may from time to time at its discretion extend the time fixed for any call, and may extend such time as to all or any of the members, whom by reason of residence outside Hong Kong or other cause the Board considers it reasonable to grant an extension to, but no member shall be entitled to any such extension as a matter of grace and favour.

INTEREST ON CALLS

31.

If the sum or any instalment payable in respect of any call is unpaid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding 15% per annum as the Board shall determine from the day appointed for the payment thereof to the time of actual payment, but the Board may waive payment of such interest wholly or in part.

SUSPENSION OF PRIVILEGES WHILE CALL IN ARREARS

32.

No member shall be entitled to receive any dividend or bonus or to be present and vote (save as proxy for another member) at any general meeting, either personally or by proxy, or be reckoned in a quorum, or to exercise any other privilege as a member until all sums or instalments due from him to the Company in respect of any call, whether alone or jointly with any other person, together with interest and expenses (if any) shall have been paid.

EVIDENCE IN ACTION FOR CALL

33.

At the trial or hearing of any action or other proceedings for the recovery of any money due for any call, it shall be sufficient to prove that the name of the member sued is entered

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in the register as the holder, or one of the holders, of the shares in respect of which such debt accrued; that the resolution making the call is duly recorded in the minute book; and that notice of such call was duly given to the member sued, in pursuance of these Articles; and it shall not be necessary to prove the appointment of the Directors who made such call, nor any other matters whatsoever, and the proof of the matters aforesaid shall be conclusive evidence of the debt.

SUMS PAYABLE ON ALLOTMENT/IN FUTURE DEEMED A CALL

34.

Any sum which by the terms of allotment of a share is made payable upon allotment or at any fixed date, whether on account of the nominal value of the share and/or by way of premium or otherwise, shall for all purposes of these Articles be deemed to be a call duly made and payable on the date fixed for payment, and in case of non-payment, all the relevant provisions of these Articles as to payment of interest and expenses, liabilities of joint holders, forfeiture and the like, shall apply as if such sum had become payable by virtue of a call duly made and notified.

PAYMENT OF CALLS IN ADVANCE

App 3 r.3(1)

35.

The Board may, if it thinks fit, receive from any member willing to advance the same, and either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and upon all or any of the moneys so advanced the Company may pay interest at such rate (if any) as the Board may decide. The Board may at any time repay the amount so advanced upon giving to such member not less than one month’s notice in writing of its intention in that behalf, unless before the expiration of such notice the amount so advanced shall have been called up on the shares in respect of which it was advanced. No such sum paid in advance of calls shall entitle the member paying such sum to any portion of a dividend declared in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable.

TRANSFER OF SHARES

FORM OF TRANSFER

App 3 r.1(4)

36.

Subject to applicable securities laws, all transfers of shares may be effected by an instrument of transfer in the usual common form or in such form consistent with the standard form of transfer as approved by the Board. All instruments of transfer must be left at the registered office of the Company or at such other place as the Board may appoint and all such instruments of transfer shall be retained by the Company.

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EXECUTION

37.

The instrument of transfer shall be executed by or on behalf of the transferor and by or on behalf of the transferee PROVIDED that the Board may dispense with the execution of the instrument of transfer by the transferee in any case which it thinks fit in its discretion to do so. The instrument of transfer of any share shall be in writing and shall be executed with a manual signature or facsimile signature (which may be machine imprinted or otherwise) by or on behalf of the transferor and transferee PROVIDED that in the case of execution by facsimile signature by or on behalf of a transferor or transferee, the Board shall have previously been provided with a list of specimen signatures of the authorised signatories of such transferor or transferee and the Board shall be reasonably satisfied that such facsimile signature corresponds to one of those specimen signatures. The transferor shall be deemed to remain the holder of a share until the name of the transferee is entered in the register in respect thereof.

BOARD MAY REFUSE TO REGISTER A TRANSFER

App 3 r.1(2)

38.

The Board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any share which is not fully paid up or on which the Company has a lien.

NOTICE OF REFUSAL

39.

If the Board shall refuse to register a transfer of any share, it shall, within two months after the date on which the transfer was lodged with the Company, send to each of the transferor and the transferee notice of such refusal.

REQUIREMENTS AS TO TRANSFER

40.

The Board may also decline to register any transfer of any shares unless:

	(a)		the instrument of transfer is lodged with the Company accompanied by the certificate for the shares to which it relates (which shall upon registration of the transfer be cancelled) and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer; and

	(b)		the instrument of transfer is in respect of only one class of shares; and

	(c)		the instrument of transfer is properly stamped (in circumstances where stamping is required); and

	(d)		in the case of a transfer to joint holders, the number of joint holders to which the share is to be transferred does not exceed four; and

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(e)

the shares concerned are free of any lien in favour of the Company.

App 3 r.1(1)

NO TRANSFER TO AN INFANT ETC

41.

No transfer shall be made to an infant or to a person in respect of whom an order has been made by any competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs or under other legal disability.

CERTIFICATE TO BE GIVEN UP ON TRANSFER

42.

Upon every transfer of shares the certificate held by the transferor shall be given up to be cancelled, and shall forthwith be cancelled accordingly, and a new certificate shall be issued without charge to the transferee in respect of the shares transferred to him, and if any of the shares included in the certificate so given up shall be retained by the transferor, a new certificate in respect thereof shall be issued to him without charge. The Company shall also retain the instrument(s) of transfer.

WHEN TRANSFER BOOKS AND REGISTER MAY CLOSE

43.

The registration of transfers may, on 14 days’ notice being given by advertisement published in the newspapers, be suspended and the register closed at such times for such periods as the Board may from time to time determine, provided always that such registration shall not be suspended or the register closed for more than 30 days in any year (or such longer period as the members may by ordinary resolution determine provided that such period shall not be extended beyond 60 days in any year).

TRANSMISSION OF SHARES

DEATH OF REGISTERED HOLDER OR OF JOINT HOLDER OF SHARES

44.

In the case of the death of a member, the survivor or survivors where the deceased was a joint holder, and the legal personal representatives of the deceased where he was a sole holder, shall be the only persons recognised by the Company as having any title to his interest in the shares; but nothing herein contained shall release the estate of a deceased holder (whether sole or joint) from any liability in respect of any share solely or jointly held by him.

REGISTRATION OF PERSONAL REPRESENTATIVES AND TRUSTEE IN BANKRUPTCY

45.

Any person becoming entitled to a share in consequence of the death or bankruptcy or winding-up of a member may, upon such evidence as to his title being produced as may from time to time be required by the Board and subject as hereinafter provided, either be

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registered himself as holder of the share or elect to have some other person nominated by him registered as the transferee thereof.

NOTICE OF ELECTION TO BE REGISTERED/REGISTRATION OF NOMINEE

46.

If the person so becoming entitled shall elect to be registered himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. If he shall elect to have his nominee registered he shall testify his election by executing in favour of his nominee a transfer of such share. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy or winding-up of the member had not occurred and the notice or transfer were a transfer executed by such member.

RETENTION OF DIVIDENDS, ETC., UNTIL TRANSFER OR TRANSMISSION OF SHARES OF A DECEASED OR BANKRUPT MEMBER

47.

A person becoming entitled to a share by reason of the death or bankruptcy or winding-up of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share. However, the Board may, if it thinks fit, withhold the payment of any dividend payable or other advantages in respect of such share until such person shall become the registered holder of the share or shall have effectually transferred such share, but, subject to the requirements of Article 85 being met, such a person may vote at meetings.

FORFEITURE OF SHARES

IF CALL OR INSTALMENT NOT PAID NOTICE MAY BE GIVEN

48.

If a member fails to pay any call or instalment of a call on the day appointed for payment thereof, the Board may, at any time during such time as any part thereof remains unpaid, without prejudice to the provisions of Article 33, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment.

FORM OF NOTICE

49.

The notice shall name a further day (not earlier than the expiration of 14 days from the date of service of the notice) on or before which, and the place where, the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which the call was made or instalment is unpaid will be liable to be forfeited. The Board may accept a surrender of any share liable to be forfeited hereunder and in such case, references in these Articles to forfeiture shall include surrender.

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IF NOTICE NOT COMPLIED WITH SHARES MAY BE FORFEITED

50.

If the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends and bonuses declared in respect of the forfeited share, and not actually paid before the forfeiture.

FORFEITED SHARES TO BE DEEMED PROPERTY OF COMPANY

51.

Any share so forfeited shall be deemed to be the property of the Company, and may be re-allotted sold or otherwise disposed of on such terms and in such manner as the Board thinks fit and at any time before a re-allotment, sale or disposition the forfeiture may be cancelled by the Board on such terms as it thinks fit.

ARREARS TO BE PAID NOTWITHSTANDING FORFEITURE

52.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all moneys which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the Board shall in its discretion so require) interest thereon from the date of forfeiture until payment at such rate not exceeding 15% per annum as the Board may prescribe, and the Board may enforce the payment thereof if it thinks fit, and without any deduction or allowance for the value of the shares forfeited, at the date of forfeiture. For the purposes of this Article any sum which, by the terms of issue of a share, is payable thereon at a fixed time which is subsequent to the date of forfeiture, whether on account of the nominal value of the share or by way of premium, shall notwithstanding that time has not yet arrived, be deemed to be payable at the date of forfeiture, and the same shall become due and payable immediately upon the forfeiture, but interest thereon shall only be payable in respect of any period between the said fixed time and the date of actual payment.

EVIDENCE OF FORFEITURE

53.

A statutory declaration in writing that the declarant is a Director or Secretary of the Company, and that a share in the Company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. The Company may receive the consideration, if any, given for the share on any re-allotment, sale or disposition thereof and the Board may authorise any person to execute a letter of re-allotment or transfer the share in favour of the person to whom the share is re-allotted, sold or disposed of and he shall thereupon be registered as the holder of the share, and shall not be bound to see to the application of the subscription or purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, re-allotment, sale or other disposal of the share.

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NOTICE AFTER FORFEITURE

54.

When any share shall have been forfeited, notice of the forfeiture shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the register. Notwithstanding the above, no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice as aforesaid.

POWER TO REDEEM FORFEITED SHARES

55.

Notwithstanding any such forfeiture as aforesaid, the Board may at any time, before any share so forfeited shall have been re-allotted, sold, or otherwise disposed of, permit the share forfeited to be redeemed upon the terms of payment of all calls and interest due upon and expenses incurred in respect of the share, and upon such further terms (if any) as it thinks fit.

FORFEITURE NOT TO PREJUDICE COMPANY’S RIGHT TO CALL OR INSTALMENT

56.

The forfeiture of a share shall not prejudice the right of the Company to any call already made or instalment payable thereon.

FORFEITURE FOR NON-PAYMENT OF ANY SUM DUE ON SHARES

57.

The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

STOCK

POWER TO CONVERT INTO STOCK

58.

Subject to the Companies Law, the Company may by ordinary resolution convert any fully paid up shares into stock, and may from time to time by like resolution re-convert any stock into fully paid up shares of any denomination.

TRANSFER OF STOCK

59.

The holders of stock may transfer the same or any part thereof in the same manner, and subject to the same regulations as and subject to which the shares from which the stock arose might prior to conversion have been transferred or as near thereto as circumstances admit, but the Board may from time to time, if it thinks fit, fix the minimum amount of stock transferable and restrict or forbid the transfer of fractions of that minimum, but so that such minimum shall not exceed the nominal amount of the shares from which the stock arose. No warrants to bearer shall be issued in respect of any stock.

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RIGHTS OF STOCKHOLDERS

60.

The holders of stock shall, according to the amount of the stock held by them, have the same rights, privileges and advantages as regards dividends, participation in assets on a winding up, voting at meetings, and other matters, as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company) shall be conferred by an amount of stock which would not, if existing in shares, have conferred such privilege or advantage.

INTERPRETATION

61.

Such of the provisions of these Articles as are applicable to paid up shares shall apply to stock, and the words “share” and “shareholder” therein shall include “stock” and “stockholder”.

ALTERATION OF CAPITAL

62.

(a)

The Company may from time to time by ordinary resolution:

CONSOLIDATION AND DIVISION OF CAPITAL AND SUB-DIVISION AND CANCELLATION OF

	(i)		consolidate and divide all or any of its share capital into shares of larger amount than its existing shares. On any consolidation of fully paid shares and division into shares of larger amount, the Board may settle any difficulty which may arise as it thinks expedient and in particular (but without prejudice to the generality of the foregoing) may as between the holders of shares to be consolidated determine which particular shares are to be consolidated into each consolidated share, and if it shall happen that any person shall become entitled to fractions of a consolidated share or shares, such fractions may be sold by some person appointed by the Board for that purpose and the person so appointed may transfer the shares so sold to the purchaser thereof and the validity of such transfer shall not be questioned, and so that the net proceeds of such sale (after deduction of the expenses of such sale) may either be distributed among the persons who would otherwise be entitled to a fraction or fractions of a consolidated share or shares rateably in accordance with their rights and interests or may be paid to the Company for the Company’s benefit;

	(ii)		cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled subject to the provisions of the Law; and

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(iii)

sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association of the Company, subject nevertheless to the provisions of the Law, and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred or other special rights, over, or may have such deferred rights or be subject to any such restrictions as compared with the others as the Company has power to attach to unissued or new shares.

REDUCTION OF CAPITAL

(b)

The Company may by special resolution reduce its share capital, any capital redemption reserve or any share premium account in any manner authorised and subject to any conditions prescribed by the Law.

BORROWING POWERS

POWER TO BORROW

63.

The Board may from time to time at its discretion exercise all the powers of the Company to raise or borrow or to secure the payment of any sum or sums of money for the purposes of the Company and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof.

CONDITIONS ON WHICH MONEY MAY BE BORROWED

64.

The Board may raise or secure the payment or repayment of such sum or sums in such manner and upon such terms and conditions in all respects as it thinks fit and, in particular, by the issue of debentures, debenture stock, bonds or other securities of the Company, whether outright or as collateral security for any debts, liability or obligations of the Company or of any third party.

ASSIGNMENT

65.

Debentures, debenture stock, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued.

SPECIAL PRIVILEGES

66.

Any debentures, debenture stock, bonds or other securities may be issued at a discount, premium or otherwise and with any special privileges as to redemption, surrender, drawings, allotment of shares, attending and voting at general meetings of the Company, appointment of Directors and otherwise.

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67.

(a)

The Board shall cause a proper register to be kept, in accordance with the provisions of the Law, of all mortgages and charges specifically affecting the property of the Company and shall duly comply with the requirements of the Law in regard to the registration of mortgages and charges therein specified and otherwise.

(b)

If the Company issues debentures or debenture stock (whether as part of a series or as individual instruments) not transferable by delivery, the Board shall cause a proper register to be kept of the holders of such debentures.

MORTGAGE OF UNCALLED CAPITAL

68.

Where any uncalled capital of the Company is charged, all persons taking any subsequent charge thereon shall take the same subject to such prior charge, and shall not be entitled, by notice to the members or otherwise, to obtain priority over such prior charge.

GENERAL MEETINGS

WHEN ANNUAL GENERAL MEETING TO BE HELD

69.

The Company shall in each year hold a general meeting as its annual general meeting in addition to any other meeting in that year and shall specify the meeting as such in the notices calling it. The annual general meeting shall be held at such time and place as the Board shall appoint.

EXTRAORDINARY GENERAL MEETING

70.

All general meetings other than annual general meetings shall be called extraordinary general meetings.

CONVENING OF EXTRAORDINARY GENERAL MEETING

71. The Board may, whenever it thinks fit, convene an extraordinary general meeting. General meetings shall also be convened on the written requisition of any two or more members of the Company deposited at the principal office of the Company in Hong Kong or, in the event the Company ceases to have such a principal office, the registered office specifying the objects of the meeting and signed by the requisitionists, provided that such requisitionists held as at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company which carries the right of voting at general meetings of the Company.

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General meetings may also be convened on the written requisition of any one member of the Company which is a recognised clearing house
(or its nominee) deposited at the principal office of the Company in Hong Kong or, in the event the Company ceases to have such a principal office, the registered office specifying the objects of the meeting and signed by the requisitionist, provided that such requisitionist held as at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company which carries the right of voting at general meetings of Company. If the Board does not within 21 days from the date of deposit of the requisition proceed duly to convene the meeting, the requisitionist(s) themselves or any of them representing more than one-half of the total voting rights of all of them, may convene the general meeting in the same manner, as nearly as possible, as that in which meetings may be convened by the Board provided that any meeting so convened shall not be held after the expiration of three months from the date of deposit of the requisition, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to them by the Company.

NOTICE OF MEETINGS; RECORD DATE
App 13 Part B r.3(1)

72.

(a)

An annual general meeting and any extraordinary general meeting called for the passing of a special resolution shall be called by not less than 21 days’ notice in writing and any other extraordinary general meeting shall be called by not less than 14 days’ notice in writing. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and shall specify the time, place, and agenda of the meeting, particulars of the resolutions to be considered at the meeting and in the case of special business (as defined in Article 74(a)) the general nature of that business. The notice convening an annual general meeting shall specify the meeting as such, and the notice convening a meeting to pass a special resolution shall specify the intention to propose the resolution as a special resolution. Notice of every general meeting shall be given to the Auditors and to all members other than such as, under the provisions hereof or the terms of issue of the shares they hold, are not entitled to receive such notice from the Company.

	(b)		The Board may fix any date as the record date for determining the members entitled to receive notice of and to vote at any general meeting of the Company but, unless so fixed, as regards the entitlement to receive notice of a meeting or notice of any other matter, the record date shall be the date of despatch of the notice and, as regards the entitlement to vote at a meeting, and any adjournment thereof, the record date shall be the date of the original meeting.

	(c)		Notwithstanding that a meeting of the Company is called by shorter notice than that referred to in paragraph (a) hereof, it shall be deemed to have been duly called if it is so agreed:

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	(i)		in the case of a meeting called as an annual general meeting, by all the members of the Company (or in the case of a member being a corporation, by its duly authorized representative) entitled to attend and vote thereat or their proxies; and

	(ii)		in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the shares giving that right.

(d)

There shall appear with reasonable prominence in every notice of general meetings of the Company a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and, on a poll, vote instead of him and that a proxy need not be
a member of the Company.

OMISSION TO GIVE NOTICE/INSTRUMENT OF PROXY

73.

(a)

The accidental omission to give any such notice to, or the non-receipt of any such notice by, any person entitled to receive notice shall not invalidate any resolution passed or any proceeding at any such meeting.

(b)

In cases where instruments of proxy are sent out with notices, the accidental omission to send such instrument of proxy to, or the non-receipt of such instrument of proxy by, any person entitled to receive notice shall not invalidate any resolution passed or any proceeding at any such meeting.

PROCEEDINGS AT GENERAL MEETINGS

SPECIAL BUSINESS; NOTICE REQUIRED WHEN MEMBER PROPOSES BUSINESS FOR DELIBERATION AT A GENERAL MEETING

74.

(a)

All business shall be deemed special that is transacted at an extraordinary general meeting and also all business shall be deemed special that is transacted at an annual general meeting with the exception of the following, which shall be deemed ordinary business:

	(i)		the declaration and sanctioning of dividends;

	(ii)		the consideration and adoption of the accounts and balance sheets and the reports of the Directors and Auditors and other documents required to be annexed to the balance sheet;

	(iii)		the appointment of Auditors;

	(iv)		the fixing of, or the determining of the method of fixing of, the remuneration of the Directors and of the Auditors;

- 24 -

	(v)		the granting of any mandate or authority to the Directors to offer, allot, grant options over, or otherwise dispose of the unissued shares of the Company representing not more than 20% in nominal value of its then existing issued share capital and the number of any securities repurchased pursuant to paragraph (vi) of this Article 74(a); and

	(vi)		the granting of any mandate or authority to the Directors to repurchase securities of the Company.

(b)

No business other than that stated in the Company’s notice of an extraordinary general meeting shall be transacted at such extraordinary general meeting. At an annual general meeting, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual general meeting, business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (ii) otherwise properly brought before the meeting by or at the direction of the Board, or (iii) otherwise properly brought before the meeting by a member. In addition to any other applicable requirements, for business to be properly brought before an annual general meeting by a member, the member must have given timely notice thereof in writing to the Secretary and the member, or his or her representative who is qualified to present the business on his or her behalf, must attend the meeting to present the business. To be timely, a member’s notice must be delivered to or mailed and received at the principal executive offices of the Company not less than the close of business on the forty-fifth (45th) day nor earlier than the close of business on the seventy-fifth (75th) day prior to the first anniversary of the date on which the Company first mailed its proxy materials for the preceding year’s annual general meeting; provided, however, that in the event that no annual general meeting was held in the previous year or the date of the annual general meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the member to be timely must be so received not earlier than the close of business on the one hundred fifth (105th) day prior to the date of the annual general meeting and not less than the close of business on the later of the seventy-fifth (75th) day prior to such annual general meeting date or, in the event public announcement of the date of such annual general meeting is first made by the Company fewer than eighty-five (85) days prior to the date of such annual general meeting, the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Company. A member’s notice to the Secretary shall set forth as to each matter the member proposes to bring before the annual general meeting: (i) a brief description of the business desired to be brought before the annual general meeting and the reasons for conducting such business at the annual general meeting, (ii) the name and address, as they appear on the register of members, of the member proposing such business, (iii) the class and number of shares of the Company which are beneficially owned by the

- 25 -

member, (iv) any material interest of the member in such business and (v) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in his or her capacity as a proponent of a shareholder proposal. Notwithstanding anything in these Articles to the contrary, no business shall be conducted at any annual general meeting except in accordance with the procedures set forth in this Article 74(b); provided, however, that nothing in this Article 74(b) shall be deemed to preclude discussion by any member of any business properly brought before the annual general meeting in accordance with such procedures. The Chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting in accordance with the provisions of this Article 74(b), and, if he should so determine, the Chairman of the meeting shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.

QUORUM

75.

For all purposes the quorum for a general meeting shall be a member or members (or in the case of a member being a corporation, by its duly authorized representative) together holding (or representing by proxy) at the date of the relevant meeting not less than one-third of the then outstanding shares of the Company’s ordinary shares that are entitled to vote at such meeting. No business (except the appointment of a Chairman) shall be transacted at any general meeting unless the requisite quorum shall be present at the commencement of the business.

WHEN IF QUORUM NOT PRESENT MEETING TO BE DISSOLVED AND WHEN TO BE ADJOURNED

76.

If within 15 minutes from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved, but in any other case it shall stand adjourned to reconvene at the same or some other time and place as shall be determined by the Board. When a meeting is adjourned to another time or place, unless these Articles otherwise require, notice need not be given of the adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which shareholders and holders of proxy may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Company may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting in accordance with Article 72.

- 26 -

CHAIRMAN OF GENERAL MEETING

77.

The Chairman shall take the chair at every general meeting, or, if there be no such Chairman or, if at any general meeting such Chairman shall not be present within 15 minutes after the time appointed for holding such meeting or is unwilling to act, the Directors present shall choose another Director as Chairman, and if no Director be present, or if all the Directors present decline to take the chair, or if the Chairman chosen shall retire from the chair, then the members present shall choose one of their own number to be Chairman.

POWER TO ADJOURN GENERAL MEETING/BUSINESS OF ADJOURNED MEETING

78.

The Chairman may, with the consent of any general meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn any meeting from time to time and from place to place as the meeting shall determine. Whenever a meeting is adjourned for 14 days or more, at least seven clear days’ notice, specifying the place, the day and the hour of the adjourned meeting shall be given in the same manner as in the case of an original meeting but it shall not be necessary to specify in such notice the nature of the business to be transacted at the adjourned meeting. Save as aforesaid, no member shall be entitled to any notice of an adjournment or of the business to be transacted at any adjourned meeting. No business shall be transacted at any adjourned meeting other than the business which might have been transacted at the meeting from which the adjournment took place.

RIGHT TO DEMAND A POLL AND WHAT IS TO BE EVIDENCE OF THE PASSING OF A RESOLUTION WHERE POLL NOT DEMANDED

79.

At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. A poll may be demanded by:

(a)

the Chairman of the meeting; or

App 13 Part B r.2(3)

(b)

at least five members present in person (or in the case of a member being a corporation, by its duly authorized representative) or by proxy and entitled to vote; or

App 13 Part B r.2(3)

(c)

any member or members present in person (or in the case of a member being a corporation, by its duly authorized representative) or by proxy and representing in

- 27 -

the aggregate not less than one-tenth of the total voting rights of all members having the right to attend and vote at the meeting; or

(d)

any member or members present in person (or in the case of a member being a corporation, by its duly authorized representative) or by proxy and holding shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

Unless a poll is so demanded and not withdrawn, a declaration by the Chairman that a resolution has on a show of hands been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the Company’s book containing the minutes of proceedings of meetings of the Company shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

POLL

80.

(a)

If a poll is demanded as aforesaid, it shall (subject as provided in Article 81) be taken in such manner (including the use of ballot or voting papers or tickets) and at such time and place, not being more than 30 days from the date of the meeting or adjourned meeting at which the poll was demanded as the Chairman directs. No notice need be given of a poll not taken immediately. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn, with the consent of the Chairman, at any time before the close of the meeting at which the poll was demanded or the taking of the poll, whichever is earlier.

BUSINESS MAY PROCEED NOTWITHSTANDING DEMAND FOR POLL

(b)

The demand of a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded.

IN WHAT CASE POLL TAKEN WITHOUT ADJOURNMENT

81.

Any poll duly demanded on the election of a Chairman of a meeting or on any question of adjournment shall be taken at the meeting and without adjournment.

CHAIRMAN TO HAVE CASTING VOTE

82.

In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote.

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WRITTEN RESOLUTIONS

83.

A resolution in writing (in one or more counterparts), including a special resolution, signed by all members for the time being entitled to receive notice of and to attend and vote at general meetings (or being corporations by their duly appointed representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held. Any such resolution shall be deemed to have been passed at a meeting held on the date on which it was signed by the last member to sign.

VOTES OF MEMBERS

VOTES OF MEMBERS

84.

Subject to any special rights, privileges or restrictions as to voting for the time being attached to any class or classes of shares, at any general meeting on a show of hands every member who is present in person (or, in the case of a member being a corporation by its duly authorised representative) shall have one vote, and on a poll every member present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy shall have one vote for each share registered in his name in the register. On a poll a member entitled to more than one vote is under no obligation to cast all his votes in the same way.

VOTES IN RESPECT OF DECEASED AND BANKRUPT MEMBERS

85.

Any person entitled under Article 45 to be registered as a shareholder may vote at any general meeting in respect thereof in the same manner as if he were the registered holder of such shares, provided that at least 48 hours before the time of the holding of the meeting or adjourned meeting (as the case may be) at which he proposed to vote, he shall satisfy the Board of his right to be registered as the holder of such shares or the Board shall have previously admitted his right to vote at such meeting in respect thereof.

VOTES OF JOINT HOLDERS

86.

Where there are joint registered holders of any share, any one of such persons may vote at any meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at any meeting personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall alone be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by reference to the order in which the names of the joint holders stand on the register in respect of the relevant joint holding. Several executors or administrators of a deceased member in whose name any share stands shall for the purposes of this Article be deemed joint holders thereof.

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VOTES OF MEMBER OF UNSOUND MIND

87.

A member in respect of whom an order has been made by any competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs may vote, whether on a show of hands or on a poll, by any person authorised in such circumstances to do so, and such person may vote on a poll by proxy.

QUALIFICATION FOR VOTING

88.

(a)

Save as expressly provided in these Articles or as otherwise determined by the Board, no person other than a member duly registered and who shall have paid everything for the time being due from him payable to the Company in respect of his shares shall be entitled to be present (or in the case of a member being a corporation, by its duly authorized representative) or to vote (save as proxy for another member), or to be reckoned in a quorum, either personally or by proxy at any general meeting.

OBJECTIONS TO VOTING

(b)

No objection shall be raised as to the qualification of any person exercising or purporting to exercise any vote or to the admissibility of any vote except at the meeting or adjourned meeting at which the person exercising or purporting to exercise his vote or the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. In the case of any dispute as to the admission or rejection of any vote, the Chairman of the meeting shall determine the same and such determination shall be final and conclusive.

PROXIES
App 13 Part B r.2(2)

89.

Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint another person (who must be an individual) as his proxy to attend and vote instead of him and a proxy so appointed shall have the same right as the member to speak at the meeting. On a poll votes may be given either personally or by proxy. A proxy need not be a member of the Company. A member may appoint any number of proxies to attend in his stead at any one general meeting (or at any one class meeting).

INSTRUMENT APPOINTING PROXY
App 3 r.11(2)

90.

The instrument appointing a proxy shall be in writing. The instrument of proxy shall be signed or, in the case of a transmission by electronic mail or through the Internet, electronically signed in a manner acceptable to the Chairman, by the appointor or by the

- 30 -

appointor’s attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or signed or, in the case of a transmission by electronic mail or through the Internet, electronically signed in a manner acceptable to the Chairman, by a duly authorised officer or attorney.

DELIVERY OF AUTHORITY FOR APPOINTMENT OF PROXY OR COPY RESOLUTION APPOINTING REPRESENTATIVE

91.

The instrument appointing a proxy and (if required by the Board) the power of attorney or other authority, (if any) under which it is signed, or a notarially certified copy of such power or authority, shall be delivered at the registered office of the Company (or at such other place as may be specified in the notice convening the meeting or in any notice of any adjournment or, in either case, in any document sent therewith) not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, not less than 48 hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid provided always that the Chairman of the meeting may at his discretion direct that an instrument of proxy shall be deemed to have been duly deposited upon receipt of cable, telex, telecopier, facsimile, electronic mail or through the Internet confirmation from the appointor that the instrument of proxy duly signed is in the course of transmission to the Company. No instrument appointing a proxy shall be valid after the expiration of 12 months from the date named in it as the date of its execution. Delivery of any instrument appointing a proxy shall not preclude a member from attending and voting in person at the meeting or poll concerned and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

FORM OF PROXY
App 3 r.11(1)

92.

Every instrument of proxy, whether for a specified meeting or otherwise, shall be in common form or such other form as the Board may from time to time approve, provided that it shall enable a member, according to his intention, to instruct his proxy to vote in favour of or against (or in default of instructions or in the event of conflicting instructions, to exercise his discretion in respect of) each resolution to be proposed at the meeting to which the form of proxy relates.

AUTHORITY UNDER INSTRUMENT APPOINTING PROXY

93.

The instrument appointing a proxy to vote at a general meeting shall: (a) be deemed to confer authority to demand or join in demanding a poll and to vote on any amendment of a resolution put to the meeting for which it is given as the proxy thinks fit; and (b) unless the contrary is stated therein, be valid as well for any adjournment of the meeting as for the meeting to which it relates, provided that the meeting was originally held within 12 months from such date.

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WHEN VOTE BY PROXY/REPRESENTATIVE VALID THOUGH AUTHORITY REVOKED

94.

A vote given in accordance with the terms of an instrument of proxy or resolution of a member shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or power of attorney or other authority under which the proxy or resolution of a member was executed or revocation of the relevant resolution or the transfer of the share in respect of which the proxy was given, provided that no intimation in writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the Company at its registered office, or at such other place as is referred to in Article 91, at least two hours before the commencement of the meeting or adjourned meeting at which the proxy is used.

CORPORATIONS/CLEARING HOUSES ACTING BY REPRESENTATIVES AT MEETINGS

App. 13 Part B r.2(2)

95.

(a)

Any corporation which is a member of the Company may, by resolution of its directors or other governing body or by power of attorney, authorise such person as it thinks fit to act as its representative at any meeting of the Company or of members of any class of shares of the Company and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual member of the Company and where a corporation is so represented, it shall be treated as being present at any meeting in person.

App 13 Part B r.6

(b)

If a recognised clearing house (or its nominee) is a member of the Company it may, by resolution of its directors or other governing body or by power of attorney, authorise such person or persons as it thinks fit to act as its proxy(ies) or representative(s) at any general meeting of the Company or at any general meeting of any class of members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person so authorised pursuant to this provision shall be entitled to exercise the same rights and powers on behalf of the recognised clearing house (or its nominee) which he represents as that recognised clearing house (or its nominee) could exercise if it were an individual member of the Company holding the number and class of shares specified in such authorisation, including the right to vote individually on a show of hands notwithstanding any contrary provision contained in Article 84.

REGISTERED OFFICE

REGISTERED OFFICE

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96.

The registered office of the Company shall be at such place in the Cayman Islands as the Board shall from time to time appoint.

BOARD OF DIRECTORS

CONSTITUTION

97.

The number of Directors shall not be less than two.

BOARD MAY FILL VACANCIES/APPOINT ADDITIONAL DIRECTORS

App 3 r.4(2)

98.

The Board shall have power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy or as an addition to the Board. Any Director so appointed shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election at that meeting provided that any Director who so retires shall not be taken into account in determining the number of Directors who are to retire at such meeting by rotation pursuant to Article 114.

QUALIFICATION OF DIRECTORS

99.

A Director need not hold any qualification shares. No Director shall be required to vacate office or be ineligible for re-election or re-appointment as a Director and no person shall be ineligible for appointment as a Director by reason only of his having attained any particular age.

DIRECTORS’ REMUNERATION

100.

(a)

The Directors shall be entitled to receive by way of remuneration for their services such sum as shall from time to time be determined by the Company in general meeting or by the Board, as the case may be, such sum (unless otherwise directed by the resolution by which it is determined) to be divided amongst the Directors in such proportions and in such manner as they may agree, or failing agreement, equally, except that in such event any Director holding office for less than the whole of the relevant period in respect of which the remuneration is paid shall only rank in such division in proportion to the time during such period for which he has held office. Such remuneration shall be in addition to any other remuneration to which a Director who holds any salaried employment or office in the Company may be entitled by reason of such employment or office.

App 13 Part B r.5(4)

(b)

Payment to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from

- 33 -

office (not being a payment to which the Director is contractually entitled) must first be approved by the Company in general meeting.

DIRECTORS’ EXPENSES

101.

The Directors shall be entitled to be paid all expenses, including travel expenses, reasonably incurred by them in or in connection with the performance of their duties as Directors including their expenses of travelling to and from Board meetings, committee meetings or general meetings or otherwise incurred whilst engaged on the business of the Company or in the discharge of their duties as Directors.

SPECIAL REMUNERATION

102.

The Board may grant special remuneration to any Director, who shall perform any special or extra services at the request of the Company. Such special remuneration may be made payable to such Director in addition to or in substitution for his ordinary remuneration as a Director, and may be made payable by way of salary, commission or participation in profits or otherwise as may be agreed.

REMUNERATION OF MANAGING DIRECTORS, ETC.

103.

The remuneration of a Managing Director (as appointed according to Article 106) or a Director appointed to any other office in the management of the Company shall from time to time be fixed by the Board and may be by way of salary, commission, or participation in profits or otherwise or by all or any of those modes and with such other benefits (including share option and/or pension and/or gratuity and/or other benefits on retirement) and allowances as the Board may from time to time decide. Such remuneration shall be in addition to such remuneration as the recipient may be entitled to receive as a Director.

WHEN OFFICE OF DIRECTOR TO BE VACATED

104.

The office of a Director shall be vacated:

	(i)		if the Director gives notice in writing to the Company that such Director resigns the office of Director;

	(ii)		if an order is made by any competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs and the Board resolves that his office be vacated;

	(iii)		if, without leave, he is absent from meetings of the Board for a continuous period of 12 months, and the Board resolves that his office be vacated;

	(iv)		if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors generally;

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	(v)		if he ceases to be or is prohibited from being a Director by law or by virtue of any provisions in these Articles;

	(vi)		if he shall be removed from office by notice in writing served upon him signed by not less than three-fourths in number (or, if that is not a round number, the nearest lower round number) of the Directors (including himself) then in office; or

App 13 Part B r.5(1)

(vii)

if he shall be removed from office by a special resolution of the members of the Company under Article 120(a).

DIRECTORS MAY CONTRACT WITH COMPANY

App 13 Part B r.5(3)

105.

(a)

(i)

No Director or proposed Director shall be disqualified by his office from contracting with the Company either as vendor, purchaser or otherwise nor shall any such contract or any contract or arrangement entered into by or on behalf of the Company with any person, company or partnership of or in which any Director shall be a member or otherwise interested be capable on that account of being avoided, nor shall any Director so contracting or being any member or so interested be liable to account to the Company for any profit so realised by any such contract or arrangement by reason only of such Director holding that office or the fiduciary relationship thereby established, provided that such Director shall, if his interest in such contract or arrangement is material, declare the nature of his interest at the earliest meeting of the Board at which it is practicable for him to do so, either specifically or by way of a general notice stating that, by reason of the facts specified in the notice, he is to be regarded as interested in any contracts of a specified description which may subsequently be made by the Company.

(ii)

Any Director may continue to be or become a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or member of any other company in which the Company may be interested and (unless otherwise agreed between the Company and the Director) no such Director shall be liable to account to the Company or the members for any remuneration or other benefits received by him as a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer or member of any such other company. The Directors may exercise the voting powers conferred by the shares in any other company held or owned by the Company, or exercisable by them as directors of such other company in such manner in all respects as they think fit (including the exercise thereof

- 35 -

in favour of any resolution appointing themselves or any of them directors, managing directors, joint managing directors, deputy managing directors, executive directors, managers or other officers of such company) and any Director may vote in favour of the exercise of such voting rights in manner aforesaid notwithstanding that he may be, or is about to be, appointed a director, managing director, joint managing director, deputy managing director, executive director, manager or other officer of such a company, and that as such he is or may become interested in the exercise of such voting rights in the manner aforesaid.

(b)

A Director may hold any other office or place of profit with the Company (except that of Auditor) in conjunction with his office of Director for such period and upon such terms as the Board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profit or otherwise) as the Board may determine, and such extra remuneration shall be in addition to any remuneration provided for by or pursuant to any other Article.

DIRECTOR MAY NOT VOTE WHERE HE HAS A MATERIAL INTEREST

App 3 r.4(1)

(c)

A Director shall not be entitled to vote on (nor shall be counted in the quorum in relation to) any resolution of the Board in respect of any contract or arrangement or any other proposal whatsoever in which he has any material interest, and if he shall do so his vote shall not be counted (nor is he to be counted in the quorum for the resolution), but this prohibition shall not apply to any of the following matters, namely:

DIRECTOR MAY VOTE IN RESPECT OF CERTAIN MATTERS

App 3 Note 1

(i)

the giving of any security or indemnity either:

	(aa)		to the Director in respect of money lent or obligations incurred by him at the request of or for the benefit of the Company or any of its subsidiaries;

	(bb)		to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director has himself assumed responsibility in whole or in part and whether alone or jointly under a guarantee or indemnity or by the giving of security;

(ii)

any proposal concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase where the Director

- 36 -

			is or is to be interested as a participant in the underwriting or sub-underwriting of the offer;

	(iii)		any proposal concerning any other company in which the Director is interested only, whether directly or indirectly, as an officer or executive or shareholder or in which the Director is beneficially interested in the shares of that company, provided that, he, together with any of his Associates (as defined below in paragraph (f)) is not, beneficially interested in five percent or more of the issued shares of any class of such company (or of any third company through which his interest is derived) or of the voting rights;

	(iv)		any proposal or arrangement concerning the benefit of employees of the Company or any of its subsidiaries including:

	(aa)		the adoption, modification or operation of any employees’ share scheme or any share incentive scheme or share option scheme under which he may benefit;

	(bb)		the adoption, modification or operation of a pension or provident fund or retirement, death or disability benefits scheme which relates both to Directors and employees of the Company or any of its subsidiaries and does not provide in respect of any Director as such any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates; and

(v)

any contract or arrangement in which the Director is interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his interest in shares or debentures or other securities of the Company.

DIRECTOR MAY VOTE ON PROPOSALS NOT CONCERNING OWN APPOINTMENT

(d)

Where proposals are under consideration concerning the appointment (including fixing or varying the terms of or terminating the appointment) of two or more Directors to offices or employments with the Company or any company in which the Company is interested, such proposals shall be divided and considered in relation to each Director separately and in such case each of the Directors concerned (if not prohibited from voting under paragraph (c)) shall be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning his own appointment.

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WHO TO DECIDE WHETHER A DIRECTOR MAY VOTE

(e)

If any question shall arise at any meeting of the Board as to the materiality of a Director’s interest or the significance of a contract, arrangement or transaction or proposed contract, arrangement or transaction or as to the entitlement of any Director to vote or form part of a quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, such question shall be referred to the other Directors at the meeting and the ruling of the other Directors in relation to an interested Director shall be final and conclusive except in a case where the nature or extent of the interests of the Director concerned as known to such Director has not been fairly disclosed to the Board.

DEFINITION OF “ASSOCIATES”

(f)

For the purpose of paragraph (c)(iii), “Associates” mean, in relation to any Director of the Company:

	(i)		his spouse and any of his or his spouse’s children or step-children under the age of 18 (“family interests”); and

	(ii)		the trustees, acting in their capacity as such trustees, of any trust of which he or any of his family interests is a beneficiary or, in the case of a discretionary trust, is a discretionary object; and

	(iii)		any company in the equity capital of which he and/or his family interests taken together are directly or indirectly interested (other than through their respective interests in the capital of the Company) so as to exercise or control the exercise of 35% or more of the voting power at general meetings, or to control the composition of a majority of the board and any other company which is its subsidiary or holding company or a fellow subsidiary of any such holding company.

MANAGING DIRECTORS

POWER TO APPOINT MANAGING DIRECTORS, ETC.

106.

The Board may from time to time appoint any one or more of its body to the office of Managing Director (who shall be the chief executive officer of the Company unless otherwise specified by the Board), Joint Managing Director, other Executive Director and/or such other employment or executive office, who shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company, as it may decide for such period and upon such terms as it thinks fit and upon such terms as to remuneration as it may decide in accordance with Article 103.

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REMOVAL OF MANAGING DIRECTOR, ETC.

107.

Every Director appointed to an office under Article 106 hereof shall, without prejudice to any claim for damages that such Director may have against the Company or the Company may have against such Director for any breach of any contract of service between him and the Company, be liable to be dismissed or removed therefrom by the Board.

CESSATION OF APPOINTMENT

108.

A Director appointed to an office under Article 106 shall be subject to the same provisions as to removal as the other Directors of the Company.

POWERS MAY BE DELEGATED

109.

The Board may from time to time entrust to and confer upon a Managing Director, Joint Managing Director or Executive Director all or any of the powers of the Board that it may think fit. But the exercise of all powers by such Director shall be subject to such regulations and restrictions as the Board may from time to time make and impose, and the said powers may at any time be withdrawn, revoked or varied but no person dealing in good faith and without notice of such withdrawal, revocation or variation shall be affected thereby.

MANAGEMENT

GENERAL POWERS OF COMPANY VESTED IN BOARD

110.	(a)	Subject to any exercise by the Board of the powers conferred by Articles 111 to 113, the management of the business of the Company shall be vested in the Board which, in addition to the powers and authorities by these Articles expressly conferred upon it, may exercise all such powers and do all such acts and things as may be exercised or done or approved by the Company and are not hereby or by the Law expressly directed or required to be exercised or done by the Company in general meeting, but subject nevertheless to the provisions of the Law and of these Articles and to any regulation from time to time made by the Company in general meeting not being inconsistent with such provisions or these Articles, provided that no regulation so made shall invalidate any prior act of the Board which would have been valid if such regulation had not been made.

	(b)	Without prejudice to the general powers conferred by these Articles, it is hereby expressly declared that the Board shall have the following powers:

(i)

to give to any person the right or option of requiring at a future date that an allotment shall be made to him of any share at par or at such premium as may be agreed; and

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(ii)

to give to any Directors, officers or employees of the Company an interest in any particular business or transaction or participation in the profits thereof or in the general profits of the Company either in addition to or in substitution for a salary or other remuneration.

App 13 Part B r.5 (2)

(c)

Except as permitted under the Companies Law, the Company shall not directly or indirectly:

	(i)		make a loan to a Director or his Associates (as defined in Article 105(f) above) or a director of any holding company of the Company;

	(ii)		enter into any guarantee or provide any security in connection with a loan made by any person to a Director or such a director; or

	(iii)		if any one or more of the Directors hold (jointly or severally or directly or indirectly) a controlling interest in another company, make a loan to that other company or enter into any guarantee or provide any security in connection with a loan made by any person to that other company.

MANAGERS

APPOINTMENT AND REMUNERATION OF MANAGERS

111.

The Board may from time to time appoint a general manager, manager or managers of the Company and may fix his or their remuneration either by way of salary or commission or by conferring the right to participation in the profits of the Company or by a combination of two or more of these modes and pay the working expenses of any of the staff of the general manager, manager or managers who may be employed by him or them in connection with the conduct of the business of the Company. In furtherance of the foregoing, the Board shall be vested with the power to appoint the president, the principal financial officer and the principal operating officers of the Company or persons performing similar functions, and the power to appoint other managers of the Company is hereby delegated by the Board to the Managing Director appointed pursuant to Article 106, which powers may be delegated, re-delegated or revoked at any time by a resolution adopted by the Board.

TENURE OF OFFICE AND POWERS

112.

The appointment of such general manager, manager or managers may be for such period as the Board (or the Managing Director pursuant to the powers conferred upon him pursuant to Article 111) may decide and the Board (or the Managing Director pursuant to the powers conferred upon him pursuant to Article 111) may confer upon him or them all

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or any of the powers of the Board (or the Managing Director pursuant to the powers conferred upon him pursuant to Article 111) as it may think fit.

TERMS AND CONDITIONS OF APPOINTMENT

113.

Subject to Article 111, the Board (or the Managing Director pursuant to the powers conferred upon him pursuant to Article 111) may enter into such agreement or agreements with any such general manager, manager or managers upon such terms and conditions in all respects as the Board (or the Managing Director pursuant to the powers conferred upon him pursuant to Article 111) may in its absolute discretion think fit, including a power for such general manager, manager or managers to appoint an assistant manager or managers or other employees whatsoever under them for the purpose of carrying on the business of the Company.

ROTATION OF DIRECTORS

ROTATION AND RETIREMENT OF DIRECTORS

114.

At each annual general meeting, one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to, but not exceeding, one-third, shall retire from office by rotation. The Directors to retire in every year shall be those who have been longest in office since their last election but as between persons who became Directors on the same day those to retire shall (unless they otherwise agree between themselves) be determined by lot. A retiring Director shall retain office until the close of the meeting at which he retires, and shall be eligible for re-election thereat. Notwithstanding the foregoing, a Director who is a Managing Director or Joint Managing Director shall not be required to retire by rotation but nonetheless shall be counted towards satisfying the number of Directors to retire by rotation at such annual general meetings at which such Managing Director or Joint Managing Director would have been a retiring Director, treating such Managing Director or Joint Managing Director as if during his or her term in office as a Director, he or she had retired and been re-elected in accordance with the first three sentences of this Article 114.

MEETING TO FILL UP VACANCIES

115.

The Company at any general meeting at which any Directors retire in manner aforesaid may fill the vacated office by electing a like number of persons to be Directors.

RETIRING DIRECTORS TO REMAIN IN OFFICE TILL SUCCESSORS APPOINTED

116.

If at any general meeting at which an election of Directors ought to take place, the places of the retiring Directors are not filled, the retiring Directors or such of them as have not had their places filled shall be deemed to have been re-elected and shall, if willing, continue in office until the next annual general meeting and so on from year to year until their places are filled, unless:

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	(i)		it shall be determined at such meeting to reduce the number of Directors; or

	(ii)		it is expressly resolved at such meeting not to fill up such vacated offices; or

	(iii)		a resolution for the re-election of such Directors is put to the meeting and lost.

POWER OF GENERAL MEETING TO INCREASE OR REDUCE THE NUMBER OF DIRECTORS

117.

The Company may from time to time in general meeting by ordinary resolution increase or reduce the number of Directors but so that the number of Directors shall not be less than two. Subject to the provisions of these Articles and the Law, the Company may by ordinary resolution in a general meeting elect any person to be a Director either to fill a casual vacancy or as an addition to the existing Directors. Any Director so appointed shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election, but shall not be taken into account in determining the Directors who are to retire by rotation at such meeting.

NOTICE TO BE GIVEN WHEN PERSON PROPOSED FOR ELECTION

App 3 r.4(4) r.4(5)

118.

No person shall, unless recommended or nominated by or at the direction of the Board, be eligible for nomination or election to the office of Director at any general meeting unless there has been given to the Secretary notice in writing by a member of the Company (not being the person to be proposed), entitled to attend and vote at the meeting for which such notice is given, of his intention to propose such person for election and also notice in writing signed by the person to be proposed of his willingness to be elected, such notice being given not less than the close of business on the forty-fifth (45th) day nor earlier than the close of business on the seventy-fifth (75th) day prior to the first anniversary of the date on which the Company first mailed its proxy materials for the preceding year’s annual general meeting; provided, however, that in the event of an extraordinary general meeting or that no annual general meeting was held in the previous year or the date of the annual general meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the member to be timely must be so received not earlier than the close of business on the one hundred fifth (105th) day prior to the date of the general meeting and not less than the close of business on the later of the seventy-fifth (75th) day prior to such general meeting date or, in the event public announcement of the date of such general meeting is first made by the Company fewer than eighty-five (85) days prior to the date of such general meeting, the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Company. To be in proper written form, such member’s notice shall set forth: (a) as to each person whom the

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member proposes to nominate for election as a director, the information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the member giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (i) the name and address, as they appear on the Company’s register of members, of such member, and of such beneficial owner; (ii) the class and number of shares of the Company which are beneficially owned by such member and such beneficial owner; (iii) a description of any arrangements or understandings between such member and each proposed nominee and any other person pursuant to which the nomination(s) are to be made by such member and such beneficial owner; and (iv) any other information relating to such member and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors, or may otherwise be required, in each case pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. No person shall be eligible for election as a Director unless nominated in accordance with the procedures set forth in this Article 118. The Chairman of the meeting shall, if the facts warrant, determine and declare at the meeting a nomination was not properly made in accordance with the provisions of this Article 118, and, if he should so determine, the Chairman of the meeting shall so declare at the meeting that any such nomination was defective and such defective nomination shall be disregarded.

119.

The Company shall keep at its office a register of directors and officers containing their names and addresses and occupations and any other particulars required by the Law and shall send to the Registrar of Companies of the Cayman Islands a copy of such register and shall from time to time notify to the Registrar of Companies of the Cayman Islands any change that takes place in relation to such Directors as required by the Law.

POWER TO REMOVE DIRECTOR BY SPECIAL RESOLUTION
App 13 Part B r.5(1)
App 3 r.4(3)

120.

(a)

The Company may by special resolution at any time remove any Director (including a Managing Director or other executive Director) before the expiration of his period of office notwithstanding anything in these Articles or in any agreement between the Company and such Director and may by ordinary resolution elect another person in his stead. Any person so elected shall hold office during such time only as the Director in whose place he is elected would have held the same if he had not been removed.

App 3 r.4(3)

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(b)

Nothing in this Article should be taken as depriving a Director removed under any provisions of this Article of compensation or damages payable to him in respect of the termination of his appointment as Director or of any other appointment or office as a result of the termination of his appointment as Director or as derogatory from any power to remove a Director which may exist apart from the provision of this Article.

PROCEEDINGS OF DIRECTORS

MEETINGS OF DIRECTORS/QUORUM ETC.

121.

The Board may meet together for the despatch of business, adjourn and otherwise regulate its meetings and proceedings as it thinks fit in any part of the world. A majority of the Directors then in office on the Board or a committee thereof shall be a quorum for meetings of the Board or such committee, respectively. A meeting of the Board or any committee of the Board may be held by means of a telephone or tele-conferencing or any other telecommunications facility provided that all participants are thereby able to communicate contemporaneously by voice with all other participants and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting. A Director may be represented at any meetings of the Board or a committee thereof by a proxy appointed in writing by such Director. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.

CONVENING OF BOARD MEETING; NOTICE

122.

A Director may, and on request of a Director the Secretary shall, at any time summon a meeting of the Board. Notice thereof shall be deemed to be duly given to a Director if it is given to such Director verbally (in person or by telephone) or otherwise communicated or sent to such Director by post, cable, telex, telecopier, facsimile, electronic mail or other mode of representing words in a legible form at such Director’s last known address or any other address given by such Director to the Company for this purpose not less than twenty-four hours in advance of the time of the meeting for which notice is being given.

HOW QUESTIONS TO BE DECIDED

123.

Subject to Article 105, questions arising at any meeting of the Board shall be decided by a majority of votes, and in case of an equality of votes the Chairman shall have a second or casting vote.

CHAIRMAN

124.

The Board may elect a Chairman of its meetings and determine the period (not being a period extending beyond the date of the annual general meeting at which such Chairman is due to retire by rotation under Article 116) for which he is to hold office; but if no such

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Chairman is elected, or if at any meeting the Chairman is not present within 15 minutes after the time appointed for holding the same, the Directors present may choose one of their number to be Chairman of the meeting.

POWER OF MEETING

125.

A meeting of the Board for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions by or under these Articles for the time being vested in or exercisable by the Board generally.

POWER TO APPOINT COMMITTEE AND TO DELEGATE

126.

The Board may delegate any of its powers to committees consisting of such member or members of the Board as the Board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall in the exercise of the powers so delegated conform to any regulations that may from time to time be imposed upon it by the Board.

ACTS OF COMMITTEE TO BE OF SAME EFFECT AS ACT OF DIRECTORS

127.

All acts done by any such committee in conformity with such regulations and in fulfilment of the purposes for which it is appointed, but not otherwise, shall have the like force and effect as if done by the Board, and the Board shall have power, with the consent of the Company in general meeting, to remunerate the members of any such committee, and charge such remuneration to the current expenses of the Company.

PROCEEDINGS OF COMMITTEE

128.

(a)

The meetings and proceedings of any such committee consisting of two or more members of the Board shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Board so far as the same are applicable thereto and are not replaced by any regulations imposed by the Board pursuant to Article 127.

MINUTES OF PROCEEDINGS OF MEETINGS AND DIRECTORS

(b)

The Board shall cause minutes to be made of:

	(i)		all appointments of officers made by the Board;

	(ii)		the names of the Directors present at each meeting of the Board and of committees appointed pursuant to Article 127;

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	(iii)		all declarations made or notices given by any Director of his interest in any contract or proposed contract or of his holding of any office or property whereby any conflict of duty or interest may arise; and

	(iv)		all resolutions and proceedings at all meetings of the Company and of the Board and of such committees.

Any such minutes shall be prima facie evidence of any such proceedings if they purport to be signed by the Chairman of the meeting, by any director present at the meeting or by the Chairman of the succeeding meeting.

WHEN ACTS OF DIRECTORS OR COMMITTEE TO BE VALID NOTWITHSTANDING DEFECTS

129.

All acts bona fide done by any meeting of the Board or by a committee of Directors or by any person acting as Director shall, notwithstanding that it shall be afterwards discovered that there was some defect in the appointment of such Director or persons acting as aforesaid or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director or member of such committee as the case may be.

DIRECTORS’ POWERS WHEN VACANCIES EXIST

130.

The continuing Directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Director or Directors may act for the purpose of increasing the number of Directors to that number or of summoning a general meeting of the Company but for no other purpose.

DIRECTORS’ RESOLUTIONS

131.

A resolution in writing and signed, or if transmitted by electronic mail or through the internet, electronically signed in a manner acceptable to the Chairman, by that number of Directors (or their respective proxies pursuant to Article 121) sufficient to pass such resolution at a meeting of the Board duly convened and held assuming all Directors then in office were present at such meeting, shall be as valid and effectual as if it had been passed at a meeting of the Board duly convened and held and may consist of several documents in like form each signed by one or more of the Directors.

SECRETARY

APPOINTMENT OF SECRETARY

132.

The Secretary shall be appointed by the Board for such term, at such remuneration and upon such conditions as it may think fit, and any Secretary so appointed may be removed

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by the Board. Anything by the Law or these Articles required or authorised to be done by or to the Secretary, if the office is vacant or there is for any other reason no Secretary capable of acting, may be done by or to any assistant or deputy Secretary appointed by the Board, or if there is no assistant or deputy Secretary capable of acting, by or to any officer of the Company authorised generally or specifically in that behalf by the Board.

SAME PERSON NOT TO ACT IN TWO CAPACITIES AT ONCE

133.

A provision of the Law or of these Articles requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as Director and as or in place of the Secretary.

GENERAL MANAGEMENT AND USE OF THE SEAL

CUSTODY AND USE OF SEAL

134.

The Board shall provide for the safe custody of the seal which shall only be used by the authority of the Board or of a committee of the Board authorised by the Board in that behalf, and every instrument to which such seal shall be affixed shall be signed by a Director and shall be countersigned by the Secretary or by a second Director or by some other person appointed by the Board for the purpose. The securities seal which shall be a facsimile of the common seal with the word “Securities” engraved thereon shall be used exclusively for sealing securities issued by the Company and for sealing documents creating or evidencing securities so issued. The Board may either generally or in any particular case resolve that the securities seal or any signatures or any of them may be affixed to certificates for shares, warrants, debentures or any other form of security by facsimile or other mechanical means specified in such authority or that any such certificates sealed with the securities seal need not be signed by any person. Every instrument to which the seal is affixed as aforesaid shall, as regards all persons dealing in good faith with the Company, be deemed to have been affixed to that instrument with the authority of the Directors previously given.

DUPLICATE SEAL

135.

The Company may have a duplicate seal for use outside of the Cayman Islands as and where the Board shall determine, and the Company may by writing under the seal appoint any agents or agent, committees or committee abroad to be the agents of the Company for the purpose of affixing and using such duplicate seal and they may impose such restrictions on the use thereof as may be thought fit. Wherever in these Articles reference is made to the seal, the reference shall, when and so far as may be applicable, be deemed to include any such duplicate seal as aforesaid.

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CHEQUES AND BANKING ARRANGEMENTS

136.

All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments, and all receipts for moneys paid to the Company shall be signed, drawn, accepted, indorsed or otherwise executed, as the case may be, in such manner as the Board shall from time to time by resolution determine. The Company’s banking accounts shall be kept with such banker or bankers as the Board shall from time to time determine.

POWER TO APPOINT ATTORNEY

137.

(a)

The Board may from time to time and at any time, by power of attorney under the seal, appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these Articles) and for such period and subject to such conditions as it may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him.

EXECUTION OF DEEDS BY ATTORNEY

(b)

The Company may, by writing under its seal, empower any person, either generally or in respect of any specified matter, as its attorney to execute deeds and instruments on its behalf in any part of the world and to enter into contracts and sign the same on its behalf and every deed signed by such attorney on behalf of the Company and under his seal shall bind the Company and have the same effect as if it were under the seal of the Company.

REGIONAL OR LOCAL BOARDS

138.

The Board may establish any committees, regional or local boards or agencies for managing any of the affairs of the Company, either in the Cayman Islands, Hong Kong, the People’s Republic of China or elsewhere, and may appoint any persons to be members of such committees, regional or local boards or agencies and may fix their remuneration, and may delegate to any committee, regional or local board or agent any of the powers, authorities and discretions vested in the Board (other than its powers to make calls and forfeit shares), with power to sub-delegate, and may authorise the members of any local board or any of them to fill any vacancies therein and to act notwithstanding vacancies, and any such appointment or delegation may be upon such terms and subject to such conditions as the Board may think fit, and the Board may remove any person so appointed and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.

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POWER TO ESTABLISH PENSION FUNDS AND EMPLOYEE SHARE OPTION SCHEMES

139.

The Board may establish and maintain or procure the establishment and maintenance of any contributory or non-contributory pension or provident or superannuation funds or (with the sanction of an ordinary resolution) employee or executive share option schemes for the benefit of, or give or procure the giving of donations, gratuities, pensions, allowances or emoluments to any persons who are or were at any time in the employment or service of the Company, or of any company which is a subsidiary of the Company, or is allied or associated with the Company or with any such subsidiary company, or who are or were at any time directors or officers of the Company or of any such other company as aforesaid, and holding or who have held any salaried employment or office in the Company or such other company, and the wives, widows, families and dependents of any such persons. The Board may also establish and subsidise or subscribe to any institutions, associations, clubs or funds calculated to be for the benefit of or to advance the interests and well-being of the Company or of any such other company as aforesaid, and may make payments for or towards the insurance of any such persons as aforesaid, and subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public, general or useful object. The Board may do any of the matters aforesaid, either alone or in conjunction with any such other company as aforesaid. Any Director holding any such employment or office shall be entitled to participate in and retain for his own benefit any such donation, gratuity, pension, allowance or emolument.

CAPITALISATION OF RESERVES

POWER TO CAPITALISE

140.

The Company in general meeting may upon the recommendation of the Board by ordinary resolution resolve that it is desirable to capitalise all or any part of the amount for the time being standing to the credit of any of the Company’s reserve accounts or funds or to the credit of the profit and loss account or otherwise available for distribution (and not required for the payment or provision of dividend on any shares with a preferential right to dividend) and accordingly that such sums be set free for distribution amongst the members who would have been entitled thereto if distributed by way of dividend and in the same proportion on condition that the same be not paid in cash but be applied either in or towards paying up any amounts for the time being unpaid on any shares held by such members respectively or paying up in full unissued shares, debentures or other securities of the Company to be allotted and distributed credited as fully paid up to and amongst such members in proportion aforesaid or partly in one way and partly in the other, and the Board shall give effect to such resolution, provided that a share premium account and a capital redemption reserve and any reserve or fund representing unrealised profits may, for the purposes of this Article, only be applied in paying up unissued shares to be issued to members of the Company as fully paid up shares or paying up calls or instalments due or payable on partly paid securities of the Company subject always to the provisions of the Law.

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EFFECT OF RESOLUTION TO CAPITALISE

141.

(a)

Wherever such a resolution as referred to in Article 140 shall have been passed the Board shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and all allotments and issues of fully paid up shares, debentures or other securities, if any, and generally shall do all acts and things required to give effect thereto, with full power to the Board:

	(i)		to make such provision by the issue of fractional certificates or by payment in cash or otherwise (including provisions whereby, in whole or in part, fractional entitlements are aggregated and sold and the net proceeds distributed to those entitled, or are disregarded or rounded up or down or whereby the benefit of fractional entitlements accrues to the Company rather than to the members concerned) as they think fit in cases where shares, debentures or other securities become distributable in fractions;

	(ii)		to exclude the right of participation or entitlement of any member with a registered address outside any territory where in the absence of a registration statement or other special or onerous formalities the circulation of an offer of such right or entitlement would or might be unlawful or where the Board consider the costs, expense or possible delays in ascertaining the existence or extent of the legal and other requirements applicable to such offer or the acceptance of such offer out of proportion to the benefits of the Company; and

	(iii)		to authorise any person to enter on behalf of all members entitled thereto into an agreement with the Company providing for the allotment to them respectively, credited as fully paid up, of any further shares, debentures or other securities to which they may be entitled upon such capitalisation, or, as the case may require, for the payment up by the Company on their behalf, by the application thereto of their respective proportions of the profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares, and any agreement made under such authority shall be effective and binding on all such members.

(b)

The Board may, in relation to any capitalisation sanctioned under this Article in its absolute discretion specify that, and in such circumstances and if directed so to do by a member or members entitled to an allotment and distribution credited as fully paid up of unissued shares or debentures in the Company pursuant to such capitalisation, shall allot and distribute credited as fully paid up the unissued shares, debentures or other securities to which that member is entitled to such person or persons as that member may nominate by notice in writing to the

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Company, such notice to be received not later than the day for which the general meeting of the Company to sanction the capitalisation is convened.

DIVIDENDS AND RESERVES

POWER TO DECLARE DIVIDENDS

142.	(a)	Subject to the Law and these Articles, the Company in general meeting may declare dividends in any currency but no dividends shall exceed the amount recommended by the Board. All shares shall rank pari passu with regard to all distributions by way of dividend or otherwise.

	(b)	The dividends, interest and bonuses and any other benefits and advantages in the nature of income receivable in respect of the Company’s investments, and any commissions, trusteeship, agency, transfer and other fees and current receipts of the Company shall, subject to the payment thereout of the expenses of management, interest upon borrowed money and other expenses which in the opinion of the Board are of a revenue nature, constitute the profits of the Company available for distribution.

BOARD’S POWER TO PAY INTERIM DIVIDENDS

143.	(a)	The Board may from time to time pay to the members such interim dividends as appear to the Board to be justified by the profits of the Company and, in particular (but without prejudice to the generality of the foregoing), if at any time the share capital of the Company is divided into different classes, the Board may pay such interim dividends in respect of those shares in the capital of the Company which confer on the holders thereof deferred or non-preferential rights as well as in respect of those shares which confer on the holders thereof preferential rights with regard to dividend and provided that the Board acts bona fide, the Board shall not incur any responsibility to the holders of shares conferring any preferential rights.

	(b)	The Board may also pay half-yearly or at other intervals to be selected by it any dividend which may be payable at a fixed rate if the Board is of the opinion that the profits available for distribution justify the payment.

POWERS OF DIRECTORS TO DECLARE AND PAY SPECIAL DIVIDENDS

(c)

The Board may in addition from time to time declare and pay special dividends on shares of any class of such amounts and on such dates as they think fit, and the provisions of paragraph (a) as regards the powers and the exemption from liability of the Board as relate to declaration and payment of interim dividends shall apply, mutatis mutandis, to the declaration and payment of any such special dividends.

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DIVIDENDS NOT TO BE PAID OUT OF CAPITAL

144.

No dividend shall be declared or payable except out of the profits and reserves of the Company lawfully available for distribution including share premium. No dividend shall carry interest against the Company.

SCRIP DIVIDENDS

145.

(a)

Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the Board may further resolve:

AS TO CASH ELECTION

(i)

that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment. In such case, the following provisions shall apply:

	(aa)		the basis of any such allotment shall be determined by the Board;

	(bb)		the Board, after determining the basis of allotment, shall give not less than two weeks’ notice in writing to the shareholders of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective;

	(cc)		the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded;

	(dd)		the dividend (or that part of the dividend to be satisfied by the allotment of shares as aforesaid) shall not be payable in cash on shares in respect whereof the cash election has not been duly exercised (“the non-elected shares”) and in satisfaction thereof shares shall be allotted credited as fully paid to the holders of the non-elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company or any part of any of the Company’s reserve accounts (including any special account, share premium account and capital redemption reserve (if there be any such reserve)) or profit or loss account or amounts

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otherwise available for distribution as the Board may determine, a sum equal to the aggregate nominal amount of the shares to be allotted on such basis and apply the same in paying up in full the appropriate number of shares for allotment and distribution to and amongst the holders of the non-elected shares on such basis;

AS TO SCRIP ELECTION

(ii)

that shareholders entitled to such dividend shall be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board may think fit. In such case, the following provisions shall apply:

	(aa)		the basis of any such allotment shall be determined by the Board;

	(bb)		the Board, after determining the basis of allotment, shall give not less than two weeks’ notice in writing to shareholders of the right of election accorded to them and shall send with such notice forms of election and specify the procedure to be followed and the place at which and the latest date and time by which duly completed forms of election must be lodged in order to be effective;

	(cc)		the right of election may be exercised in respect of the whole or part of that portion of the dividend in respect of which the right of election has been accorded;

	(dd)		the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable on shares in respect whereof the share election has been duly exercised (“the elected shares”) and in lieu thereof shares shall be allotted credited as fully paid to the holders of the elected shares on the basis of allotment determined as aforesaid and for such purpose the Board shall capitalise and apply out of any part of the undivided profits of the Company’s reserve accounts (including any special account, share premium account and capital redemption reserve (if there be any such reserve)) or profit and loss account or amounts otherwise available for distribution as the Board may determine, a sum equal to the aggregate nominal amount of the shares to be allotted on such basis and apply the same in paying up in full the appropriate number of shares for allotment and distribution to and amongst the holders of the elected shares on such basis.

(b)

The shares allotted pursuant to the provisions of paragraph (a) of this Article shall be of the same class as the class of, and shall rank pari passu in all respects with the shares then held by the respective allottees save only as regards participation:

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	(i)		in the relevant dividend (or share or cash election in lieu thereof as aforesaid); or

	(ii)		in any other distributions, bonuses or rights paid, made, declared or announced prior to or contemporaneously with the payment or declaration of the relevant dividend, unless contemporaneously with the announcement by the Board of its proposal to apply the provisions of paragraph (i) or (ii) of paragraph (a) in relation to the relevant dividend or contemporaneously with its announcement of the distribution, bonus or rights in question, the Board shall specify that the shares to be allotted pursuant to the provisions of this paragraph (b) shall rank for participation in such distributions, bonuses or rights.

	(c)		The Board may do all acts and things considered necessary or expedient to give effect to any capitalisation pursuant to the provisions of paragraph (a) with full power to the Board to make such provisions as it thinks fit in the case of shares becoming distributable in fractions (including provisions whereby, in whole or in part, fractional entitlements are aggregated and sold and the net proceeds distributed to those entitled, or are disregarded or rounded up or down or whereby the benefit of fractional entitlements accrues to the Company rather than to the members concerned). The Board may authorise any person to enter into on behalf of all members interested, an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made pursuant to such authority shall be effective and binding on all concerned.

	(d)		The Company may upon the recommendation of the Board by ordinary resolution resolve in respect of any one particular dividend of the Company that notwithstanding the provisions of paragraph (a) a dividend may be satisfied wholly in the form of an allotment of shares credited as fully paid without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

	(e)		The Board may on any occasion determine that rights of election and the allotment of shares under paragraph (a) shall not be made available or made to any shareholders with registered addresses in any territory where in the absence of a registration statement or other special formalities the circulation of an offer of such rights of election or the allotment of shares would or might be unlawful, or where the Board considers the costs, expenses or possible delays in ascertaining the existence or extent of the legal and other requirements applicable to such offer or the acceptance of such offer out of proportion to the benefit of the Company, and in any such case the provisions aforesaid shall be read and construed subject to such determination.

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SHARE PREMIUM AND RESERVES

146.	(a)	The Board shall establish an account to be called the share premium account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any share in the Company. The Company may apply the share premium account in any manner permitted by the Companies Law. The Company shall at all times comply with the provisions of the Companies Law in relation to the share premium account.

	(b)	The Board may, before recommending any dividend, set aside out of the profits of the Company such sums as it thinks fit as a reserve or reserves which shall, at the discretion of the Board, be applicable for meeting claims on or liabilities of the Company or contingencies or for paying off any loan capital or for equalising dividends or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (including shares, warrants and other securities of the Company) as the Board may from time to time think fit, and so that it shall not be necessary to keep any reserves separate or distinct from any other investments of the Company. The Board may also without placing the same to reserve carry forward any profits which it may think prudent not to distribute by way of dividend.

DIVIDENDS TO BE PAID IN PROPORTION TO PAID UP CAPITAL

147.

Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. For the purpose of this Article no amount paid up on a share in advance of calls shall be treated as paid up on the share.

RETENTION OF DIVIDENDS, ETC.

148.	(a)	The Board may retain any dividends or other moneys payable on or in respect of a share upon which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists.

	(b)	The Board may retain any dividends or other monies payable upon shares in respect of which any person is, under the provisions as to the transmission of shares hereinbefore contained, entitled to become a member, or in respect of which any person is under those provisions entitled to transfer, until such person shall become a member in respect of such shares or shall transfer the same.

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DEDUCTION OF DEBTS

(c)

The Board may deduct from any dividend or other monies payable to any member all sums of money (if any) presently payable by him to the Company on account of calls, instalments or otherwise.

DIVIDEND AND CALL TOGETHER

149.

Any general meeting sanctioning a dividend may make a call on the members of such amount as the meeting resolves, but so that the call on each member shall not exceed the dividend payable to him, and so that the call be made payable at the same time as the dividend, and the dividend may, if so arranged between the Company and the member, be set off against the call.

DIVIDEND IN SPECIE

150.

The Board, with the sanction of the members in general meeting, may direct that any dividend be satisfied wholly or in part by the distribution of specific assets of any kind and in particular of paid up shares, debentures or warrants to subscribe securities of any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution the Board may settle the same as it thinks expedient, and in particular may disregard fractional entitlements, round the same up or down or provide that the same shall accrue to the benefit of the Company, and may fix the value for distribution of such specific assets, or any part thereof, and may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend and such appointment shall be effective. Where required, a contract shall be filed in accordance with the provisions of the Law and the Board may appoint any person to sign such contract on behalf of the persons entitled to the dividend and such appointment shall be effective.

EFFECT OF TRANSFER

151.	(a)	A transfer of shares shall not pass therewith the right to any dividend or bonus declared thereon before the registration of the transfer.

	(b)	Any resolution declaring or resolving upon the payment of a dividend or other distribution on shares of any class, whether a resolution of the Company in general meeting or a resolution of the Board, may specify that the same shall be payable or made to the persons registered as the holders of such shares at the close of business on a particular date, notwithstanding that it may be a date prior to that on which the resolution is passed, and thereupon the dividend or other distribution shall be payable or made to them in accordance with their respective holdings so

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registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares.

RECEIPT FOR DIVIDENDS BY JOINT HOLDERS OF SHARE

152.

If two or more persons are registered as joint holders of any shares, any one of such persons may give effectual receipts for any dividends, interim and special dividends or bonuses and other moneys payable or rights or property distributable in respect of such shares.

PAYMENT BY POST

153.

(a)

Unless otherwise directed by the Board, any dividend, interest or other sum payable in cash to a holder of shares may be paid by cheque or warrant sent through the post to the registered address of the member entitled, or, in case of joint holders, to the registered address of the person whose name stands first in the register in respect of the joint holding or to such person and to such address as the holder or joint holders may in writing direct. Every cheque or warrant so sent shall be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares and shall be sent at his or their risk, and the payment of any such cheque or warrant by the bank on which it is drawn shall operate as a good discharge to the Company in respect of the dividend and/or bonus represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that any endorsement thereon has been forged.

App 3 r.13(1)

(b)

The Company may cease sending such cheques for dividend entitlements or dividend warrants by post if such cheques or warrants have been left uncashed on two consecutive occasions. However, the Company may exercise its power to cease sending cheques for dividend entitlements or dividend warrants after the first occasion on which such a cheque or warrant is returned undelivered.

UNCLAIMED DIVIDEND
App 3 r.3(2)

154.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the Board for the exclusive benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof or be required to account for any money earned thereon. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the Board and shall revert to the Company and after such forfeiture no member or other person shall have any right to or claim in respect of such dividends or bonuses.

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UNTRACEABLE SHAREHOLDERS

SALE OF SHARES OF UNTRACEABLE SHAREHOLDERS

155.

(a)

The Company shall be entitled to sell any shares of a member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or operation of law if and provided that:

	(i)		all cheques or warrants, not being less than three in number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of 12 years;

	(ii)		the Company has not during that time or before the expiry of the three month period referred to in paragraph (iv) below received any indication of the whereabouts or existence of the member or person entitled to such shares by death, bankruptcy or operation of law;

App 3 r.13(2)(a)

(iii)

during the 12-year period, at least three dividends in respect of the shares in question have become payable and no dividend during that period has been claimed by the member; and

App 3 r.13(2)(b)

(iv)

upon expiry of the 12-year period, the Company has caused an advertisement to be published in the newspapers, giving notice of its intention to sell such shares, and a period of three months has elapsed since such advertisement.

The net proceeds of any such sale shall belong to the Company and upon receipt by the Company of such net proceeds it shall become indebted to the former member for an amount equal to such net proceeds.

(b)

To give effect to any sale contemplated by paragraph (a) the Company may appoint any person to execute as transferor an instrument of transfer of the said shares and such other documents as are necessary to effect the transfer, and such documents shall be as effective as if it had been executed by the registered holder of or person entitled by transmission to such shares and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount. No trust shall be created in respect of the debt, no interest shall be

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payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares or other securities in or of the Company or its holding company if any) or as the Board may from time to time think fit.

DOCUMENT DESTRUCTION

DESTRUCTION OF REGISTRABLE DOCUMENTS, ETC.

156.

The Company shall be entitled to destroy all instruments of transfer, probate, letters of administration, stop notices, powers of attorney, certificates of marriage or death and other documents relating to or affecting title to securities in or of the Company (“Registrable Documents”) which have been registered at any time after the expiration of six years from the date of registration thereof and all dividend mandates and notifications of change of address at any time after the expiration of two years from the date of recording thereof and all share certificates which have been cancelled at any time after the expiration of one year from the date of the cancellation thereof and it shall conclusively be presumed in favour of the Company that every entry in the register if purporting to have been made on the basis of an instrument of transfer or Registrable Document so destroyed was duly and properly made and every instrument of transfer or Registrable Document so destroyed was a valid and effective instrument or document duly and properly registered and every share certificate so destroyed was a valid and effective certificate duly and properly cancelled and every other document hereinbefore mentioned so destroyed was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company, provided always that:

	(a)		the provisions aforesaid shall apply only to the destruction of a document in good faith and without express notice of the Company of any claim (regardless of the parties thereto) to which the document might be relevant;

	(b)		nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article; and

	(c)		references herein to the destruction of any document include references to the disposal thereof in any manner.

Notwithstanding any provision contained in these Articles, the Directors may, if permitted by applicable law, authorise the destruction of any documents referred to in this Article or any other documents in relation to share registration which may have been microfilmed or electronically stored by the Company or by the share registrar on its behalf provided always that this Article shall apply only to the destruction of a document in good faith and

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without express notice to the Company that the preservation of such document was relevant to a claim.

ANNUAL RETURNS AND FILINGS

ANNUAL RETURNS AND FILINGS

157.

The Board shall make the requisite annual returns and any other requisite filings in accordance with the Law.

ACCOUNTS

ACCOUNTS TO BE KEPT
App 13 Part B r.4(1)

158.

The Board shall cause to be kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to show and explain its transactions and otherwise in accordance with the Law.

WHERE ACCOUNTS ARE TO BE KEPT

159.

The books of account shall be kept at the Company’s principal place of business in Hong Kong or, subject to the provisions of the Law, at such other place or places as the Board thinks fit and shall always be open to the inspection of the Directors.

INSPECTION BY MEMBERS

160.

The Board shall from time to time determine whether, to what extent, at what times and places and under what conditions or regulations, the accounts and books of the Company, or any of them, shall be open to the inspection of the members (other than officers of the Company) and no member shall have any right of inspecting any accounts or books or documents of the Company except as conferred by the Law or any other relevant law or regulation or as authorised by the Board or by the Company in general meeting.

ANNUAL PROFIT AND LOSS ACCOUNT AND BALANCE SHEET
App 13 Part B r.4(2)

161.

(a)

The Board shall, commencing with the first annual general meeting cause to be prepared and to be laid before the members of the Company at every annual general meeting a profit and loss account for the period, in the case of the first account, since the incorporation of the Company and, in any other case, since the preceding account, together with a balance sheet as at the date to which the profit and loss account is made up and a Directors’ report with respect to the profit or loss of the Company for the period covered by the profit and loss account and the state of the Company’s affairs as at the end of such period, an Auditors’ report on

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such accounts prepared pursuant to Article 162 and such other reports and accounts as may be required by law.

ANNUAL REPORT OF DIRECTORS AND BALANCE SHEET TO BE SENT TO MEMBERS ETC.

App 13 Part B r.3(3) App 3 r.5

(b)

Copies of those documents to be laid before the members of the Company at an annual general meeting shall not less than 21 days before the date of the meeting be sent to every member of the Company and every holder of debentures of the Company or posted on the Internet where such copies are accessible to the general public and the Company notifies every member of the Company and every holder of debentures of the Company in writing of availability of such posted copies, provided that the Company shall not be required to send copies of those documents to any person of whose address the Company is not aware or to more than one of the joint holders of any shares or debentures.

AUDIT

AUDITORS
App 13 Part B r.4(2)

162.

The Auditors shall audit the profit and loss account and balance sheet of the Company in each year and shall prepare a report thereon to be annexed thereto. Such report shall be laid before the Company at its annual general meeting in each year and shall be open to inspection by any member. The Auditors shall at the next annual general meeting following their appointment and at any other time during their term of office, upon request of the Board or any general meeting of the members, make a report on the accounts of the Company in general meeting during their tenure of office.

APPOINTMENT AND REMUNERATION OF AUDITORS

163.

The Company shall at any annual general meeting ratify an auditor or auditors of the Company appointed by the Audit Committee of the Board who shall hold office until the next annual general meeting. The remuneration of the Auditors shall be fixed by the Audit Committee of the Board. No person may be appointed as the, or an, Auditor, unless he is independent of the Company. The Audit Committee of the Board may before the first annual general meeting appoint an auditor or auditors of the Company who shall hold office until the first annual general meeting unless previously removed by an ordinary resolution of the members in general meeting in which case the members at that meeting may appoint Auditors. The Audit Committee of the Board may fill any casual vacancy in the office of Auditor but while any such vacancy continues the surviving or continuing Auditor or Auditors, if any, may act.

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WHEN ACCOUNTS TO BE DEEMED SETTLED

164.

Every statement of accounts audited by the Auditors and presented by the Board at an annual general meeting shall after approval at such meeting be conclusive except as regards any error discovered therein within three months of the approval thereof. Whenever any such error is discovered within that period, it shall forthwith be corrected, and the statement of account amended in respect of the error shall be conclusive.

NOTICES

SERVICE OF NOTICES
App 3 r.7(l)

165.

(a)

Any notice or document (including a share certificate) may be served by the Company and any notices may be served by the Board on any member either personally or by sending it to such member at his registered address as appearing in the register or (in the case of notice) by advertisement published in the newspapers. For the purposes of this Article, a notice may be sent by letter mail, courier service, cable, telex, telecopier, facsimile, electronic mail, through the Internet or other mode of representing words in a legible form. In the case of joint holders of a share, all notices shall be given to that holder for the time being whose name stands first in the register and notice so given shall be sufficient notice to all the joint holders.

(b)

Notice of every general meeting shall be given in any manner hereinbefore authorised to:

	(i)		every person shown as a member in the register of members as of the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the register of members;

	(ii)		every person upon whom the ownership of a share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a member of record where the member of record but for his death or bankruptcy would be entitled to receive notice of the meeting;

	(iii)		the Auditors; and

	(iv)		each Director.

No other person shall be entitled to receive notices of general meetings.

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MEMBERS OUT OF HONG KONG

App. 3 r.7(2)
App 3 r.7(3)

166.

A member shall be entitled to have notice served on him at any address within Hong Kong. Any member whose registered address is outside Hong Kong may notify the Company in writing of an address in Hong Kong which for the purpose of service of notice shall be deemed to be his registered address. A member who has no registered address in Hong Kong shall be deemed to have received any notice which shall have been displayed at the transfer office and shall have remained there for a period of 24 hours and such notice shall be deemed to have been received by such member on the day following that on which it shall have been first so displayed, provided that, without prejudice to the other provisions of these Articles, nothing in this Article 166 shall be construed as prohibiting the Company from sending, or entitling the Company not to send, notices or other documents of the Company to any member whose registered address is outside Hong Kong.

WHEN NOTICE DEEMED TO BE SERVED

167.

Any notice or document sent by post shall be deemed to have been served on the day following that on which it is put into a post office situated within Hong Kong and in proving such service it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly prepaid, addressed and put into such post office and a certificate in writing signed by the Secretary or other person appointed by the Board that the envelope or wrapper containing the notice or document was so addressed and put into such post office shall be conclusive evidence thereof. Any notice delivered or left at a registered address otherwise than by post shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission and, in proving such service, it shall be sufficient to prove that the notice was properly addressed and prepaid, delivered to the courier or to the cable company or transmitted by telex, facsimile, electronic mail, through the Internet, or such other method as the case may be. Any notice served by advertisement shall be deemed to have been served on the day of issue of the official publication and/or newspaper(s) in which the advertisement is published (or on the last day of issue if the publication and/or newspaper(s) are published on different dates).

SERVICE OF NOTICE TO PERSONS ENTITLED ON DEATH, MENTAL DISORDER OR BANKRUPTCY OF A MEMBER

168.

A notice may be given by the Company to the person or persons entitled to a share in consequence of the death, mental disorder or bankruptcy of a member by sending it through the post in a prepaid letter addressed to him or them by name, or by the title of representative of the deceased, or trustee of the bankrupt, or by any like description, at the address, if any, within Hong Kong supplied for the purpose by the person claiming to be

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so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death, mental disorder or bankruptcy had not occurred.

TRANSFEREE BOUND BY PRIOR NOTICES

169.

Any person who by operation of law, transfer or other means whatsoever shall become entitled to any share shall be bound by every notice in respect of such share which prior to his name and address being entered on the register shall have been duly given to the person from whom he derives his title to such share.

NOTICE VALID THOUGH MEMBER DECEASED

170.

Any notice or document delivered or sent by post or left at the registered address of any member otherwise than by post in pursuance of these Articles, shall notwithstanding that such member be then deceased and whether or not the Company has notice of his death be deemed to have been duly served in respect of any registered shares whether held solely or jointly with other persons by such member until some other person be registered in his stead as the holder or joint holder thereof, and such service shall for all purposes of these Articles be deemed a sufficient service of such notice or document on his personal representatives and all persons (if any) jointly interested with him in any such shares.

HOW NOTICE TO BE SIGNED

171.

The signature to any notice to be given by the Company may be written or printed by means of facsimile.

INFORMATION

MEMBER NOT ENTITLED TO INFORMATION

172.

No member shall be entitled to require discovery of or any information in respect of any detail of the Company’s trading or any matter which is or may be in the nature of a trade secret or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Board would not be in the interests of the members or the Company to communicate to the public.

DIRECTORS ENTITLED TO DISCLOSE INFORMATION

173.

The Board shall be entitled to release or disclose any information in its possession, custody or control regarding the Company or its affairs to any of its members including, without limitation, information contained in the register of members and transfer books of the Company.

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WINDING UP

POWER TO DISTRIBUTE ASSETS IN SPECIE FOLLOWING LIQUIDATION

174.

If the Company shall be wound up (whether the liquidation is voluntary, under supervision or by the court), the liquidator may, with the authority of a special resolution of the Company and any other sanction required by the Law divide among the members in specie or kind the whole or any part of the assets of the Company (whether the assets shall consist of property of one kind or shall consist of properties of different kinds) and may for such purpose set such value as he deems fair upon any property to be divided and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority or sanction vest the whole or any part of such assets in trustees upon such trusts for the benefit of the members as the liquidator, with the like authority or sanction and subject to the Law, shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no member shall be compelled to accept any assets, shares or other securities in respect of which there is a liability.

DISTRIBUTION OF ASSETS IN LIQUIDATION

175.

If the Company shall be wound up, and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively. And if in a winding up the assets available for distribution amongst the members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst the members in proportion to the capital paid up at the commencement of the winding up on the shares held by them respectively. This Article is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions.

SERVICE OF PROCESS

176.

In the event of a winding-up of the Company in Hong Kong, every member of the Company who is not for the time being in Hong Kong shall be bound, within 14 days after the passing of an effective resolution to wind up the Company voluntarily, or the making of an order for the winding-up of the Company, to serve notice in writing on the Company appointing some person resident in Hong Kong and stating that person’s full name, address and occupation upon whom all summonses, notices, process, orders and judgments in relation to or under the winding-up of the Company may be served, and in default of such nomination the liquidator of the Company shall be at liberty on behalf of such member to appoint some such person, and service upon any such appointee, whether appointed by the member or the liquidator, shall be deemed to be good personal service on such member for all purposes, and, where the liquidator makes any such appointment,

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he shall with all convenient speed give notice thereof to such member by advertisement as he shall deem appropriate or by a registered letter sent through the post and addressed to such member at his address as appearing in the register, and such notice shall be deemed to be service on the day following that on which the advertisement first appears or the letter is posted.

INDEMNITIES

INDEMNITIES OF DIRECTORS AND OFFICERS

177.

(a)

To the fullest extent permitted by applicable laws, as the same exists or as may hereafter be amended, a Director of the Company shall not be personally liable to the Company or its shareholders for monetary damages for breach of any fiduciary duty as a Director. Notwithstanding the foregoing, every Director, Auditor or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities incurred or sustained by him as a Director, Auditor or other officer of the Company in defending any proceedings, whether civil or criminal, in which judgment is given in his favour, or in which he is acquitted.

(b)

Notwithstanding the foregoing, subject to the Companies Law, if any Director or other person shall become personally liable for the payment of any sum primarily due from the Company, the Board may execute or cause to be executed any mortgage, charge, or security over or affecting the whole or any part of the assets of the Company by way of indemnity to secure the Director or person so becoming liable as aforesaid from any loss in respect of such liability.

FINANCIAL YEAR

FINANCIAL YEAR

178.

The financial year of the Company shall be prescribed by the Board and may, from time to time, be changed by it.

AMENDMENT OF MEMORANDUM AND ARTICLES

AMENDMENT OF MEMORANDUM AND ARTICLES
App 13 Part B r.1

179.

Subject to the Law, the Company may at any time and from time to time by special resolution alter or amend its Memorandum of Association and Articles of Association in whole or in part.


		CERTIFIED TO BE A TRUE AND CORRECT COPY SIG. /s/ D. EVADNE EBANKS
				D. EVADNE EBANKS Assistant Registrar

		Date.		15 December, 2009

- 66 -

Exhibit 99.1

SINA CORPORATION
Unaudited Pro Forma Condensed Consolidated Financial Information

Overview

On February 24, 2008, SINA Corporation (“SINA”, the Company”) entered into an agreement with E-House (China) Holdings Limited (“E-House”) to form China Online Housing Technology Corporation (“China Online Housing”), a joint venture to operate SINA’s real estate channel operations. The joint venture investment in China Online Housing was subsequently consummated on April 1, 2008. SINA contributed to China Online Housing $2.5 million in cash, certain assets and liabilities and the rights to operate its real estate channel operations for a period of ten years. The licenses granted to China Online Housing included the rights to use SINA’s trademark, domain name, portal technologies and certain software. In addition, SINA signed an advertising agency agreement (the “old advertising agency agreement”) with China Online Housing, under which China Online Housing would be the exclusive agent for selling advertising to real estate customers on SINA’s other channels for three years starting from April 1, 2008, and China Online Housing would be entitled to receive 15% of the sales contract amount as agency fee. Additionally, China Online Housing guaranteed a certain amount of advertising revenue to be placed on SINA’s non-real estate channels from real estate customers during the agreement period. Thirty-four percent of China Online Housing shares were then issued to E-House in exchange for payment of $2.5 million cash and 10-year exclusive, business-to-consumer usage of the database from E-House’s subsidiary China Real Estate Information Corporation (“CRIC”).

On July 23, 2009, SINA announced that it entered into a definitive agreement (the “Agreement”) with E-House to merge E-House’s real estate information and consulting services and China Online Housing (the “Transaction”). E-House’s real estate information and consulting services business is operated by CRIC. Under the Agreement, SINA would contribute its online real estate business into its majority-owned subsidiary China Online Housing, and CRIC would issue 47,666,667ordinary shares to SINA to acquire SINA’s equity interest in China Online Housing upon and conditioned on the completion of the initial public offering of CRIC (the “CRIC IPO”).

On September 2, 2009, SINA entered into an amended and restated advertising agency agreement, a domain name and content license agreement, a trademark license agreement and a software license and support services agreement (collectively the “License Agreements”) with China Online Housing as part of its consideration for the interest in CRIC. Below is a summary of the License Agreements:

	•		Amended and Restated Advertising Agency Agreement. Under the amended and restated advertising agency agreement, upon the completion of the CRIC IPO, China Online Housing continues to operate SINA’s existing real estate and home furnishing channels and will develop a new real estate-related channel on sina.com.cn, and will have the exclusive right to sell to real estate, home furnishing and construction material advertisers on these three channels as well as SINA’s other websites. If China Online Housing sells advertising on SINA’s websites other than these three channels, China Online Housing is entitled to receive approximately 85% of the revenues generated from these sales. In addition, China Online Housing authorizes SINA as its exclusive agent to sell non real estate advertising on its directly operated website and channels. China Online Housing is also entitled to receive 85% of the revenues generated from these sales. The initial term of the amended and restated advertising agency agreement is ten years.

	•		Domain Name and Content License Agreement. Under the domain name and content license agreement, which became effective upon the completion of the CRIC IPO, SINA grants to China Online Housing an exclusive license to use its three domain names, i.e., house.sina.com.cn, jiaju.sina.com.cn and construction.sina.com.cn , in connection with China Online Housing’s real estate Internet operations in China. In addition, SINA also grants to China Online Housing an exclusive license to use all content whose copyrights are owned by SINA or owned by a third party provider but is sub-licensable by SINA without requiring payment of any additional fees. For other operating content, China Online Housing is required to enter into an agreement with the owner independently and is responsible for the costs associated with procuring the content. The licenses are for an initial term of ten years and free of any additional fees.

	•		Trademark License Agreement. Under the trademark license agreement, which became effective upon the completion of CRIC’s IPO, SINA grants to China Online Housing a non-exclusive license to use three SINA trademarks and an exclusive license to use two SINA Leju trademarks in connection with China Online Housing’s real estate Internet operations in China through website located at www.leju.com and the channels located at house.sina.com.cn, jiaju.sina.com.cn and construction.sina.com.cn . The licenses are for an initial term of ten years and free of any additional fees.

	•		Software License and Support Services Agreement. Under the software license and support services agreement, which became effective upon the completion of CRIC’s IPO, SINA grants to China Online Housing a non-exclusive license to use (i) SINA’s proprietary software including those used for internet content publishing, advertising publishing, sales management, procurement reimbursement, financial management , flow statistics and monitoring, (ii) current software products and interfaces necessary to facilitate China Online Housing’s use of the current software products, (iii) the databases and compilations, (iv) its improvement to the licensed software and (v) related documentation and hardware, in connection with China Online Housing’s real estate Internet operations in China. SINA will also provide to China Online Housing infrastructure necessary to operate its websites and facilitate its use of the licensed software. In addition, SINA will also provide China Online Housing support services, including routine maintenance, technical support and hardware support. The licenses are for an initial term of ten years and free of any additional fees. However, to the extent that there are any reasonable, incremental costs for use of the licensed software

or the infrastructure or provision of support services due to a change in its business needs, China Online Housing is required to reimburse SINA for such costs.

On October 16, 2009, the Transaction was consummated following the listing of CRIC’s American depositary shares on the NASDAQ Global Select Market. As of the closing of the Transaction, SINA is the second largest shareholder of CRIC with approximately 33% interest.

In preparing the unaudited pro forma condensed consolidated financial statements presented herein, the Company assumed that the Transaction was consummated as of June 30, 2009 for purposes of the pro forma condensed consolidated balance sheet and at the beginning of the periods presented for purposes of the pro forma condensed consolidated statement of operations. The Transaction included the following:

	(i)		completion of CRIC IPO;

	(ii)		disposal of SINA’s 66% interest in China Online Housing;

	(iii)		acquisition of an approximately 33% interest in CRIC; and

	(iv)		signing of the License Agreements.

The unaudited pro forma condensed consolidated financial information is based on, and should be read in conjunction with, the respective historical consolidated financial statements and the notes thereto of the Company and CRIC, that have been filed as Exhibit 99.2 and 99.7 to the Form 6-K to which this exhibit is included.

The unaudited pro forma condensed consolidated balance sheet and statements of operations are not necessarily indicative of the financial position and operating results that would have been achieved had the Transaction been in effect as of the dates indicated and should not be construed as being a representation of future financial position or operating results of the Company. There can be no assurance that the Company will incur less costs or expenses as a result of the disposal of SINA’s 66% equity interest in China Online Housing or that CRIC’s management will be successful in its effort to integrate the operations of CRIC and China Online Housing.

F-2

SINA CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2009
(US Dollars, in thousands)


				China Online		Pro Forma						Pro Forma
	SINA			Housing,		Adjustments			Notes			Results

ASSETS
Current assets:
Cash and cash equivalents	$	431,861		$	9,331							$	422,530
Short-term investments		150,096			—								150,096
Accounts receivable, net		72,324			10,694		7,141			(4	)		68,771
Prepaid expenses and other current assets		13,351			361								12,990

Total current assets		667,632			20,386								654,387
Property and equipment, net		27,912			1,348								26,564
Investment in equity interest		—			—		572,000			(1	)		572,000
Intangible assets, net		9,478			3,098								6,380
Goodwill		84,050			—								84,050
Other assets		1,854			33								1,821

Total assets	$	790,926		$	24,865							$	1,345,202


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,356		$	17							$	1,339
Accrued liabilities		60,323			2,986								57,337
Income taxes payable		9,977			48								9,929
Deferred taxes liabilities					113								(113	)
Deferred revenue		10,335			2,901		18,745			(1	)		26,179
Amount due to a related party					7,141		7,141			(4	)		—
Convertible debt		99,000			—								99,000

Total current liabilities		180,991			13,206								193,671
Long-term liabilities:
Deferred revenue							168,705			(1	)		168,705
Other liabilities		3,785			—								3,785

Total other long-term liabilities		3,785			—								172,490

Total liabilities		184,776			13,206								366,161

Shareholders’ equity:
SINA shareholders’ equity:
Ordinary Shares		7,491			10		10			(1	)		7,491
Additional paid-in capital		390,397			8,644		8,531			(1	)		390,284
Treasury stock		(50,074	)		—								(50,074	)
Retained earnings		201,656			2,994		379,920			(1	)		578,582
Accumulated other comprehensive income		51,946			11		11			(1	)		51,946

Total SINA shareholders’ equity		601,416			11,659								978,229
Noncontrolling interest		4,734			—		(3,922	)		(1	)		812

Total shareholders’ equity		606,150			11,659								979,041

Total liabilities and shareholders’ equity	$	790,926		$	24,865							$	1,345,202

See accompanying notes to the unaudited pro forma condensed consolidated financial information.

F-3

SINA CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2009
(US Dollars, in thousands, except per share data)


				China Online			Pro Forma						Pro Forma
	SINA			Housing			Adjustments			Notes			Results
Net revenues:
Advertising	$	100,926		$	16,641			814			(5	)	$	85,099
Non-advertising		63,097			—			9,373			(6	)		72,470

		164,023			16,641									157,569

Costs of revenue:
Advertising		45,874			10,041			7,182			(3	)		42,474
								(610	)		(3	)
								69			(5	)
Non-advertising		29,246			—									29,246

		75,120			10,041									71,720

Gross profit		88,903			6,600									85,849

Operating expenses:
Sales and marketing		36,947			3,385									33,562
Product development		15,319			615									14,704
General and administrative		13,480			1,423									12,057
Amortization of intangible assets		822			—									822

Total operating expenses		66,568			5,423									61,145

Income from operations		22,335			1,177									24,704
Interest and other income, net		5,056			(7	)								5,063
Share of income from equity investment		—			—			608			(7	)		608

		5,056			(7	)								5,671

Income before income taxes expense		27,391			1,170									30,375
Income tax expense		(4,043	)		38			723			(3	)		(3,440	)
								(82	)		(5	)

Net income		23,348			1,208									26,935
Less: Net income attributable to the noncontrolling interest		(261	)		—			411			(1	)		150

Net income attributable to SINA	$	23,087		$	1,208								$	27,085

Basic net income per share attributable to SINA	$	0.43											$	0.50
Diluted net income per share attributable to SINA	$	0.40											$	0.46
Shares used in computing basic income per share attributable to SINA		54,097												54,097
Shares used in computing diluted income per share attributable to SINA		58,285												58,285

See accompanying notes to the unaudited pro forma condensed consolidated financial information.

F-4

SINA CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2008
(US Dollars, in thousands, except per share data)


				China Online
				Housing		China Online			Pro Forma
	SINA			Predecessor*		Housing			Adjustments			Notes			Pro Forma Results
	Year Ended			Three Months		Nine Months									Year Ended
	December 31,			Ended March		Ended December									December 31,
	2008			31, 2008		31, 2008									2008
Net revenues:
Advertising	$	258,499		$	6,551	$	31,067			1,853			(5	)	$	222,734
Non-advertising		111,088			—		—			18,745			(6	)		129,833

		369,587			6,551		31,067									352,567

Costs of revenue:
Advertising		100,008			2,490		19,494			15,230			(3	)		92,117
										(1,295	)		(3	)
										158			(5	)
Non-advertising		50,327			—		—									50,327

		150,335			2,490		19,494									142,444

Gross profit		219,252			4,061		11,573									210,123

Operating expenses:
Sales and marketing		79,784			1,237		5,278									73,269
Product development		30,371			577		811									28,983
General and administrative		33,179			684		2,499									29,996
Amortization of intangible assets		1,337			36		—									1,301

Total operating expenses		144,671			2,534		8,588									133,549

Income from operations		74,581			1,527		2,985									76,574
Interest and other income, net		18,270			—		(18	)								18,288
Gain (loss) on the sale of noncontrolling interest in a subsidiary		2,358			—		—			(3,137	)		(2	)		(779	)
Share of income from equity investment		—			—		—			3,492			(7	)		3,492

		20,628			—		(18	)								21,001

Income before income taxes expense		95,209			1,527		2,967									97,575
Income tax expense		(14,042	)		—		(1,181	)		1,812			(3	)		(11,269	)
										(220	)		(5	)

Net income		81,167			1,527		1,786									86,306
Less: Net income attributable to the noncontrolling interest		(529	)		—		—			607			(1	)		78

Net income attributable to SINA	$	80,638		$	1,527	$	1,786								$	86,384

Basic net income per share attributable to SINA	$	1.44													$	1.55
Diluted net income per share attributable to SINA	$	1.33													$	1.43
Shares used in computing basic income per share attributable to SINA		55,821														55,821
Shares used in computing diluted income per share attributable to SINA		60,474														60,474


*		Prior to the restructuring, SINA’s Real Estate Channel Operations operated as an integral part of SINA’s advertising business and were not accounted for as a separate entity, subsidiary or division of SINA’s business. SINA considered its Real Estate Channel Operations to be the predecessor to China Online Housing, as this was a business with an associated and continuing revenue stream (i.e. sale of online advertising to real estate customers).

See accompanying notes to the unaudited pro forma condensed consolidated financial information.

F-5

SINA CORPORATION
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

1. Basis of Pro Forma Presentation

The Company’s acquisition of approximately 33% interest in CRIC represents a significant acquisition in accordance with Rule 3-05 of Regulation S-X, and the disposal of 66% equity interest in China Online Housing is a significant disposal under the pro forma requirements of Article 11 of Regulation S-X. The financial statements of CRIC for purposes of compliance with Rule 3-05 of Regulation S-X have been filed as Exhibit 99.3 and 99.4 to the Form 6-K, to which this exhibit is included. The Transaction included the following:

	(i)		completion of CRIC IPO;

	(ii)		disposal of SINA’s 66% equity interest in China Online Housing;

	(iii)		acquisition of an approximately 33% interest in CRIC; and

	(iv)		signing of the License Agreements.

The basis of unaudited pro forma financial statements has been prepared under the assumption that the Transaction occurred as of June 30, 2009 or at the beginning of the periods presented. Assets and liabilities exchanged in the Transaction were measured at fair value as of CRIC’s IPO date, or October 16, 2009.

Based on the offering price of CRIC’s IPO, the Company’s 33% interest in CRIC was valued at $572.0 million as of CRIC’s IPO date, which also represents the consideration received for the disposal of the interest in China Online Housing and for entering into the License Agreements. The investment was accounted for using the equity method with the cost allocated as follows:


	Allocated value			Amortization Period
	(in thousands)

Share of net tangible assets acquired	$	112,233
Share of intangible assets acquired as recorded in the underlying financial statements of CRIC *		68,686		1-10 years
Share of intangible assets not included in CRIC’s financial statements*		36,797		2-8 years, indefinite
Deferred tax liabilities		(22,604	)
Goodwill		376,888

Investment in CRIC	$	572,000


*		Above intangible assets were measured at fair value as of CRIC’s IPO date based on a valuation report.

On CRIC’s IPO date, the fair value of 66% equity interest in China Online Housing was $384,550,000 which was determined by management with the assistance of a valuation consultant. Netting the book value amount of $6,118,000, the Company recorded a one-time gain of $378,432,000. This capital gain may be subject to corporate income tax, of which the Company is currently evaluating.

The amount allocated to the fair value of the License Agreements was $187,450,000, which represents the difference between the total consideration and the amount allocated to China Online Housing and was recorded as deferred revenues and expected to be amortized over the contract period of ten years.

2. Pro Forma Adjustments

The Company’s unaudited pro forma condensed consolidated financial information gives effect to the following pro forma adjustments as applied to the unaudited financial statements:

Note (1): To record the initial investment in CRIC, the disposal of SINA’s 66% equity interest in China Online Housing with the related gain of $378,432,000 and the deferred revenues relating to the License Agreements. This gain adjustment was made only to retained earnings in the unaudited pro forma condensed consolidated balance sheet since it does not have a continuing impact on SINA’s results of operation and is nonrecurring. These adjustments also remove the related noncontrolling interest (34% held by E-house) after disposing the Company’s 66% equity interest in China Online Housing to CRIC.

Note (2): To remove the previously recognized gain on the sale of 34% noncontrolling interest of China Online Housing to E-House on April 1, 2008.

Note (3): When SINA consolidated China Online Housing historically, any intercompany transactions with China Online Housing were eliminated in consolidation. The subtraction of the financial statement amounts of China Online Housing from SINA’s consolidated financial statements in these unaudited pro forma financial statements removes revenues and costs of revenue amounts which were already eliminated through SINA’s normal consolidation process. This adjustment is to add back the costs of revenue that were originally eliminated on consolidation of SINA and China Online Housing and removed again through the adjustment to reflect the disposal of SINA’s 66% equity interest in China Online Housing, and related business taxes from China Online Housing’s cost of revenues, as well as related income tax expenses calculated at the

F-6

effective income tax rate of SINA’s PRC operations.

Note (4): Certain intercompany transactions have been eliminated both through (a) the elimination of intercompany accounts already reflected in the “SINA” column of the pro forma balance sheet and; (b) the subtraction of the “China Online Housing” column from the “SINA” column on the face of the pro forma balance sheet. Consequently, these adjustments are necessary so that the transactions are eliminated once rather than twice.

Note (5): To add agency fees which are calculated by 15% of China Online Housing’s revenue generated from the sales of advertising on SINA’s non-real estate channels based on the amended and restated advertising agency agreement and related business taxes, as well as related income tax expenses calculated at the effective income tax rate of SINA’s PRC operations.

Note (6): To record the amortization of deferred revenues from the License Agreements, which represents the difference between the total consideration and the amount allocated to China Online Housing and was recorded as deferred revenues and expected to be amortized over the contract period of ten years.

Note (7): To record equity income from the investment in CRIC, assuming the transaction was consummated at the beginning of the periods presented.


	Six months ended			Year ended
	June 30, 2009			December 31, 2008
	(in thousands)

Pro forma net income attributable to CRIC shareholders as included in the CRIC’s Registration Statement on Form F-1	$	9,790		$	21,520
Adjustment to income tax benefits related to the pro forma amortization of the acquired intangible assets for the six months ended June 30, 2009 *		(2,438	)		—
Adjustment to increase the amortization expense due to increase in final valuation of acquired intangible assets **		(895	)		(1,780	)

Pro forma net income attributable to CRIC shareholders, as adjusted	$	6,457		$	19,740

Multiplication by the ownership percentage		33.35	%		33.35	%
SINA’s equity income	$	2,153		$	6,583
Adjustment to record the equity share of amortization of CRIC intangible assets that are not included in CRIC’s financial statements, net of related tax benefits		(1,545	)		(3,091	)

SINA’s equity income, as adjusted	$	608		$	3,492


*		The deferred tax liability was calculated based on the amortization of the intangible assets and the applicable income tax rate in each year of their useful life. Under the current legal structure and tax arrangement, the tax benefit for 2009 is computed using the preferential tax rate of 0%, instead of the statutory tax rate of 25%.

**		The tangible and intangible assets acquired by CRIC from China Online Housing were remeasured at fair value as of CRIC’s IPO date and result in higher amortization expenses than amounts assumed and included in the CRIC’s unaudited pro forma condensed combined financial information included in their Form F-1. The amount of this additional step up and related amortization expense has been estimated on CRIC’s IPO date based on a valuation report.

F-7

Exhibit 99.2

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Unaudited Interim Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008			F-2
Unaudited Interim Condensed Consolidated Statements of Operation for the Six Months Ended June 30, 2009 and 2008			F-3
Unaudited Interim Condensed Consolidated Statements of Shareholders’ Equity for the Six Months Ended June 30, 2009 and 2008			F-4
Unaudited Interim Condensed Consolidated Statements of Cash Flow for the Six Months Ended June 30, 2009 and 2008			F-5
Notes to Unaudited Interim Condensed Consolidated Financial Statements			F-6

SINA CORPORATION (“SINA”)
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)


	June 30,			December 31,
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	431,861		$	383,320
Short-term investments		150,096			220,504
Accounts receivable, net		72,324			79,183
Prepaid expenses and other current assets		13,351			9,424

Total current assets		667,632			692,431
Property and equipment, net		27,912			34,111
Intangible assets, net		9,478			10,477
Goodwill		84,050			84,050
Other assets		1,854			1,425

Total assets	$	790,926		$	822,494

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,356		$	1,397
Accrued liabilities		60,323			68,468
Income taxes payable		9,977			17,391
Deferred revenue		10,335			7,651
Convertible debt		99,000			99,000

Total current liabilities		180,991			193,907
Long-term liabilities:
Other liabilities		3,785			4,039

Total liabilities		184,776			197,946

Commitments and contingencies (Note 12)

Shareholders’ equity:
SINA shareholders’ equity:
Ordinary shares: $0.133 par value; 150,000 shares authorized; 56,321 and 56,121 shares issued and outstanding		7,491			7,464
Additional paid-in capital		390,397			382,880
Treasury stock: 2,455 shares and nil		(50,074	)		—
Retained earnings		201,656			178,569
Accumulated other comprehensive income (loss):
Unrealized loss on investments in marketable securities		—			(329	)
Cumulative translation adjustments		51,946			51,921

Total SINA shareholders’ equity		601,416			620,505
Noncontrolling interest (Note 13)		4,734			4,043

Total shareholders’ equity		606,150			624,548

Total liabilities and shareholders’ equity	$	790,926		$	822,494

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

F-2

SINA CORPORATION
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)


	Six months ended June 30,
	2009			2008
Net revenues:
Advertising	$	100,926		$	112,776
Non-advertising		63,097			49,859

		164,023			162,635

Costs of revenue:
Advertising		45,874			42,718
Non-advertising		29,246			21,644

		75,120			64,362

Gross profit		88,903			98,273

Operating expenses:
Sales and marketing		36,947			36,099
Product development		15,319			13,399
General and administrative		13,480			15,235
Amortization of intangible assets		822			515

Total operating expenses		66,568			65,248

Income from operations		22,335			33,025
Interest and other income, net		5,056			8,412
Gain on the sale of noncontrolling interest in a subsidiary		—			3,137

Income before income taxes expense		27,391			44,574
Income tax expense		(4,043	)		(7,825	)

Net income		23,348			36,749
Less: Net income attributable to the noncontrolling interest		(261	)		(121	)

Net income attributable to SINA	$	23,087		$	36,628

Basic net income per share attributable to SINA	$	0.43		$	0.66
Diluted net income per share attributable to SINA	$	0.40		$	0.61
Shares used in computing basic income per share attributable to SINA		54,097			55,609
Shares used in computing diluted income per share attributable to SINA		58,285			60,463

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

F-3

SINA CORPORATION
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)


						SINA Shareholders’ Equity
	Total									Additional									Accumulated
	Shareholders’			Comprehensive						Paid-in									Other		Retained		Noncontrolling
	Equity			Income		Ordinary Shares				Capital			Treasury Stock						Comprehensive Income		Earnings		Interest
						Shares		Amount					Shares			Amount
Balances at December 31, 2008	$	624,548		$	—		56,121	$	7,464	$	382,880			—		$	—		$	51,592	$	178,569	$	4,043
Issuance of ordinary shares pursuant to stock plans		1,115			—		200		27		1,088			—			—			—		—		—
Repurchase of ordinary shares		(50,074	)		—		—		—		—			(2,455	)		(50,074	)		—		—		—
Stock-based compensation expenses		6,600			—		—		—		6,600			—			—			—		—		—
Sale of subsidiaries’ shares to noncontrolling interest		578			—		—		—		—			—			—			—		—		578
Purchase of subsidiaries’ shares from noncontrolling interest		(342	)		—		—				(171	)		—										(171	)
Others		23			—		—		—		—			—			—			—		—		23
Comprehensive income:
Net income		23,348			23,348		—		—		—			—			—			—		23,087		261
Other comprehensive income:
Unrealized gain on investments in marketable securities		329			329		—		—		—			—			—			329		—		—
Currency translation adjustments		25			25		—		—		—			—			—			25		—		—

Total other comprehensive income		354			354

Total comprehensive income		23,702		$	23,702

Balances at June 30, 2009	$	606,150					56,321	$	7,491	$	390,397			(2,455	)	$	(50,074	)	$	51,946	$	201,656	$	4,734


Balances at December 31, 2007	$	494,976		$	—		55,521	$	7,384	$	358,232			—		$	—		$	31,429	$	97,931	$	—
Issuance of ordinary shares pursuant to stock plans		6,046			—		302		41		6,005			—			—			—		—		—
Stock-based compensation expenses		7,098			—		—		—		7,098			—			—			—		—		—
Sale of subsidiaries’ shares to noncontrolling interest		3,071			—		—		—		—			—			—			—		—		3,071
Others		(130	)		—		—		—		(130	)		—			—			—		—		—
Comprehensive income:
Net income		36,749			36,749		—		—		—			—			—			—		36,628		121
Other comprehensive income:
Unrealized gain on investments in marketable securities		358			358		—		—		—			—			—			358		—		—
Currency translation adjustments		19,402			19,402		—		—		—			—			—			19,402		—		—

Total other comprehensive income		19,760			19,760

Total comprehensive income		56,509		$	56,509

Balances at June 30, 2008	$	567,570					55,823	$	7,425	$	371,205			—		$	—		$	51,189	$	134,559	$	3,192

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

F-4

SINA CORPORATION
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


	Six months ended June 30,
	2009			2008
Cash flows from operating activities:
Net income	$	23,348		$	36,749
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		8,112			7,550
Stock-based compensation		6,600			7,098
Amortization of intangible assets		999			604
Provision for allowance for doubtful accounts		2,500			1,834
Gain on the sale of a noncontrolling interest in a subsidiary		—			(3,137	)
Foreign exchange gain (loss) from liquidated subsidiaries		1,964			(1,866	)
Loss on disposal of property and equipment		67			—
Changes in assets and liabilities:
Accounts receivable		4,384			(16,408	)
Prepaid expenses and other current assets		(78	)		(1,549	)
Other assets		142			(66	)
Accounts payable		(118	)		106
Accrued liabilities		(8,485	)		9,967
Income taxes payable		(7,424	)		2,803
Deferred revenue		2,684			1,814

Net cash provided by operating activities		34,695			45,499

Cash flows from investing activities:
Purchases of short-term investments		(45,454	)		(95,710	)
Maturities of short-term investments		116,300			83,026
Purchases of property and equipment		(1,891	)		(10,881	)
Investments and prepayments on investments		(4,248	)		—

Net cash provided by (used in) investing activities		64,707			(23,565	)
Cash flows from financing activities:
Proceeds from sales of noncontrolling interest in a subsidiary		578			2,500
Proceeds from issuance of ordinary shares		930			6,046
Repurchase of ordinary shares		(50,074	)		—
Other financing activities		(256	)		(130	)

Net cash (used in) provided by financing activities		(48,822	)		8,416

Effect of exchange rate change on cash and cash equivalents		(2,039	)		9,774

Net increase in cash and cash equivalents		48,541			40,124
Cash and cash equivalents at the beginning of the period		383,320			271,666

Cash and cash equivalents at the end of the period	$	431,861		$	311,790

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

F-5

SINA CORPORATION
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

SINA Corporation (“SINA”, “we” or the “Company”) is an online media company and MVAS provider in the People’s Republic of China and the global Chinese communities. With a branded network of localized websites targeting Greater China and overseas Chinese, the Company provides services through five major business lines including SINA.com (online news and content), SINA Mobile (MVAS), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA E-Commerce (online shopping). Together these business lines provide an array of services, including region-focused online portals, MVAS, social networking service (SNS), blog, audio and video streaming, album, online games, email, search, classified listings, fee-based services, e-commerce and enterprise e-solutions. The Company generates the majority of its revenues from online advertising and MVAS offerings and, to a lesser extent, from search and fee-based services.

2. Basis of Presentation and Use of Estimates

These financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP 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 and such differences may be material to the financial statements. The Company believes accounting for advertising and MVAS revenues, accounting for income taxes, assessment of impairment of goodwill and long-lived assets, allowance for doubtful accounts, stock-based compensation, consolidation, determination of the estimated useful lives of assets, accountings for advertising expenses and foreign currency represent critical accounting policies that reflect the more significant judgments and estimates used in the preparation of its unaudited interim condensed consolidated financial statements. The accounting policies used for the preparation of these financial statements for the six months ended June 30, 2009 are consistent with those set out in the Revised Consolidated Financial Statements for the year ended December 31, 2008 filed as Exhibit 99.7 to the Form 6-K to which this exhibit is included. These financial statements should be read in conjunction with the revised consolidated financial statements and related footnotes included in the “Revised Item 8 — Financial Information and Item 18 — Financial Statements” filed as exhibit 99.7 to the Form 6-K to which this Exhibit is included.

The accompanying unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. Results for the six months ended June 30, 2009 are not necessarily indicative of the results expected for the full fiscal year or for any future period.

Consolidation

GAAP requires a variable interest entity (“VIE”) to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. To comply with PRC laws and regulations, the Company provides substantially all its Internet content, MVAS and advertising services in China via its VIEs. These VIEs are wholly or partially owned by certain employees of the Company. The capital for the VIEs 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 of the 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 June 30, 2009, the total amount of interest-free loans to these PRC employees was $8.2 million and the aggregate accumulated losses of all VIEs were approximately $0.6 million, which have been included in the unaudited interim condensed consolidated financial statements.

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

•

Beijing SINA Internet Information Service Co., Ltd. (the “ICP Company”), a China company controlled through a series of contractual arrangements. The ICP Company is responsible for operating www.sina.com.cn in connection with its Internet content company license, selling the advertisements to advertisers and providing MVAS with its Value-Added Telecommunication Services Operating License in China via third-party operators to the users. It is 1.5% owned by Yan Wang, the Company’s Chairman of the Board, 22.50% owned by the Company’s executive officer Tong Chen, 26.75% owned by the Company’s executive officer Hong Du, and 49.25% owned by two other non-executive PRC employees of the Company. The registered capital of the ICP Company is $2.5 million.

F-6

	•		Guangzhou Media Message Technologies, Inc. (“Xunlong”), a China company controlled through a series of contractual arrangements. Xunlong is responsible for providing MVAS in China via third-party operators to the users under its Value-Added Telecommunication Services Operating License. It is owned by two non-executive PRC employees of the Company. The registered capital of the Xunlong is $1.2 million.

	•		Beijing Star-Village Online Cultural Development Co., Ltd. (“StarVI”), previously called Beijing Star-Village.com Cultural Development Co., Ltd, a China company controlled through a series of contractual arrangements. StarVI is responsible for providing MVAS in China via third-party operators to the users under its Value-Added Telecommunication Services Operating License. It is owned by three non-executive PRC employees of the Company. The registered capital of StarVI is $1.2 million.

	•		Shenzhen Wang Xing Technology Co., Ltd. (“Wangxing”), a China company controlled through a series of contractual arrangements. Wangxing is responsible for providing MVAS in China via third-party operators to the users under its Value-Added Telecommunication Services Operating License. It is owned by three non-executive PRC employees of the Company. The registered capital of Wangxing is $1.2 million.

	•		Beijing SINA Infinity Advertising Co., Ltd. (the “IAD Company”), a China company controlled through a series of contractual arrangements. The IAD Company is an advertising agency. It is 20% owned by the Company’s executive officer Tong Chen and 80% owned by four non-executive PRC employees of the Company. This entity has an approved business scope including design, production, agency and issuance of advertisements. The registered capital of the IAD Company is $0.1 million.

	•		Beijing Yisheng Leju Information Services Co., Ltd. (“Beijing Leju”), a China company controlled by the Company through a series of contractual arrangements. Beijing Leju is an advertising agency and is responsible for selling advertisement of real-estate and home decoration channels. It is owned by two non-executive PRC employees of the Company. This entity has an approved business scope including agency and issuance of advertisements. The registered capital of Beijing Leju is $0.1 million.

The Company began to consolidate the ICP Company in October 2001. Xunlong and StarVI were acquired from Memestar Limited in January 2003 and the operating results for these two companies have been consolidated since January 2003. Wangxing was acquired from Crillion Corporation in March 2004 and the operating results for Wangxing have been consolidated since March 2004. The operating results of the IAD Company have been consolidated since its establishment in 2004. The operating results of Beijing Leju have been consolidated since its establishment in 2008.

Convertible debt

Starting January 1, 2009 the Company adopted revised guidance on accounting for convertible debt instrument issued by the FASB, which requires issuers of convertible debt that may be settled wholly or partly in cash when converted to account for the debt and equity components separately. The revised guidance has to be applied retrospectively to all periods and requires the Company to estimate the fair value of its convertible notes as of the date of issuance, and as if the instrument was issued without the conversion feature. The difference between the fair value and the principal amount of the instrument was retrospectively recorded as debt discount and as a component of equity. The amortization of the debt discount was recognized over the expected four-year life of the convertible notes as a non-cash increase to interest expense in the historical periods ended in June 2007. Although the revised guidance did not have an impact on the Company’s past or future cash flows, it required the Company to record non-cash interest expense that would not have occurred under the previous GAAP guidance. The adoption of the revised guidance increased the Company’s interest expense for the period from July 2003 to July 2007 by $25.8 million, which was adjusted in opening retained earnings for 2008 and 2007 in these unaudited interim condensed consolidated financial statements.

Recent accounting pronouncements

Effective July 2009, the Financial Accounting Standards Board (FASB) codified accounting literature into a single source of authoritative accounting principles. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Since the codification did not alter existing GAAP, it did not have an impact on our condensed consolidated financial statements. All references to pre-codified GAAP have been removed in the unaudited condensed interim financial statements.

In June 2009, the FASB issued revised guidance on the accounting for the transfer of financial assets. The revised guidance requires additional information disclosures on the transfer of financial assets, including securitization transactions, and where an entity has continuing exposure to risks related to transferred financial assets. The revised guidance eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets and requires additional disclosures. This guidance will be effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009. The Company is currently evaluating the impact of the revised guidance on its financial statements.

In June 2009, the FASB issued revised guidance on the consolidation of VIE. The revised guidance requires an analysis to determine whether an entity has a controlling financial interest in a VIE. Additionally, the revised guidance requires an ongoing reassessment and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. This guidance will be effective at the start of a reporting entity’s first fiscal year

F-7

beginning after November 15, 2009. The Company is currently evaluating the impact of the revised guidance on its financial statements.

In May 2009, the FASB issued guidance on events that occur after the balance sheets date and before the issuance of the financial statements. The guidance relates to the evaluation of subsequent events or transactions for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheets date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheets date. The guidance is effective for interim or annual periods ending after June 15, 2009. The Company has adopted the requirements of this pronouncement starting January 2009. The adoption of this guidance did not have an impact on the Company’s financial statements.

In April 2009, the FASB issued guidance to address application issues on the initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities arising from contingencies in a business combination. This guidance is effective for assets and liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this guidance did not have an impact on the Company’s financial statements.

3. Goodwill and Intangible Assets

The Company acquired Memestar Limited, a British Virgin Islands limited liability corporation (“Memestar”) in 2003 and Crillion Corporation, a British Virgin Islands limited liability corporation (“Crillion”) in 2004 to enhance its MVAS offerings as well as increase its market share in the PRC MVAS market. The Company also acquired Davidhill Capital Inc., a British Virgin Islands limited liability corporation (“Davidhill”), and its UC instant messaging technology platform in 2004. In 2008, the Company took a controlling interest in a privately held web-application development firm. The following table summarizes goodwill by segment from these acquisitions:


	Advertising		MVAS		Total
	(In thousands)
Balance at December 31, 2008	$	15,159	$	68,891	$	84,050


Balance at June 30, 2009	$	15,159	$	68,891	$	84,050

The Company is required to perform an impairment assessment of its goodwill on an annual basis or when facts and circumstances warrant a review. The Company performed an impairment assessment relating to goodwill arising from its acquisitions as of December 31, 2008, and concluded that there was no impairment as to the carrying value of the goodwill. The Company has not noted any triggering events during the six months ended June 30, 2009 that would require an interim impairment assessment of its goodwill and intangible assets.

The following table summarizes the Company’s intangible assets:


	June 30, 2009							December 31, 2008
			Accumulated							Accumulated
	Cost		amortization			Net		Cost		amortization			Net
	(In thousands)
Technology	$	10,300	$	(5,150	)	$	5,150	$	10,300	$	(4,635	)	$	5,665
Database		3,541		(443	)		3,098		3,541		(266	)		3,275
Software		1,844		(614	)		1,230		1,844		(307	)		1,537

Total	$	15,685	$	(6,207	)	$	9,478	$	15,685	$	(5,208	)	$	10,477

All intangible assets are amortizable. Technology and database have estimated useful lives of ten years. Software is amortized over three years.

Amortization expenses related to intangible assets were $1.0 million and $0.6 million for the six months ended June 30, 2009 and 2008, respectively. As of June 30, 2009, estimated amortization expenses for future periods are expected to be as follows:


Fiscal year	(In thousands)
Six months ending December 31, 2009	$	999
2010		1,998
2011		1,693
2012		1,384
2013		1,384
Thereafter		2,020

Total expected amortization expense	$	9,478

F-8

4. Balance Sheet Components


	June 30,			December 31,
	2009			2008
	(In thousands)
Accounts receivable, net:
Accounts receivable	$	83,107		$	88,329
Allowance for doubtful accounts:
Balance at the beginning of period		(9,146	)		(5,663	)
Additional provision charged to expenses		(2,500	)		(3,528	)
Write-off, net of recoveries		863			45

Balance at the end of period		(10,783	)		(9,146	)

	$	72,324		$	79,183

Prepaid expenses and other current assets:
Content fees	$	3,139		$	4,034
Rental and other deposits		1,927			1,404
Prepayments on investments		4,425			—
Others		3,860			3,986

	$	13,351		$	9,424

Property and equipment, net:
Computers and equipment	$	76,913		$	76,253
Leasehold improvements		4,755			4,988
Furniture and fixtures		4,110			3,821
Other		1,469			1,571

		87,247			86,633
Less: Accumulated depreciation and amortization		(59,335	)		(52,522	)

	$	27,912		$	34,111

Accrued liabilities:
Accrued compensation and benefits	$	7,502		$	9,480
Sales commission		2,933			4,055
Business taxes payable		4,649			5,835
Sales rebates		11,174			10,305
Marketing expenses		5,322			9,100
Professional fees		4,518			5,144
Internet connection costs		3,347			3,151
Content fees		15,845			13,526
Others		5,033			7,872

	$	60,323		$	68,468

5. Related Party Transactions

In April 2007, one of the Company’s subsidiaries entered into an agreement with Broadvision Inc. (“Broadvision”). Mr. Pehong Chen, a director of SINA, is a significant stockholder of Broadvision and serves as its Chairman, Chief Executive Officer and President. Under the agreement, Broadvision provides HR information management hosting service, including software subscription and system upgrade, feature enhancement and technical support, to the Company’s operations in China for an annual subscription fee of RMB 500,000 or approximately $66,000. Broadvision also charge an initial system implementation fee of RMB 500,000. SINA has an option to buy out the software license from Broadvision on a non-exclusive basis by paying a lump-sum amount (RMB 1,500,000, or RMB 1,000,000 for buy-out in 2009 or 2010 or later, respectively) plus an additional 22% of the buy-out amount for maintenance services. For the six months ended June 30, 2009 and 2008, the Company paid Broadvision approximately $42,000 and $36,000, respectively. Amount prepaid to Broadvision was $77,000 as of June 30, 2009.

6. Income Taxes

The Company is registered in the Cayman Islands and has operations in four tax jurisdictions - the PRC, the U.S. of America, Hong Kong and Taiwan. The Company generated substantially all of its net income from its PRC operations for the six months ended June 30, 2009 and 2008, and the Company has recorded income tax provisions for these periods.

The components of income before income taxes are as follows:


	Six months ended June 30,
	2009			2008
	(In thousands, except percentage)
Income before income taxes	$	27,391		$	44,574
Loss from non China operations	$	(11,046	)	$	(3,783	)
Income from China operations	$	38,437		$	48,357
Income tax expenses applicable to China operations	$	4,043		$	7,825
Effective tax rate for China operations		11	%		16	%

F-9

Effective January 1, 2008, the new Enterprise Income Tax Law (the “EIT Law”) in China unifies the enterprise income tax rate for VIEs and Foreign-Invested Enterprises (“FIEs”) at 25%. The EIT Law provides a five-year transitional period for certain entities that enjoyed a favorable income tax rate of less than 25% and/or a preferential tax holiday under the previous income tax law and were established before March 16, 2007, to gradually increase their rates to 25%. In addition, new and high technology enterprises continue to enjoy a preferential tax rate of 15%. The EIT Law also provides grandfathering treatment for new and high technology enterprises that received special tax holidays under the previous income tax law to continue to enjoy their tax holidays until expiration. For the six months ended June 30, 2008, there were uncertainties on the interpretation and implementation of the EIT Law and the Administration Measures for Recognition of New and High Technology Enterprises, including whether certain of the Company’s FIEs in China would receive the new and high technology enterprise status under the EIT Law. Therefore, for the six months ended June 30, 2008, the Company made an income tax provision without considering the tax benefits as a qualified new or high technology enterprise.

In December 2008, two of the Company’s subsidiaries in China, SINA.com Technology (China) Co. Ltd. and Beijing New Media Information Technology Co. Ltd., qualified as new and high technology enterprises under the new EIT Law. In February 2009, another subsidiary of the Company Shanghai SINA Leju Information Technology Co., Limited was granted software enterprise status, which qualifies the subsidiary to be exempted from income taxes for 2009, followed by a 50% reduction in income tax rate from 2010 through 2012. These changes resulted in lower effective income tax rate for the Company’s China operations in the first six months of 2009 compared to the same period last year.

The EIT Law provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, the Company does not believe that it is likely that its operations outside of the PRC would be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history the EIT Law, should PRC tax authorities determine that SINA should be treated as a resident enterprise for PRC tax purposes, the Company would be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to January 1, 2008.

The EIT Law imposes a withholding income tax of 10% on dividends distributed by an FIE to its immediate holding company outside of China, if such immediate holding company is considered a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the previous income tax law. The Cayman Islands, where the Company is incorporated, does not have such a tax treaty with China. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by an FIE in China to its direct holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5%. A majority of the Company’s FIE operations in China are invested and held by Hong Kong registered entities. Under GAAP on accounting for income taxes, all undistributed earnings are presumed to be transferred to the parent company and are subject to the withholding taxes. Based on the subsequently issued interpretation of the new EIT, Article 4 of Cai Shui [2008] Circular No. 1, dividends on earnings prior to 2008 but distributed after 2008 are not subject to withholding income tax. The current policy approved by the Company’s Board allows the Company to distribute PRC earnings offshore only if the Company does not have to pay a dividend withholding tax. Such policy may require the Company to reinvest all earnings made since 2008 onshore indefinitely or be subject to 10% withholding tax should its policy change to allow for earnings distribution offshore. If the Company were to distribute its FIEs’ earnings from January 1, 2008 to June 30, 2009, the Company would be subject to a withholding tax of approximately $6.3 million.

The Company’s VIEs are wholly owned by the Company’s employees and controlled by the Company through various contractual agreements. To the extent that these VIEs have undistributed earnings, the Company has to pay taxes on behalf of its employees when dividends are distributed from these local entities in the future. Such withholding individual income tax rate is 20%.

7. Net Income Per Share

Basic net income per share is computed using the weighted average number of the ordinary shares outstanding during the period. Diluted net income per share is computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the period. For the six months ended June 30, 2009 and 2008, options to purchase ordinary shares and restricted share units that were anti-dilutive and excluded from the calculation of diluted net income per share were approximately 2.2 million and 0.4 million, respectively.

F-10

The following table sets forth the computation of basic and diluted net income per share attributable to SINA for the periods indicated:


	Six months ended June 30,
	2009		2008
	(In thousands, except per share
	amounts)
Basic net income per share calculation:
Numerator:
Net income attributable to SINA	$	23,087	$	36,628

Denominator:
Weighted average ordinary shares outstanding		54,097		55,609

Basic net income per share attributable to SINA	$	0.43	$	0.66

Diluted net income per share calculation:
Numerator:
Net income attributable to SINA	$	23,087	$	36,628

Denominator:
Weighted average ordinary shares outstanding		54,097		55,609
Weighted average ordinary shares equivalents:
Stock options		204		982
Unvested restricted shares		145		33
Convertible debt		3,839		3,839

Shares used in computing diluted net income per share attributable to SINA		58,285		60,463

Diluted net income per share attributable to SINA	$	0.40	$	0.61

In the fourth quarter of 2008, the Board authorized, but did not obligate, the Company to repurchase of up to $100 million of the Company’s ordinary shares on an opportunistic basis. Stock repurchases under this program may be made through open market purchases, in negotiated transactions off the market, in block trades pursuant to a 10b5-1 plan, which would give a third party independent discretion to make purchases of the Company’s ordinary shares, or otherwise and in such amounts as management deems appropriate. During the six months ended June 30, 2009, the Company repurchased 2,454,956 shares in the open market, at an average price of $20.37 for total consideration of $50 million which were recorded as Treasury Stock. No other shares were repurchased as of December 23, 2009. Additional shares up to a maximum of $50 million may be purchased under this program through the end of 2009.

8. Stock-based Compensation Expenses

Stock-based compensation expenses related to the Company’s employee incentive plans recognized in the unaudited interim condensed consolidated statements of operations were as follows:


	Six months ended June 30,
	2009		2008
	(In thousands)
Costs of revenues	$	1,253	$	1,578
Sales and marketing		1,063		1,116
Product development		843		1,042
General and administrative		3,370		3,362

	$	6,529	$	7,098

As of June 30, 2009, there was $25.5 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based awards granted to the Company’s employees which will be recognized over a weighted-average period of 2 years. Total unrecognized compensation cost may be adjusted for future changes in estimated forfeitures.

The following table sets forth the summary of number of shares available for issuance:


	Shares Available
	(In thousands)
December 31, 2008		3,851
Granted *		(1,297	)
Cancelled/expired/forfeited		23

June 30, 2009		2,577


*		During the six months ended June 30, 2009, 741,000 restricted shares units, or approximately 1.3 million equivalent shares, were granted.

F-11

Summary of Stock Option

The following table sets forth the summary of option activity under the Company’s stock option program:


						Weighted Average
	Options			Weighted Average		Remaining		Aggregate
	Outstanding			Exercise Price		Contractual Life		Intrinsic Value
	(In thousands)					(In years)		(In thousands)
December 31, 2008		2,835		$	25.85		4.39	$	4,018
Exercised		(53	)	$	21.14
Cancelled/expired/forfeited		(53	)	$	27.37

June 30, 2009		2,729		$	25.91		3.90	$	14,423

Vested and expected to vest as of June 30, 2009		2,675		$	25.77		3.89	$	14,368
Exercisable as of June 30, 2009		2,009		$	24.09		3.83	$	12,898

The aggregate intrinsic value in the preceding table represents the difference between the market value as of the last day of the periods and the exercise price of the shares. As reported by the NASDAQ Global Selected Market, the Company’s closing stock price as of June 30, 2009 and December 31, 2008 was $29.48 and $23.15, respectively.

The total intrinsic value of options exercised during the six months ended June 30, 2009 was $0.5 million. The intrinsic value is calculated as the difference between the market value on the date of exercise and the exercise price of the shares. Cash received from the exercise of stock options during the six months ended June 30, 2009 was $0.9 million.

As of June 30, 2009, there was $11.4 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock options granted to the Company’s employees. This cost is expected to be recognized over a weighted-average period of 2.4 years. Total unrecognized compensation cost may be adjusted for future changes in estimated forfeitures.

Information regarding the stock options outstanding at June 30, 2009 is summarized below:


			Weighted				Weighted		Weighted Average
	Options		Average		Options		Average		Remaining
Range of Exercise prices	Outstanding		Exercise Price		Exercisable		Exercise Price		Contractual Life
	(In thousands)				(In thousands)				(In years)
$1.32 — $23.17		967	$	19.13		798	$	18.27		3.36
$24.23 — $24.73		862	$	24.62		766	$	24.61		3.54
$25.57 — $33.68		720	$	32.47		345	$	31.58		4.82
$36.40 — $49.95		180	$	42.31		100	$	40.77		4.87

		2,729	$	25.91		2,009	$	24.09		3.90

Summary of Service-Based Restricted Share Units

Service-based restricted share units activities in the six months ended June 30, 2009 were as follows:


				Weighted-Average Grant-Date
	Shares Granted			Fair Value
	(In thousands)
December 31, 2008		75		$	46.83
Awarded		741		$	20.86
Issued		(79	)	$	27.98

June 30, 2009		737

Restricted share units are not considered outstanding in the computation of basic earnings per share. As of June 30, 2009, there was $14.1 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested, service-based restricted share units granted to the Company’s employees. This cost is expected to be recognized over a weighted-average period of 1.6 years.

Summary of Performance-Based Restricted Share Units

Performance-based restricted share unit activities in the six months ended June 30, 2009 were as follows:


				Weighted-Average Grant-Date
	Shares Granted			Fair Value
	(In thousands)
December 31, 2008		68		$	40.57
Issued		(68	)	$	20.85

June 30, 2009		—

F-12

In September 2008, the Company’s subsidiary COHT adopted a 2008 Share Incentive Plan (“2008 COHT Plan”). The 2008 COHT Plan permits the granting of stock options, share appreciation rights, restricted share units and restricted shares of COHT to employees, directors and consultants. Options with a fair value of $514,000 were granted during the six months ended June 30, 2009. Stock compensation expenses related to the grant are amortized over four years on a straight-line basis, with $71,000 expensed in the six months ended June 30, 2009.

9. Segment Information

The Company currently operates in three principal business segments globally—advertising, MVAS and other non-advertising. Information regarding the business segments provided to the Company’s chief operating decision maker (“CODM”) are at the revenue or gross margin level. The Company’s CODM does not use information requiring the allocation of operating costs or assets to its segments to allocate resources to or evaluate the performance of the operating segments.

The following is a summary of revenues, costs of revenues and gross profit margins by segment:


	Advertising			MVAS			Other			Total
	(In thousands)
Six months ended June 30, 2009:
Net revenues	$	100,926		$	59,864		$	3,233		$	164,023
Costs of revenues		45,874			28,421			825			75,120
Gross profit margins		55	%		53	%		74	%		54	%

Six months ended June 30, 2008:
Net revenues	$	112,776		$	46,208		$	3,651		$	162,635
Costs of revenues		42,718			20,453			1,191			64,362
Gross profit margins		62	%		56	%		67	%		60	%

The following is a summary of the Company’s geographic operations:


	China		International		Total
	(In thousands)
Six months ended June 30, 2009:
Revenues	$	162,663	$	1,360	$	164,023
Six months ended June 30, 2008:
Revenues	$	160,957	$	1,678	$	162,635

As of June 30, 2009:
Long-lived assets	$	27,034	$	878	$	27,912
As of December 31, 2008:
Long-lived assets	$	33,005	$	1,106	$	34,111

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

10. Financial Instruments

Fair Value of Financial Instruments


	Fair Value Measurements at June 30, 2009
			Quoted Prices in
			Active Market		Significant Other
			for Identical Assets		Observable Inputs
	Total		(Level 1)		(Level 2)
Money market funds (1)	$	283,049	$	283,049	$	—
Bank time deposits (2)		204,327		—		204,327

Total	$	487,376	$	283,049	$	204,327


(1)		Included in cash and cash equivalents in the Company’s unaudited interim condensed consolidated balance sheets.

(2)		Included in cash and cash equivalents and short-term investments in the Company’s unaudited interim condensed consolidated balance sheets.

Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivables. In addition, with the majority of its operations in China, the Company is subject to RMB currency risk and offshore remittance risk, which are difficult to hedge and the Company has not hedged.

F-13

The Company limits its exposure to credit loss by depositing its cash and cash equivalents with financial institutions in the U.S., the PRC, Hong Kong and Taiwan that management believes are of high credit quality. The Company usually invests in marketable debt securities with A ratings or above.

The Company has approximately $292.4 million in cash and bank deposits, such as time deposits, with large domestic banks in China, which constitute about 50% of its total cash, cash equivalents and short-term investments as of June 30, 2009. The terms of these deposits are generally up to twelve months. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests. However, China promulgated a new Bankruptcy Law that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the new Bankruptcy Law, a Chinese bank may go bankrupt. In addition, since China’s concession to WTO, foreign banks have been gradually permitted to operate in China and have become serious competitors to Chinese banks in many aspects, especially since the opening of RMB business to foreign banks in late 2006. Therefore, the risk of bankruptcy on Chinese banks in which the Company holds cash and bank deposits has increased. In the event that a Chinese bank that holds the Company’s deposits goes bankrupt, the Company is unlikely to claim its deposits back in full since it is unlikely to be classified as a secured creditor to the bank under the PRC laws.

Accounts receivable consist primarily of advertising agencies, direct advertising customers and mobile operators. As of June 30, 2009 and December 31, 2008, approximately 99% and 99% of the net accounts receivable were derived from the Company’s operations in the PRC.

For the six months ended June 30, 2009 and 2008, advertising revenues from agencies were approximately 92% and 93%, respectively, of the Company’s advertising revenues. Focus Media Holding Limited (“Focus”), a large advertising agency in China, through its subsidiaries and affiliate accounted for less than 10% of the Company’s total revenues in the six months ended June 30, 2009 and for 12% of total revenues for the six months ended June 30, 2008. No individual advertising customer accounted for 10% or more of total revenues for the six months ended June 30, 2009 and 2008. Focus accounted for 15% and 18% of the Company’s total accounts receivables as of June 30, 2009 and December 31, 2008, respectively. No individual advertising customer accounted for 10% or more of accounts receivables as of as of June 30, 2009 and December 31, 2008.

With regard to the MVAS operations, revenues charged via provincial and local subsidiaries of China Mobile were 31% and 26% of the Company’s total revenues the six months ended June 30, 2009 and 2008, respectively. Revenues from the SMS product line accounted for 16% and less than 10% of the Company’s total revenues for the six months ended June 30, 2009 and 2008, respectively. China Mobile and its provincial and local subsidiaries in aggregate accounted for less than 10% and 10% of the Company’s accounts receivables as of June 30, 2009 and December 31, 2008, respectively. Accounts receivable from third-party operators represents MVAS fees collected on behalf of the Company after deducting their billing services and transmission charges. The Company maintains allowances for potential credit losses. Historically, the Company has not had any significant direct write off of bad debts.

The majority of the Company’s revenues derived and expenses incurred have been in RMB. Approximately 50%, 99%, and 43% of the Company’s cash, cash equivalents and short-term investments, accounts receivable and current liabilities, respectively, were denominated in RMB as of June 30, 2009. Accordingly, the Company may experience economic losses and negative impacts on earnings and equity as a result of exchange rate fluctuations with the RMB. Moreover, the Chinese government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The Company may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency.

11. Convertible Debt

In 2003, the Company issued $100 million of zero-coupon, convertible, subordinated notes (the “Notes”) due 2023. During 2007, $1 million of the Notes were converted to SINA ordinary shares upon the purchaser’s request. The Notes were issued at par and bear 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 the quarter ended September 30, 2009, the sale price of SINA ordinary shares exceeded the threshold set forth in item (i) above; therefore, the Notes are convertible into SINA ordinary shares during the quarter ending December 31, 2009.

F-14

accordance with guidance, obligations such as the Notes are considered current liabilities when they are or will be callable within one year from the balance sheet date, even though liquidation may not be expected within that period. These notes were accounted for in accordance with a revised guidance on accounting for convertible debt instrument issued by the FASB which the Company adopted on January 1, 2009. See Note 2 “Basis of Presentation and Use of Estimates — Convertible debt” to the unaudited interim condensed consolidated financial statements.

12. Commitments and Contingencies

Operating lease commitments include the commitments under the lease agreements for the Company’s office premises. The Company leases office facilities under non-cancelable operating leases with various expiration dates through 2013. Rental expenses were $3.7 million and $2.9 million, respectively, for the six months ended June 30, 2009 and 2008. Based on the current rental lease agreements, future minimum rental payments required as of June 30, 2009 were as follows:


			Less than one		One to		Three to		More than
	Total		year		Three years		five years		five years
					(In thousands)
Operating lease commitments	$	6,002	$	2,922	$	2,950	$	130	$	—

Purchase commitments mainly include minimum commitments for Internet connection fees associated with website production, content fees associated with website production and MVAS, advertising serving services and marketing activities. Purchase commitments as of June 30, 2009 were as follows:


			Less than one		One to		Three to		More than
	Total		year		Three years		Five years		five years
					(In thousands)
Purchase commitments	$	48,159	$	37,943	$	10,115	$	89	$	12

In the fourth quarter of 2008, the board authorized, but did not obligate, the Company to repurchase up to US$100 million of the Company’s ordinary shares on an opportunistic basis. Stock repurchases under this program may be made through open market purchases, in negotiated transactions off the market, in block trades pursuant to a 10b5-1 plan, which would give a third party independent discretion to make purchases of the Company’s ordinary shares, or otherwise and in such amounts as management deems appropriate. No shares had been repurchased as of December 31, 2008. As of December 23, 2009, the Company has repurchased 2,454,956 shares in the open market, at an average price of $20.37 for a total consideration of $50 million. Additional shares up to a maximum of $50 million may be purchased under this program through the end of 2009.

There are uncertainties regarding the legal basis of the Company’s ability to operate an Internet business and mobile value-added services in China. Although the country has implemented a wide range of market-oriented economic reforms, the telecommunication, information and media industries in the PRC remain highly regulated. Not only are such restrictions currently in place, but in addition regulations are unclear as to in which 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 its financial position, results of operations and cash flows.

There are no legal or arbitration proceedings that have had in the recent past, or to the Company’s knowledge, may have, significant effects on the Company’s financial position, results of operations or cash flows.

13. Noncontrolling Interest

In accordance with revised FASB guidance on accounting for minority interest, starting January 1, 2009, the Company has renamed its minority interests to noncontrolling interests and reclassified the related amounts in its unaudited interim condensed consolidated balance sheets from the mezzanine section between liabilities and equity to a separate line item in the equity section. The Company also expanded disclosures in the unaudited interim condensed consolidated financial statements to identify and distinguish the interests of SINA from the interests of noncontrolling interest holders. Consistent with the revised guidance the Company has applied the presentation and disclosure requirements retroactively for all periods presented for comparability purposes.

Noncontrolling interests in the unaudited interim condensed consolidated financial statements as of and for the periods ended June 30, 2009 and December 31, 2008 primarily consist of the 34% interest in China Online Housing Technology Corporation (“China Online Housing”) that SINA did not own.

14. Subsequent Events

The Company has performed an evaluation of subsequent events through December 23, 2009, which is the date the unaudited interim condensed consolidated financial statements were issued.

In July 2009, the Company announced that it entered into a definitive agreement (the “Agreement”) with E-House (China) Holdings Limited (“E-House”), a leading real estate services company in China, to merge E-House’s real

F-15

estate information and consulting services and the Company’s online real estate business (the “Transaction”). E-House’s real estate information and consulting services are operated by China Real Estate Information Corporation (“CRIC”), a subsidiary of E-House. Under the Agreement, SINA would contribute its online real estate business into its majority-owned subsidiary China Online Housing, and CRIC would issue its own ordinary shares to SINA to acquire SINA’s equity interest in China Online Housing in exchange for shares in CRIC. On October 16, 2009, the Transaction was consummated following the listing of CRIC’s American depositary shares on the NASDAQ Global Select Market. As of the closing of the Transaction, SINA is the second largest shareholder of CRIC, with approximately 33% interest in CRIC. The Company intends to account for its interest in CRIC using the equity method of accounting. The Company expects to recognize a material gain from the closing of the merger transaction with CRIC.

In September 2009, the Company announced that the Company and Focus Media Holding Limited (NASDAQ: FMCN) have jointly reached a decision to not extend the deadline of the agreement announced on December 22, 2008, by which the Company agreed to acquire substantially all of the assets of Focus Media’s digital out-of-home advertising networks.

In September 2009, the Company announced that it has entered into a definitive agreement for a private equity placement of its ordinary shares with New-Wave Investment Holding Company Limited (“New-Wave”), a British Virgin Islands company established and controlled by Charles Chao, the Company’s Chief Executive Officer, and other members of the Company’s management. On November 25, 2009, the private equity financing with New-Wave consummated. At the closing, SINA received gross proceeds of $180 million, and New-Wave received approximately 5.6 million ordinary shares in SINA. The shares issued to New-Wave are subject to a six month lock-up and have customary registration rights pursuant to a Registration Rights Agreement entered into between SINA and New-Wave. The Company expects to use the proceeds of the financing for future acquisitions and general corporate purposes. The Company is currently evaluating the accounting treatment for the private equity placement, which may require the Company to recognize compensation expense.

In October 2009, the Company awarded 400,000 shares of service-based restricted share units to employees, 170,051 of which vested within the quarter and the remaining 229,949 shares are expected to vest on a straight-lined basis over three years.

In December 2009, the Company awarded 42,000 shares of service-based restricted share units to non-employee directors, which are expected to vest on a straight-line basis over four years.

F-16

Exhibit 99.3

China Real Estate Information Corporation

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2006, 2007 and 2008


Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets as of December 31, 2007 and 2008			F-3
Consolidated Statements of Operations for the Years Ended December 31, 2006, 2007 and 2008			F-4
Consolidated Statements of Shareholder’s Equity and Comprehensive Income for the Years Ended December 31, 2006, 2007, and 2008			F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2007 and 2008			F-6
Notes to Consolidated Financial Statements			F-7
Schedule 1 — China Real Estate Information Corporation Condensed Financial Statements for the period from August 22, 2008 (date of inception) to December 31, 2008			F-26
Appendix 1 — Entities included in the consolidated financial statements			F-27

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of
China Real Estate Information Corporation

We have audited the accompanying consolidated balance sheets of China Real Estate Information Corporation and its subsidiaries (the “Group”) as of December 31, 2007 and 2008, and the related consolidated statements of operations, shareholder’s equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2008, and the related financial statement schedule included in Schedule 1. These financial statements and financial statement schedule are the responsibility of the Group’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of China Real Estate Information Corporation and its subsidiaries as of December 31, 2007 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

The accompanying consolidated financial statements were prepared to present the assets and liabilities and related results of operations and cash flows of China Real Estate Information Corporation and its subsidiaries, two operating segments of E-House (China) Holdings Limited. These consolidated financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations and cash flows if China Real Estate Information Corporation and its subsidiaries had operated as a stand-alone group during the periods presented.

As discussed in Note 2 to the financial statements, in 2009 the Company changed its method of accounting for the noncontrolling interest in a subsidiary to conform to FASB Statement No. 160, Non-controlling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51 (SFAS 160) and, retrospectively, adjusted the 2006, 2007 and 2008 financial statements for the change.

/s/ Deloitte Touche Tohmatsu CPA Ltd.

Shanghai, China
September 3, 2009 (except for Note 15, as to which the date is September 29, 2009)

F-2

China Real Estate Information Corporation
Consolidated Balance Sheets
(In U.S. dollar except for share data)


	December 31,
	2007			2008
	$			$
Assets
Current assets:
Cash and cash equivalents		26,411,473			25,791,238
Unbilled accounts receivable		236,586			10,767,049
Accounts receivable, net of allowance for doubtful accounts of nil and nil at December 31, 2007 and 2008, respectively		1,118,411			13,168,789
Advance payment for advertising placement		—			1,803,980
Prepaid expenses and other current assets		392,513			5,810,274
Amounts due from related parties		2,160,269			—

Total current assets		30,319,252			57,341,330
Property and equipment, net		504,213			2,521,190
Intangible assets, net		—			1,529,322
Goodwill		—			4,269,149
Investment in affiliates		—			5,062,394
Advance payment for advertising placement		—			4,927,059
Advance payment for properties		—			7,791,586
Other non-current assets		—			309,103

TOTAL ASSETS		30,823,465			83,751,133

Liabilities and Shareholder’s Equity
Current liabilities:
Accounts payable		32,172			510,489
Accrued payroll and welfare expenses		167,350			992,263
Income tax payable		689,037			3,877,645
Other tax payable		139,007			775,842
Amounts due to related parties		100			5,472,859
Payable for acquisition of subsidiary		—			1,319,976
Other current liabilities		77,786			1,977,480

Total current liabilities		1,105,452			14,926,554
Deferred revenue—non current		—			1,975,155
Other non-current liabilities		—			338,259

Total liabilities		1,105,452			17,239,968

Commitments and contingencies (Note 14)
Shareholder’s equity:
Ordinary shares ($0.0002 par value): 250,000,000 shares authorized, 71,522,222 and 71,522,222 shares issued and outstanding as of December 31, 2007 and 2008, respectively		14,304			14,304
Additional paid-in capital		30,000,000			40,991,770
Retained earnings (accumulated deficit)		(1,205,488	)		20,956,173
Accumulated other comprehensive income		923,501			3,707,854
Subscription receivable		(14,304	)		(14,304	)

Total CRIC shareholder’s equity		29,718,013			65,655,797

Noncontrolling interest		—			855,368

Total equity		29,718,013			66,511,165

Total liabilities and shareholder’s equity		30,823,465			83,751,133

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

F-3

China Real Estate Information Corporation
Consolidated Statements of Operations
(In U.S. dollar except for share data)


	Years Ended December 31,
	2006			2007			2008
	$			$			$
Total revenues		5,394,853			8,195,165			50,048,530
Cost of revenues		(214,060	)		(895,405	)		(2,897,247	)
Selling, general and administrative expenses		(2,197,961	)		(4,985,048	)		(19,819,873	)

Income from operations		2,982,832			2,314,712			27,331,410
Other income (expense):
Interest income		23,032			192,961			420,517
Foreign exchange loss		—			(502,210	)		(1,341,165	)
Other income		—			345,385			—

Income before taxes and equity in affiliates		3,005,864			2,350,848			26,410,762
Income tax expense		(894,217	)		(284,999	)		(4,721,015	)

Income before equity in affiliates		2,111,647			2,065,849			21,689,747
Income from equity in affiliates		—			—			153,700

Net income		2,111,647			2,065,849			21,843,447
Net loss attributable to noncontrolling interest		—			—			318,214

Net income attributable to CRIC		2,111,647			2,065,849			22,161,661

Earnings per share:
Basic	$	0.03		$	0.03		$	0.31
Diluted	$	0.03		$	0.03		$	0.31
Shares used in computation:
Basic		71,522,222			71,522,222			71,522,222
Diluted		71,522,222			71,522,222			71,522,222

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

F-4

China Real Estate Information Corporation
Consolidated Statements of Shareholder’s Equity
and Comprehensive Income
(In U.S. dollar)


							Retained			Accumulated
					Additional		Earnings			Other											Total
	Ordinary				Paid-in		(Accumulated			Comprehensive		Subscription			Noncontrolling			Total			Comprehensive
	Shares				Capital		Deficit)			Income		Receivable			Interests			Equity			Income
	Number		$		$		$			$		$			$			$			$
Balance at January 1, 2006		71,522,222		14,304		—		(582,733	)		—		(14,304	)		—			(582,733	)		—
Net income		—		—		—		2,111,647			—		—			—			2,111,647			2,111,647
Cash contribution from E-House		—		—		5,000,000		—			—		—			—			5,000,000			—
Distribution to E-House		—		—		—		(456,404	)		—		—			—			(456,404	)		—
Foreign currency translation adjustments		—		—		—		—			47,452		—			—			47,452			47,452

Balance at December 31, 2006		71,522,222		14,304		5,000,000		1,072,510			47,452		(14,304	)		—			6,119,962			2,159,099
Net income		—		—		—		2,065,849			—		—			—			2,065,849			2,065,849
Cash contribution from E-House		—		—		25,000,000					—		—			—			25,000,000			—
Distribution to E-House		—		—		—		(4,343,847	)		—		—			—			(4,343,847	)		—
Foreign currency translation adjustments		—		—		—		—			876,049		—			—			876,049			876,049

Balance at December 31, 2007		71,522,222		14,304		30,000,000		(1,205,488	)		923,501		(14,304	)		—			29,718,013			2,941,898
Capital contribution		—		—		—		—			—		—			1,173,582			1,173,582			—
Net income (loss)		—		—		—		22,161,661			—		—			(318,214	)		21,843,447			21,843,447
Contribution from E-House		—		—		2,591,770		—			—		—			—			2,591,770			—
Cash contribution from E-House		—		—		8,400,000		—			—		—			—			8,400,000			—
Foreign currency translation adjustments		—		—		—		—			2,784,353		—			—			2,784,353			2,784,353

Balance at December 31, 2008		71,522,222		14,304		40,991,770		20,956,173			3,707,854		(14,304	)		855,368			66,511,165			24,627,800

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

F-5

China Real Estate Information Corporation
Consolidated Statements of Cash Flows
(In U.S. dollar)


	Years Ended December 31,
	2006			2007			2008
	$			$			$
Operating activities:
Net income		2,111,647			2,065,849			21,843,447
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		11,728			60,577			440,613
Income from investment in affiliates		—			—			(153,700	)
Changes in operating assets and liabilities:
Accounts receivable		(2,237,658	)		1,046,519			(21,746,362	)
Amounts due from related parties		(456,404	)		(4,442,415	)		2,690,338
Advance payment for advertising placement		—			—			(6,731,039	)
Prepaid expenses and other current assets		(20,193	)		(89,135	)		(4,718,931	)
Other non-current assets		—			—			(4,336	)
Accounts payable		(51,944	)		32,172			387,544
Accrued payroll and welfare expenses		(148,695	)		167,350			718,993
Income tax payable		190,820			152,175			3,182,709
Other tax payable		(56,232	)		54,535			642,958
Other current liabilities		95,394			(27,352	)		326,624
Deferred tax		—			(250,124	)		(124,654	)

Net cash used in operating activities		(561,537	)		(1,229,849	)		(3,245,796	)

Investing activities:
Purchases of property and equipment		(76,414	)		(368,575	)		(9,478,138	)
Purchase of subsidiaries, net of cash acquired		—			—			(2,399,326	)
Investment in affiliates		—			—			(2,500,000	)
Proceeds from disposal of property and equipment		—			—			18,645
Loans to related parties		(2,926,355	)		—			—
Collection of the loans from related parties		—			964,513			2,157,683

Net cash provided by (used in) investing activities		(3,002,769	)		595,938			(12,201,136	)

Financing activities:
Contribution from noncontrolling interest		—			—			270
Proceeds of loans from related parties		—			—			5,696,838
Contribution from E-House		5,000,000			25,000,000			8,400,000

Net cash provided by financing activities		5,000,000			25,000,000			14,097,108

Effect of exchange rate changes		23,397			586,293			729,589

Net increase in cash and cash equivalents		1,459,091			24,952,382			(620,235	)
Cash and cash equivalents at the beginning of the year		—			1,459,091			26,411,473

Cash and cash equivalents at the end of the year		1,459,091			26,411,473			25,791,238

Supplemental disclosure of cash flow information:
Income taxes paid		—			—			1,446,702
Related party loans converted to equity		5,000,000			25,000,000			8,400,000
Related party receivable paid as dividend or (payable recorded as a capital contribution)		456,404			4,343,847			(2,591,770	)

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

F-6

China Real Estate Information Corporation
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2006, 2007 and 2008
(In U.S. dollar)

1. Organization and Principal Activities

China Real Estate Information Corporation (the “Company”) was incorporated on August 21, 2008 in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands. The Company, through its subsidiaries and consolidated variable interest entity (“VIE”), is principally engaged in providing real estate consulting and information services and real estate advertising services in the People’s Republic of China (“PRC”). The Company, its subsidiaries and consolidated VIE are collectively referred to as the “Group”.

E-House (China) Holdings Limited (“E-House Holdings”) is the Company’s parent company. E-House Holdings, its subsidiaries and VIEs are collectively referred to as “E-House”, which excludes the Group. E-House began developing the CRIC system in 2002, initially to support services to its clients. In April 2006, E-House incorporated a subsidiary, CRIC (China) Information Technology Co., Ltd., in the British Virgin Islands (“CRIC BVI”). In July 2006, E-House, through CRIC (China) Information Technology Co., Ltd., established a new PRC subsidiary, Shanghai CRIC Information Technology Co., Ltd. (“Shanghai CRIC”), and transferred its assets and staff relating to the CRIC system to Shanghai CRIC. Prior to the establishment of Shanghai CRIC, the real estate information and consulting services were carried out by various companies owned by E-House Holdings. Shanghai CRIC began commercializing the CRIC system and offering information and related consulting services in 2006.

Shanghai CRIC began offering real estate advertising services in 2008 through a newly acquired VIE in China, Shanghai Tian Zhuo Advertising Co., Ltd. and its majority owned subsidiaries (“Tian Zhuo”).

E-House Holdings transferred all of the outstanding shares of CRIC BVI to CRIC in October 2008. The restructuring process has been accounted for as a reorganization of entities under common control.

Upon incorporation, the Company had 500,000,000 ordinary shares authorized, 1,000 ordinary shares issued and outstanding with a par value of $0.0001 per share, all of which were held by E-House Holdings. On January 1, 2009, the Company issued an additional 99,999,000 ordinary shares to E-House Holdings for par value, or $10,000. On August 29, 2009, the Company effected a reverse share split whereby all of 100,000,000 issued and outstanding ordinary shares, having a par value of $0.0001 per share, were converted into 50,000,000 ordinary shares, having a par value of $0.0002 per share, and the number of authorized shares was reduced from 500,000,000 to 250,000,000. On September 28, 2009, the Company issued 21,522,222 additional ordinary shares at par value to E-House Holdings. Both the reverse share split and the ordinary share issuance to E-house Holdings have been retroactively reflected for all periods presented herein.

As of December 31, 2008, all consolidated subsidiaries of the Company are included in Appendix 1.

The consolidated financial statements have been prepared on a carve-out basis and represent the assets and liabilities and the related results of operations and cash flows of the Group, which represent two operating segments of E-House Holdings. The financial data of previously separate entities have been combined, to the extent included in the aforementioned operating segments of E-House Holdings, for all periods presented as all such entities were under common control. However, such presentation may not necessarily reflect the results of operations, financial position and cash flows if the Group had actually existed on a standalone basis during the periods presented. Transactions between the Group and E-House are herein referred to as related party transactions.

In connection with a contemplated initial public offering (the “offering”) of the Company, E-House Holdings and the Company entered into non-competition arrangements on July 29, 2009, according to which E-House has agreed not to compete with the Group in the real estate information and consulting services and real estate advertising services business anywhere in the world and the Group has agreed not to compete with E-House in any services currently provided or contemplated by E-House. Prior to these non-competition arrangements, both E-House and the Group conducted real estate information and consulting services and primary real estate agency services. Shanghai CRIC began offering real estate advertising services in 2008, and there were no advertising activities prior to the formation of CRIC BVI and Shanghai CRIC.

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The consolidated financial statements include the Group’s direct expenses as well as allocations for various selling, general and administrative expenses of E-House that are not directly related to real estate information and consulting services or real estate advertising services. These expenses consist primarily of share-based compensation expenses of senior management and shared marketing and management expenses including marketing, finance, legal, technology, human resources, administration and internal audit. These allocations were made using a proportional cost allocation method and were based on revenues, expenses and headcount as well as estimates of actual time spent on the provision of services attributable to the Group. Management believes these allocations are reasonable. Total selling, general and administrative expenses allocated from E-House are $321,042, $624,654 and $3,516,284 for the years ended December 31, 2006, 2007 and 2008, respectively. Income tax liability is calculated based on a separate return basis as if the Group had filed a separate tax return.

2. Summary of Principal Accounting Policies

(a) Basis of presentation

The consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

(b) Basis of consolidation

The consolidated financial statements include the financial statements of CRIC, its majority owned subsidiaries and its VIE, Tian Zhuo. All significant inter-company transactions and balances have been eliminated in consolidation.

In accordance with the provisions of FASB Interpretation No. 46 (Revised), “Consolidation of Variable Interest Entities” (“FIN 46R”), the Group evaluates each of its interests in private companies to determine whether or not the entity is a VIE and, if so, whether the Group is the primary beneficiary of such VIE. If deemed the primary beneficiary, the Group consolidates the VIE.

PRC regulations currently prohibit or restrict foreign ownership of companies that provide Internet content and advertising services. To comply with these regulations, the Group provides Internet content service and provides substantially all of its real estate advertising services through the investments held by Tian Zhuo, a PRC entity solely owned by Xin Zhou, the Group’s Chairman. On April 1, 2008, Tian Zhuo entered into various agreements with Shanghai CRIC, including a Consultancy Service Agreement, Shareholder Voting Rights Proxy Agreement and Exclusive Equity Transfer Call Agreement. Under these agreements, Shanghai CRIC provides Tian Zhuo with consulting and related services and information services and is entitled to receive service fees. In addition, the shareholder of Tian Zhuo irrevocably granted Shanghai CRIC the power to exercise all voting rights to which it was entitled. Finally, Shanghai CRIC has the option to acquire all or part of the equity interests in Tian Zhuo, to the extent permitted by the then-effective PRC laws and regulations, for nominal consideration.

Through the contractual arrangements described above, Shanghai CRIC is deemed the primary beneficiary of Tian Zhuo. Accordingly, the results of Tian Zhuo and its subsidiaries have been included in the accompanying consolidated financial statements, beginning April 1, 2008.

During 2008, the Group funded Tian Zhuo’s capital requirements of $146,314 and provided an additional $5,120,989 for the purpose of acquisitions and $9,949,353 as prepayment and deposit for a three-year period for real estate advertising placements to certain Shanghai newspapers via a $15,216,656 in interest-free loans to Xin Zhou.

The following financial statement amounts and balances of Tian Zhuo were included in the accompanying consolidated financial statements as of and for the year ended December 31, 2008:


	As of December 31, 2008
Total assets		14,738,217
Total liabilities		15,509,814

(c) Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates. Significant accounting estimates reflected in the Group’s financial statements include valuation of long-lived assets and goodwill, allowance for doubtful accounts and the valuation allowance on deferred tax assets.

(d) Fair value of financial instruments

The Group adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair value measurements” (“SFAS 157”) on January 1, 2008 for all financial assets and liabilities that under other accounting pronouncements require or permit fair value measurements and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS 157 defines fair value, established a framework for measuring fair value, and expands disclosure about fair value measurements.

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SAFS 157 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers and it considers assumptions that market participants would use when pricing the asset or liability.

SAFS 157 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. SAFS 157 establishes three levels of inputs that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model- derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Group does not have any financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The carrying amount of cash, accounts receivable, other receivables, accounts payable, other payables and amounts due from/to related parties approximates fair value due to their short-term nature.

The fair value of advance payment for advertising placement, non-current portion was $4,435,132 as at December 31, 2008 based on discounted cash flow.

(e) Business combinations

Business combinations are recorded using the purchase method of accounting and, accordingly, the acquired assets and liabilities are recorded at their fair market value at the date of acquisition. Any excess of acquisition cost over the fair value of the acquired assets and liabilities, including identifiable intangible assets, is recorded as goodwill.

(f) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.

(g) Unbilled accounts receivable

Unbilled accounts receivable represents amounts recognized in revenue prior to issuing official tax receipts to customers. The Group regularly reviews the collectability of unbilled accounts receivable in the same method as accounts receivable.

(h) Advance Payment for Advertising Placement

In December 2008, the Group prepaid $6,731,039 to certain Shanghai newspapers for real estate advertising placements over a three-year period.

(i) Advance Payment for Properties, Non-current Portion

In May 2008, the Group prepaid $7,791,586 for an office building, which the Group intended to use as its corporate office. In April 2009, the Group leased another office building as its corporate office. The Group intends to sell the property for which they made the prepayment upon receipt of the property title.

(j) Investment in affiliates

Affiliated companies are entities over which the Group has significant influence, but which it does not control. The Group generally considers an ownership interest of 20% or higher to represent significant influence. Investments in affiliates are accounted for by the equity method of accounting. Under this method, the Group’s share of the post-acquisition profits or losses of affiliated companies is recognized in the income statement and its shares of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. Unrealized gains on transactions between the Group and its affiliated companies are eliminated to the extent of the Group’s interest in the affiliated companies; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. When the Group’s share of losses in an affiliated company equals or exceeds its interest in the affiliated company, the Group does not recognize further losses, unless the Group has incurred obligations or made payments on behalf of the affiliated company. An impairment loss is

F-9

recorded when there has been a loss in value of the investment that is other-than-temporary. The Group has not recorded any impairment losses in any of the periods reported.

(k) Property and equipment, net

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the following estimated useful lives:


Leasehold improvements		Over the shorter of the lease term or their estimated useful lives
Furniture, fixtures and equipment		5 years
Motor vehicles		5 years

Gains and losses from the disposal of property and equipment are included in income from operations.

(l) Intangible assets, net

Acquired intangible assets mainly consist of customer contracts and non-compete agreements from business combinations and are recorded at fair value on the acquisition date. Customer contracts are amortized based on the timing of the revenue expected to be derived from the respective customer. Non-compete agreements are amortized ratably over the specified contract term.

(m) Internally developed software

The costs of software for internal use are capitalized in accordance with Statement of Position No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” (“SOP 98-1”). Qualifying costs incurred during the application development stage, which consist primarily of internal labor costs, are capitalized and amortized over the estimated useful life of the asset. All other costs are expensed as incurred. Historically the costs incurred have been immaterial and, as a result, expensed as incurred.

(n) Impairment of long-lived assets

The Group evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss equal to the excess of the carrying amount over the fair value of the assets.

(o) Impairment of goodwill

SFAS No. 142 requires the Group to complete a two-step goodwill impairment test. The first step compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill.

Management performs its annual goodwill impairment test on December 31. No goodwill has been impaired during any of the periods presented.

(p) Income taxes

Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, net operating loss carryforwards and credits by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on the characteristics of the underlying assets and liabilities.

Effective January 1, 2007, the Group adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined in that statement. No significant impact of adopting FIN 48 was noted on the Group’s consolidated financial statements.

F-10

(q) Value added taxes

Shanghai CRIC is subject to value added tax at a rate of 17% on proceeds received from provision of the CRIC subscription services, less any VAT already paid or borne by Shanghai CRIC on the goods or services purchased by it and utilized in the provisions of the CRIC subscription services that have generated the gross sales proceeds. However, pursuant to Certain Policies for Encouraging Software Industry and Integrated Circuits Industry issued in 2000, Shanghai CRIC qualifies as a “software enterprise” and is entitled to a rebate of its net VAT liability to the extent that it exceeds 3% of the actual VAT burden. Such refunds are not treated as taxable income and must be used for funding the Shanghai CRIC’s software research and development. This policy is effective until 2010. The net VAT balance is recorded either in other tax payables or prepaid expenses and other current assets on the face of consolidated balance sheets.

(r) Share-based compensation

The Company accounts for share-based compensation in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). Accordingly, share-based compensation cost is measured on the grant date, based on the fair value of the award, and recognized as an expense over the requisite service period. As required by SFAS 123R, management has made an estimate of expected forfeitures and recognizes compensation cost only for those equity awards expected to vest.

(s) Revenue recognition

The Group recognizes revenues when there is persuasive evidence of an arrangement, service has been rendered, the sales price is fixed or determinable and collectability is reasonably assured. Revenues are recorded, net of sales related taxes.

The Group provides real estate consulting services to customers in relation to land acquisition and property development. In certain instances, the Group agrees to a consulting arrangement wherein payment is contingent upon the delivery of a final product, such as closing a land acquisition transaction or providing a market study report. The Group recognizes revenue under such arrangements upon delivery of the final product, assuming customer acceptance has occurred and the fee is no longer contingent. In other instances, the Group provides services periodically during the development stage of a real estate project, such as monthly market updates. The contractual period for such arrangements is usually between one and twelve months with revenue being recognized ratably over such period.

The Group sells subscriptions to its proprietary CRIC system for which revenues are recognized ratably over the subscription period, which is usually six to twelve months.

When an arrangement includes periodic consulting services and subscriptions for the CRIC system, revenues are recognized ratably over the longer of the consulting or CRIC subscription period. When an arrangement includes project-based consulting services and subscriptions for the CRIC system, the entire arrangement is considered a single unit of account as the Group does not have objective and reliable evidence of fair value for each deliverable. Revenue is recognized based on the revenue recognition model for the final deliverable in the arrangement, which is typically the subscription for the CRIC system which requires ratable recognition over the subscription period. The Group has objective and reliable evidence of the fair value for the CRIC subscription service. As such, upon delivery of the consulting product, the Group defers the fair value of the remaining CRIC subscription and recognizes the residual amount, or the difference between the remaining fair value of the CRIC subscription and the total arrangement fee, as revenue, assuming all other revenue recognition criteria have been met. The residual amount recognized is limited to the cumulative amount due under the terms of the arrangement.

As a subsidiary of E-House, the Group have historically had multiple element arrangements which have included the provision of primary real estate services, payment of which is based on a commission rate that is contingent upon the sale of real estate. The Group has determined that the commission rate for the primary real estate services under these multiple element arrangements has been at or above fair value. As such, the fixed arrangement fees associated with the consulting services and/or subscription for the CRIC system have been recognized in accordance with the preceding paragraph.

The Group generates revenues from real estate advertising design services. The Group recognizes the revenue derived from real estate advertising design services ratably over the specified contract period ranging from three to twelve months.

Deferred revenues are recognized when payments are received in advance of revenue recognition.

(t) Cost of revenue

Cost of revenue primarily consists of costs incurred for developing, maintaining and updating the CRIC database system, which includes cost of data purchased or licensed from third-party sources, personnel related costs and associated equipment depreciation. Cost of revenue also includes fees paid to third parties for the services directly related to advertising design. These costs are expensed in the periods incurred.

(u) Advertising expenses

Advertising expenses are charged to the statements of operations in the period incurred and amounted to $142,388, $124,353 and $1,424,240 for the years ended December 31, 2006, 2007 and 2008, respectively.

F-11

(v) Foreign currency translation

The functional currency of the Company is the United States dollar (“U.S. dollar”) and is used as the reporting currency of the Company. Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollar at the rates of exchange ruling at the balance sheet date. Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as foreign currency translation adjustment and are shown as a separate component of other comprehensive income in the consolidated statements of shareholder’s equity and comprehensive income.

The financial records of certain of the Company’s subsidiaries are maintained in local currencies other than the U.S. dollar, such as Renminbi (“RMB”), which are their functional currencies. Transactions in other currencies are recorded at the rates of exchange prevailing when the transactions occur.

The Group recorded an exchange loss of nil, $502,210 and $1,341,165 for the years ended December 31, 2006, 2007 and 2008, respectively.

(w) Concentration of credit risk

Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Group places its cash and cash equivalents with reputable financial institutions.

The Group regularly reviews the creditworthiness of its customers, but generally does not require collateral or other security from its customers. The Group establishes an allowance for doubtful accounts primarily based on factors surrounding the credit risk of specific customers, including overall relationship with the customer, past and ongoing business relationship, past record and pattern of settling receivables, length of the receivable and any specific information indicating the collectability of the receivables. No allowance for doubtful accounts has been provided during any of the periods presented.

(x) Earnings per share

Basic earnings per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period.

Diluted income per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. There were no dilutive securities for any of the periods presented.

(y) Comprehensive income

Comprehensive income includes all changes in equity except those resulting from investments by owners and distributions to owners. For the years presented, total comprehensive income included net income and foreign currency translation adjustments.

(z) Recently issued accounting pronouncements

In December 2007, the FASB issued SFAS No. 141, Business Combinations: (Revised 2007) (“SFAS 141R”). SFAS 141R is relevant to all transactions or events in which one entity obtains control over one or more other businesses. SFAS 141R requires an acquirer to recognize any assets and noncontrolling interest acquired and liabilities assumed to be measured at fair value as of the acquisition date. Liabilities related to contingent consideration are recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of the consideration may be resolved beyond a reasonable doubt. This revised approach replaces SFAS 141’s cost allocation process in which the cost of an acquisition was allocated to the individual assets acquired and liabilities assumed based on their respective fair value. SFAS 141R requires any acquisition-related costs and restructuring costs to be expensed as incurred as opposed to allocating such costs to the assets acquired and liabilities assumed as previously required by SFAS 141. Under SFAS 141R, an acquirer recognizes liabilities for a restructuring plan in purchase accounting only if the requirements of SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, are met. SFAS 141R allows for the recognition of pre- acquisition contingencies at fair value only if these contingencies are likely to materialize. If this criterion is not met at the acquisition date, then the acquirer accounts for the non-contractual contingency in accordance with recognition criteria set forth under SFAS 5, Accounting for Contingencies, in which case no amount should be recognized in purchase accounting. SFAS 141R is effective as of the beginning of an entity’s first fiscal year that begins after December 15, 2008. The Group adopted SFAS 141R on January 1, 2009 and has accounted for subsequent business combinations accordingly.

On April 1, 2009, the FASB issued FSP FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (“FSP FAS 141(R)-1”), which amends the guidance in SFAS No. 141R, to establish a model for preacquisition contingencies that is similar to the one entities used under Statement 141. Under the FSP, an acquirer is required to recognize at fair value an “asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period.” If the acquisition-date fair value cannot be determined, then the acquirer follows the recognition criteria in Statement 5 and Interpretation 14 to determine whether the contingency should be recognized as of the acquisition date or after it. The FSP is effective for business combinations whose acquisition date is on or after the beginning of the first

F-12

annual reporting period beginning on or after December 15, 2008. The Group adopted FSP FAS 141(R)-1 on January 1, 2009 and has accounted for subsequent business combinations accordingly.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51 (SFAS 160). This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity and should be reported as equity on the financial statements. SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. Furthermore, disclosure of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest is required on the face of the financial statements. SFAS 160 is effective as of the beginning of an entity’s first fiscal year that begins after December 15, 2008. The adoption of SFAS No. 160 on January 1, 2009 resulted in a minority interest reclassification on both the consolidated balance sheets and statements of income, with no other material impact to the Group’s financial position or results of operations.

In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-2 delays the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis, until fiscal years beginning after November 15, 2008. As a result of FSP 157-2, the Group will adopt FAS 157 for its non-financial assets and non-financial liabilities beginning with the first interim period of its fiscal year 2009. The adoption of FAS 157 for the Group’s non-financial assets and non-financial liabilities on January 1, 2009 did not have a material impact on its financial position, results of operations or cash flows.

In October 2008, the FASB issued FSP FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”). FSP 157-3 clarifies the application of SFAS 157 in a market that is not active, and addresses application issues such as the use of internal assumptions when relevant observable data does not exist, the use of observable market information when the market is not active, and the use of market quotes when assessing the relevance of observable and unobservable data. FSP 157-3 is effective for all periods presented in accordance with FAS 157. The adoption of FSP 157-3 did not have a material impact on the Group’s consolidated financial statements or the fair values of its financial assets and liabilities.

On April 9, 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with FASB 157 when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of FSP 157-4 on April 1, 2009 did not have a material impact on the Group’s consolidated financial statements or the fair values of its financial assets and liabilities.

In April 2008, the FASB issued FASB Staff Position FAS 142-3, Determination of the Useful Life of Intangible Assets. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. This FSP is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The guidance for determining the useful life of a recognized intangible asset in this FSP shall be applied prospectively to intangible assets acquired after the effective date. The adoption of FSP FAS 142-3 on January 1, 2009 did not have a material impact on the Group’s consolidated financial statements.

At the November 24, 2008 meeting, the FASB ratified the consensus reached by the Task Force in Issue No. 08-6, Equity Method Investment Accounting Considerations (“EITF 08-6”). Because of the significant changes to the guidance on subsidiary acquisitions and subsidiary equity transactions and the increased use of fair value measurements as a result of SFAS 141(R) and 160, questions have arisen regarding the application of that accounting guidance to equity method investments. EITF 08-6 provides guidance for entities that acquire or hold investments accounted for under the equity method. This issue is effective for transactions occurring in fiscal years and interim periods beginning on or after December 15, 2008. Early adoption is not permitted. The adoption of EITF 08-6 on January 1, 2009 did not have a material impact on the Group’s consolidated financial position and results of operations.

In April 2009, the FASB issued FSP FAS 115-2 and 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2 and FAS 124-2”). The FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The adoption of FSP FAS 115-2 and FAS 124-2 on April 1, 2009 did not have a material impact on the Group’s consolidated financial statements.

In November 2008, the FASB ratifies the consensus reached by the Task Force in EITF Issue 08-7, “Accounting for Defensive Intangible Assets” (“EITF 08-7”). EITF 08-7 requires entities that will acquire a defensive intangible asset after the effective date of SFAS 141R, to account for the acquired intangible asset as a separate unit of accounting and amortize the acquired intangible asset over the period during which the asset would diminish in value. EITF 08-7 is effective for defensive intangible assets acquired in fiscal years beginning on or after December 15, 2008. The adoption of EITF 08-7 on January 1, 2009 did not have a material impact on the Group’s consolidated financial statements.

F-13

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, SFAS 165 provides (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. SFAS 165 is effective prospectively for interim or annual financial periods ending after June 15, 2009. The adoption of SFAS 165 on April 1, 2009 did not have a material impact on the Group’s consolidated financial statements.

In June 2009 the FASB issued SFAS No. 166, “Accounting for Transfers of financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. SFAS 166 will be effective for the Company’s fiscal year beginning January 1, 2010. The adoption of SFAS 166 on April 1, 2009 did not have a material impact on the Group’s consolidated financial statements.

In June 2009 the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 eliminates Interpretation 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also contains a new requirement that any term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in applying Interpretation 46(R)’s provisions. SFAS 167 will be effective for the Group’s fiscal year beginning January 1, 2010. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements.

3. Investments in Affiliated Companies

On February 24, 2008, the Group entered into a joint venture agreement with SINA Corporation (“SINA”) to form China Online Housing Technology Corporation (“China Online Housing”). The Group contributed $2.5 million in cash and a 10-year license to its proprietary CRIC database and SINA contributed $2.5 million in cash and the right to its real estate and home decoration channel operations for a period of 10 years. The Group and SINA hold a 34% and 66% interest in China Online Housing, respectively. The Group recorded an initial investment cost of $4,908,694, including $2.5 million cash contribution, $2,400,951 in the portion of the fair value of the 10-year license to its proprietary CRIC database ascribed to SINA, proportional to its 66% interest, and $7,743 in transaction cost. The Group recorded deferred revenue of $2,400,951, which is being recognized as revenue over the ten-year term of the contributed CRIC database license given the Group’s ongoing obligation to continually maintain and update the content contained within the CRIC database. Deferred revenue is classified as current or non-current depending on when the revenue is expected to be recognized.

This transaction was accounted for using the equity method with the purchase price of China Online Housing allocated as follows:


	Allocated		Amortization
	Value		Period
	$
Cash acquired		1,700,000
Intangible assets
Advertising rights		2,894,775	10 years
Customer contract backlog		313,919	6 months

Total		4,908,694

The initial purchase price resulted in negative goodwill of $325,395, which has been reflected above as a reduction in the recorded amount of intangible assets acquired.

4. Acquisitions of Subsidiaries

To expand their real estate consulting and real estate advertising services, the Group completed the following two acquisitions in 2008:

On September 9, 2008, the Group acquired a 60% interest in Wushi Consolidated (Beijing) Advertising Media Co., Ltd. for $2,678,728. The transaction was accounted for using the purchase method with the purchase price allocated as follows:


	Allocated		Amortization
	Value		Period
	$
Cash acquired		1,759,969
Intangible assets
Customer advertising designing contracts		81,438	3 months
Non-compete agreement		191,424	5 years

F-14


	Allocated			Amortization
	Value			Period
	$
Goodwill		666,257
Deferred tax liabilities		(20,360	)

Total		2,678,728

The goodwill was allocated to the real estate advertising services segment.

On October 14, 2008, the Group purchased a 100% interest in Guangzhou Integrated Residential Building Industry Facility Co., Ltd. for $4,451,118. An additional $2.2 million in cash consideration was contingently payable upon achieving certain earnings targets for the year ending December 31, 2009 and for the six months ending June 30, 2010. Such conditional consideration had not been included in the acquisition cost. The transaction was accounted for using the purchase method, with the purchase price allocated as follows:


	Allocated			Amortization
	Value			Period
	$
Tangible assets acquired		1,217,304
Liability assumed		(1,434,594	)
Intangible assets—Non-compete agreement		1,420,688		5 years
Goodwill		3,602,892
Deferred tax liabilities		(355,172	)

Total		4,451,118

The goodwill was allocated to the real estate information and consulting services segment.

Pro forma results (unaudited)

The following table summarizes unaudited pro forma financial information for the years ended December 31, 2007 and 2008 as if the acquisitions had occurred on January 1, 2007 and 2008, respectively. These pro forma results have been prepared for informational purposes only based on the Group’s best estimate and are not indicative of the results of operations that would have been achieved had the acquisitions occurred as of January 1, 2007 and 2008.


	As of December 31
	2007		2008
	$		$
Total revenues		9,968,712		52,793,468
Net income		1,887,888		21,129,709
Earnings per share:
Basic		0.03		0.30
Diluted		0.03		0.30

5. Property and Equipment, Net

Property and equipment, net consists of the following:


	As of December 31
	2007			2008
	$			$
Leasehold improvements		20,973			265,650
Furniture, fixtures and equipment		578,948			2,133,841
Motor vehicles		—			565,652

Total		599,921			2,965,143
Less: Accumulated depreciation		(95,708	)		(443,953	)

Property and equipment, net		504,213			2,521,190

The Group’s depreciation expenses were $11,728, $60,577 and $274,644 for the years ended December 31, 2006, 2007 and 2008, respectively.

6. Intangible Assets, Net

Intangible assets subject to amortization are comprised of the following:


	As of December 31,
	2007		2008
	$		$
Intangible assets subject to amortization
Customer contracts		—		81,438
Non-compete agreements		—		1,612,112
Computer software licenses		—		1,741

		—		1,695,291

F-15


	As of December 31,
	2007		2008
	$		$
Less: Accumulated amortization
Customer contracts		—		(81,438	)
Non-compete agreements		—		(84,444	)
Computer software licenses		—		(87	)

		—		(165,969	)

Intangible assets subject to amortization, net		—		1,529,322

The Group recorded amortization expense of nil, nil and $165,969 for the years ended December 31, 2006, 2007 and 2008, respectively. The Group expects to record amortization expense of $311,602, $311,602, $311,171, $310,907 and $284,040 for the years ending December 31, 2009, 2010, 2011, 2012 and 2013, respectively.

7. Goodwill

Changes in the carrying amount of goodwill by segment are as follows:


	Real Estate
	Information and		Real Estate
	Consulting		Advertising
	Service		Service
	Segment		Segment		Total
	$		$		$
Balance as of December 31, 2007		—		—		—
Goodwill recognized upon acquisition		3,602,892		666,257		4,269,149

Balance as of December 31, 2008		3,602,892		666,257		4,269,149

8. Income Tax

The provision for income taxes is comprised of the following:


	Years Ended December 31
	2006		2007			2008
	$		$			$
Current Tax
PRC		558,269		404,149			3,976,671
Other		335,948		130,974			848,852

		894,217		535,123			4,825,523

Deferred Tax
PRC		—		(250,124	)		(104,508	)

Income tax expense		894,217		284,999			4,721,015

Cayman Islands and British Virgin Islands

Under the current laws of the Cayman Islands and the British Virgin Islands, the Company and CRIC BVI are not subject to tax on their respective income or capital gains. In addition, the Cayman Islands and the British Virgin Islands do not impose withholding tax on dividend payments.

Hong Kong

The Company’s subsidiaries in Hong Kong is subject to a profit tax at the rate of 17.5% , 17.5% and 16.5% on assessable profit determined under relevant Hong Kong tax regulations for 2006, 2007 and 2008, respectively.

PRC

Prior to January 1, 2008, the Company’s PRC subsidiaries and consolidated VIEs were governed by the Income Tax Law of People’s Republic of China concerning Foreign Investment Enterprises and Foreign Enterprise and the Enterprise Income Regulation (“the old income tax law and rules”). Pursuant to the old income tax law and rules, such PRC entities were generally subject to Enterprise Income tax (“EIT”) at the statutory rate of 33% (30% of state income tax plus 3% local income tax) on PRC taxable income with the exception of Shanghai Real Estate Consultant & Sales (Group) Co., Ltd (“E-House Shanghai”), the main subsidiary of E-House, which was registered in the Pudong New Area of Shanghai, the PRC, and was subject to a 15% preferential income tax rate for the years ended December 31, 2006 and 2007.

On January 1, 2008, a new Enterprise Income Tax Law in China took effect. The new law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises. The new law provides a five-year transition period from its effective date for certain qualifying enterprises that were established before the promulgation date of the new tax law and that were entitled to a preferential tax treatment such as a reduced tax rate or a tax holiday. E-House Shanghai is subject to such a graduated rate schedule, specifically, the applicable rates are 18%, 20%, 22%, 24% and 25% for 2008, 2009, 2010, 2011, 2012 and thereafter, respectively.

F-16

CRIC Shanghai was approved as a high and new technology enterprise under the new law and is therefore subject to a 15% preferential income tax rate for the years from 2008 through 2010.

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined in that statement. FIN 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures.

The Group adopted the provisions of FIN 48 effective January 1, 2007. Based on its FIN 48 analysis documentation, the Group has made its assessment of the level of tax authority for each tax position (including the potential application of interest and penalties) based on the technical merits, and has measured the unrecognized tax benefits associated with the tax positions. The Group had no material uncertain tax positions as of December 31, 2007 and 2008 or material unrecognized tax benefit which would favorably affect the effective income tax rate in future periods for the adoption of FIN 48. The Group classifies interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2008, the amount of interest and penalties related to uncertain tax positions was immaterial.

The Group does not anticipate any significant increases or decreases to its liability for unrecognized tax benefits within the next 12 months.

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined, but an underpayment of tax liability exceeding RMB100,000 (approximately $14,600 under the current exchange rate) is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The Group’s major operating entity, CRIC Shanghai, is therefore subject to examination by the PRC tax authorities from inception through 2008 on both transfer pricing and non-transfer pricing matters.

The principal components of the deferred income tax asset and liabilities are as follows:


	As of December 31,
	2006			2007		2008
	$			$		$
Deferred tax assets:
Accrued salary expenses		—			41,837		25,868
Advertising expenses		—			—		17,206
Net operating loss carryforwards		196,625			218,621		304,766

Gross deferred tax assets		196,625			260,458		347,840

Valuation allowance		(196,625	)		—		—

Net deferred tax assets		—			260,458		347,840

Analysis as:
Current		—			260,458		43,074
Non-current		—			—		304,766

Deferred tax liabilities:
Amortization of intangible and other assets		—			—		338,259

Total deferred tax liabilities		—			—		338,259

Analysis as:
Current		—			—		—
Non-current		—			—		338,259

Movement of the valuation allowance is as follows:


	2006		2007			2008
	$		$			$
Balance as of January 1,		—		196,625			—
Additions		193,439		—			—
Releases		—		(202,113	)		—
Changes due to foreign exchange		3,186		5,488			—

Balance as of December 31,		196,625		—			—

In December 2007, the Group entered into a strategic cooperation agreement with a customer, which the Group estimated, would generate enough profit to utilize all the cumulative losses. As such, the valuation allowance previously provided against the net operating losses in 2006 were fully released in 2007.

Reconciliation between the provision for income tax computed by applying the statutory tax rate to income before income taxes and the actual provision for income taxes is as follows:

F-17


	Year Ended December 31,
	2006			2007			2008
PRC income tax rate		33.00	%		33.00	%		25.00	%
Expenses not deductible for tax purposes		3.75	%		9.26	%		3.40	%
Effect of tax preference		(3.12	)%		(12.57	)%		(9.04	)%
Effect of different tax rate of subsidiary operations in other jurisdiction		(10.31	)%		(12.45	)%		(1.59	)%
Effect of new income tax law		—			3.48	%		—
Valuation allowance movement		6.43	%		(8.60	)%

		29.75	%		12.12	%		17.77	%

As of December 31, 2006, 2007 and 2008, the Group had net operating loss carryforwards of $588,227, $853,887 and $1,219,064, respectively, which will expire if not used between 2011 and 2013.

Undistributed earnings of the Company’s PRC subsidiaries of approximately $22 million at December 31, 2008 are considered to be indefinitely reinvested and, accordingly, no provision for PRC dividend withholding tax has been provided thereon. Upon distribution of those earnings generated after January 1, 2008, in the form of dividends or otherwise, the Group would be subject to the then applicable PRC tax laws and regulations. For distribution of those earnings generated before January 1, 2008, the distributions are exempt from PRC withholding tax.

9. Share-Based Compensation

E-House Holdings’s Share Incentive Plan (“the E-House Plan”)

During the year ended December 31, 2006, E-House Holdings adopted the E-House plan, which allows E-House Holdings to offer a variety of share-based incentive awards to employees, officers, directors and individual consultants who render services to E-House. Under the plan, E-House Holdings authorized 3,636,364 ordinary shares, or 5% of the then total shares outstanding of E-House Holdings, to grant as options or restricted shares over a three-year period. Options have a ten-year life. Share options granted under the E-House Plan can be settled by the employee either by cash or net settled by shares.

On November 28, 2006, E-House Holdings granted options for the purchase of 436,364 shares to an employee. The options entitle the option holder to acquire ordinary shares of E-House Holdings at an exercise price of $3.30 per share. The options expire ten years from the date of grant, with one-third of the options vesting on each of the following three grant date anniversaries.

On May 16, 2007, E-House Holdings granted 436,364 restricted shares to replace the above mentioned option award granted under the E-House Plan. The purchase price of the restricted shares was $3.30 per share, which was the exercise price of the option that was replaced. The vesting and other requirements imposed on these restricted shares were the same as under the original option grant. This modification did not result in any incremental compensation expense. Cash received from the purchase of the restricted shares was $1,440,001. 148,364 restricted shares were vested on November 28, 2007. The cash received from the purchase of the restricted shares relating to the unvested portion was recorded as a payable due to related parties as of December 31, 2007.

In 2007 and 2008, E-House Holdings granted options to certain employees, senior management and independent directors for the purchase of 1,215,000 and 1,356,000 ordinary shares, respectively. The options entitle the option holders to acquire ordinary shares of E-House Holdings at the exercise price ranging from $5.50 to $12.50 per share in 2007, and $9.53 to $24.30 per share in 2008, based on the fair market value of the ordinary shares at each of the dates of grant. Under the terms of each option plan, options expire 10 years from the date of grant and generally vest over three years.

E-House’s management has used the binomial model to estimate the fair value of the options. The assumptions used in the binomial model were:


	2006			2007			2008
Average risk-free rate of return		4.50	%		4.76	%		3.98	%
Contractual life of option	10 years			10 years			10 years
Average estimated volatility rate		49.0	%		62.7	%		59.3	%
Average dividend yield		0.00	%		0.00	%		0.00	%

On November 7, 2008, E-House Holdings modified the exercise price and vesting schedule of 2,014,166 outstanding options previously granted between July 23 2007 to August 2, 2008. The exercise price for these options was reduced from between $9.53 to $24.30 to $5.37. The vesting schedule of 1,794,166 of the 2,014,166 options was extended such that the options previously granted in 2007 and 2008 vest ratably over the two and three years subsequent to the modification date, respectively.

In connection with the above modifications, incremental compensation cost was measured as the excess of the fair value of the modified options over the fair value of the original options immediately before their terms were modified, measured based on the share price and other pertinent factors at the modification date. Incremental compensation cost of the vested options amounting to $229,110 was immediately expensed. For those unvested or partially vested options, E-House will recognize

F-18

incremental cost of $1,643,541 and the unrecognized compensation cost from the initial grant date over the modified requisite service period.

The total fair value of options vested, which reflected the modification of the options, was nil, nil and $2,167,030 during the years ended December 31, 2006, 2007 and 2008, respectively.

The weighted-average grant-date fair value of options granted during the years ended December 31, 2006, 2007 and 2008 was $1.39, $3.80 and $7.47 per share, respectively. The weighted-average modification date fair value of modified options in 2008 was $2.44. E-House recorded compensation expense of $16,806, $751,222 and $4,399,831 for the years ended December 31, 2006, 2007 and 2008. There were no options exercised during the years ended December 31, 2006, 2007 and 2008, respectively.

A summary of options activity under the E-House Plan as of December 31, 2008 and changes for the year then ended is presented below and all the amounts reflect the modification of exercise prices of options.


						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
	Number of			Exercise		Contractual	Intrinsic
	Options			Price		Term	Value of Options
				$			$
Outstanding, as of January 1, 2008		1,215,000			5.40
Granted		1,356,000			5.37
Exercised		—			—
Forfeited		(256,834	)		5.37
Cancelled		—			—
Outstanding, as of December 31, 2008		2,314,166			5.39	8.9 years		6,278,673
Vested and expected to vest as of December 31, 2008		2,126,589			5.39	8.9 years		5,766,588
Exercisable as of December 31, 2008		387,484			5.40	8.5 years		1,044,831

As of December 31, 2008, there was $10,943,400 of total unrecognized compensation expense related to unvested share options granted under the E-House Plan. That cost is expected to be recognized over a weighted-average period of 2.5 years.

A summary of restricted share activity under the E-House Plan as of December 31, 2007 and 2008 and changes in the periods is presented below:


	No. of			Weighted Average
	Restricted Shares			Grant-Date Fair Value
				$
Unvested as of January 1, 2008		288,000			1.39
Granted		—			—
Vested		(144,000	)		1.39
Forfeited		—			—

Unvested as of December 31, 2008		144,000			1.39

The total fair value of restricted shares vested in 2007 and 2008 was $206,226 and $200,160, respectively.

As of December 31, 2008, there was $184,861 of total unrecognized compensation expense related to restricted shares granted under the E-House Plan. That cost is expected to be recognized over a weighted-average period of 0.92 years.

The weighted-average grant-date fair value of restricted shares granted during the year ended December 31, 2007 was $1.39 per share. E-House recorded compensation expense of $201,667 and $201,667 for the years ended December 31, 2007 and 2008. There were no restricted shares granted during the year ended December 31, 2007 and 2008.

The share-based compensation expense recorded by the Group was $1,619, $172,053 and $1,253,890 for the years ended December 31, 2006, 2007 and 2008, respectively. These expenses are recorded in selling, general and administrative expenses and included share options granted by E-house to the Group’s employees and options to E-House’s senior management that were allocated to the Group.

The Company’s Share Incentive Plan (“the CRIC Plan”)

On September 9, 2008, the Company adopted the CRIC Plan to provide additional incentives to employees, directors and consultants who render services to CRIC. Under the CRIC Plan, the maximum number of shares that may be issued shall be 15% of the total outstanding shares of the Company on an as-converted basis assuming all options outstanding were converted into shares as of the effective date of the CRIC Plan, plus an additional number of shares to be added on each of the third, sixth and ninth anniversary of the effective date of the CRIC Plan.

F-19

10. Employee Benefit Plans

The Company’s PRC subsidiaries are required by law to contribute a certain percentages of applicable salaries for retirement benefit, medical insurance benefits, housing funds, unemployment and other statutory benefits. The PRC government is directly responsible for the payments of such benefits. The Group contributed $59,116, $201,384 and $1,337,295 for the years ended December 31, 2006, 2007 and 2008, respectively, for such benefits.

11. Distribution of Profits

Pursuant to laws applicable to entities incorporated in the PRC, the Company’s subsidiaries must make appropriation from after-tax profit to non-distributable reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires annual appropriations of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC at each year-end) until such cumulative appropriation reaches 50% of the registered capital; the other fund appropriations are at the Group’s discretion. These reserve funds can only be used for specific purposes of enterprise expansion and staff bonus and welfare and are not distributable as cash dividends. The amount of the reserve fund for the Group as of December 31, 2007 and 2008 were nil and $1,838,675, respectively.

In addition, the share capital of the Company’s PRC subsidiaries of $30,000,000 and $33,000,000 as at December 31, 2007 and 2008, respectively, was considered restricted due to restrictions on the distribution of share capital.

As a result of these PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets, including general reserve and registered capital, either in the form of dividends, loans or advances. Such restricted portion amounted to $34,838,675 as of December 31, 2008.

12. Segment Information

The Group uses the management approach to determine operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision makers (“CODM”) for making decisions, allocating resources and assessing performance. The Group’s CODM has been identified as the chief executive officer, who review consolidated and segment results when making decisions about allocating resources and assessing performance of the Group.

The Group has two operating segments: 1) real estate information and consulting services and 2) real estate advertising services. The Group’s CODM reviews net revenue, cost of sales, operating expenses, income from operations and net income for each operating segment and does not review balance sheet information. For the years ended December 31, 2006 and 2007, the real estate information and consulting services was the Group’s sole operating segment. The real estate advertising service segment commenced in 2008. Corporate expenses such as selling, general and administrative expenses, and interest income are not allocated among segments and are recorded as non-allocated items.

The following table summarizes the selected revenue and expense information for each operating segment:


	Real Estate			Real Estate
	Information			Advertising
	and Consulting			Service
2008	Service Segment			Segment			Non-Allocated			Total
	$			$			$			$
Revenues from external customers		49,116,061			932,469			—			50,048,530
Cost of revenues		(2,855,398	)		(41,849	)					(2,897,247	)
Selling, general and administrative expenses		(13,776,504	)		(1,865,669	)		(4,177,700	)		(19,819,873	)

Income (loss) from operations		32,484,159			(975,049	)		(4,177,700	)		27,331,410
Interest income		415,512			3,779			1,226			420,517
Foreign exchange loss		(1,323,858	)		—			(17,307	)		(1,341,165	)

Income (loss) before taxes and equity in an associate		31,575,813			(971,270	)		(4,193,781	)		26,410,762
Income tax benefit (expense)		(4,917,503	)		196,488			—			(4,721,015	)

Income (loss) before equity in affiliates		26,658,310			(774,782	)		(4,193,781	)		21,689,747
Income from investment in affiliates		—			—			153,700			153,700

Net income (loss)		26,658,310			(774,782	)		(4,040,081	)		21,843,447

Geographic

Substantially all of the Group’s revenues from external customers and long-lived assets are located in the PRC.

Service Lines

Details of revenues to external customers of the Group’s various service lines are as follows:

F-20


	Years Ended December 31
	2006		2007		2008
Real estate consulting service		5,382,216		7,907,707		46,940,567
Real estate information service		12,637		287,458		2,175,494
Real estate advertising services		—		—		932,469

Total revenues		5,394,853		8,195,165		50,048,530

Major customers

Details of the revenues for customers accounting for 10% or more of total revenues are as follows:

Years Ended December 31,

2006

2007

2008

Customer A

28,321,400

Customer B

7,788,385

Customer C

5,144,560

Customer D

1,700,826

1,774,818

Customer E

1,690,435

Customer F

1,690,435

Customer G

1,919,703


*		indicates the revenue from these customers was less than 10% in the stated periods.

Details of the accounts receivable from customers accounting for 10% or more of total accounts receivable are as follows:


	Years Ended December 31,
	2007		2008
	$		$
Customer A		*		7,666,854
Customer B		*		8,047,270
Customer H		177,481		*


*		indicates the accounts receivables from the customer was less than 10% as at the stated year end.

13. Related Party Balances and Transactions

These consolidated financial statements include transactions with E-House and its subsidiaries. Furthermore, E-House provided certain corporate services for the consolidated financial statement periods presented. During the years ended December 31, 2006, 2007 and the Group waived net receivables from E-House and its consolidated subsidiaries of $456,404, $4,343,847 respectively, and have recorded such amounts as adjustments to equity. During the year ended December 31, 2008, E-House waived net receivables from the Group of $2,591,770, which the Group has reflected as a capital contribution.

During the years ended December 31, 2006, 2007 and 2008, E-House loaned $5,000,000, $25,000,000 and $8,400,000, respectively, to fund capital injections into CRIC’s PRC subsidiaries. Such amounts have been waived by E-House and have been reflected as capital contributions as of the date such loans were originally made.

The table below sets forth major related parties and their relationships with the Group:


Company Name		Relationship with the Group
E-House		Under common control by E-House Holdings
Shanghai JinYue Real Estate Development Co., Ltd.		Mr. Xin Zhou, chairman of CRIC, is a director of the entity

During the years ended December 31, 2006, 2007 and 2008, significant related party transactions were as follows:

Transactions with E-House


	Years Ended December 31,
	2006		2007		2008
	$		$		$
Corporate selling, general and administrative expenses allocated from E-House (Note 1)		321,042		624,654		3,516,284
Information services provided to E-House		—		98,568		—
Advertising services provided to E-House		—		—		169,928

The advertising services provided to E-house represents advertising services provided to E-house from Wushi Consolidated (Beijing) Advertising Media Co., Ltd.

F-21

The transactions are measured at the amount of consideration established and agreed to by the related parties, which approximate amounts charged to third parties. Expense allocations from E-House are based on a variety of factors and are dependent on the nature of the expenses being allocated.

As of December 31, 2007, amounts due from related parties was $2,160,269, which represents loans made to E-House for general working capital requirements. The loan was interest free and fully repaid in 2008.

As at December 31, 2007 and 2008, amounts due to related parties is comprised of the following:


	As of December 31,
	2007		2008
	$		$
Shanghai JinYue Real Estate Development Co., Ltd.		—		146,314
E-House		100		5,326,545

Total		100		5,472,859

The amount due to Shanghai JinYue Real Estate Development Co., Ltd. represents amounts paid on behalf of the Group to fund Tian Zhuo’s capital requirements. The Group repaid such amounts in March 2009.

The amount due to E-House as of December 31, 2008 reflects prepayments for real estate advertising placements on behalf of the Group by E-House. The balance is interest free and settleable on demand.

The rollforward of the intercompany receivable balance with E-House for the years ended December 31, 2006, 2007 and 2008 is as follows:


	Year Ended December 31,
	2006			2007			2008
Balance at January 1		—			2,949,470			2,160,269
Loans granted to E-House		2,949,470			—			—
Collection of loans granted to E-House		—			(887,769	)		(2,061,701	)
Loans received from E-House		(5,000,000	)		(25,000,000	)		(8,400,000	)
Corporate expenses allocated from E-House		(321,042	)		(624,654	)		(3,516,284	)
Group revenues, net of expenses, collected by E-House		777,446			4,968,501			924,514
Related party balance waivers		4,543,596			20,656,153			10,991,770
Service provided to E-House		—			98,568			169,928
Payments received for services		—			—			(268,496	)

Balance at December 31		2,949,470			2,160,269			—

14. Commitments and contingencies

a) Operating lease commitments

The Group has operating lease agreements principally for its office properties in the PRC. Such leases have remaining terms ranging from six to 60 months and are renewable upon negotiation. Rental expense was $20,049, $134,030 and $833,976 for the years ended December 31, 2006, 2007 and 2008, respectively.

Future minimum lease payments under non-cancelable operating lease agreements at December 31, 2008 were as follows:


Year Ending December 31	$
2009		1,806,723
2010		1,099,835
2011		671,336
2012		147,522
2013		6,158

Total		3,731,574

(b) Contingencies

The Group is subject to claims and legal proceedings that arise in the ordinary course of its business. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be decided unfavorably to the Group. The Group does not believe that any of these matters will have a material adverse affect on its business, assets or operations.

15. Subsequent Events

On January 1 2009, the Company, granted 5,569,000 and 431,000 options to purchase the Company’s ordinary shares to certain of the Group’s employees and employees of E-House, respectively, at an exercise price of $3.00 per share, pursuant to the CRIC Plan. The options expire ten years from the date of grant and vest at each grant date anniversary over a period of one

F-22

to four years. The weighted average grant-date fair value of the options was $2.08 per share. The Group will recognize a total $10,482,736 of compensation cost for those options expected to vest over the requisite service period.

In March, 2009, Tianzhuo failed to reach an agreement with a Shanghai newspaper agency on its intended purchase of the newspaper advertising slots. As a result, the Group’s deposit of $3,218,314 will be returned to the Group, of which $1,609,157 had been received as of March 24, 2009.

In April, 2009, CRIC BVI acquired Portal Overseas Limited, a company incorporated in the British Virgin Islands, for $7,193,030. The acquisition represents an acquisition of assets, the major asset of which is a 20-year prepaid operating lease of an office building in Shanghai, which the Group uses as its corporate office.

On July 23, 2009, the Company entered into a share purchase agreement with SINA, pursuant to which, the Group agreed to acquire SINA’s 66% equity interest in China Online Housing, in exchange for issuing the Company’s ordinary shares (the “Subscription Shares”) to SINA upon the closing of this offering, which will give SINA a 39% equity interest in the Company (excluding (i) any of the Company’ shares to be issued in the IPO and (ii) any of the Company’s shares to be issued upon exercise, conversion or exchange of options or other securities). The consummation of this offering will be considered the closing date of the transaction with SINA. The purchase price will be based on the initial public offering price.

On July 27, 2009, the Company entered into agreements with E-House with respect to various ongoing relationships between E-House and the Group. These include a master transaction agreement, an onshore transitional services agreement, an offshore transitional services agreement, a non-competition agreement, a consulting and services agreement relating to certain services to be provided by the Group to E-House, a consulting and services agreement relating to certain services to be provided by E-House to the Group, and a registration rights agreement.

On July 15, 2009, the Company granted 790,000 and 274,500 options to purchase its ordinary shares to certain of the Group’s employees and E-House’s employees, respectively, at an exercise price of $6.00 per share, pursuant to the CRIC plan. On July 30, 2009, the Company granted 300,000 options to purchase its ordinary shares to certain of the Group’s employees at an exercise price of $6.00 per share, pursuant to the CRIC plan. The options expire ten years from the date of grant and vest ratably at each grant date anniversary over a period of one to four years. The weighted average grant date fair value of the options was $5.12 per share and $5.62 per share for the options granted on July 15, 2009 and July 30, 2009, respectively. Total estimated compensation cost for those options expected to vest of $6.17 million will be recognized over the requisite service period, which is approximately one to four years.

On September 1, 2009, the Company changed its name from CRIC Holdings Limited to China Real Estate Information Corporation.

On September 24, 2009, the Company granted 1,327,500 options to purchase its ordinary shares to certain of the Group’s employees and E-House’s employees, respectively, at an exercise price of $8.00 per share, pursuant to CRIC plan. The options expire ten years from the date of grant and vest ratably at each grant date anniversary over a period of two to four years.

On July 22, 2009, the Company sold a 12.35% ownership interest in its wholly-owned subsidiary, E-house (China) Information Technology Service Limited, whose primary activities relate to holding a 34% equity interest in China Online Housing, to Modern Information Ltd. for $882,522.

On September 28, 2009, the Company issued 21,522,222 additional ordinary shares at par value to E-House Holdings. This issuance has been retroactively reflected for all periods presented herein.

On September 28, 2009, E-house (China) Information Technology Service Limited transferred its 34% ownership interest in China Online Housing to the Company. As a result, the Company issued 3,033,333 ordinary shares at par value to Modern Information Ltd. in exchange for its indirect equity interest in China Online Housing.

Subsequent events have been updated through September 29, 2009.

F-23

SCHEDULE 1
CHINA REAL ESTATE INFORMATION CORPORATION
BALANCE SHEET
(In U.S. dollar except for share data)


	December 31
	2008
	$
ASSETS
Current assets:
Cash and cash equivalents		142

Total current assets		142
Investment in subsidiaries		65,659,276

TOTAL ASSETS		65,659,418

LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Amounts due to related parties		3,621

Total current liabilities		3,621

Shareholder’s equity:
Ordinary share ($0.0002 par value): 250,000,000 shares issued authorized, 71,522,222 and 71,522,222 shares issued and outstanding as of December 31, 2007 and 2008, respectively		14,304
Additional paid-in capital		40,991,770
Retained earnings		20,956,173
Accumulated other comprehensive income		3,707,854
Subscription receivable		(14,304	)

Total shareholder’s equity		65,655,797

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY		65,659,418

F-24

CHINA REAL ESTATE INFORMATION CORPORATION
STATEMENT OF OPERATIONS
(In U.S. dollar)


	Period from
	August 22, 2008
	(Date of Inception) to
	December 31, 2008
	$
Total revenues		—
Cost of revenues		—
Selling, general and administrative expenses		(3,368	)

Income from operations		(3,368	)
Other expense		(11	)
Income tax expense		—

Loss before equity in subsidiaries		(3,379	)
Equity in earnings of subsidiaries		3,389,791

Net income		3,386,412

CHINA REAL ESTATE INFORMATION CORPORATION
STATEMENT OF CASH FLOWS
(In U.S. dollar)


	Period from
	August 22, 2008
	(Date of Inception) to
	December 31, 2008
	$
Operating activities:
Net income		3,386,412
Adjustments to reconcile net income to net cash used in operating activities:
Equity in earnings of subsidiaries		(3,389,791	)
Changes in operating assets and liabilities:
Amounts due to related parties		3,521

Net cash used in operating activities		142
Cash and cash equivalents at the beginning of the year		—

Cash and cash equivalents at the end of the year		142

Supplemental disclosures of non-cash activities:
Net contribution received by subsidiaries from E-House		62,269,485

F-25

CHINA REAL ESTATE INFORMATION CORPORATION
NOTES TO SCHEDULE 1

Schedule 1 has been provided pursuant to the requirements of Rule 12-04(a) and 4-08(e) (3) of Regulation S-X, which require condensed financial information as to financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated and unconsolidated subsidiaries together exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. As of December 31, 2008, approximately $34,838,675 is not available for distribution and, as such, the condensed financial information of the Company has been presented for the period from August 22, 2008 (date of inception) to December 31, 2008.

F-26

Appendix 1

Entities included in the consolidated financial statements

The following table sets forth information concerning entities included in the Company:


			Percentage of
	Date of	Place of	ownership
	incorporation	incorporation	(%)
CRIC (China) Information Technology Co., Ltd.,	April 26, 2006	BVI		100
Shanghai CRIC Information Technology Co., Ltd.	July 3, 2006	PRC		100
E-House (China) Information Technology Service Limited	January 15, 2008	BVI		100
Hong Kong CRIC Information Technology Company Limited	February 25, 2008	Hong Kong		100
Shanghai CRIC Software Technology Co., Ltd.	June 13, 2008	PRC		100
Richpoint Overseas Ltd.	April 7, 2008	BVI		85
CRIC Information Technology Ltd.	May 23, 2008	Hong Kong		85
Wuhan CRIC Information Technology Co., Ltd.	June 19, 2008	PRC		100
Chengdu CRIC Information Technology Co., Ltd.	April 21, 2008	PRC		100
Shanghai Tian Zhuo Advertising Co., Ltd.	February 27, 2008	PRC	VIE
Shanghai Landpro Advertising Design Co., Ltd.	December 19, 2008	PRC		100*
Guangzhou Integrated Residential Building Industry Facility Co., Ltd.	July 15, 2004	PRC		100*
Wushi Consolidated (Beijing) Advertising Media Co., Ltd.	July 28, 2008	PRC		60


*:		Wholly owned subsidiaries of Shanghai Tian Zhuo Advertising Co., Ltd.

F-27

Exhibit 99.4

China Real Estate Information Corporation

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2008 and 2009


Unaudited Condensed Consolidated Balance Sheets as of June 30, 2009		F-2
Unaudited Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2008 and 2009		F-3
Unaudited Condensed Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the Six Months Ended June 30, 2008 and 2009		F-4
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2009		F-5
Notes to Unaudited Condensed Consolidated Financial Statements		F-6
Appendix 1 — Entities included in the unaudited condensed consolidated financial statements		F-21

CHINA REAL ESTATE INFORMATION CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollar except for share data)


	As of June 30,
	2009
	$
ASSETS
Current assets:
Cash and cash equivalents		51,849,600
Unbilled accounts receivable		7,763,416
Accounts receivable, net of allowance for doubtful accounts of nil as of June 30, 2009		5,414,988
Advance payment for advertising placement		2,313,885
Prepaid expenses and other current assets		4,347,997

Total current assets		71,689,886
Property and equipment, net		5,956,943
Intangible assets, net		3,777,997
Goodwill		4,269,149
Investment in affiliates		5,447,699
Advance payment for advertising placement		4,001,664
Advance payment for properties		7,791,586
Prepaid rent		4,182,295
Deferred tax assets—non-current		625,048

TOTAL ASSETS		107,742,267

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		1,427,732
Accrued payroll and welfare expenses		1,884,448
Income tax payable		4,468,571
Other tax payable		1,174,186
Amounts due to related parties		11,586,693
Other current liabilities		3,869,652

Total current liabilities		24,411,282
Deferred revenue—non-current		1,920,761
Other non-current liabilities		1,585,496

Total liabilities		27,917,539

Commitments and contingencies (Note 14)
Shareholders’ equity:
Ordinary shares ($0.0002 par value): 250,000,000 shares authorized, and 71,522,222 shares issued and outstanding as of June 30, 2009		14,304
Additional paid-in capital		43,456,743
Retained earnings		31,903,135
Accumulated other comprehensive income		3,674,923
Subscription receivable		(4,304	)

Total CRIC shareholders’ equity		79,044,801
Noncontrolling interests		779,927

Total equity		79,824,728

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		107,742,267

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

F-2

CHINA REAL ESTATE INFORMATION CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In U.S. dollar except for share data)


	Six Months Ended June 30,
	2008			2009
	$			$
Total revenues		19,277,675			31,200,105
Cost of revenues		(1,795,872	)		(3,381,276	)
Selling, general and administrative expenses		(7,503,927	)		(15,611,011	)

Income from operations		9,977,876			12,207,818
Other income (expense):
Interest income		156,141			96,423
Foreign exchange loss		(1,196,024	)		(22,007	)

Income before taxes and equity in affiliates		8,937,993			12,282,234
Income tax expense		(1,561,586	)		(2,021,892	)

Income before equity in affiliates		7,376,407			10,260,342
Income (loss) from equity in affiliates		(151,180	)		385,305

Net income		7,225,227			10,645,647
Net loss attributable to noncontrolling interest		813			355,092

Net income attributable to CRIC		7,226,040			11,000,739

Earnings per share:
Basic	$	0.10		$	0.15
Diluted	$	0.10		$	0.15
Shares used in computation:
Basic		71,522,222			71,522,222
Diluted		71,522,222			71,524,954

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

F-3

CHINA REAL ESTATE INFORMATION CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
(In U.S. dollar)


	CRIC Common Shareholders
										Accumulated
					Additional					Other										Total
					Paid-in		Retained			Comprehensive		Subscription			Noncontrolling			Total		Comprehensive
	Ordinary Shares				Capital		Earnings			Income		Receivables			Interests			Equity		Income
	Number		$		$		$			$		$			$			$		$
Balance at January 1, 2008		71,522,222		14,304		30,000,000		(1,205,488	)		923,501		(14,304	)		—			29,718,013		—
Capital contribution		—		—		—		—			—		—			269			269		—
Net income (loss)		—		—		—		7,226,040			—		—			(813	)		7,225,227		7,225,227
Contribution from E-House		—		—		1,197,851		—			—		—			—			1,197,851		—
Cash contribution from E-House		—		—		2,500,000		—			—		—			—			2,500,000		—
Foreign currency translation adjustments		—		—		—		—			2,191,237		—			—			2,191,237		2,191,237

Balance at June 30, 2008		71,522,222		14,304		33,697,851		6,020,552			3,114,738		(14,304	)		(544	)		42,832,597		9,416,464


	CRIC Common Shareholders
										Accumulated
					Additional					Other												Total
					Paid-in		Retained			Comprehensive			Subscription			Noncontrolling			Total			Comprehensive
	Ordinary Shares				Capital		Earnings			Income			Receivables			Interests			Equity			Income
	Number		$		$		$			$			$			$			$			$
Balance at January 1, 2009		71,522,222		14,304		40,991,770		20,956,173			3,707,854			(14,304	)		855,368			66,511,165			—
Capital contribution		—		—		—		—			—			—			292,744			292,744			—
Collection of subscription receivables		—		—		—		—			—			10,000			—			10,000			—
Net income (loss)		—		—		—		11,000,739			—			—			(355,092	)		10,645,647			10,645,647
Share-based compensation		—		—		1,404,627		(53,777	)		—			—			—			1,350,850			—
Contribution from E-House		—		—		1,060,346		—			—			—			—			1,060,346			—
Foreign currency translation adjustments		—		—		—		—			(32,931	)		—			(13,093	)		(46,024	)		(46,024	)

Balance at June 30, 2009		71,522,222		14,304		43,456,743		31,903,135			3,674,923			(4,304	)		779,927			79,824,728			10,599,623

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

F-4

CHINA REAL ESTATE INFORMATION CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollar)


	Six Months Ended June 30,
	2008			2009
	$			$
Operating activities:
Net income		7,225,227			10,645,647
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		86,371			598,730
Income (loss) from investment in affiliates		151,180			(385,305	)
Gain on disposal of property, plant and equipment		—			(18,815	)
Share based compensation		—			1,350,850
Changes in operating assets and liabilities:
Accounts receivable		(2,650,362	)		10,757,434
Amounts due from related parties		1,296,419			1,060,346
Advance payment for advertising placement		(2,915,840	)		415,490
Prepaid expenses and other current assets		(243,797	)		2,829,553
Accounts payable		788,717			917,243
Accrued payroll and welfare expenses		602,360			892,185
Income tax payable		1,191,815			475,133
Other tax payable		129,561			514,137
Other current liabilities		187,848			(3,583,376	)
Other non-current liabilities		—			1,281,063
Deferred tax		260,459			(354,092	)

Net cash provided by operating activities		6,109,958			27,396,223

Investing activities:
Purchases of property and equipment		(8,518,087	)		(679,341	)
Purchase of subsidiaries, net of cash acquired		—			(7,247,234	)
Investment in affiliates		(9,789,600	)		—
Proceeds from disposal of property and equipment		—			221,825
Collection of loans from related parties		2,061,701			—

Net cash used in investing activities		(16,245,986	)		(7,704,750	)

Financing activities:
Contribution from noncontrolling interest		270			292,744
Net proceeds from capital contribution		—			10,000
Proceeds of loans from related parties		10,687,184			6,050,395
Contribution from E-House		2,500,000			—

Net cash provided by financing activities		13,187,454			6,353,139
Effect of exchange rate changes		1,193,683			13,750

Net increase in cash and cash equivalents		4,245,109			26,058,362
Cash and cash equivalents at the beginning of the period		26,411,473			25,791,238

Cash and cash equivalents at the end of the period		30,656,582			51,849,600

Supplemental disclosure of cash flow information:
Income taxes paid		—			3,160,823
Related party loans converted to equity		2,500,000			—
Related party receivable paid as dividend		1,197,851			1,060,346

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

F-5

CHINA REAL ESTATE INFORMATION CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2009
(In U.S. dollar)

1. Organization and Principal Activities

E-House Holdings transferred all of the outstanding shares of CRIC BVI to CRIC in October 2008. The restructuring process has been accounted for as a reorganization of entities under common control.

As of June 30, 2009, all consolidated subsidiaries of the Company are included in Appendix 1.

The consolidated financial statements include the Group’s direct expenses as well as allocations for various selling, general and administrative expenses of E-House that are not directly related to real estate information and consulting services or real estate advertising services. These expenses consist primarily of share-based compensation expenses of senior management and shared marketing and management expenses including marketing, finance, legal, technology, human resources, administration and internal audit. These allocations were made using a proportional cost allocation method and were based on revenues, expenses and headcount as well as estimates of actual time spent on the provision of services attributable to the Group. Management believes these allocations are reasonable. Total selling, general and administrative expenses allocated from E-House are $1,357,493 and $2,022,712 for the six months ended June 30, 2008 and 2009, respectively. Income tax liability is calculated based on a separate return basis as if the Group had filed a separate tax return.

F-6

2. Summary of Principal Accounting Policies

(a) Basis of presentation

The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission, regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Company’s consolidated financial statements as of and for the three years in the period ended December 31, 2008.

(b) Basis of consolidation

(c) Use of estimates

(d) Fair value of financial instruments

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair value measurements” (“SFAS 157”) on January 1, 2008 for all financial assets and liabilities that under other accounting pronouncements require or permit fair value measurements and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosure about fair value measurements.

SAFS 157 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Group does not have any financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The adoption of SFAS 157 on January 1, 2009 for nonfinancial assets and nonfinancial liabilities did not have a material impact on the Group’s consolidated Financial Statements.

F-7

The carrying amount of cash, accounts receivable, current portion of advance payment for advertising placement, prepaid expenses and other current assets, accounts payable, other current liabilities and amounts due from/to related parties approximates fair value due to their short-term nature.

The fair value of advance payment for advertising placement, non-current potion was $3,670,313 as at June 30, 2009 based on discounted cash flow.

(e) Business combinations

(f) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.

(g) Unbilled accounts receivable

(h) Advance Payment for Advertising Placement

In December, 2008, the Group prepaid $6,731,039 to certain Shanghai newspapers for real estate advertising placements over a three-year period. $415,490 was utilized for the six months ended June 30, 2009.

(i) Advance Payment for Properties, Non-current Portion

In May 2008, the Group prepaid $7,791,586 for an office building, which the Group intended to use as its corporate office. In April 2009, the Group leased another office building as its corporate office through the acquisition of Portal Overseas Limited. The Group intends to sell the property for which they made the prepayment upon receipt of the property title.

(j) Investment in affiliates

(k) Property and equipment, net

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the following estimated useful lives:


Leasehold improvements		Over the shorter of the lease term or their estimated useful lives
Furniture, fixtures and equipment		5 years
Motor vehicles		5 years

Gains and losses from the disposal of property and equipment are included in income from operations.

(l) Intangible assets, net

Acquired intangible assets, net mainly consists of customer contracts, non-compete agreements and favorable lease term from business combinations and are recorded at fair value on the acquisition date. Customer contracts are amortized based on the timing of the revenue expected to be derived from the respective customer. Non-compete agreements are amortized ratably over the specified contract term. The favorable lease is amortized ratably over the lease term.

(m) Internally developed software

F-8

(n) Impairment of long-lived assets

(o) Impairment of goodwill

Management performs its annual goodwill impairment test on December 31. No goodwill has been impaired during any of the periods presented.

(p) Income taxes

(q) Value added taxes

The Company’s PRC subsidiaries are subject to value added tax at a rate of 17% on proceeds received from provision of the CRIC subscription service, less any VAT already paid or borne by the taxpayer on the goods or services purchased by it and utilized in the provision of the CRIC subscription services that have generated the gross sales proceeds. However, pursuant to Certain Policies for Encouraging Software Industry and Integrated Circuits Industry issued in 2000, Shanghai CRIC qualifies as a “software enterprise” and is entitled to a rebate of its net VAT liability to the extent that it exceeds 3% of the actual VAT burden. Such refunds are not treated as taxable income and must be used for funding the Company’s software research and development and the expansion of its production capacity. This policy is effective until 2010. The net VAT balance is recorded either in accrued expenses and other payables or prepaid expenses and other current assets on the face of consolidated balance sheets.

(r) Share-based compensation

F-9

(s) Revenue recognition

The Group provides real estate consulting services to customers in relation to land acquisition and property development. In certain instances, the Group agrees to a consulting arrangement wherein payment is contingent upon the delivery of a final product, such as closing a land acquisition transaction or providing a market study report. The group recognizes revenue under such arrangement upon delivery of the final product, assuming customer acceptance has occurred and the fee is no longer contingent. In other instances, the Group provides services periodically during the development stage of a real estate project, such as monthly market updates. The contractual period for such arrangements usually between one and twelve months with revenue being recognized ratably over such period.

The Group sells subscriptions to its proprietary CRIC system for which revenues are recognized ratably over the subscription period, which is usually six to twelve months.

The Group provides advertising sales services in which it acquires advertising space and subsequently sells such space to its real estate customers. Revenues under such arrangements are recognized when the related advertisement is placed. The Group recognizes advertising sales revenue on a gross basis because the Group acts as principal and is the primary obligator in the arrangement.

Deferred revenues are recognized when payments are received in advance of revenue recognition.

(t) Cost of revenue

Cost of revenue primarily consists of costs incurred for developing, maintaining and updating the CRIC database system, which includes cost of data purchased or licensed from third-party sources, personnel related costs and associated equipment depreciation. Cost of revenue also includes fees paid to third parties for the services directly related to advertising design and for the acquired advertising space in its advertising sales services arrangements. These costs are expensed in the periods incurred or, in the case of acquired advertising space, utilized.

(u) Advertising expenses

Advertising expenses are charged to the statements of operations in the period incurred and amounted to $600,853 and $491,907 for the six months ended June 20, 2008 and 2009, respectively.

(v) Foreign currency translation

F-10

The Group recorded an exchange loss of $1,196,024 and $22,007 for the six months ended June 30, 2008 and 2009, respectively.

(w) Concentration of credit risk

(x) Earnings per share

Basic earnings per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period.

Diluted income per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares.


	Six Months Ended June 30
	2008		2009
Net income attributable to CRIC—basic	$	7,226,040	$	11,000,739

Weighted average ordinary shares outstanding		71,522,222		71,522,222
Stock options		—		2,732

Weighted average number of ordinary shares outstanding—diluted		71,522,222		71,524,954

Basic earnings per share	$	0.10	$	0.15

Diluted earnings per share	$	0.10	$	0.15

(y) Comprehensive income

3. Investments in Affiliated Company

On February 24, 2008, the Group entered into a joint venture agreement with SINA Corporation (“SINA”) to form China Online Housing. The Group contributed $2.5 million in cash and a 10-year license to its proprietary CRIC database and SINA contributed $2.5 million in cash and the right to its real estate and home decoration channel operations for a period of 10 years. The Group and SINA hold a 34% and 66% interest in China Online Housing, respectively. The Group recorded an initial investment cost of $4,908,694, including $2.5 million cash contribution, $2,400,951 in the portion of the fair value of the 10-year license to its proprietary CRIC database ascribed to SINA, proportional to its 66% interest, and $7,743 in transaction cost. The Group recorded deferred revenue of $2,400,951, which is being recognized as revenue over the ten-year term of the contributed CRIC database license given the Group’s ongoing obligation to continually maintain and update the content contained within the CRIC database. Deferred revenue is classified as current or non-current depending on when the revenue is expected to be recognized.

This transaction was accounted for using the equity method with the purchase price of China Online Housing allocated as follows:


	Allocated		Amortization
	Value		Period
	$
Cash acquired		1,700,000
Intangible assets
Advertising rights		2,894,775	10 years
Customer contract backlog		313,919	6 months

Total		4,908,694

The initial purchase price resulted in negative goodwill of $325,295, which has been reflected above as a reduction in the intangible assets acquired.

F-11

4. Acquisition of Subsidiary

In April 2009, CRIC BVI acquired Portal Overseas Limited (“Portal Overseas”), a company incorporated in the British Virgin Islands, for $7,193,030. Portal Overseas was a development stage company that had acquired a 20-years lease for an office building in Shanghai and was developing such building for subsequent sub-lease. The Company acquired Portal Overseas to obtain the lease of the office building, which the Group uses as its corporate office. Purchase price is allocated as follows:


	Allocated			Amortization
	Value			Period
	$
Leasehold improvement		2,077,479		5-20 years
Prepaid rent		4,348,647		20 years
Favorable lease term		2,428,110		20 years
Other current assets		1,463,529
Cash		1,265,772
Liability assumed		(4,390,507	)

Total		7,193,030

The current portion of prepaid rent was included in prepaid expenses and other current assets.

5. Property and Equipment, Net

Property and equipment, net consists of the following:


	As of June 30, 2009
	$
Leasehold improvements		3,382,290
Furniture, fixtures and equipment		3,067,994
Motor vehicles		353,301

Total		6,803,585
Less: Accumulated depreciation		(846,642	)

Property, plant and equipment, net		5,956,943

The Group’s depreciation expenses were $86,371 and $419,295 for six months ended June 30, 2008 and 2009, respectively.

6. Intangible Assets, Net

Intangible assets subject to amortization are comprised of the following:


	As of June 30, 2009
	$
Intangible assets subject to amortization Favorable lease term		2,428,110
Non-compete agreements		1,612,112
Computer software licenses		1,741

		4,041,963


Less: Accumulated amortization Favorable lease term		(30,351	)
Non-compete agreements		(233,180	)
Computer software licenses		(435	)

		(263,966	)

Intangible assets subject to amortization, net		3,777,997

The Group recorded amortization expense of nil and $179,435 for the six months ended June 30, 2008 and 2009, respectively. The Group expects to record amortization expense of $215,504, $433,007, $432,576, $432,312 and $412,162 for the years ending December 31, 2009, 2010, 2011, 2012 and 2013, respectively.

F-12

7. Goodwill

The carrying amount of goodwill by segment are as follows:

Real Estate

Consulting and

Real Estate

Information

Advertising

Service

Segment

Total

Balance as of December 31, 2008 and June 30, 2009

3,602,892

666,257

4,269,149

8. Income Tax

The provision for income taxes is comprised of the following:


	Six Months Ended June 30
	2008		2009
	$		$
Current Tax
PRC		1,285,568		2,375,984
Other		—		—

		1,285,568		2,375,984

Deferred Tax
PRC		276,018		(354,092	)
Other		—		—

		276,018		(354,092	)
Income tax expense		1,561,586		2,021,892

Cayman Islands and British Virgin Islands

Hong Kong

The Company’s subsidiaries in Hong Kong is subject to a profit tax at the rate of 16.5% on assessable profit determined under relevant Hong Kong tax regulations.

PRC

CRIC Shanghai was approved as a high and new technology enterprise under the new law and is therefore subject to a 15% preferential income tax rate for the years from 2008 through 2010.

The Group has made its assessment of the level of tax authority for each tax position (including the potential application of interest and penalties) based on the technical merits, and has measured the unrecognized tax benefits associated with the tax positions. The Group had no material uncertain tax positions as of June 30, 2009 or material unrecognized tax benefit which would favorably affect the effective income tax rate in future periods. The Company classifies interest and/or penalties related to income tax matters in income tax expense. As of June 30, 2009, the amount of interest and penalties related to uncertain tax positions was immaterial.

The Group does not anticipate any significant increases or decreases to its liability for unrecognized tax benefits within the next 12 months.

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined, but an underpayment of tax liability exceeding RMB100,000 (approximately $14,600 under the current exchange rate) is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is 10 years. There is no statute of limitations in the case of tax evasion. The Group’s major operating entity, CRIC Shanghai, is therefore subject to examination by the PRC tax authorities from inception through 2008 on both transfer pricing and non-transfer pricing matters.

F-13

The principal components of the deferred income tax asset and liabilities are as follows:


	As of June 30, 2009
	$
Deferred tax assets:
Accrued salary expenses		25,852
Advertising expenses		17,206
Deferred Governmental subsidy		320,266
Net operating loss carryforwards		304,782
Gross deferred tax assets		668,106

Valuation allowance		—
Gross deferred tax assets		668,106

Analysis as:
Current		43,058
Non-current		625,048

Deferred tax liabilities:
Amortization of intangible and other assets		304,433

Total deferred tax liabilities		304,433

Analysis as:
Current		—
Non-current		304,433

There was no change in the valuation allowance between January 1, 2009 and June 30, 2009.

Reconciliation between the provision for income tax computed by applying the statutory tax rate to income before income taxes and the actual provision for income taxes is as follows:


	Six Months Ended June 30
	2008			2009
PRC income tax rate		25.00	%		25.00	%
Expenses not deductible for tax purposes		3.40	%		0.15	%
Effect of tax preference		(9.04	)%		(10.74	)%
Effect of different tax rate of subsidiary operations in other jurisdiction		(1.59	)%		1.55	%

		17.77	%		15.96	%

As of June 30, 2009, the Group had net operating loss carryforwards of $2,627,267, which will expire if not used between 2013 and 2014.

Undistributed earnings of the Group’s PRC subsidiaries of approximately $29 million at June 30, 2009 are considered to be indefinitely reinvested and, accordingly, no provision for PRC dividend withholding tax has been provided thereon. Upon distribution of those earnings generated after January 1, 2008, in the form of dividends or otherwise, the Group would be subject to the then applicable PRC tax laws and regulations. For distribution of those earnings generated before January 1, 2008, the distributions are exempt from PRC withholding tax.

9. Share-Based Compensation

E-House Holdings’s Share Incentive Plan (“the E-House Plan”)

There were no new options or restricted shares granted during the period from January 1, 2009 to June 30, 2009 under the E-House Plan.

E-House recorded compensation expense of $1,638,370 and $2,371,755 for the six months ended June 30, 2008 and 2009.

A summary of options activity under the E-House Plan as of June 30, 2009 and changes for the six month period then ended is as follows:

F-14


						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
	Number of			Exercise		Contractual	Intrinsic
	Options			Price		Term	Value of Options
				$			$
Outstanding, as of January 1, 2009		2,314,166			5.39
Granted		—			—
Exercised		(148,630	)		14.81
Forfeited		(40,167	)		5.37
Cancelled		—			—
Outstanding, as of June 30, 2009		2,125,369			5.38	8.4 years		20,371,474
Vested and expected to vest as of June 30, 2009		1,994,969			5.39	8.3 years		20,058,346
Exercisable as of June 30, 2009		635,922			5.38	8.0 years		6,398,746

As of June 30, 2009, there was $9,016,797 of total unrecognized compensation expense related to unvested share options granted under the E-House Plan. That cost is expected to be recognized over a weighted-average period of 2 years.

The outstanding unvested restricted shares as of June 30, 2009 was 144,000 with the weight-average grant-date fair value of $1.39 per share. There was no restricted share activity for the six months ended June 30, 2009.

As of June 30, 2009, there was $84,028 of total unrecognized compensation expense related to restricted shares granted under the E-House Plan. That cost is expected to be recognized over a weighted-average period of 0.42 years.

E-House recorded compensation expense related to restricted shares of $100,833 and $100,833 for the six months ended June 30, 2008 and 2009, respectively.

Share-based compensation expense recorded by the Group was $486,062 and $631,350 for the six months ended June 30, 2008 and 2009, respectively. These expenses are recorded in selling, general and administrative expenses and included share options granted by E-house to the Group’s employees and options to E-House’s senior management that were allocated to the Group.

The Company’s Share Incentive Plan (“the CRIC Plan”)

On January 1, 2009, the Company granted 5,569,000 and 431,000 options to purchase its ordinary shares to certain of the Group’s employees and E-House’s employees, respectively, at an exercise price of $3.00 per share pursuant to the CRIC plan. The options expire ten years from the date of grant and vest ratably at each grant date anniversary over a period of one to four years.

The Company’s used the binomial model to estimate the fair value of the options using the following assumptions:


	January 1, 2009
Average risk-free rate of return		2.23	%
Contractual life of option	10 years
Average estimated volatility rate		73.55	%
Average dividend yield		0.00	%

The weighted average grant date fair value of the options was $2.08 per share. For the six months ended June 30, 2009, the Group recorded compensation expense of $1,350,850 for the share options granted to the Group’s employees and recorded dividends to E-House of $53,777 for the share options granted to E-House’s employees.

A summary of options activity under the CRIC Plan as of June 30, 2009 and changes for the six months then ended is presented below:


						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Options			Price		Term		Value of Options
				$				$
Outstanding, as of January 1, 2009		—			—
Granted		6,000,000			3.00
Exercised		—			—
Forfeited		(17,500	)		3.00
Cancelled		—			—
Outstanding, as of June 30, 2009		5,982,500			3.00	9.5 years			12,920,918
Vested and expected to vest as of June 30, 2009		5,046,735			3.00	9.5 years			10,899,866
Exercisable as of June 30, 2009		—			—		—		—

F-15

As of June 30, 2009, there was $9,078,109 of total unrecognized compensation expense related to unvested share options granted under the CRIC Plan. That cost is expected to be recognized over a weighted-average period of 3.4 years.

10. Employee Benefit Plans

The Company’s PRC subsidiaries are required by law to contribute a certain percentages of applicable salaries for retirement benefit, medical insurance benefits, housing funds, unemployment and other statutory benefits. The PRC government is directly responsible for the payments of such benefits. The Group contributed $473,623 and $947,884 for the six months ended June 30, 2008 and 2009, respectively, for such benefits.

11. Distribution of Profits

In addition, the share capital of the Company’s PRC subsidiaries of $38,273,186 as of June 30, 2009, was considered restricted due to restrictions on the distribution of share capital.

12. Segment Information

The Group uses the management approach to determine operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision makers (“CODM”) for making decisions, allocating resources and assessing performance. The Group’s CODM has been identified as the Chairman and the chief executive officer, who review consolidated and segment results when making decisions about allocating resources and assessing performance of the Group.

The Group has two operating segments: 1) real estate consulting and information services and 2) real estate advertising services. The Group’s CODM reviews net revenue, cost of sales, operating expenses, income from operations and net income for each operating segment and does not review balance sheet information. For the six months ended June 30, 2008, the real estate consulting and information services was the Group’s sole operating segment. The real estate advertising service segment commenced in the third quarter of 2008. Corporate expenses such as selling, general and administrative expenses, and interest income are not allocated among segments and are recorded as non-allocated items.

The following table summarizes the selected revenue and expense information for each operating segment for the six months ended June 30, 2009:


	Real Estate			Real Estate
	Consulting			Advertising
	and Information			Service
	Service Segment			Segment			Non-allocated			Total
	$			$			$			$
Revenues from external customers		26,340,248			4,859,857						31,200,105
Cost of revenues		(886,569	)		(2,494,707	)					(3,381,276	)
Selling, general and administrative expenses		(10,767,518	)		(2,596,205	)		(2,247,288	)		(15,611,011	)
Income (loss) from operations		14,686,161			(231,055	)		(2,247,288	)		12,207,818
Interest income		88,317			7,051			1,055			96,423
Other income		(25,801	)		—			3,794			(22,007	)

Income (loss) before taxes and equity in affiliates		14,748,677			(224,004	)		(2,242,439	)		12,282,234
Income tax benefit (expense)		(2,065,368	)		43,476			—			(2,021,892	)

Income (loss) before equity in affiliates		12,683,309			(180,528	)		(2,242,439	)		10,260,342
Income from investment in affiliates								385,305			385,305

Net income (loss)		12,683,309			(180,528	)		(1,857,134	)		10,645,647

F-16

Geographic

Substantially all of the Group’s revenues from external customers and long-lived assets are located in the PRC.

Service Lines


	Six Months Ended June 30
	2008		2009
	$		$
Real estate consulting service		18,672,442		24,598,958
Real estate information service		605,233		1,741,290
Real estate advertising service		—		4,859,857

		19,277,675		31,200,105

Major customers

Details of the revenues for customers accounting for 10% or more of total revenues are as follows:


	Six Months Ended June 30
	2008		2009
	$		$
Customer A		14,056,684		14,632,828
Customer B		2,591,341		*


*		indicates the revenue from these customers was less than 10% in the stated periods.

Details of the accounts receivable from customers accounting for 10% or more of total accounts receivable are as follows:


	As of June 30,
	2008		2009
	$		$
Customer B		2,672,848		*
Customer C		984,096		2,964,036
Customer D		*		1,463,720


*		indicates the accounts receivables from the customer was less than 10% as at the stated year end.

13. Related Party Balances and Transactions

During the six months ended June 30, 2008 and 2009, E-House loaned $2,500,000 and nil, respectively, to fund the Group’s investment in affiliates. This amount have been waived by E-House and has been reflected as a capital contribution as of the date such loans were originally made.

The table below sets forth major related parties and their relationships with the Group:


Company name		Relationship with the Group
E-House		Under common control by E-House Holdings
E-House China Real Estate Investment Fund I, L.P. (“the Fund”)		Partially owned by Mr. Xin Zhou, chairman of CRIC

During the six months ended June 30, 2008 and 2009, significant related party transactions were as follows:

Transactions with E-House


	Six Months Ended June 30
	2008		2009
	$		$
Corporate selling, general and administrative expenses allocated from E-House (Note 1)		1,357,493		2,002,712
Consulting services provided to E-House		—		1,669,774
Advertising sales services provided to E-House		—		1,008,274

F-17

The consulting services provided to E-House represents consulting services provided to E-House from Shanghai CRIC Information Technology Co., Ltd.

The advertising services provided to E-house represents advertising services provided to E-House from Shanghai Landpro Advertising Design Co., Ltd.

In April, 2009, CRIC BVI acquired Portal Overseas from the Fund for $7,193,030 (Note 4).

Expense allocations from E-House are based on a variety of factors and are dependent on the nature of the expenses being allocated.

As of June 30, 2009, amounts due to related parties represent an amount due to E-House of $11,586,693, which reflects prepayments for real estate advertising placements on behalf of the Group by E-House and the loan from E-House to acquire Portal Overseas. The balance is interest free and settleable on demand.

The rollforward of the intercompany receivable balance with E-House for the six months ended June 30, 2008 and 2009 is as follows:


	Six Months Ended June 30
	2008			2009
Balance at January 1		2,160,269			—
Loans granted to E-House		—			—
Collection of loans granted to E-House		(2,061,701	)		—
Loans received from E-House		(2,500,000	)		—
Corporate expenses allocated from E-House		(1,357,493	)		(2,022,712	)
Group revenue, net of expenses, collected by E-House		159,642			962,366
Related party balance waivers		3,697,851			1,060,346
Service provided to E-House		—			2,678,048
Payments received for services		(98,568	)		(2,678,048	)

Balance at June 30		—			—

14. Contingencies

15. Subsequent Events

On September 1, 2009, the Company changed its name from CRIC Holdings Limited to China Real Estate Information Corporation.

F-18

The options expire ten years from the date of grant and vest ratably at each grant date anniversary over a period of two to four years.

On September 28, 2009, the Company issued 21,522,222 additional ordinary shares at par value to E-House Holdings. This issuance has been retroactively reflected for all periods presented herein.

On October 16, 2009, the Company completed its acquisition of SINA’s 66% equity interest in China Online Housing, increasing its interest from 34% to 100%, in exchange for 47,666,667 of the Company’s ordinary shares. China Online Housing operates a real estate Internet business in China that provides region-specific real estate news and information, property data and access to online communities via local websites. The Company expects that its acquisition of China Online Housing will create substantial synergies between its current operations and China Online Housing’s real estate business by, among other things, providing its real estate developer clients with access to SINA’s large Internet user base and leveraging its established relationships with real estate developers to attract more advertising clients for China Online Housing’s real estate websites.

The following table summarizes the consideration transferred to acquire China Online Housing:


Fair value of Company shares issued			572,000,004
Replacement of China Online Housing stock options			8,182,833

Fair value of the Company’s investment in China Online Housing held before the business combination			27,078,000

			607,260,837

The fair value of the 47,666,667 ordinary shares issued by the Company was based on the offering price of the Company’s ADS on October 16, 2009, the acquisition date.

The purchase price has been allocated as follows:


				Amortization
	Amount			Period
Total tangible assets acquired		26,703,269
Liabilities assumed		(17,432,772	)
Intangible assets acquired:
— License agreement with SINA		80,660,000		10 years
— Real estate advertising agency agreement with SINA		106,790,000		10 years
— CRIC database license agreement		8,300,000		9 years
— Customer relationship		5,580,000		10 years
— Contract Backlog		110,000		1 year
Goodwill		438,107,702
Deferred tax liability		(41,557,362	)

		607,260,837

As a result of the Company obtaining control over China Online Housing, the Company’s previously held interest was remeasured to fair value of $27,078,000 resulting in a gain of $21,453,221. This will be recognized in the line item ‘other income — net’ in the consolidated statements of income.

The acquisition was accounted for as a purchase transaction, and accordingly, the assets and liabilities of the acquired entity were recorded at their estimated fair values at the date of acquisition. The primary items that generated the goodwill were the value of the synergies between China Online Housing and the Company and the acquired assembled workforce, neither of which qualified as an amortizable intangible asset. The Goodwill will be assigned to a new segment created as a result of this acquisition, online real estate advertising services segment. The goodwill is not deductible for tax purposes.

The fair value of the assets acquired includes trade receivables of $13,177,212. The gross amount due under contracts is $15,617,292, of which $2,440,080 is expected to be uncollectible. The Company did not acquire any other class of receivable as a result of this acquisition.

F-19

Prior to the acquisition, the Company had a preexisting relationship with China Online Housing in the form of an ongoing obligation to continually maintain and update the content contained within the CRIC database contributed to China Online Housing upon formation for a period of 10 years. The Company had recorded deferred revenue associated with this arrangement of $2,100,832 as of the acquisition date. There were no off-market components associated with the pre-existing relationship as of the acquisition date. The Company will record a gain in the line item ‘other income — net’ in the consolidated statement of income on settlement of this preexisting relationship equal to the unrecognized deferred revenue as a result of this acquisition.

Pro forma results

The following table summarizes unaudited pro forma financial information for the six month periods ended June 30, 2008 and 2009, as if the acquisition had occurred on January 1, 2008 and 2009, respectively. These pro forma results have been prepared for informational purposes only based on the Company’s best estimate and are not indicative of the results of operations that would have been achieved had the acquisition occurred as of January 1, 2008 and 2009.

The pro forma results include an adjustment to reflect the change in terms of the advertising agency arrangement between China Online Housing and SINA. China Online Housing was obligated to pay fees to SINA for advertising sales on SINA’s non-real estate channels. Under the original advertising agency agreement, these fees were equal to 85% of such sales revenues, subject to a minimum guarantee. In connection with the Company’s acquisition of SINA’s interest in China Online Housing, China Online Housing and SINA have entered into a new advertising agency agreement, which took effective upon the closing of this transaction. Under the new advertising agency agreement, China Online Housing will continue to operate SINA’s existing real estate and home furnishing channels and will develop a new real estate-related channel on sina.com.cn, and will have the exclusive right to sell advertising relating to real estate, home furnishing and construction materials on these three channels as well as SINA’s other websites. If China Online Housing sells advertising on SINA’s websites other than the three channels, it will pay SINA fees of approximately 15% of the revenues generated from these sales, as opposed to the historical 85%.


	Six months ended June 30,
	2008		2009
Revenue		32,867,318		46,382,105
Net income attributable to Shareholders		4,811,612		6,457,423

Subsequent events have been updated through December 21, 2009.

F-20

Appendix 1

Entities included in the unaudited condensed consolidated financial statements

The following table sets forth information concerning entities included in the Company:


	Date of	Place of	Percentage of
	Incorporation	Incorporation	Ownership
CRIC (China) Information Technology Co., Ltd.,	April 26, 2006	BVI		100
Shanghai CRIC Information Technology Co., Ltd.	July 3, 2006	PRC		100
E-House (China) Information Technology Service Limited	January 15, 2008	BVI		100
Hong Kong CRIC Information Technology Company Limited	February 25, 2008	Hong Kong		100
Shanghai CRIC Software Technology Co., Ltd.	June 13, 2008	PRC		100
Richpoint Overseas Ltd.	April 7, 2008	BVI		85
CRIC Information Technology Ltd.	May 23, 2008	Hong Kong		85
Wuhan CRIC Information Technology Co., Ltd.	June 19, 2008	PRC		100
Chengdu CRIC Information Technology Co., Ltd.	April 21, 2008	PRC		100
Shanghai Tian Zhuo Advertising Co., Ltd.	February 27, 2008	PRC	VIE
Shanghai Landpro Advertising Design Co., Ltd.	December 19, 2008	PRC		100*
Guangzhou Integrated Residential Building Industry Facility Co., Ltd.	July 15, 2004	PRC		100*
Wushi Consolidated (Beijing) Advertising Media Co., Ltd.	July 28, 2008	PRC		60
Portal Overseas Ltd.	January 02, 2008	BVI		100
Portal Holdings Ltd.	February 25, 2008	Hong Kong		100
Shanghai ShineLend Property Management Limited	April 29, 2008	PRC		100
Shanghai Yifang Software	February 17, 2009	PRC		100
China Real Estate Business Network Technology Ltd.	December 17, 2007	Hong Kong		100
GuangZhouFangShang Network Software Technology Ltd.	August 11, 2008	PRC		100
Status Holding Ltd.	October 30, 2008	Hong Kong		100
Status Company Ltd.	August 08, 2008	BVI		100
Shanghai Ruizhe Information Technology Co Ltd.	July 4, 2008	PRC		100


*:		Wholly owned subsidiaries of Shanghai Tian Zhuo Advertising Co., Ltd.

F-21

Exhibit 99.5

Revised Item 3. Key Information

A. Selected Financial Data

The selected consolidated statements of operation data presents the results for the five years ended December 31, 2008, 2007, 2006, 2005 and 2004. The Company’s historical results do not necessarily indicate results expected for any future periods. The selected consolidated financial data below should be read in conjunction with “Revised Item 5. Operating and Financial Review and Prospects” and “Revised Item 8. Financial Information and Item 18. Financial Statements” filed as exhibits 99.6 and 99.7, respectively, to the Form 6-K to which this exhibit is included, and the other information contained in the Company’s Form 20-F filed on June 29, 2009.


	Years ended December 31, (1) (2)
	2008		2007		2006		2005		2004
	( In thousands, except per share data)
Operations:
Net revenues	$	369,587	$	246,127	$	212,854	$	193,552	$	199,987
Gross profit		219,252		151,425		133,444		130,445		138,376
Income from operations		74,581		51,014		34,907		41,508		69,325
Income before income tax expense		95,209		60,619		37,016		39,102		63,291
Net income		81,167		54,115		32,965		36,692		60,063
Net income attributable to SINA		80,638		54,115		32,965		36,692		60,063
Net income per share attributable to SINA
Basic	$	1.44	$	0.98	$	0.61	$	0.70	$	1.19
Diluted	$	1.33	$	0.97	$	0.69	$	0.75	$	1.15


	December 31,
	2008		2007		2006		2005		2004
	(In thousands)
Financial position:
Cash, cash equivalents and short-term investments	$	603,824	$	477,999	$	362,751	$	300,689	$	275,635
Working capital		498,524		377,608		270,820		297,910		252,027
Total assets		822,494		662,263		538,719		468,449		429,971
Long-term liabilities		4,039		1,337		—		89,163		84,700
Total liabilities		197,946		167,287		147,292		138,262		159,638
SINA shareholders’ equity		620,505		494,976		391,427		330,187		270,333
Total shareholders’ equity		624,548		494,976		391,427		330,187		270,333


(1)		The selected consolidated financial data have been revised to reflect the Company’s retrospective adoption, effective January 1, 2009, of guidance on accounting for convertible debt instrument and noncontrolling interest issued by the Financial Accounting Standards Board. Refer to Note 2 to the Consolidated Financial Statements, Significant Accounting Policies — “Basis of presentation and use of estimates” and “Recent accounting pronouncement” included in the “Revised Item 8. Financial Information and Item 18. Financial Statements” filed as exhibit 99.7 to the Form 6-K to which this exhibit is included.

(2)		The Company began to include stock-based compensation charges in its costs of revenues and operating expenses starting January 1, 2006 in accordance with the Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment.” Stock-based compensation charges for fiscal 2008, 2007 and 2006 were $14.3 million, $8.7 million and $9.5 million, or $0.24 diluted net income per share, $0.15 diluted net income per share and $0.16 diluted net income per share, respectively.

Exhibit 99.6

Revised Item 5. Operating and Financial Review and Prospects

This information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” the negative of such terms or other comparable terminology. All forward-looking statements included in this document are based on information available to us on June 29, 2009, the date we filed our annual report on Form 20-F for the year ended December 31, 2008 (“2008 Form 20-F ”), and we have not updated this information to reflect events since then and undertake 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 “Revised Item 3. Key Information —A. Selected Financial Data” filed as exhibit 99.5 to the Form 6-K to which this exhibit is included, and “Item 3. Key Information — D. Risk Factors” to our 2008 Form 20-F. We caution you that our business and financial performance are subject to substantial risks and uncertainties, including the factors identified in “Item 3. Key Information — D. Risk Factors,” to our 2008 Form 20-F and our other filings that could cause actual results to differ materially from those in the forward-looking statements. Other filings with the SEC contain important information regarding events, developments and updates to certain of our expectations that have occurred since the filing of the 2008 Form 20-F .

Overview

We are an online media company and mobile value-added services (“MVAS”) provider in China and the global Chinese communities. Advertising and MVAS are currently the major sources of our revenues, and we derive the majority of these revenues from our operations in China.

Our advertising business in China was robust in recent years because of a strong local economy, growth in Internet users and a shift of advertising budgets from traditional media to online media. Our advertising revenues in 2008 were boosted in part by the coverage of major international sporting events, such as the 2008 Beijing Olympics and the UEFA Euro 2008, neither of which will be repeated in 2009. In addition, the growth rate of the Chinese economy has slowed significantly in recent months, exacerbated by the current global financial crisis. Although we believe content consumption in China will continue to shift toward the Internet and online media will continue to outperform traditional media in the near future, it is uncertain how long the global financial crisis will last and how much impact it will have on the Chinese economy and the advertising sector in China in particular. For the first quarter of 2009, our unaudited online advertising revenues declined 10% from the same period last year. For the second quarter of 2009, our preliminary guidance released in the earnings announcement on June 9, 2009, which is subject to change without further notice, assumes that our online advertising revenues will decline year-over-year. For the third quarter of 2009, our online advertising revenues is also likely to experience year-over-year decline.

Other factors affecting our future growth include: (1) our ability to increase awareness of our brand and continue to build user loyalty; (2) our ability to attract a larger audience to our network; and (3) our ability to attract new advertisers and increase the average spending of our existing advertisers. The performance of our advertising business also depends on our ability to react to risks and challenges, including:

	•		ability to compete with other Internet properties, including social networking sites, video sites and search for brand influence and market share;

	•		increased competition and potential downward pressure on online advertising prices and limitations on web page space;

	•		the maintenance and enhancement of our brands in a cost effective manner;

	•		development and retention of a large base of users possessing demographic characteristics attractive to advertisers;

	•		expansion of our content portfolio, product offerings and network bandwidth in a cost effective manner;

	•		the change in government policy that would curtail or restrict our online advertising services; and

	•		the consolidation of advertising agencies leading to increased bargaining power of larger advertising agencies.

In order to grow our online user base and attract new advertisers, we expect to continue to invest in new and innovative products and product enhancements, expand the content and services on our network and procure more bandwidth and network equipment. We also expect to continue to invest in marketing initiatives to increase the awareness of our brand to both users and advertisers.

Our MVAS business rebounded in 2008, resulting mainly from a relatively stable operating environment following years of abrupt changes in operator policies and government regulations. While we have seen five quarters of sequential growth in this business, we believe policy changes from operators continue to be a key risk for our MVAS business in the near future. Our ability to cope with these sudden operator policy changes and stabilize our MVAS revenues is dependent on our ability to quickly react with new services or through new channels that meet the requirements of the new policies and are accepted by the market. During 2008, the Chinese government distributed 3G licenses to the three major telecom

operators in China, which we believe will be positive for mobile consumers and will bring new opportunities to mobile service providers over the long run. We are uncertain of the impact from recent slowdown of the Chinese economy to our MVAS business and will continue to monitor the situation. The changing operator policies coupled with the fierce competition in the MVAS space have caused our MVAS business to experience declining gross margins in recent years.

As of December 31, 2008 and 2007, we have accumulated earnings of $178.6 million and $97.9 million, respectively. Our total cash, cash equivalent and short-term investments as of December 31, 2008 and 2007 were $603.8 million and $478.0 million, respectively. We have funded our operations and capital expenditures primarily using the net proceeds raised through the sale of preference shares prior to our initial public offering and the sale through our ordinary shares in the initial public offering and cash generated from operations. We raised additional capital through the issuance of zero-coupon, convertible, subordinated notes in July 2003. We intend to continue our investment in the development and enhancement of our products, content and services, as well as investment in sales and marketing. If we are unable to generate sufficient net income from our operations in the future, we may have to finance our operations from the current funds available or seek equity or debt financing.

Critical Accounting Policies, Judgments 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 GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions 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 and judgment areas, including those related to revenues, customer programs and incentives, bad debts, investments, intangible assets and goodwill, stock-based compensation, income taxes, financing operations, advertising expenses, estimated useful lives of assets, foreign currency, 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. For further information on our critical accounting policies, see the discussion in the section titled “Recent Accounting Pronouncements” below and Note 2 to the Consolidated Financial Statements included in the “Revised Item 8. Financial Information and Item 18. Financial Statements” filed as exhibit 99.7 to the Form 6-K to which this exhibit is included.

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

Marketable securities

Our marketable securities are held as available for sale and are reported at fair value. The treatment of a decline in the fair value of an individual security is based on whether the decline is other-than-temporary. Significant judgment is required to assess whether the impairment is other-than-temporary. Our judgment of whether an impairment is other-than-temporary is based on an assessment of factors including our ability and intent to hold the individual security, severity of the impairment, expected duration of the impairment and forecasted recovery of fair value. Changes in the estimates and assumptions could affect our judgment of whether an identified impairment should be recorded as an unrealized loss in the equity section of our consolidated balance sheets or as a realized loss in the consolidated statements of operations.

Allowance for doubtful accounts

The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts based on factors such as historical experience, credit-worthiness and age of receivable balances. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, or if the operators decide not to pay the Company, additional allowances may be required which could materially impact our financial position and results of operations. Allowances for doubtful accounts charged to income were $3.5 million, $5.3 million and $5.0 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Property and Equipment

Property and equipment 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. Judgment is required to determine the estimated useful lives of assets, especially for computer equipment, including determining how long existing equipment can function and when new technologies will be introduced at cost-effective price points to replace existing equipment. Changes in these estimates and assumptions could materially impact our financial position and results of operations.

Impairment of goodwill and long-lived assets

balance sheet may exist. The timing of an impairment test may result in charges to our statements of operations in our current reporting period that could not have been reasonably foreseen in prior periods. Application of an impairment test of goodwill requires judgment, including the identification of reporting units, assigning assets and liabilities to the reporting units, assigning goodwill to reporting units and estimating the fair value of each reporting unit. Changes in these estimates and assumptions could materially affect the determination of fair value of each reporting unit which could trigger impairment. More conservative assumptions of the anticipated future benefits from these reporting units could result in impairment charges, which would decrease net income and result in lower asset values on our balance sheet. Conversely, less conservative assumptions could result in smaller or no impairment charges, higher net income and higher asset values. See Note 4 “ Goodwill and intangible assets ” in the Consolidated Financial Statements included in the “Revised Item 8. Financial Information and Item 18. Financial Statements” filed as exhibit 99.7 to the Form 6-K to which this exhibit is included for additional information on goodwill.

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold or use is based on the amount by which the carrying value exceeds the fair value of the asset. Changes in these estimates and assumptions could materially impact our financial position and results of operations.

Equity investments

Our equity investments are comprised of joint ventures and other privately held companies. We account for equity investments in entities in which we exercise significant influence but do not own a majority equity interest or otherwise control using the equity method. For equity investments over which we do not have significant influence, the cost method of accounting is used. We evaluate our equity investments for impairment whenever events and changes in business circumstances indicate the carrying amount of the equity investment may not be fully recoverable. The impairment evaluation requires significant judgment to identify events or circumstances that would likely have a significant adverse effect on the fair value of the equity investments. Equity investments identified as having an indication of impairment are subject to further analysis to determine if the impairment is other-than-temporary and this analysis requires estimating the fair value of the equity investments. The determination of fair value of the equity investments involves considering factors such as current economic and market conditions, the operating performance of the companies including current earnings trends and undiscounted cash flows and other company-specific information including recent financing rounds. The evaluation process is based on information that we request from these privately-held companies. This information is not subject to the same disclosure regulations as U.S. publicly traded companies, and as such, the basis for these evaluations is subject to the timing and the accuracy of the data received from these companies. Fair value determination, particularly for equity investments in privately-held companies, requires significant judgment to determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the equity investments and the determination of whether any identified impairment is other-than-temporary.

Revenue recognition

Advertising

Our advertising revenues are derived principally from online advertising and, to a lesser extent, sponsorship arrangements. Online advertising arrangements allow advertisers to place advertisements on particular areas of our websites, in particular formats and over particular periods of time. Sponsorship arrangements allow advertisers to sponsor a particular area on our websites in exchange for a fixed payment over the contract period. While the majority of our revenue transactions contain standard business terms and conditions, there are certain transactions that contain non-standard business terms and conditions. In addition, we have certain sales transactions that involve multiple element arrangements (arrangements with more than one deliverable) that may include placement on specific properties. As a result, significant contract interpretation is sometimes required to determine the appropriate accounting for these transactions including: (1) how the arrangement consideration should be allocated among potential multiple elements; (2) when to recognize revenue on the deliverables; and (3) whether all elements of the arrangement have been delivered. Changes in judgments on these assumptions and estimates could materially impact the timing or amount of revenue recognition.

MVAS

We mainly rely on third-party operators for billing, collection and transmission of our MVAS to our users. We also rely on other service providers to provide content and to distribute MVAS or other services for us. In accordance with EITF No. 99-19, “Reporting Revenues Gross as a Principal Versus Net as an Agent,” revenues are recorded on a gross basis when most of the gross indicators are met, such as the fact that we are considered the primary obligor in the arrangement, design and develop (in some cases with the assistance of third-parties) the MVAS, have reasonable latitude to establish price, have discretion in selecting the operators to offer our MVAS, provide customer services related to the MVAS and take on the credit risks associated with the transmission fees. Conversely, revenues are recorded on a net basis when most of the gross indicators are not met. The determination of whether we are the primary obligor for a particular type of service is subjective in nature and is based on an evaluation of the terms of the arrangement. If the terms of the arrangement with operators were to change and result in the gross indicators not being met, we would have to record our MVAS revenues on a net basis. Consequently, this would cause a significant decline in our net revenues, but should not have a significant impact on our gross margin. During fiscal 2008, approximately 85% of our MVAS revenues were recorded on a gross basis.

Due to the time lag between when the services are rendered and when the operator billing statements are received, MVAS revenues are estimated based on our internal records of billings and transmissions for the month, adjusting for prior periods’ confirmation rates with operators and prior periods’ discrepancies between internally estimated revenues and actual revenues confirmed by operators. The confirmation rate applied to the estimation of revenue is determined at the lower of the latest confirmation rate available and the average of six months historical rates available, provided that we have obtained confirmation rates for six months. If we have not yet received confirmation rates for six months, revenues would be deferred until billing statements are received from the operators. If subsequent billing statements from the operators differ significantly from management’s estimates, our revenues could be materially impacted.

In addition, our revenue recognition policy requires an assessment as to whether collection is reasonably assured, which requires us to evaluate the creditworthiness of our customers. Changes in judgments on these assumptions and estimates could materially impact the timing or amount of revenue recognition.

Advertising expenses

We expense all advertising costs as incurred and classify these costs under sales and marketing expenses. Advertising expenses include costs related to direct advertising that are intended to acquire subscribers for monthly subscription based and usage based MVAS. Assessing whether costs related to direct advertising should be expensed as incurred or capitalized and amortized over a longer period requires judgment, including determining whether the direct advertising activity has a primary purpose to elicit sales from customers who could be shown to have responded specifically to the advertising and whether the activities would result in probable future economic benefits. Changes in assumptions could materially affect the manner in which direct advertising costs are expensed.

Stock-based compensation

We account for stock-based compensation in accordance with, SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), since January 1, 2006. Under the fair value recognition provisions of SFAS 123R, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis, net of estimated forfeitures, over the requisite service period, which is generally the vesting period. We use the Black-Scholes option pricing model to determine the fair value of share options. The determination of the fair value of stock-based compensation awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including our expected stock price volatility over the term of the awards, actual and projected employee share option exercise behaviors, risk-free interest rate and expected dividends. If we use different assumptions for estimating stock-based compensation expense in future periods or if we decide to use a different valuation model, the change in our stock-based compensation expense could materially affect our operating income, net income attributable to SINA and net income per share attributable to SINA.

Furthermore, we are required to estimate forfeitures at the time of grant and record stock-based compensation expense only for those awards that are expected to vest. If actual forfeitures differ materially from our estimated forfeitures, we may need to revise those estimates used in subsequent periods.

See Note 14 Shareholders’ Equity under Notes to Consolidated Financial Statements included in the “Revised Item 8. Financial Information and Item 18. Financial Statements” filed as exhibit 99.7 to the Form 6-K to which this exhibit is included for information regarding the SFAS 123R disclosures.

Income taxes

We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Management must make assumptions, judgments and estimates to determine our current provision for income taxes and our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. Our judgments, assumptions and estimates relative to the current provision for income tax take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements. Our assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations. Actual operating results and the underlying amount and category of income in future years could render our current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate. Any of the assumptions, judgments and estimates mentioned above could cause our actual income tax obligations to differ from our estimates, and thus materially impact our financial position and results of operations.

In accordance with APB Opinion No. 23, “Accounting for Income Taxes — Special Areas,” undistributed earnings of a subsidiary are presumed to be transferred to the parent company and are subject to withholding taxes, unless the parent company has evidence of specific plans for reinvestment of undistributed earnings of a subsidiary which demonstrate that remittance of the earnings will be postponed indefinitely. The current policy adopted by the Company’s Board of Directors allows the Company to distribute PRC earnings offshore only if the Company does not have to pay a dividend tax. Based on the EIT Law, which became effective on January 1, 2008, such policy would require the Company to indefinitely reinvest all earnings made in China since 2008 onshore or be subject to 10% withholding tax should it decides to distribute earnings accumulated since 2008 offshore.

We adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”), on January 1, 2007. We make assumptions, judgments and estimates in the recognition and measurement of a tax position taken or expected to be taken in a tax return. These judgments, assumptions and estimates take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts of unrecognized, uncertain tax positions, if any, provided or to be provided for in our consolidated financial statements.

Foreign currency

Our reporting currency and functional currency are the U.S. dollar and our subsidiaries and VIEs in China, Hong Kong and Taiwan use their respective local currencies as their functional currencies. An entity’s functional currency is the currency of the primary economic environment in which the entity operates. Management must use judgment in determining an entity’s functional currency, assessing economic factors including cash flow, sales price, sales market, expense, financing and inter-company transactions and arrangements. Impact from exchange rate changes related to transactions denominated in currencies other than the functional currency is recorded as a gain and loss in our consolidated statements of operations, while impact from exchange rate changes related to translating a foreign entity’s financial statements from the functional currency to our reporting currency, the U.S. dollar, is disclosed and accumulated in a separate component under the equity section of our consolidated balance sheets. Translation gains or losses are not released to net income unless the associated net investment has been sold, liquidated or substantially liquidated. Management uses judgment in determining the timing of recognition of translational gains or losses. Such determination requires assessing whether translational gains or losses were derived from the sale or complete or substantially complete liquidation of an investment in a foreign entity. Different judgments or assumptions resulting in a change of functional currency or timing of recognition of foreign exchange gains or losses may materially impact our financial position and results of operations. For fiscal 2008, our translation adjustment was $19.6 million and our net transaction gain was $3.3 million.

Recent accounting pronouncements

In December 2008, the FASB issued FASB Staff Position (“FSP”) No. 140-4 and FIN 46R-8 (“FSP 140-4 and FIN 46R-8”), “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.” FSP 140-4 and FIN 46R-8 require additional disclosures about transfers of financial assets and involvement with variable interest entities. The requirements apply to transferors, sponsors, servicers, primary beneficiaries and holders of significant variable interests in a variable interest entity or qualifying special purpose entity. Disclosures required by FSP 140-4 and FIN 46R-8 are effective for us for fiscal years beginning after December 15, 2008. Because FSP 140-4 and FIN 46R-8 only require additional disclosures, the adoption will not impact our consolidated financial position, cash flows or results of operations.

In May 2008, the FASB issued FASB Staff Position No. APB14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB14-1”), which requires issuers of convertible debt that may be settled wholly or partly in cash when converted to account for the debt and equity components separately. This statement is effective for fiscal years beginning after December 15, 2008 and must be applied retrospectively to all periods. In 2003, the Company issued $100 million of zero-coupon, convertible, subordinated notes (the “Notes”) due 2023, and subsequently in 2007, $1 million of the Notes were converted to SINA ordinary shares upon the purchaser’s request. As required by FSP APB 14-1, the Company estimated the fair value, as of the date of issuance, of its convertible notes as if the instrument was issued without the conversion option. The difference between the fair value and the principal amount of the instrument was retrospectively recorded as debt discount and as a component of equity. The amortization of the debt discount was recognized over the expected four-year life of the convertible notes as a non-cash increase to interest expense in the historical periods ended in June 2007. The adoption of APB 14-1 resulted in net increase in SINA’s shareholders’ equity of $3.6 million, $10.6 million and $17.0 million at December 31, 2006, 2005 and 2004, respectively, and a $25.8 million reclassification in the SINA’s shareholders’ equity by decreasing retained earnings and increasing additional paid-in capital at December 31, 2007 and 2008. SINA’s income before income tax, net income and net income attributable to SINA were reduced by $3.6 million, $7.0 million, $6.4 million and $5.9 million for the fiscal years 2007, 2006, 2005 and 2004, respectively, primarily due to increased interest expense.

In April 2008, the FASB issued FASB Staff Position No. FAS142-3 “Determination of the Useful Life of Intangible Assets” (“FSP FAS142-3”), which amends the factors to be considered in determining the useful life of intangible assets. Its intent is to improve the consistency between the useful life of an intangible asset and the period of expected cash flows used to measure its fair value. This statement is effective for fiscal years beginning after December 15, 2008. FSP 142-3 is effective for intangible assets acquired after December 15, 2008, and early application is prohibited. The impact of the

adoption of FSP 142-3 on the Company’s consolidated financial position and results of operations will be largely dependent on the size and nature of the intangible assets acquired after the adoption of this statement.

In December 2007, the FASB issued SFAS No. 141 (revised 2007) “Business Combinations” (“SFAS 141R”). SFAS 141R will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of the adoption of SFAS 141R on the Company’s consolidated financial position and results of operations will be largely dependent on the size and nature of the business combinations completed after the adoption of this statement.

In December 2007, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin 110 (“SAB 110”). Under SAB 110, the Staff will continue to allow companies to use the simplified method for estimating the expected terms of “plain vanilla” share options beyond December 31, 2007, assuming certain circumstances are met. The adoption of SAB 110 did not have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

In December 2007, the FASB issues SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” which requires noncontrolling interests (previously referred to as minority interests) in subsidiaries to be classified as a separate component of equity in the consolidated financial statements. The new standard also requires the amounts of net income and comprehensive income attributable to the noncontrolling interests to be included on the face of the statement of income and comprehensive income, respectively, and requires various additional disclosures related to noncontrolling interests. SFAS No. 160 requires changes in ownership interest that result either in consolidation or deconsolidation to be recorded at fair value through earnings, including the retained ownership interest, while changes that do not result in either consolidation or deconsolidation of a subsidiary are treated as equity transactions. FAS 160 shall be effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company has adopted FAS 160 effective January 1, 2009 and in accordance with the transition provisions, the prior year’s presentation and disclosures have been retrospectively adjusted for all periods presented.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). Under SFAS 159, companies may elect to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. SFAS 159 is effective for the Company beginning fiscal 2008. From January 1, 2009, the Company renamed the minority interest to noncontrolling interest and reclassified the related amounts in its consolidated balance sheets from the mezzanine section between liabilities and equity to a separate line item in equity. The Company also expanded disclosures in the consolidated financial statements to clearly identify and distinguish the interests of SINA from the interests of the noncontrolling interest holders. The Company has applied the presentation and disclosure requirements retroactively for all periods presented for comparability.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. However, on February 12, 2008, the FASB issued FASB Staff Position FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”), which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP FAS 157-2 partially defers the effective date of Statement 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP. The Company adopted SFAS 157 in 2008, except as it applies to those nonfinancial assets and nonfinancial liabilities as noted in FSP FAS 157-2. The adoption of SFAS 157 in 2008 did not have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

A. Operating Results

Net revenues


	Years ended December 31,
	2008				2007				2006				% of Change
	(in thousands, except percentages)
													YOY			YOY
													08 & 07			07 & 06
Net revenues
Advertising	$	258,499	70	%	$	168,926	69	%	$	120,067	56	%		53	%		41	%
Non-advertising:
MVAS		103,318	28	%		70,489	29	%		86,257	41	%		47	%		-18	%
Others		7,770	2	%		6,712	2	%		6,530	3	%		16	%		3	%

Subtotal		111,088	30	%		77,201	31	%		92,787	44	%		44	%		-17	%

Total net revenues	$	369,587	100	%	$	246,127	100	%	$	212,854	100	%		50	%		16	%

The year-over-year increase in total net revenues for 2008 and 2007 was 50% and 16%, respectively. The increase from 2007 to 2008 was mainly due to the year-over-year increase in advertising and MVAS revenues. The increase from 2006 to 2007 was mainly due to the year-over-year increase in advertising revenues, partially offset by the decline in MVAS revenues. Advertising revenues as a percentage of total net revenues grew to 70% in 2008 from 69% in 2007 and 56% in 2006, while MVAS revenues declined to 28% in 2008 from 29% in 2007 and 41% in 2006.

Advertising. Advertising revenues grew 53% and 41% year-over-year in 2008 and in 2007, respectively. Advertising revenues from China accounted for 99% of our total advertising revenues in 2008, compared to 98% and 97% of our total advertising revenues for 2007 and 2006, respectively. The growth of our advertising revenues in 2008 was greatly due to the coverage of the 2008 Beijing Olympics. Total number of advertisers in China was approximately 1,220 in 2008, compared to approximately 1,080 and 980 in 2007 and 2006, respectively. Average revenue per advertising customer in China was approximately $210K in 2008, as compared to approximately $150K and $120K in 2007 and 2006, respectively. Our top ten customers in the aggregate generated approximately 17%, 16% and 16% of our advertising revenues in the PRC in 2008, 2007 and 2006, respectively. Automobile, real estate and financial were the top three advertising sectors in 2008, accounting for approximately 57% of total advertising revenues and the majority of our year-over-year advertising revenue growth.

Non-advertising. Non-advertising revenues consist of MVAS and, to a lesser extent, fee-based revenues.

MVAS


	Years ended December 31,
	2008				2007				2006				% of Change
	(in thousands, except percentages)
													YOY			YOY
													08 & 07			07 & 06
2.0G products	$	64,005	62	%	$	55,404	79	%	$	73,665	85	%		16	%		-25	%
2.5G products		39,313	38	%		15,085	21	%		12,592	15	%		161	%		20	%

Total MVAS revenues	$	103,318	100	%	$	70,489	100	%	$	86,257	100	%		47	%		-18	%

MVAS revenues increased 47% year-over-year in 2008 but decreased 18% year-over-year in 2007. The year-over year increase in MVAS revenues in 2008 was mainly due to relatively more stable operator policies, government regulations and business environment.

Revenues from 2.0G products include SMS, IVR, CRBT, increased 16% year-over-year in 2008. Revenues from SMS accounted for 33%, 51% and 64% of MVAS revenues in 2008, 2007 and 2006, respectively. Revenues from IVR were 25%, 22% and 17% of MVAS revenues in 2008, 2007 and 2006, respectively. SMS decreased 6% year-over-year in 2008, while IVR increased 70% year-over-year. The year-over-year change in product mix between SMS and IVR (and MMS) in 2008 mostly reflected the allocation of promotional activities to maximize the return on our marketing efforts. SMS revenues declined 35% year-over-year in 2007, while IVR revenues increased 3% year-over-year. The decline in SMS revenues in 2007 was largely due to higher churn rates by our monthly subscription users, less effective means to recruit new users and, in general, tightening operator policies and regulatory environment in China.

Revenues from 2.5G products include MMS, WAP and Kjava, increased 161% and 20% year-over-year in 2008 and 2007, respectively. MMS, WAP and Kjava accounted for 17%, 11% and 10% of MVAS revenues, respectively, in 2008. These products each accounted for less than 10% of MVAS revenues in 2007 and 2006. MMS revenues increased 343% year-over-year in 2008 mainly due to increased marketing effort (as stated above). WAP revenues increased 73% year-over-year in 2008 primarily due to increased marketing efforts as well as better placement on the China Mobile Monternet portal. Kjava revenues increased 126% from 2007 mainly due to increased game offerings, sales promotion effect and general market demand.

In the past, operators have made significant changes to their policies on mobile value-added services in accordance with policy derivatives from MII. The policy changes by the operators have significantly reduced our ability to acquire new MVAS subscribers and increased churn rate of our existing monthly MVAS subscribers. In addition, our MVAS business has been impacted by other regulatory arms in China, such as SARFT. The key policy changes made by operators in recent years include the following:

• In December 2007, the MII unified the dialing codes of each service provider by adding a four-digit code to each service provider’s product. This complicates the purchasing process of MVAS and may reduce the effectiveness of our direct advertising and increase the difficulties of new user recruitment. We are unable to estimate the impact of such change on our results of operations, cash flows and financial condition.

• In August 2007, the MII tightened the regulations over direct advertising in China. This change reduced the effectiveness of our direct advertising on MVAS and increased the difficulties of new user recruitment. We have not been able to accurately estimate the impact of such change on our results of operations, cash flows and financial condition, but believe it has had and will continue to have a significant negative impact to our MVAS business. Revenues from direct-advertising-based MVAS in 2008 accounted for approximately 19% of our MVAS revenues.

• In July 2007, China Mobile began implementing a score and ranking system that attempts to reward service providers based on certain factors, such as revenue size, revenue growth rate and user complaint volume. A low score or ranking by any of our mobile entities would significantly result in a negative impact to our results of operations, cash flows and financial condition. Revenues billed via provincial and local subsidiaries of China Mobile in the aggregate in 2008 were approximately $92.9 million.

• In April 2007, China Unicom changed its service fee settlement method with service providers from estimated collection to actual collection. As a result of the switch, fee settlement with China Unicom, based on the receipt of billing statement, has taken up to four months, which has negatively impacted our cash flow. In addition, if we are unable to rely on historical confirmation rates from China Unicom in the future as a result of the change in fee settlement method, we may need to defer recognition of such revenues until the billing statements are received. Revenues billed via provincial and local subsidiaries of China Unicom in the aggregate in 2008 were less than 10% of our MVAS revenues.

• In July 2006, China Mobile made significant changes to their policy on subscription-based MVAS, which were intended to address a number of issues, including reducing subscriber complaints, increasing customer satisfaction and promoting healthy development of MVAS industry in China. The key changes include requiring double confirmations on new MVAS subscriptions as well as sending SMS reminders to existing monthly subscribers of SMS, MMS and WAP to inform them of their MVAS subscriptions and fee information. In September 2006, China Unicom began enforcing double confirmations on new subscription services. We have not been able to estimate the impact of these policy changes on our results of operations, cash flows and financial conditions, but believe it has reduced and will continue to significantly reduce our ability to acquire new monthly MVAS subscribers and increase the churn rate of our existing monthly MVAS subscribers. Revenues from subscription-based MVAS in 2008 accounted for approximately 19% of our MVAS revenues.

Mobile operators, such as China Mobile and China Unicom, and governmental bodies, such as the MII and SARFT, may announce additional measures or regulations in the future, which may adversely impact on our results of operations, cash flows and financial condition. We are in the process of developing and promoting new products that we believe are not subject to recent policy and regulations changes made by operators and governmental bodies. However, there is no guarantee that we will be able to develop any such new products, that any such products will achieve market acceptance or that such products will not be affected by future changes in rules and regulations.

Other non-advertising revenues

Other non-advertising revenues include enterprise services, such as paid search and directory listings, e-commerce and fee-based services, such as paid email services and causal games. Other non-advertising revenues increased 16% and 3% year-over-year in 2008 and 2007, respectively.

Costs of revenues


	Years ended December 31,
	2008		2007		2006		% of Change			% of Change
							YOY 08 & 07			YOY 07 & 06
	(In thousands, except percentages)
Costs of revenues:
Advertising	$	100,008	$	63,466	$	42,529		58	%		49	%
Non-advertising:
MVAS		48,005		29,339		34,255		64	%		-14	%
Other		2,322		1,897		2,626		22	%		-28	%

Subtotal		50,327		31,236		36,881		61	%		-15	%

Total costs of revenues	$	150,335	$	94,702	$	79,410		59	%		19	%

Costs of revenues increased 59% and 19% year-over-year in 2008 and 2007, respectively. Higher advertising cost was a key cost driver in 2008 and 2007, while higher MVAS cost also contributed to higher cost of revenues in 2008.

Advertising. Costs of advertising revenues primarily consist of expenses associated with the production of our websites, including fees paid to third parties for Internet connection, content and services, personnel-related costs and equipment depreciation expenses. Costs of advertising revenues also include the business taxes on advertising sales in the PRC. Business taxes, surcharges and cultural business construction fees are levied at approximately 8.5% of advertising revenues in China.

Costs of advertising revenues increased 58% and 49% year-over-year in 2008 and 2007, respectively. Compared to 2007, content fees increased $10.0 million in 2008, business taxes increased $8.3 million, attributable to higher advertising revenues, web production costs increased $7.7 million, driven by an increase headcount and personnel related expenses, and Internet connection costs associated with additional bandwidth increased $7.2 million. Compared to 2006, web production costs increased $6.2 million in 2007, driven by an increase headcount and personnel related expenses, Internet connection costs associated with additional bandwidth increased $5.0 million, business taxes increased $4.6 million, attributable to higher advertising revenues, and content fees increased $4.5 million. These increases were driven by the need to provide additional resources to support our web traffic and advertising revenue growth. Costs of advertising revenues for 2008, 2007 and 2006 included stock-based compensation of $3.2 million, $1.8 million and $1.7 million, respectively.

Non-advertising. Costs of non-advertising revenues mainly consist of the fees paid to third-party operators for their services related to billing, transmissions and collection of our MVAS revenues and for using their transmission gateways, fees or royalties paid to third-party providers for contents and services associated with our MVAS, and business taxes and surcharges levied on non-advertising sales in the PRC, which are approximately 3.3% for mobile related revenues and 5.5% for other non-advertising revenues.

Costs of MVAS revenues increased 64% year-over-year in 2008 and decreased 14% year-over-year in 2007. Compared to 2007, fees paid to third-party content and service providers increased $12.7 million in 2008 and fees retained by or paid to operators increased $6.0 million. Compared to 2006, fees retained by or paid to operators decreased $8.2 million in 2007 while fees paid to third-party content and service providers increased $3.8 million.

Historical cost of MVAS revenue trends may not be indicative of future results, as the operators in China have made changes to the way service fees are charged. For example, starting in January 2007, we were required to switch from using our own platform for the delivery of IVR services to that of China Mobile. Consequently, China Mobile’s service fees for IVR increased from 15% to 30%. China Mobile, China Unicom and other operators may further change their fee policies, which may have a material and adverse impact to our results of operation, financial position and cash flow.

Costs of other non-advertising revenue also include costs for providing our enterprise services, e-commerce and fee-based services. For 2006, costs of other non-advertising revenues include a $1.1 million write-off of prepaid royalty related to our iGame based on management’s assessment of the game business.

Gross profit margins


	Years ended December 31,
	2008			2007			2006
Gross profit margins:
Advertising		61	%		62	%		65	%
Non-advertising:		55	%		60	%		60	%
MVAS		54	%		58	%		60	%
Other		70	%		72	%		60	%
Overall		59	%		62	%		63	%

Compared to the prior year, overall gross margin declined three percentage points to 59% in 2008 and declined one percentage point to 62% in 2007.

Advertising. The year-over-year declines in advertising gross profit margin in 2008 and 2007 were mainly due to the increase in content fees and Internet connection cost. Stock-based compensation for 2008, 2007 and 2006 accounted for approximately 1% of our advertising revenues. We expect to continue to increase our investments in the production of web content and Internet connection in absolute dollars to maintain our competitiveness.

Non-advertising. The majority of the costs associated with non-advertising revenues are variable costs. Gross margin for non-advertising revenues declined 5% from 2007 to 55% in 2008 and remained flat at 60% in 2007. Gross margin for MVAS declined four percentage points and two percentage points, year-over-year in 2008 and 2007, respectively. These declines were mainly driven by the increases in content and channel distribution costs. We expect further increases in fees paid to content providers and channel distributors as a percentage of MVAS revenues, which will result in continuing decline in MVAS gross margin in the future.

Operating expenses


	Years ended December 31,
	2008					2007					2006					% of change
	(in thousands, except percentages)
			% of net					% of net					% of net			YOY			YOY
			revenues					revenues					revenues			08 & 07			07 & 06
Sales and marketing expenses	$	79,784		22	%	$	50,555		21	%	$	49,972		23	%		58	%		1	%
Product development expenses	$	30,371		8	%	$	21,942		9	%	$	19,573		9	%		38	%		12	%
General and administrative expenses	$	33,179		9	%	$	26,738		11	%	$	27,172		13	%		24	%		-2	%

Sales and marketing expenses. Sales and marketing expenses consist primarily of compensation expenses, sales commissions, advertising and promotional expenditures and travel expenses. Compared to 2007, corporate branding spending and MVAS promotions increased $21.6 million in 2008, stock-based compensation increased $0.9 million and payroll-related expenses, such as sales commissions bonuses, increased $5.6 million. The year-over-year change from 2006 to 2007 was not significant. We expect sales and marketing expenses to continue to increase in absolute dollars in the near future.

Product development expenses. Product development expenses consist primarily of personnel-related expenses incurred for the enhancement to and maintenance of our websites as well as costs associated with new product development and enhancement for products such as blog, video podcasting and email. Compared to 2007, personnel-related expenses increased $4.6 million in 2008, depreciation expenses increased $1.3 million in 2008, resulting from purchases of new capital equipment, while stock-based compensation increased $0.4 million. Compared to 2006, depreciation expenses increased $1.4 million in 2007 resulting from purchases of new capital equipment, while stock based compensation decreased $0.2 million. We expect product development expenses to continue to increase in absolute dollars in the near future.

General and administrative expenses. General and administrative expenses consist primarily of personnel compensation costs, professional service fees 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 the PRC to our subsidiaries. Compared to 2007, stock-based compensation expenses increased $2.9 million, professional fees increased $2.8 million and personnel related expenses increased $1.5 million. These were partially offset by the decrease in provision for allowance for doubtful accounts of $1.9 million. The year-over-year change from 2006 to 2007 was not significant.

Amortization of intangible assets . Amortization of intangibles was approximately $1.3 million, or less than 1% of total net revenues, in 2008, compared with $1.2 million, or 1%, in 2007 and $1.8 million, or 1%, in 2006. As of December 31, 2008, the net carrying amount of our intangible assets represents purchased technology, database and software. See Note 4 to the Consolidated Financial Statements included in the “Revised Item 8. Financial Information and Item 18. Financial Statements” filed as exhibit 99.7 to the Form 6-K to which this exhibit is included for further information on intangible assets, including estimates of amortization expenses for future periods.

Interest and other income


	Years ended December 31,
	2008		2007			2006
	(In thousands)
Interest income	$	15,371	$	11,522		$	8,510
Amortization of debt discount		—		(3,704	)		(7,133	)
Other income		2,899		1,209			39

	$	18,270	$	9,027		$	1,416

The year-over-year increases in interest income in 2008 and 2007 were due to higher balances of cash, cash equivalent and short-term investments in 2008 and 2007. With the adoption of FSP APB 14-1, we recorded debt discount of $26.5 million and amortized the amount on a straight-line basis over four years ended in June 2007 as a non-cash increase to interest expense. Net currency transaction gains (shown under “Other Income”) for 2008 and 2007 were approximately $3.3 million and $1.1 million, respectively, arising from the Chinese renminbi appreciating against the U.S. dollar. Net currency transaction loss for 2006 was $0.1 million.

Amortization of convertible debt issuance cost

With the adoption of FSP APB 14-1, we recorded convertible debt issuance cost of approximately $2.0 million. This amount was amortized on a straight-line basis over four years ended in June 2007. The amortization expense for 2007 and 2006 was $0.3 million and $0.5 million, respectively.

Gain on business and equity investments, net

The following summarizes the gain (loss) on business and investments:


	Years ended December 31,
	2008			2007		2006
	(In thousands)
COHT	$	3,137		$	—	$	—
Shanghai-NC Soft		—			—		2,006
Others		(779	)		830		(663	)

	$	2,358		$	830	$	1,343

% of total net revenues		*			*		1	%


*		Less than 1%

In July 2008, the Company recognized an investment loss of $0.8 million, as a result of taking a controlling interest in a $3.6 million follow-on investment of a web application development firm. In April 2008, the Company sold a 34% interest of its restructured real estate and home decoration business China Online Housing Technology Corporation and recorded a gain of $3.1 million from the step up of its sold interests to fair value. In June 2007, the Company sold its interest in a privately held company and recorded a gain of $0.8 million. In May 2006, the Company sold its 51% interest in Shanghai-NC SINA, a joint venture with NC Soft, a Korean online game company, to NC Soft and recorded a gain of $2.0 million.

Provision for income taxes


	Years ended December 31,
	2008			2007			2006
	(In thousands)
Current income tax provision	$	14,098		$	6,030		$	4,401
Deferred income tax		(56	)		474			(350	)

Total	$	14,042		$	6,504		$	4,051

Income from China operations	$	108,147		$	70,167		$	56,128
Effective tax rate for China operations		13	%		9	%		7	%

Based on our current operating structure and preferential tax treatments available to us in China, the effective income tax rate for our China operations in 2008 was 13%, compared to 9% in 2007 and 7% in 2006. The increase in effective income tax rate in 2008 was due to the phasing out of tax holidays of our FIEs, while the increase in 2007 was primarily due to greater taxable income sourced from higher tax rate entities.

Prior to January 1, 2008, our subsidiaries and VIEs were governed by the Previous IT Law. Under the Previous IT Law, our subsidiaries and VIEs were generally subjected to enterprise income taxes at a statutory rate of 33% (30% state income tax plus 3% local income tax) or 15% for qualified new and high technology enterprises. In addition to a preferential statutory rate, some of our new and high technology subsidiaries were entitled to special tax holidays of three-year tax exemption followed by three years at a 50% reduction in the tax rate, commencing the first operating year.

Effective January 1, 2008, the EIT Law in China supersedes the Previous IT Law and unifies the income tax rate for domestic enterprises and FIEs at 25%. The EIT Law provides a five-year transitional period for certain entities that enjoyed a favorable income tax rate of less than 25% and/or a preferential tax holiday under the Previous IT Law and were established before March 16, 2007, to gradually increase their rates to 25%. In addition, new and high technology enterprises continued to enjoy a preferential tax rate of 15%. The EIT Law also provides grandfather treatment for new and high technology enterprises that received special tax holidays under the Previous IT Law to continue to enjoy their tax holidays until expiration. In December 2008, two of our subsidiaries in China, SINA.com Technology (China) Co. Ltd. and Beijing New Media Information Technology Co. Ltd., were qualified as new and high technology enterprises under the new EIT Law.

The EIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law defines the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” The determination of tax residency requires a review of surrounding facts and circumstances of each case. If SINA is treated as a resident enterprise for PRC tax purposes, SINA will be subject to PRC tax on worldwide income at a uniform tax rate of 25% starting from January 1, 2008.

The EIT Law also imposes a withholding income tax of 10% on dividends distributed by an FIE to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the Previous IT Law. The Cayman Islands, where the Company incorporated, does not have such tax treaty with China. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a foreign-invested enterprise in China to its direct holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). A majority of our FIEs’ operations in China are invested and held by Hong Kong registered entities. In accordance with APB Option No. 23, “Accounting for Income Taxes — Special Area,” all undistributed earnings are presumed to be transferred to the parent company and are subject to the withholding taxes unless certain conditions are met. Based on the subsequently issued interpretation of the new EIT, Article 4 of Cai Shui [2008] Circular No. 1, dividends on earnings prior to 2008 but distributed after 2008 are not subject to withholding income tax. The current policy approved by our Board allows us to distribute PRC earnings offshore only if we do not have to pay a dividend tax. Such policy may require us to reinvest all earnings made since 2008 onshore indefinitely or be subject to 10% withholding tax should our policy change to allow for earnings distribution offshore. If we were to distribute our FIEs’ 2008 earnings, we would be subject to a withholding tax expense of approximately $4.7 million.

During 2007, we reassessed our deferred tax assets assuming the 25% effective tax rate under the EIT Law. Historically, deferred tax assets were calculated using old statutory rate 33% or applicable preferential rates of 7.5% or 15% of the respective legal entities. As a result of the reassessment, we wrote down $0.4 million in deferred tax assets in the first quarter of 2007.

For further information on our tax structures and inherent risks see “ If tax benefits available to us in China are reduced or repealed, our results of operations could suffer significantly and your investment in our shares may be adversely affected .” under Risk Factors in Part I Item 3.D of our 2008 Form 20-F. See also Note 10 “ Income Taxes ” to the

Consolidated Financial Statements included in the “Revised Item 8. Financial Information and Item 18. Financial Statements” filed as exhibit 99.7 to the Form 6-K to which this exhibit is included for further discussion on income taxes.

B. Liquidity and Capital Resources


	As of December 31
	2008		2007		2006
	(In thousands)
Cash and cash equivalents and short-term investments	$	603,824	$	477,999	$	362,751
Working capital	$	498,524	$	377,608	$	270,820
SINA shareholders’ equity	$	620,505	$	494,976	$	391,427

We have funded our operations and capital expenditures primarily using the $97.5 million raised through the sale of preference shares, the $68.8 million raised from the sale of ordinary shares in the initial public offering and the $97.3 million raised from the sale of zero-coupon, convertible, subordinated notes in July 2003, as well as cash generated from operations and the exercise of stock options.

On July 7, 2003, we issued $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 bear no interest. The Notes are 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. During 2007, one million dollars of the Notes were converted as SINA ordinary shares, resulting in a balance of $99.0 million in outstanding Notes as of December 31, 2008. 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. 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, which Registration Statement is no longer 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 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. The closing price of our ordinary shares on December 31, 2008, the last trading day of 2008, was $23.15. For the quarter ended December 31, 2008, the sale price of SINA ordinary shares did not exceed 115% of the conversion price per ordinary share for five consecutive trading days. The Notes are therefore not convertible into SINA ordinary shares for the quarter ending March 31, 2009 in accordance with threshold (i) described above. Upon a purchaser’s election to convert the Notes in the future periods, we have the right to deliver cash in lieu of ordinary shares, or a combination of cash and ordinary shares.

As of December 31, 2008, we had $603.8 million in cash and cash equivalents and short-term investments to meet the future requirements of our operating 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 or to increase our cash reserve for future acquisitions. 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.

In fourth quarter of 2008, the board authorized, but did not obligate, the Company to repurchase up to $100 million of the Company’s ordinary shares on an opportunistic basis. Stock repurchases under this program may be made through open market purchases, in negotiated transactions off the market, in block trades pursuant to a 10b5-1 plan, which would give a third party independent discretion to make purchases of the Company’s ordinary shares, or otherwise and in such amounts as we deem appropriate. No shares had been repurchased as of December 31, 2008. As of June 10, 2009, we have repurchased 2,454,956 shares in the open market, at an average price of $20.37 for a total consideration of $50 million. Additional shares up to a maximum of $50 million may be purchased under this program through the end of 2009.

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


	Years ended December 31,
	2008			2007			2006
	(In thousands)
Net cash provided by operating activities	$	114,000		$	89,065		$	63,097
Net cash used in investing activities		(23,960	)		(5,857	)		(850	)
Net cash provided by financing activities		12,407			19,037			9,979
Effect of exchange rate changes on cash and cash equivalents		9,207			6,244			2,541

Net increase in cash and cash equivalents		111,654			108,489			74,767
Cash and cash equivalents at beginning of period		271,666			163,177			88,410

Cash and cash equivalents at end of period	$	383,320		$	271,666		$	163,177

Operating activities

Net cash provided by operating activities for 2008 was $114.0 million. This was attributable to our net income of $81.2 million, adjusted by non-cash related expenses including depreciation of $16.0 million, stock-based compensation of $14.3 million, allowance for doubtful accounts of $3.5 million, amortization of intangible assets of $1.6 million and a net increase in cash from working capital items of $1.6 million, offset by the foreign exchange gains from liquidated subsidiaries of $2.0 million and gains from the sale of business and equity investments of $2.4 million. The net increase in working capital items was mainly due to the increase in accrued liabilities, such as content fees, bandwidth costs, sales commissions, bonuses and marketing expenses, deferred revenues and income tax payable, partially offset by the increase in account receivables that resulted from the significant increase in our advertising revenues during 2008.

Net cash provided by operating activities for 2007 was $89.1 million. This was attributable to our net income of $54.1 million, adjusted by non-cash related expenses including depreciation of $13.4 million, stock-based compensation of $8.7 million, allowance for doubtful accounts of $5.3 million, amortization of debt discount of $3.7 million, amortization of intangible assets of $1.2 million, and a net increase in cash from working capital items of $2.7 million, offset by gains from the sale of investments of $0.8 million. The net increase in working capital items was mainly due to increase in accrued liabilities, such as sales rebates, content fees, bandwidth costs, sales commissions, bonuses and marketing expenses, and deferred revenues and income tax payable, partially offset by the increase in account receivables which resulted from the significant increase in our advertising revenues during 2007.

Net cash provided by operating activities for 2006 was $63.1 million. This was attributable to our net income of $33.0 million, adjusted by non-cash related expenses including depreciation of $9.9 million, stock-based compensation of $9.5 million, allowance for doubtful accounts of $5.0 million, amortization of debt discount of $7.1 million, amortization of intangible assets of $1.8 million, amortization of convertible debt issuance cost of $0.5 million and net losses from equity investments of $0.7 million, offset by gains from the sale of businesses and investments of $2.0 million and a net decrease in cash from working capital items of $2.2 million. The net decrease in working capital items was mainly due to increase in account receivables that resulted from the significant increase in our advertising revenues during 2006, partially offset by the increase in accrued liabilities, such as sales rebates, content fees, bandwidth costs, sales commission, bonuses and overall marketing expenses, and income tax payable.

Investing activities

Net cash used in investing activities for 2008 was $24.0 million. This was due to the purchase of short-term investments of $154.0 million, equipment purchases of $18.8 million and purchase of additional interest in a private company of $2.0 million, offset by the maturities of short-term investments of $150.9 million.

Net cash used in investing activities for 2007 was $5.9 million. This was due to the purchase of short-term investments of $98.8 million, equipment purchases of $12.2 million, offset by the proceeds from the maturities of short-term investments of $104.4 million and other net investment activities of $0.7 million.

Net cash used in investing activities for 2006 was $0.9 million. This was due to the purchase of short-term investments of $102.1 million, equipment purchases of $14.1 million and additional consideration paid for the Crillion acquisition of $11.3 million. This was offset by the proceeds from the maturities of short-term investments of $120.1 million and the sale of business and investments of $6.5 million.

Financing activities

Net cash provided by financing activities for 2008 was $12.4 million. Proceeds from the exercise of share options was $10.5 million, capital contribution from eHouse was $2.5 million and payments for other financing activities were $0.6 million. Net cash provided by financing activities for 2007 and 2006 was $19.0 million and $10.0 million, respectively, primarily related to the proceeds from the exercise of share options.

C. Research and Development, Patents and Licenses, etc.

Not applicable.

D. Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2008 to December 31, 2008 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E. Off-Balance Sheet Arrangements

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.

F. Contractual Obligations

The following table sets forth our contractual obligations as of December 31, 2008:


	Payments due by period
			Less than one		One to		Three to		More than
	Total		year		three years		five years		five years
	(In thousands)
Operating lease obligations	$	8,874	$	5,317	$	3,221	$	336	$	—
Purchase commitments		33,458		26,183		6,819		432		24
Other long-term liabilities		4,039		—		1,536		—		2,503

Total contractual obligations	$	46,371	$	31,500	$	11,576	$	768	$	2,527

Operating lease obligations include the commitments under the lease agreements for our office premises. We lease office facilities under non-cancelable operating leases with various expiration dates through 2013. Rental expenses for the years ended December 31, 2008, 2007 and 2006 were $6.5 million, $4.9 million and $3.6 million, respectively. Based on the current rental lease agreements, future minimum rental payments required as of December 31, 2008 are $5.3 million, $1.8 million and $0.8 million for the years ending December 31, 2009, 2010 and 2011, respectively. The majority of the commitments are from our office lease agreements in the PRC.

On December 22, 2008, we announced that we entered into a definitive agreement with Focus to acquire substantially all of the assets of Focus’s digital out-of-home advertising networks, including LCD display network, poster frame network and certain in-store network. The transaction is intended to combine the new media platform of the two companies in China to provide more effective and integrated marketing solutions to customers. The transaction is subject to customary closing conditions and certain regulatory approvals and, if approved, is expected to be completed by the third quarter of 2009. Based on the announcement on December 22, 2008, we will issue 47 million newly issued ordinary shares to Focus as consideration for the acquired assets. Focus will then distribute our shares to its shareholders shortly after the closing.

Exhibit 99.7

Revised Item 8. Financial Information and Item 18. Financial Statements

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


				Page


Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets at December 31, 2008 and 2007		F-3
Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006		F-4
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2008, 2007 and 2006		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006		F-6
Notes to Consolidated Financial Statements		F-7

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of SINA Corporation:

In our opinion, the accompanying consolidated balance sheets, consolidated statements of operations, consolidated statements of shareholders’ equity and consolidated statements of cash flows present fairly, in all material respects, the financial position of SINA Corporation and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15 of SINA Corporation’s Form 20-F for the year ended December 31, 2008 (not included herewith). Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty of Income Taxes” since January 1, 2007 .

As discussed in Note 2 to the consolidated financial statements, in 2009 the Company changed the manner in which it accounts for non-controlling interests and convertible debt instruments.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers Zhong Tian CPAs Limited Company

PricewaterhouseCoopers Zhong Tian CPAs Limited Company

Beijing, the People’s Republic of China

June 29, 2009, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the change in accounting for non-controlling interests and convertible debt instruments described in Note 2, as to which the date is December 23, 2009

F-2

SINA CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)


	December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	383,320		$	271,666
Short-term investments		220,504			206,333
Accounts receivable, net of allowances for doubtful accounts of $9,146 and $5,663, respectively		79,183			56,719
Prepaid expenses and other current assets		9,424			8,840

Total current assets		692,431			543,558
Property and equipment, net		34,111			26,846
Equity investments		—			1,300
Intangible assets, net		10,477			6,695
Goodwill		84,050			82,663
Other assets		1,425			1,201

Total assets	$	822,494		$	662,263

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,397		$	940
Accrued liabilities		68,468			49,488
Income taxes payable		17,391			9,079
Deferred revenue		7,651			7,443
Convertible debt		99,000			99,000

Total current liabilities		193,907			165,950
Long-term liabilities:
Other liabilities		4,039			1,337

Total liabilities		197,946			167,287

Commitments and contingencies (Note 18)

Shareholders’ equity:
SINA shareholders’ equity:
Ordinary Shares: $0.133 par value; 150,000 shares authorized; 56,121 and 55,521 shares issued and outstanding		7,464			7,384
Additional paid-in capital		382,880			358,232
Retained earnings		178,569			97,931
Accumulated other comprehensive income (loss):
Unrealized loss on investments in marketable securities		(329	)		(920	)
Cumulative translation adjustments		51,921			32,349

Total SINA shareholders’ equity		620,505			494,976

Noncontrolling interest		4,043			—

Total shareholders’ equity		624,548			494,976

Total liabilities and shareholders’ equity	$	822,494		$	662,263

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

F-3

SINA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)


	Years ended December 31,
	2008			2007			2006
Net revenues:
Advertising	$	258,499		$	168,926		$	120,067
Non-advertising		111,088			77,201			92,787

		369,587			246,127			212,854


Costs of revenue:
Advertising		100,008			63,466			42,529
Non-advertising		50,327			31,236			36,881

		150,335			94,702			79,410

Gross profit		219,252			151,425			133,444

Operating expenses:
Sales and marketing		79,784			50,555			49,972
Product development		30,371			21,942			19,573
General and administrative		33,179			26,738			27,172
Amortization of intangible assets		1,337			1,176			1,820

Total operating expenses		144,671			100,411			98,537

Income from operations		74,581			51,014			34,907
Interest and other income, net		18,270			9,027			1,416
Amortization of convertible debt issuance cost		—			(252	)		(503	)
Loss on investment in Tidetime Sun		—			—			(147	)
Gain on the sale of noncontrolling interest in a subsidiary and equity investments, net		2,358			830			1,343

Income before income tax expense		95,209			60,619			37,016
Income tax expenses		(14,042	)		(6,504	)		(4,051	)

Net income		81,167			54,115			32,965
Less: Net income attributable to the noncontrolling interest		(529	)		—			—

Net income attributable to SINA	$	80,638		$	54,115		$	32,965

Basic net income per share attributable to SINA	$	1.44		$	0.98		$	0.61
Diluted net income per share attributable to SINA	$	1.33		$	0.97		$	0.69
Shares used in computing basic net income per share attributable to SINA		55,821			55,038			53,696
Shares used in computing diluted net income per share attributable to SINA		60,474			60,020			58,549

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

F-4

SINA CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)


						SINA Shareholders’ Equity
													Accumulated
	Total									Additional			Other
	Shareholders’			Comprehensive		Ordinary Shares				Paid-in			Comprehensive		Retained			Noncontrolling
	Equity			Income		Shares		Amount		Capital			Income		Earnings			Interest
Balances at December 31, 2005 as reported	$	319,622		$	—		53,265	$	7,084	$	284,559		$	1,922	$	26,057		$	—
Adjustment to initially apply FSP APB 14-1 for convertible debt		10,565			—		—		—		25,771			—		(15,206	)		—

Balances at December 31, 2005 as revised		330,187			—		53,265		7,084		310,330			1,922		10,851			—
Issuance of ordinary shares pursuant to stock plans		9,979			—		895		119		9,860			—		—			—
Stock-based compensation expenses		9,474			—		—		—		9,474			—		—			—
Business acquisition		—			—		184		25		(25	)		—		—			—
Comprehensive income:
Net income		32,965			32,965		—		—		—			—		32,965			—
Unrealized gain on marketable securities		532			532		—		—		—			532		—			—
Currency translation adjustments		8,290			8,290		—		—		—			8,290		—			—

Total comprehensive income		41,787		$	41,787

Balances at December 31, 2006		391,427					54,344		7,228		329,639			10,744		43,816			—
Issuance of ordinary shares pursuant to stock plans		19,037			—		1,138		151		18,886			—		—			—
Stock-based compensation expenses		8,712			—		—		—		8,712			—		—			—
Issuance of ordinary shares pursuant to convertible bonds conversion		1,000			—		39		5		995					—			—
Comprehensive income:
Net income		54,115			54,115		—		—		—			—		54,115			—
Unrealized gain on marketable securities		1,451			1,451		—		—		—			1,451		—			—
Currency translation adjustments		19,234			19,234		—		—		—			19,234		—			—

Total comprehensive income		74,800		$	74,800

Balances at December 31, 2007		494,976			—		55,521		7,384		358,232			31,429		97,931			—
Issuance of ordinary shares pursuant to stock plans		10,549			—		600		80		10,469			—		—			—
Stock-based compensation expenses		14,309			—		—		—		14,309			—		—			—
Sale of subsidiaries’ shares to noncontrolling interest		3,514			—		—		—		—			—		—			3,514
Others		(130	)		—		—		—		(130	)		—		—			—
Comprehensive income:
Net income		81,167			81,167		—		—		—			—		80,638			529
Unrealized gain on marketable securities		591			591		—		—		—			591		—			—
Currency translation adjustments		19,572			19,572		—		—		—			19,572		—			—

Total comprehensive income		101,330		$	101,330

Balances at December 31, 2008	$	624,548					56,121	$	7,464	$	382,880		$	51,592	$	178,569		$	4,043

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

F-5

SINA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


	Years ended December 31,
	2008			2007			2006
Cash flows from operating activities:
Net income	$	81,167		$	54,115		$	32,965
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		16,002			13,374			9,892
Stock-based compensation		14,309			8,712			9,474
Amortization of debt discount		—			3,704			7,133
Amortization of convertible debt issuance cost		—			252			503
Amortization of intangible assets		1,603			1,176			1,820
Provision for allowance for doubtful accounts		3,528			5,294			5,044
Deferred income taxes		(56	)		474			(350	)
Gain on sale of business and equity investments, net		(2,358	)		(830	)		(1,343	)
Foreign exchange gains from liquidated subsidiaries		(1,964	)		—			—
Loss on investment in Tidetime Sun		—			—			147
Loss on disposal of property and equipment		53			83			17
Changes in assets and liabilities (net of effect from business acquisition):
Accounts receivable		(21,903	)		(14,241	)		(14,791	)
Prepaid expenses and other current assets		65			2,003			(490	)
Other assets		24			77			1,429
Accounts payable		62			(58	)		(1	)
Accrued liabilities		14,646			9,140			11,171
Income taxes payable		8,614			2,504			2,922
Deferred revenue		208			3,286			(2,445	)

Net cash provided by operating activities		114,000			89,065			63,097

Cash flows from investing activities, net of effect from business acquisition:
Purchases of short-term investments		(154,036	)		(98,792	)		(102,135	)
Maturities of short-term investments		150,885			104,354			120,121
Purchases of property and equipment		(18,790	)		(12,158	)		(14,090	)
Cash paid for acquisitions, net of cash acquired, and equity investments		(2,019	)		(1,261	)		(11,266	)
Proceeds from sale of business and investments, net		—			2,000			6,520

Net cash used in investing activities		(23,960	)		(5,857	)		(850	)

Cash flows from financing activities:
Proceeds from sale of subsidiary shares to noncontrolling interest		2,500			—			—
Proceeds from issuance of ordinary shares		10,549			19,037			9,979
Other financing activities		(642	)		—			—

Net cash provided by financing activities		12,407			19,037			9,979

Effect of exchange rate change on cash and cash equivalents		9,207			6,244			2,541

Net increase in cash and cash equivalents		111,654			108,489			74,767
Cash and cash equivalents at the beginning of the year		271,666			163,177			88,410

Cash and cash equivalents at the end of the year	$	383,320		$	271,666		$	163,177


Supplemental disclosures:
Cash paid for income taxes	$	5,270		$	3,634		$	1,294

Cash paid for acquisitions	$	(3,663	)	$	—		$	(11,266	)
Cash acquired		1,644			—			—

Cash paid for acquisitions, net of cash acquired	$	(2,019	)	$	—		$	(11,266	)

Supplemental disclosures of noncash investing and financing activities:
Ordinary shares issued pursuance to convertible bond conversion	$	—		$	1,000		$	—

Increase in equity investment from deposit on equity investment	$	—		$	—		$	800

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

F-6

SINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Operations

SINA Corporation (“SINA”, “we” or the “Company”) is an online media company and value-added information service provider in the People’s Republic of China (the “PRC” or “China”) and the global Chinese communities. With a branded network of localized websites targeting Greater China and overseas Chinese, the Company provides services through five major business lines including SINA.com (online news and content), SINA Mobile (mobile value-added services or “MVAS”), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA E-Commerce (online shopping). Together these business lines provide an array of services including region-focused online portals, MVAS, search and directory, interest-based and community-building channels, free and premium email, blog services, audio and video streaming, game community services, classified listings, fee-based services, e-commerce and enterprise e-solutions. The Company generates the majority of its revenues from online advertising and MVAS offerings, and, to a lesser extent, from search and fee-based services.

On December 22, 2008, the Company announced that it entered into a definitive agreement with Focus Media Holding Limited (“Focus”) to acquire substantially all of the assets of Focus’s digital out-of-home advertising networks, including LCD display network, poster frame network and certain in-store network. The transaction is intended to combine the new media platform of the two companies in China to provide more effective and integrated marketing solutions to customers. The transaction is subject to customary closing conditions and certain regulatory approvals and, if approved, is expected to be completed by the third quarter of 2009. Based on the December 22, 2008 announcement, SINA will issue 47 million newly issued ordinary shares to Focus as consideration for the acquired assets. Focus will then distribute SINA shares to its shareholders shortly after the closing.

2. Significant Accounting Policies

Basis of presentation and use of estimates

The preparation of the consolidated financial statements is in conformity with accounting principles generally accepted in the U.S., 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, such differences may be material to the financial statements. The Company believes accounting for advertising and MVAS revenues, accounting for income taxes, assessment of impairment of goodwill and long-lived assets, assessment of impairment of marketable securities, allowance for doubtful accounts, assessment of impairment of equity investments, stock-based compensation, determination of the estimated useful lives of assets, accounting for advertising expenses and foreign currency represent critical accounting policies that reflect the more significant judgments and estimates used in the preparation of its consolidated financial statements.

As discussed “Recent accounting pronouncements” below, the Company have adopted FASB Staff Position No. APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”) and FASB Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51.” (“SFAS 160”), effective January 1, 2009. All periods presented in this consolidated financial statement have been restated or reclassified in accordance with those pronouncements.

Consolidation

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. FASB Interpretation No. 46R “Consolidation of Variable Interest Entities” (“FIN 46R”) requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIEs or is entitled to receive a majority of the VIE’s residual returns.

To comply with PRC laws and regulations, the Company provides substantially all its Internet content, MVAS and advertising services in China via its VIEs. These VIEs are wholly or partially owned by certain employees of the Company. The capital for the VIEs 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

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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, 2008, the total amount of interest-free loans to these PRC employees was $8.0 million and the aggregate accumulated losses of all VIEs were approximately $3.2 million, which have been included in the consolidated financial statements.

The following is a summary of the major 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, selling the advertisements to advertisers and providing MVAS with its Value-Added Telecommunication Services Operating License in China via third-party operators to the users. It is 1.5% owned by Yan Wang, the Company’s Chairman of the Board, 22.50% owned by the Company’s executive officer Tong Chen, 26.75% owned by the Company’s executive officer Hong Du, and 49.25% owned by two other non-executive PRC employees of the Company. The registered capital of the ICP Company is $2.5 million.

	•		Guangzhou Media Message Technologies, Inc. (“Xunlong”), a China company controlled through business agreement. Xunlong is responsible for providing MVAS in China via third-party operators to the users under its Value-Added Telecommunication Services Operating License. It is owned by two non-executive PRC employees of the Company. The registered capital of the Xunlong is $1.2 million.

	•		Beijing Star-Village Online Cultural Development Co., Ltd. (“StarVI”), previously translated as Beijing Star-Village.com Cultural Development Co., Ltd, a China company controlled through business agreement. StarVI is responsible for providing MVAS in China via third-party operators to the users under its Value-Added Telecommunication Services Operating License. It is owned by three non-executive PRC employees of the Company. The registered capital of the StarVI is $1.2 million.

	•		Shenzhen Wang Xing Technology Co., Ltd. (“Wangxing”), a China company controlled through business agreement. Wangxing is responsible for providing MVAS in China via third-party operators to the users under its Value-Added Telecommunication Services Operating License. It is owned by three non-executive PRC employees of the Company. The registered capital of Wangxing is $1.2 million.

	•		Beijing SINA Infinity Advertising Co., Ltd. (the “IAD Company”), a China company controlled through business agreement. The IAD Company is an advertising agency. It is 20% owned by the Company’s executive officer Tong Chen and 80% owned by four non-executive PRC employees of the Company. This entity has an approved business scope including design, production, agency and issuance of advertisements. The registered capital of the IAD Company is $0.1 million.

	•		Beijing Yisheng Leju Information Services Co., Ltd. (“Beijing Leju”), a China company controlled by us through a series of contractual arrangements. Beijing Leju is an advertising agency and is responsible for selling advertisement of real-estate and home decoration channels. It is owned by two non-executive PRC employees of the Company. This entity has an approved business scope including agency and issuance of advertisements. The registered capital of Beijing Leju is $0.1 million.

The Company began to consolidate the ICP Company in October 2001. Xunlong and StarVI were acquired from Memestar Limited in January 2003 and the operating results for these two companies were consolidated by the Company since January 2003. Wangxing was acquired from Crillion Corporation in March 2004 and the operating results for Wangxing were consolidated by the Company since March 2004. The operating results of the IAD Company were consolidated since its establishment in 2004. The operating results of Beijing Leju were consolidated since its establishment in 2008.

Certain prior year amounts of the balance sheets and the statements of operations and cash flow have been reclassified to conform to the current year presentation.

Cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2008 and 2007, cash equivalents were comprised primarily of investments in time deposits, commercial paper and money market funds stated at cost plus accrued interest, which approximated fair value.

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Available-for-sale securities

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 is written down to fair value as a new cost basis and the amount of the write-down is accounted for as 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 increases and decreases in the fair value of available-for-sale securities will be included in comprehensive income through a credit or charge to shareholders’ equity except for an other-than- temporary impairment, which will be charged to income.

Investments classified as available-for-sale securities include marketable debt securities. The Company invests in marketable debt securities that are readily available for sale to meet operating or acquisition needs and, accordingly, classifies them as short-term investments.

Allowances for doubtful accounts

The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts based on a historical, rolling average, bad debt rate in the prior year and other factors such as credit-worthiness and age of receivable balances. 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 the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, or if the operators incur more bad debt than their original estimates, more bad debt allowance may be required.

Long-lived assets

Property and equipment. Property and equipment are stated at 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 four years for computers and equipment and five years for furniture and fixtures. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remaining lease term. Depreciation expenses were $16.0 million, $13.4 million and $9.9 million for fiscal 2008, 2007 and 2006, respectively.

As a result of the Company’s evaluation on its estimate of the useful life of its computer equipment (e.g., servers and filers) during the first quarter of 2006, such life was changed from three years to four years. This change in accounting estimate resulted in a reduction in depreciation expenses of $0.6 million for the three months ended March 31, 2006, of which $0.2 million were in the costs of advertising revenue and $0.4 million were in operating expenses.

Goodwill. Goodwill is carried at cost. Under SFAS No. 142, “Goodwill and Intangible Assets” (“SFAS 142”), goodwill is no longer amortized but tested for impairment annually, or more frequently, if facts and circumstances warrant a review. The provisions of SFAS 142 require that a two-step test be performed to assess goodwill for impairment. First, the fair value of each reporting unit, defined as the operating segment or one level below, is compared to its carrying value, including goodwill. The Company generally determines the fair value of its reporting units using a blended market approach and income approach. If the carrying value of a reporting unit exceeds its fair value, the second step shall be performed and an impairment loss equal to the difference between the implied fair value of reporting unit’s goodwill and the carrying amount of the goodwill will be recorded.

Intangible assets other than goodwill. Intangible assets arising from acquisitions are recognized at fair value upon acquisition and amortized on a straight-line basis over their estimated useful lives, generally from eighteen months to ten years.

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold or use is based on the amount by which the carrying value exceeds the fair value of the asset.

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Equity investments

Equity investments are comprised of joint ventures and privately held companies. The Company accounts for an equity investment over which it has significant influence but does not own a majority equity interest or otherwise control using the equity method. For equity investments over which the Company does not have significant influence, the cost method accounting is used.

The Company assesses its equity investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies, including current earnings trends and undiscounted cash flows, and other company-specific information, such as recent financing rounds. The evaluation process is based on information that it receives from these privately-held companies. This information is not subject to the same disclosure requirements as U.S. publicly traded companies, and as such, the basis for these evaluations is subject to the timing and the accuracy of the data received from these companies.

Convertible debt

The Company applies SFAS No. 78, “Classification of Obligations That Are Callable by the Creditor” to determine the classification of its convertible debt. In accordance with SFAS 78, obligations such as convertible notes are required to be classified as a current liability if they are or will be callable within one year from the balance sheet date, even though liquidation may not be expected within that period. The Company adopted FSP APB14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” on January 1, 2009. APB 14-1 requires issuers of convertible debt that may be settled wholly or partly in cash when converted to account for the debt and equity components separately. This statement is effective for fiscal years beginning after December 15, 2008 and must be applied retrospectively to all periods. In 2003, the Company issued $100 million of zero-coupon, convertible, subordinated notes (the “Notes”) due 2023, and subsequently in 2007, $1 million of the Notes were converted to SINA ordinary shares upon the purchaser’s request. As required by FSP APB 14-1, the Company estimated the fair value, as of the date of issuance, of its convertible notes as if the instrument was issued without the conversion option. The difference between the fair value and the principal amount of the instrument was retrospectively recorded as debt discount and as a component of equity. The amortization of the debt discount was recognized over the expected four-year life of the convertible notes as a non-cash increase to interest expense in the historical periods ended in June 2007. Amortization of debt discount charged to interest and other income, net were $3.7 million and $7.1 million for the fiscal years 2007 and 2006, respectively. The adoption of FSP APB 14-1 resulted in net increase in SINA’s shareholders’ equity of $3.6 million at December 31, 2006 and a $25.8 million reclassification in the SINA’s shareholders’ equity by decreasing retained earnings and increasing additional paid-in capital at December 31, 2007 and 2008. SINA’s income before income tax expense, net income and net income attributable to SINA were reduced by $3.6 million and $7.0 million for the fiscal years 2007 and 2006, respectively, primarily due to increased interest expense.

Revenue recognition

Advertising

Advertising revenues are derived principally from online advertising and, to a lesser extent, sponsorship arrangements. Online advertising arrangements allow advertisers to place advertisements on particular areas of the Company’s websites, in particular formats and over particular periods of time. Advertising revenues from online advertising arrangements are recognized ratably over the contract period of display when the collectibility is reasonably assured. Sponsorship arrangements allow advertisers to sponsor a particular area on its websites in exchange for a fixed payment over the contract period. Advertising revenues from sponsorship are recognized ratably over the contract period. Advertising revenues derived from the design, coordination and integration of online advertising and sponsorship arrangements to be placed on the Company’s websites are recognized ratably over the term of such programs. Revenues for advertising services are recognized net of agency rebates. In accordance with Emerging Issues Task Force (“EITF”) No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables,” advertising arrangements involving multiple deliverables are broken down into single-element arrangements based on their relative fair value for revenue recognition purposes, when possible. The Company recognizes revenue on the elements delivered and defers the recognition of revenue for the fair value of the undelivered elements until the remaining obligations have been satisfied.

Revenues from barter transactions are recognized during the period in which the advertisements are displayed on the Company’s properties. Barter transactions are recorded at the lower of the fair value of the goods and 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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Deferred revenue primarily comprises contractual billings in excess of recognized revenue and payments received in advance of revenue recognition.

Non-advertising

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

The Company contracts with China Mobile and its subsidiaries, China Unicom and its subsidiaries, and, to a lesser degree, other operators, for billing, collection and transmission services related to the MVAS offered to its users. The Company also contracts with other service providers to provide content and to distribute MVAS or other services for us. In accordance with EITF No. 99-19, “Reporting Revenues Gross as a Principal Versus Net as an Agent,” revenues are recorded on a gross basis when most of the gross indicators are met, such as the Company is considered the primary obligor in the arrangement, designs and develops (in some cases with the assistance of third-parties) the MVAS, has reasonable latitude to establish price, has discretion in selecting the operators to offer its MVAS, provides customer services related to the MVAS and takes on the credit risks associated with the transmission fees. Conversely, revenues are recorded on a net basis when most of the gross indicators are not met.

The Company purchases certain contents from third-party content providers for its MVAS. In most of these arrangements, 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 operators. The Company’s MVAS revenues are inclusive of such fees when 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.

Due to the time lag between when the services are rendered and when the operator billing statements are received, MVAS revenues are estimated based on the Company’s internal billing records and transmissions for the month, adjusting for prior periods’ confirmation rates with operators and prior periods’ discrepancies between internally estimated revenues and actual revenues confirmed by operators. The confirmation rate applied to the estimation of revenue is determined at the lower of the latest confirmation rate available and the average of six-months’ historical rates available, provided that the Company has obtained confirmation rates for six months. If the Company has not yet received confirmation rates for six months, revenues would be deferred until billing statements are received from the operators. Historically, there have been no significant adjustments to the revenue estimates.

Historically, due to the time lag of receiving billing statements from operators and the lack of adequate information to make estimates, the Company has adopted a one-month lag reporting policy for MVAS revenues. Such policy has been applied on a consistent basis and does not apply to MVAS revenues from acquired entities Memestar Limited and Crillion Corporation as the acquired entities were able to obtain timely and accurate information to support their revenue estimates through the acquisition dates which has continued since our acquisition. For the years ended December 31, 2008, 2007 and 2006, the Company recorded MVAS revenues in the amount of $103.3 million, $70.5 million and $86.3 million, respectively. If the Company had not used the one-month lag reporting policy, its revenues from MVAS for the years ended December 31, 2008, 2007 and 2006 would have been $103.6 million, $72.1 million and $87.1 million, respectively.

Credit memos issued by operators on billings that were previously settled and for which payments have been received are accounted for as a credit to revenue based on a historical rolling average. Historically, the true-ups between accrued amounts and actual credit memos issued have not been significant.

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

E-commerce. E-commerce revenues are derived principally from slotting fees charged to agencies for selective positioning and promotion of their goods or services within the Company’s 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

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shown on the Company’s website while the commission revenue is recognized on a net basis after both successful online verification of customers’ credit cards and shipment of products. Product returns have not been significant and are assumed by vendors.

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

In accordance with GAAP, 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 the Company’s assessment of the probability of collection of accounts receivable had been different.

Pursuant to EITF Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should be Presented in the Income Statement,” the Company presents taxes assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction on a gross basis in the financial statements. These taxes include business taxes, surcharges and cultural business construction fees. The total amount of such taxes for fiscal 2008, 2007 and 2006 were $25.9 million, $17.5 million and $13.2 million, respectively.

Costs of revenues

Advertising

Costs of advertising revenue consist mainly of costs associated with the production of websites, which includes fees paid to third parties for Internet connection, content and services, personnel related costs, and equipment depreciation associated with the website production. Costs of advertising revenue also include business taxes, surcharges and cultural business construction fees levied on advertising sales in China, which are approximately 8.5% of the advertising revenues in China.

Non-advertising

Costs of non-advertising revenue consist mainly of fees paid to or retained by the third-party operators for their services relating to the billing and collection of the Company’s MVAS revenues and for using their transmission gateways. Costs of non-advertising revenue also consist of fees or royalties paid to third-party content and service providers associated with the MVAS, costs for providing the enterprise services and business taxes levied on non-advertising sales in China. Business taxes and surcharges levied on non-advertising revenues are approximately 3.3% for mobile related revenues and 5.5% for other non-advertising revenues.

Product development expenses

Product development expenses consist primarily of personnel-related expenses incurred for enhancement to and maintenance of the Company’s websites as well as costs associated with new product development and product enhancements. 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 substantially been expensed as incurred.

Advertising expenses

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred and classify these costs under sales and marketing expenses. The nature of the Company’s direct advertising activities is such that they are intended to acquire subscribers for subscription-based and usage-based MVAS. The Company considered Statement of Position 93-7 — “Reporting on Advertising Costs” (“SOP 93-7”) issued by the American Institute of Certified Public Accountants (“AICPA”) and concluded that the criteria specified for capitalizing the costs of direct response advertising for subscription-based MVAS were not met. Advertising expenses for fiscal years 2008, 2007 and 2006 were $46.4 million, $24.6 million and $23.3 million, respectively.

Stock-based compensation

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Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). Under the fair value recognition provisions of this statement, all stock-based awards to employees and directors, including stock options and restricted share units, are measured at the grant date based on the fair value of the awards. Stock-based compensation, net of forfeitures, is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period.

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of fair value of stock-based payment awards on the date of grant using an option pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, a risk-free interest rate and any expected dividends. Options granted generally vest over four years.

The Company recognizes the estimated compensation cost of service-based restricted share units based on the fair value of its common shares on the date of the grant. The Company recognizes the compensation cost, net of estimated forfeitures, over a vesting term of three to four years.

The Company recognizes the estimated compensation cost of performance-based restricted share units based on the fair value of its common shares on the date of the grant. The awards are earned upon attainment of identified performance goals. The Company recognizes the compensation cost, net of estimated forfeitures, over the performance period. The Company also adjusts the compensation cost based on the probability of performance goal achievement at the end of each reporting period.

Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option and restricted share units forfeitures and record stock-based compensation expense only for those awards that are expected to vest.

See Note 14 Shareholders’ Equity for further discussion on stock-based compensation.

Operating leases

The Company leases office space under operating lease agreements with original lease periods up to three years. Rental expenses are recognized from the date of initial possession of the leased property on a straight-line basis over the term of the lease. Certain lease agreements contain rent holidays, which are recognized on a straight-line basis over the lease term. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease term.

Income taxes

Income taxes are accounted for using the asset and liability approach. Under this approach, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not.

The Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109” (“FIN 48”), on January 1, 2007. FIN 48 prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. The Company did not have any adjustment to the opening balance of retained earnings as of January 1, 2007, as a result of the implementation of FIN 48. For the years ended December 31, 2008 and 2007, the Company did not have any significant liabilities nor any interest or penalties associated with unrecognized tax benefit. As of December 31, 2008 and 2007, the Company did not have any significant unrecognized uncertain tax positions.

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Law”) in China, which became effective on January 1, 2008, such policy would require the Company to indefinitely reinvest all earnings made in China since 2008 onshore or be subject to a significant withholding tax should it decides to distribute earnings made since 2008 offshore.

Foreign currency

The Company’s reporting currency and functional currency are the U.S. dollar. The Company’s operations in China and in international regions use their respective currencies as their functional currencies. The financial statements of these subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average rates of exchange in the period for revenues and expenses.

Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders’ equity. Net gains and losses resulting from foreign exchange transactions are included in interest and other income. Translation gains or losses are not released to net income unless the associated net investment has been sold, liquidated, or substantially liquidated. Foreign currency translation adjustments to the Company’s comprehensive income for 2008, 2007 and 2006 were $19.6 million, $19.2 million and $8.3 million, respectively. Net foreign currency transaction gains for 2008 and 2007 were approximately $3.3 million and $1.1 million, respectively, arising from the Chinese renminbi appreciating against the U.S. dollar. Net foreign currency transaction loss for 2006 was $0.1 million.

Net income per share

Basic net income per share is computed using the weighted average number of ordinary shares outstanding during the period. Diluted net income per share is computed using the weighted average number of ordinary share and ordinary share equivalents outstanding during the period. Ordinary share equivalents include options to purchase ordinary shares and restricted share units, unless they were anti-dilutive, and conversion of zero-coupon, convertible, subordinated notes.

Comprehensive income

Comprehensive income 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. Comprehensive income for the periods presented includes net income, foreign currency translation adjustments and unrealized gains (losses) on marketable securities classified as available for sale.

Recent accounting pronouncements

In December 2008, the FASB issued FASB Staff Position (“FSP”) No. 140-4 and FIN 46R-8 (“FSP 140-4 and FIN 46R-8”), “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.” FSP 140-4 and FIN 46R-8 require additional disclosures about transfers of financial assets and involvement with variable interest entities. The requirements apply to transferors, sponsors, servicers, primary beneficiaries and holders of significant variable interests in a variable interest entity or qualifying special purpose entity. Disclosures required by FSP 140-4 and FIN 46R-8 are effective for the Company for fiscal years beginning after December 15, 2008. Because FSP 140-4 and FIN 46R-8 only require additional disclosures, the adoption will not impact the Company’s consolidated financial position, cash flows or results of operations.

In May 2008, the FASB issued FSP APB14-1, which requires issuers of convertible debt that may be settled wholly or partly in cash when converted to account for the debt and equity components separately. This statement is effective for fiscal years beginning after December 15, 2008 and must be applied retrospectively to all periods. In 2003, the Company issued $100 million of zero-coupon, convertible, subordinated notes (the “Notes”) due 2023, and subsequently in 2007, $1 million of the Notes were converted to SINA ordinary shares upon the purchaser’s request. As required by FSP APB 14-1, the Company estimated the fair value, as of the date of issuance, of its convertible notes as if the instrument was issued without the conversion option. The difference between the fair value and the principal amount of the instrument was retrospectively recorded as debt discount and as a component of equity. The amortization of the debt discount was recognized over the expected four-year life of the convertible notes as a non-cash increase to interest expense in the historical periods ended in June 2007. Amortization of debt discount charged to interest and other income, net were $3.7 million and $7.1 million for the fiscal years 2007 and 2006, respectively. The adoption of FSP APB 14-1 resulted in net increase in SINA’s shareholders’ equity of $3.6 million at December 31, 2006 and a $25.8 million reclassification in the SINA’s shareholders’ equity by decreasing retained earnings and increasing additional paid-in capital at December 31, 2007 and 2008. SINA’s income before income tax expense, net income and net income attributable to SINA were reduced by $3.6 million and $7.0 million for the fiscal years 2007 and 2006, respectively, primarily due to increased interest expense.

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In April 2008, the FASB issued FASB Staff Position No. FAS142-3 “Determination of the Useful Life of Intangible Assets” (“FSP FAS142-3”), which amends the factors to be considered in determining the useful life of intangible assets. Its intent is to improve the consistency between the useful life of an intangible asset and the period of expected cash flows used to measure its fair value. This statement is effective for fiscal years beginning after December 15, 2008. FSP 142-3 is effective for intangible assets acquired after December 15,2008 and early application is prohibited. The impact of the adoption of FSP 142-3 on the Company’s consolidated financial position and results of operations will be largely dependent on the size and nature of the intangible assets acquired after the adoption of this statement.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” which requires noncontrolling interests (previously referred to as minority interests) in subsidiaries to be classified as a separate component of equity in the consolidated financial statements. The new standard also requires the amounts of net income and comprehensive income attributable to the noncontrolling interests to be included on the face of the statement of income and comprehensive income, respectively, and requires various additional disclosures related to noncontrolling interests. SFAS No. 160 requires changes in ownership interest that result either in consolidation or deconsolidation to be recorded at fair value through earnings, including the retained ownership interest, while changes that do not result in either consolidation or deconsolidation of a subsidiary are treated as equity transactions. FAS 160 shall be effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company has adopted FAS 160 effective January 1, 2009 and in accordance with the transition provisions, the prior year’s presentation and disclosures have been retrospectively adjusted for all periods presented.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. However, on February 12, 2008, the FASB issued FASB Staff Position FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”), which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP FAS 157-2 partially defers the effective date of Statement 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP. The Company adopted SFAS 157 in 2008, except as it applies to those nonfinancial assets and nonfinancial liabilities as noted in FSP FAS 157-2. The partial adoption of SFAS 157 in 2008 did not have a material impact on the Company’s consolidated financial position, cash flows and results of operations. The Company is still evaluating the impact of the remaining SFAS 157 on its consolidated financial position, cash flows and results of operations.

3. Noncontrolling Interests

In April 2008, the Company restructured its real estate and home decoration channels and related business into a new subsidiary, China Online Housing Technology Corporation (“COHT”). Thirty-four percent of COHT shares were issued to eHouse (China) Holdings Limited (“eHouse”) in exchange for payment of $2.5 million cash to the Company and a 10-year exclusive, business-to-

F-15

consumer usage of its China Real Estate Information Circle (“CRIC”) database to COHT. The 10-year exclusive licensing of the CRIC database was appraised at $3.5 million and was recorded as an intangible asset and amortized on a straight-line basis over the life of the license. A gain of $3.1 million was recorded from stepping up eHouse’s share of COHT to fair value. Financial results of COHT have been consolidated into the Company’s operating results since its inception in 2008.

In July 2008, the Company invested an additional $3.6 million to take a controlling interest in a privately held web-application development firm. Based on estimated fair value, the follow-on investment resulted in recognizing $1.8 million in intangible assets, $1.4 million in goodwill and an investment loss of $0.8 million. The operating results of the privately held company have been consolidated by the Company since July 2008.

4. Goodwill and Intangible Assets

The Company acquired Memestar Limited, a British Virgin Islands limited liability corporation (“Memestar”) in 2003 and Crillion Corporation, a British Virgin Islands limited liability corporation (“Crillion”) in 2004 to enhance its MVAS offerings as well as increase its market share in the PRC MVAS market. The Company also acquired Davidhill Capital Inc., a British Virgin Islands limited liability corporation (“Davidhill”), and its UC instant messaging technology platform in 2004. In 2008, the Company took controlling interest in a privately held web-application development firm. The following table summarizes goodwill by segment from these acquisitions:


	Advertising		MVAS		Total
	(In thousands)
Balances at December 31, 2006	$	13,772	$	68,891	$	82,663

Balances at December 31, 2007	$	13,772	$	68,891	$	82,663
Additional interest in a majority-owned investment		1,387		—		1,387

Balances at December 31, 2008	$	15,159	$	68,891	$	84,050

The following table summarizes the Company’s intangible assets:


	December 31, 2008							December 31, 2007
			Accumulated							Accumulated
	Cost		amortization			Net		Cost		amortization			Net
	(In thousands)
Technology	$	10,300	$	(4,635	)	$	5,665	$	10,300	$	(3,605	)	$	6,695
Database		3,541		(266	)		3,275		—		—			—
Software		1,844		(307	)		1,537		—		—			—
Non-compete agreements		—		—			—		3,147		(3,147	)		—

Total	$	15,685	$	(5,208	)	$	10,477	$	13,447	$	(6,752	)	$	6,695

All intangible assets are amortizable. Technology and database have estimated useful lives of ten years. Software is amortized over three years. Non-compete agreements have estimated useful lives of eighteen months to thirty-six months.

Amortization expense related to intangible assets was $1.6 million, $1.2 million and $1.8 million for the years ended December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, estimated amortization expenses for future periods are expected to be as follows:


Fiscal year	(In thousands)
2009	$	1,998
2010		1,998
2011		1,693
2012		1,384
2013		1,384
Thereafter		2,020

Total expected amortization expense	$	10,477

F-16

5. Investment in Tidetime Sun

Investment in Tidetime Sun was accounted for as an investment in marketable equity securities under the provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and classified as available for sale. In December 2006, the Company sold its investment in Tidetime Sun for $0.6 million. Net loss on investment for 2006 was $0.1 million.

6. Equity Investments

Equity investments comprised of joint ventures and other privately held companies. The following sets forth the changes in the Company’s equity investments.


	Shanghai NC-SINA			Others			Total
	(In thousands)
Balances at December 31, 2005	$	1,417		$	1,844		$	3,261
Investment		—			800			800
Share of loss of equity investments		(108	)		(582	)		(690	)
Sale of equity investments		(1,309	)		(892	)		(2,201	)

Balances at December 31, 2006		—			1,170			1,170
Investment		—			1,300			1,300
Sale of equity investments		—			(1,170	)		(1,170	)

Balance at December 31, 2007		—			1,300			1,300
Converted to controlling interest		—			(1,300	)		(1,300	)

Balance at December 31, 2008	$	—		$	—		$	—

In May 2006, the Company sold its 51% interest in Shanghai-NC SINA, a joint venture with NC Soft, a Korean online game company, to NC Soft and recorded a gain of $2.0 million. In June 2007, the company sold its interest in a privately held company and recorded a gain of $0.8 million. In July 2008, the Company took a controlling interest in a privately held firm through a $3.6 million follow-on investment.

7. Cash, Cash Equivalents and Short-term Investments

Cash, cash equivalents and short-term investments consisted of the following as of December 31, 2008 and 2007:


	As of December 31, 2008							As of December 31, 2007
			Unrealized			Estimated fair				Unrealized			Estimated fair
	Carrying value		losses			value		Carrying value		losses			value
	(In thousands)
Cash and cash equivalents:
Cash	$	196,548	$	—		$	196,548	$	147,724	$	—		$	147,724
Cash equivalents:
Bank time deposits		56,617		—			56,617		30,433		—			30,433
Money market funds		130,155		—			130,155		93,509		—			93,509

		186,772		—			186,772		123,942		—			123,942

		383,320		—			383,320		271,666		—			271,666


Short-term investments:
Bank time deposits		205,609		—			205,609		165,872		—			165,872
U.S. Treasury and federal agency bonds		—		—			—		16,080		(397	)		15,683
Corporate bonds and notes		15,224		(329	)		14,895		20,328		(138	)		20,190
Floating rate notes		—		—			—		4,973		(385	)		4,588

		220,833		(329	)		220,504		207,253		(920	)		206,333

Total cash, cash equivalents and short-term investments	$	604,153	$	(329	)	$	603,824	$	478,919	$	(920	)	$	477,999

Interest income for the years ended December 31, 2008, 2007 and 2006 was $15.4 million, $11.5 million and $8.5 million, respectively.

In accordance with FASB Staff Position No. FAS 115-1 “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” the following table summarizes the fair value and unrealized gains/(losses) related to available-for-sale debt securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2008:

F-17


	Less than 12 months					Total
			Gross					Gross
	Estimated		unrealized			Estimated		unrealized
	fair value		losses			fair value		losses
	(In thousands)
Corporate bonds and notes	$	14,895	$	(329	)	$	14,895	$	(329	)

Market values were determined for each individual security in the investment portfolio. The declines in value of these investments are primarily related to changes in interest rates and market demand and are considered to be temporary in nature. Realized gains or loss on short-term investments were immaterial for the periods presented. See Note 2 for the Company’s policy on available-for-sale securities.

The following table summarizes the contractual maturities of short-term investments at December 31, 2008:


			Gross
	Estimated		unrealized
	fair value		losses
	(In thousands)
Due within one year	$	210,839	$	6
Due after five years		9,665		(335	)

	$	220,504	$	(329	)

8. Balance Sheet Components


	December 31,
	2008			2007
	(In thousands)
Accounts receivable, net:
Accounts receivable	$	88,329		$	62,382
Allowance for doubtful accounts:
Balance at beginning of year		(5,663	)		(4,471	)
Additional provision charged to expenses		(3,528	)		(5,294	)
Write-off, net of recoveries		45			4,102

Balance at end of year		(9,146	)		(5,663	)

	$	79,183		$	56,719


Prepaid expenses and other current assets:
Content fees	$	4,034		$	3,906
Rental and other deposits		1,404			1,092
Others		3,986			3,842

	$	9,424		$	8,840


Property and equipment, net:
Computers and equipment	$	76,253		$	57,826
Leasehold improvements		4,988			3,805
Furniture and fixtures		3,821			2,663
Other		1,571			1,637

		86,633			65,931
Less: Accumulated depreciation and amortization		(52,522	)		(39,085	)

	$	34,111		$	26,846


Accrued liabilities:
Accrued compensation and benefits	$	9,480		$	7,990
Sales commission		4,055			2,407
Business taxes payable		5,835			5,961
Sales rebates		10,305			11,777
Marketing expenses		9,100			4,641
Professional fees		5,144			2,185
Internet connection costs		3,151			1,160
Content fees		13,526			8,403
Others		7,872			4,964

	$	68,468		$	49,488

F-18

9. Related Party Transactions

In April 2007, one of the Company’s subsidiaries entered into an agreement with Broadvision Inc. (“Broadvision”). Mr. Pehong Chen, a director of SINA, is a significant stockholder of Broadvision and serves as its Chairman, Chief Executive Officer and President. Under the agreement, Broadvision provides HR information management hosting service, including software subscription and system upgrade, feature enhancement and technical support, to the Company’s operations in China for an annual subscription fee of RMB 500,000 or approximately $66,000. Broadvision also charges an initial system implementation fee of RMB 500,000. SINA has an option to buy out the software license from Broadvision on a non-exclusive basis by paying a lump-sum amount (RMB 2,000,000, RMB 1,500,000, or RMB 1,000,000 for buy-out in 2008, 2009 or 2010 or later, respectively) plus a 22% of the buy-out amount for maintenance services. For 2007 and 2008, the Company paid Broadvision approximately $131,000 and $72,000, respectively. There was no payable outstanding as of December 31, 2008.

During 2007, a VIE of the Company entered into a $0.4 million technical support contract with an equity investment. All amounts were expensed and paid in 2007. In 2008, the Company took a controlling interest in the privately held firm and began consolidating its results.

10. Income Taxes

The Company is registered in the Cayman Islands and has operations in four tax jurisdictions - the PRC, the U.S. of America, Hong Kong and Taiwan. The operations in Taiwan represent a branch office of the subsidiary in the U.S. For operations in the U.S, Hong Kong and Taiwan, the Company has incurred net accumulated operating losses for income tax purposes. The Company believes that it is more likely than not that these net accumulated operating losses will not be utilized in the future. Therefore, the Company has provided full valuation allowance for the deferred tax assets arising from the losses at these locations as of December 31, 2008. The Company generated substantially all of its net income from its PRC operations for the years ended December 31, 2008, 2007 and 2006, and the Company has recorded income tax provisions for these years.

The components of income before income taxes are as follows:


	Years ended December 31,
	2008			2007			2006
	(In thousands, except percentage)
Income before income tax expense	$	95,209		$	60,619		$	37,016
Loss from non China operations	$	(12,938	)	$	(9,548	)	$	(19,112	)
Income from China operations	$	108,147		$	70,167		$	56,128
Income tax expenses applicable to China operations	$	14,042		$	6,504		$	4,051
Effective tax rate for China operations		13	%		9	%		7	%

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.

China

Prior to January 1, 2008, the Company’s subsidiaries and variable interest enterprises (“VIEs”) were governed by the previous Income Tax Law (the “ Previous IT Law”) of China. Under the Previous IT Law, the Company’s subsidiaries and VIEs were generally subjected to enterprise income taxes at a statutory rate of 33% (30% state income tax plus 3% local income tax) or 15% for qualified new and high technology enterprises. In addition to a preferential statutory rate, some of the Company’s new and high technology subsidiaries were entitled to special tax holidays of three-year tax exemption followed by three years at a 50% reduction in the tax rate, commencing the first operating year.

Effective January 1, 2008, the new Enterprise Income Tax Law (the “EIT Law”) in China supersedes the Previous IT Law and unifies the enterprise income tax rate for VIEs and Foreign-Invested Enterprises (“FIEs”) at 25%. The EIT Law provides a five-year transitional period for certain entities that enjoyed a favorable income tax rate of less than 25% and/or a preferential tax holiday under the Previous IT Law and were established before March 16, 2007, to gradually increase their rates to 25%. In addition, new and high technology enterprises continue to enjoy a preferential tax rate of 15%. The EIT Law also provides grandfather treatment for new and high technology enterprises that received special tax holidays under the Previous IT Law to continue to enjoy their tax holidays until

F-19

expiration. In December 2008, two of the Company’s subsidiaries in China, SINA.com Technology (China) Co. Ltd. and Beijing New Media Information Technology Co. Ltd., were qualified as new and high technology enterprises under the new EIT Law.

The EIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, the Company does not believe that it is likely that its operations outside of the PRC should be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history the EIT Law, should SINA be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to January 1, 2008.

The EIT Law also imposes a withholding income tax of 10% on dividends distributed by an FIE to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the Previous IT Law. The Cayman Islands, where the Company incorporated, does not have such tax treaty with China. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a foreign-invested enterprise in China to its direct holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). A majority of the Company’s FIEs’ operations in China are invested and held by Hong Kong registered entities. In accordance with APB Option No. 23, “Accounting for Income Taxes — Special Area,” all undistributed earnings are presumed to be transferred to the parent company and are subject to the withholding taxes unless certain conditions are met. Based on the subsequently issued interpretation of the new EIT, Article 4 of Cai Shui [2008] Circular No. 1, dividends on earnings prior to 2008 but distributed after 2008 are not subject to withholding income tax. The current policy approved by the Company’s Board allows the Company to distribute PRC earnings offshore only if the Company does not have to pay a dividend tax. Such policy may require the Company to reinvest all earnings made since 2008 onshore indefinitely or be subject to a 10% withholding tax should its policy change to allow for earnings distribution offshore. If the Company was to distribute its FIEs’ 2008 earnings, the Company would be subject to a withholding tax expense of approximately $4.7 million.

Composition of income tax expenses for China operations

The following table sets forth current and deferred portion of income tax expenses of the Company’s China subsidiaries and VIEs,:


	Years ended December 31,
	2008			2007			2006
	(In thousands)
Current tax provision	$	(14,098	)	$	(6,030	)	$	(4,401	)
Deferred tax provision		56			(474	)		350

Income tax expenses	$	(14,042	)	$	(6,504	)	$	(4,051	)

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

The following table sets forth reconciliation between the statutory EIT rate and the effective tax rate for China operations:


	Years ended December 31,
	2008			2007			2006
Statutory EIT rate		25	%		33	%		33	%
Effect on tax holiday, preferential tax rate and dividend tax on VIEs’ undistributed earnings, net		(13	)%		(29	)%		(32	)%
Permanent differences		1	%		1	%		1	%
Change in valuation allowance		—			4	%		5	%

Effective tax rate for China operations		13	%		9	%		7	%

F-20

The provisions for income taxes for the years ended December 31, 2008, 2007 and 2006 differ from the amounts computed by applying the EIT primarily due to the tax holidays and the preferential tax rate enjoyed by certain of the Company’s entities in the PRC. The effective tax rate of the PRC operations for 2008 as higher than those of 2007 and 2006 primarily due to the phasing out of tax holiday in China.

The following table sets forth the effect of tax holiday on China operations:


	Years ended December 31,
	2008		2007		2006
	(In thousands, except per share amount)
Tax holiday effect	$	16,146	$	20,734	$	18,323
Basic net income per share attributable to SINA effect	$	0.29	$	0.38	$	0.34
Diluted net income per share attributable to SINA effect	$	0.27	$	0.35	$	0.31

The following table sets forth the significant components of deferred tax assets for China operations:


	December 31,
	2008			2007			2006
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards (expiring through 2012)	$	669		$	1,021		$	1,774
Allowances for doubtful accounts, accruals and other liabilities		5,159			4,168			3,165
Depreciation		1,736			2,828			1,620

Total deferred tax assets		7,564			8,017			6,559
Less: valuation allowance		(6,252	)		(6,761	)		(4,829	)

Net deferred tax assets	$	1,312		$	1,256		$	1,730

Valuation allowances are provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; and (iii) tax planning strategies. Historically, deferred tax assets were valued using the previous statutory rate of 33% or applicable preferential rates of 7.5% or 15% of the respective legal entities. In March 2007, upon the enactment of the EIT Law, the Company recalculated the carrying deferred tax assets based on the new EIT rate of 25%. As a result of the recalculation, deferred tax assets in the amount of $0.4 million were written down in the first quarter of 2007. During 2007, the valuation allowance for deferred tax assets related to the allowances for doubtful accounts was increased by $1.6 million based on the Company’s historical experience with the Chinese tax authorities.

U.S.

As of December 31, 2008, the Company’s subsidiary in the U.S. had approximately $80.7 million of federal and $36.9 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 June 30, 2011 through December 31, 2028, and the state net operating loss carryforwards will expire, if unused, in the years ending June 30, 2010 through December 31, 2018. Included in the net operating loss carryforwards were $35.0 million and $22.1 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 U.S. subsidiary at December 31, 2008 consists mainly of net operating loss carryforwards for which a full valuation allowance has been provided, as the management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the net deferred tax assets for operation in the U.S.:


	December 31,
	2008			2007			2006
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	30,013		$	29,282		$	28,461
Other tax credits, allowances for doubtful accounts, accruals and other liabilities		425			441			445

Total deferred tax assets		30,438			29,723			28,906
Less: valuation allowance		(30,438	)		(29,723	)		(28,906	)

Deferred tax assets	$	—		$	—		$	—

F-21

Hong Kong

As of December 31, 2008, the Company’s Hong Kong subsidiary had approximately $14.3 million of net operating loss carryforwards which can be carried forward indefinitely to offset future taxable income. As of December 31, 2008, the deferred tax assets for the Hong Kong subsidiary, consists mainly of net operating loss carryforwards, for which a full valuation allowance has been provided. Management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the net deferred tax assets for Hong Kong operation as of December 31, 2008, 2007 and 2006:


	December 31,
	2008			2007			2006
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	2,360		$	2,130		$	2,290
Less: valuation allowance		(2,360	)		(2,130	)		(2,290	)

Deferred tax assets	$	—		$	—		$	—

Aggregate net deferred tax assets

The following table sets forth the significant components of the aggregate net deferred tax assets:


	December 31,
	2008			2007			2006
	(In thousands)
Net deferred tax assets included in other current assets and other assets:
Net operating loss carryforwards	$	33,042		$	32,433		$	32,525
Allowances for doubtful accounts, accruals and other liabilities		5,238			4,263			3,264
Depreciation		1,736			2,828			1,620
Other tax credits		346			346			346

Total deferred tax assets		40,362			39,870			37,755
Less: valuation allowance		(39,050	)		(38,614	)		(36,025	)

Net deferred tax assets	$	1,312		$	1,256		$	1,730

Movement of valuation allowances for deferred tax assets

The following table sets forth the movement of the aggregate valuation allowances for deferred assets:


	Years ended December 31,
	2008		2007		2006
	(In thousands)
Balance at beginning of the year	$	38,614	$	36,025	$	32,555
Provision for the year		436		2,589		3,470

Balance at end of the year	$	39,050	$	38,614	$	36,025

11. Net Income Per Share

Basic net income per share is computed using the weighted average number of the ordinary shares outstanding during the period. Diluted net income per share is computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the period. For the year ended December 31, 2008, 2007 and 2006, options to purchase ordinary shares and restricted share units that were anti-dilutive and excluded from the calculation of diluted net income per share were approximately 644,000, 31,000 and 1.9 million, respectively.

The following table sets forth the computation of basic and diluted net income per share attributable to SINA for the periods indicated:

F-22


	Years ended December 31,
	2008		2007		2006
	(In thousands, except per share amounts)
Basic net income per share attributable to SINA calculation:
Numerator:
Net income used in computing basic net income per share attributable to SINA	$	80,638	$	54,115	$	32,965

Denominator:
Weighted average ordinary shares outstanding		55,821		55,038		53,696

Basic net income per share attributable to SINA	$	1.44	$	0.98	$	0.61
Diluted net income per share attributable to SINA calculation:
Numerator:
Net income attributable to SINA	$	80,638	$	54,115	$	32,965
Amortization of debt discount		—		3,704		7,133
Amortization of convertible debt issuance cost		—		252		503

Net income used in computing diluted net income per share attributable to SINA	$	80,638	$	58,071	$	40,601

Denominator:
Weighted average ordinary shares outstanding		55,821		55,038		53,696
Weighted average ordinary shares equivalents:
Stock options		770		1,114		967
Unvested restricted shares		44		—		—
Convertible debt		3,839		3,868		3,877
Others		—		—		9

Shares used in computing diluted net income per share attributable to SINA		60,474		60,020		58,549

Diluted net income per share attributable to SINA	$	1.33	$	0.97	$	0.69

In fourth quarter of 2008, the board authorized, but did not obligate, the Company to repurchase of up to $100 million of the Company’s ordinary shares on an opportunistic basis. Stock repurchases under this program may be made through open market purchases, in negotiated transactions off the market, in block trades pursuant to a 10b5-1 plan, which would give a third party independent discretion to make purchases of the Company’s ordinary shares, or otherwise and in such amounts as management deems appropriate. No shares had been repurchased as of December 31, 2008. As of June 10, 2009, the Company had repurchased 2,454,956 shares in the open market, at an average price of $20.37 for a total consideration of $50 million. Additional shares up to a maximum of $50 million may be purchased under this program through the end of 2009.

12. Employee Benefit Plans

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, housing 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 years ended December 31, 2008, 2007 and 2006, the Company contributed a total of $9.5 million, $6.5 million, $6.1 million, respectively, to these funds.

4 01(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 U.S. 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.

13. Profit Appropriation

The Company’s subsidiaries and VIEs in China are required to make appropriations to certain non-distributable reserve funds. In accordance with the laws applicable to China’s FIEs, its subsidiaries have to 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

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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. Effective January 1, 2006 under the revised China Company Laws, appropriation to the statutory public welfare fund is no longer mandatory. 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, 2008, the Company is subject to a maximum appropriation of $15.4 million to these non-distributable reserve funds.

14. Shareholders’ Equity

Stockholder Rights Plan

In 2005, the Company put in place a Rights Plan to protect the best interests of all shareholders. In general, the Plan vests stockholders of SINA with rights to purchase ordinary common shares of the Company at a substantial discount from those securities’ fair market value upon a person or group acquiring, without the approval of the Board of Directors, more than 10% of the Company’s ordinary shares. Any person or group who triggers the purchase right distribution becomes ineligible to participate in the Plan, causing substantial dilution of such person or group’s holdings. The rights will expire on February 22, 2015.

In addition, the Company’s Board of Directors has the authority, without further action by its 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 its 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. Similarly, the Board of Directors may approve the issuance of debentures convertible into voting shares, which may limit the ability of others to acquire control of the Company.

2007 Share Incentive Plan

On June 29, 2007, the Company adopted the 2007 Share Incentive Plan (the “2007 Plan”). The 2007 Plan permits the granting of share options, share appreciation rights, restricted share units and restricted shares. The 2007 Plan has a 5-year term with a fixed number of shares authorized for issuance. Under the plan, a total of 5,000,000 ordinary shares of the Company are available for issuance. The maximum number of ordinary shares that may be granted subject to awards under the 2007 Plan during any given fiscal year will be limited to 3% of the total outstanding shares of the Company as of the end of the immediately preceding fiscal year, plus any shares remaining available under the share pool for the immediately preceding fiscal year. Share options and share appreciation rights must be granted with an exercise price of at least 100% of the fair market value on the date of grant. The maximum number of ordinary shares available for issuance will be reduced by 1 share for every 1 share issued pursuant to a share option or share appreciation right and by 1.75 share for every 1 share issued as restricted shares or pursuant to a restricted unit. As of December 31, 2008, there were 693,000 options and 143,000 restricted share units outstanding under the 2007 Plan. Concurrent with the adoption of the 2007 Plan, all remaining shares available for grant under the existing 1999 Stock Plan, 1999 Executive Plan and 1999 Directors’ Stock Option Plan were forfeited.

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, 2006, the Company has cumulatively approved 14,358,000 ordinary shares for issuance under the 1999 Plan, including a previous plan carried over from 1997 and options assumed in the Sinanet acquisition. As of December 31, 2008, there were a total of 1,685,000 options outstanding under the 1999 Plan.

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Options under the Company’s 1999 Plan may be granted for a term of up to ten years and at prices determined by the Board of Directors of the Company, provided, however, that the exercise price of an ISO shall not be less than 100% of the fair value of the shares on the date of grant or, if granted to a 10% shareholder, shall not be less than 110% of the fair value of the shares on the date of grant. The exercise price of an NSO granted to an executive officer of the Company shall not be less than 100% of the fair value of the shares on the date of grant if such option is intended to qualify as performance-based compensation under Section 162(m) of the US Internal Revenue Code of 1986, as amended. Options granted under the 1999 Plan generally vest over a 4-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. Concurrent with the adoption of the 2007 Plan, all remaining shares available for grant under the 1999 Plan were forfeited.

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 approved 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, 2008, there were a total of 139,000 options outstanding under the Executive Plan. Options under Executive Plan may be granted for a term of up to ten years and at prices determined by the Board of Directors of the Company, provided, however, that the exercise price of an ISO shall not be less than 100% of the fair value of the shares on the date of grant or, if granted to a 10% shareholder, shall not be less than 110% of the fair value of the shares on the date of grant. The exercise price of an NSO granted to an executive officer of the Company shall not be less than 100% of the fair value of the shares on the date of grant if such option is intended to qualify as performance-based compensation under Section 162(m) of the US Internal Revenue Code of 1986, as amended. Options granted under the Executive Plan generally vest over a four- 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. Concurrent with the adoption of the 2007 Plan, all remaining shares available for grant under the Executive Plan were forfeited.

1999 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 Directors’ Plan shall have an exercise price equal to 100% of the fair value of the shares on the date of grant and shall have a term of 10 years from the date of grant. All options granted under the Directors’ Plan vest in full immediately upon grant. On September 27, 2005, the shareholders of the Company approved an increase to the aggregate number of ordinary shares issuable under the Directors’ Plan from 750,000 ordinary shares to 1,125,000 ordinary shares. As of December 31, 2008, 318,000 options were outstanding under the Directors’ Plan. Concurrent with the adoption of the 2007 Plan, all remaining shares available for grant under the Directors’ Plan were forfeited.

Compensation Costs

Effective January 1, 2006, the Company adopted SFAS 123R. See Note 2 for a description of the Company’s adoption of SFAS 123R. Stock-based compensation expenses recognized in the Company’s Consolidated Statement of Operations were as follows:


	Years ended December 31,
	2008		2007		2006
	(In thousands)
Costs of revenues	$	3,248	$	1,788	$	1,743
Sales and marketing		2,098		1,234		1,511
Product development		1,978		1,593		1,808
General and administrative		6,943		4,097		4,412

	$	14,267	$	8,712	$	9,474

As of December 31, 2008, there was $18.3 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based awards granted to the Company’s employees which will be recognized over a weighted-average period of 1.6 years. Total unrecognized compensation cost may be adjusted for future changes in estimated forfeitures.

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Valuation of Stock Options

The assumptions used to value the Company’s option grants were as follows:


	Years ended December 31,
	2008			2007			2006
Stock options:
Expected term (in years)		4.0			4.0			3.8-5.0
Expected volatility		46% -50	%		50	%		68%-71	%
Risk-free interest rate		2.0% - 2.7	%		3.2	%		5.0%-5.2	%
Expected dividend yield		0			0			0

Expected term represents the weighted average period of time that stock-based awards granted are expected to be outstanding giving consideration to historical exercise patterns. The simplified method was used for fiscal 2006, 2007 and 2008 due to the lack of industry comparison. Expected volatilities are based on historical volatilities of the Company’s ordinary shares over the respective expected term of the stock-based awards. Risk-free interest rate is based on US Treasury zero-coupon issues with maturity terms similar to the expected term on the stock-based awards. The Company does not anticipate paying any cash dividends in the foreseeable future.

The following table set forth the summary of number of shares available for issuance:


	Shares Available
December 31, 2005		2,681
Granted		(2,100	)
Cancelled/expired/forfeited		722

December 31, 2006		1,303
Increased authorization		5,000
Granted		(434	)
Cancelled/expired/forfeited		(1,300	)

December 31, 2007		4,569
Granted *		(804	)
Cancelled/expired/forfeited		86

December 31, 2008		3,851


*		In 2008, 676,000 options and 73,300 restricted shares units, or 128,275 equivalent shares, were granted.

Summary of Stock Option

The following table sets forth the summary of option activity under the Company’ stock option program:


						Weighted Average
	Options			Weighted Average		Remaining		Aggregate
	Outstanding			Exercise Price		Contractual Life		Intrinsic Value
	(In thousands)					(in years)		(in thousands)
December 31, 2005		3,610		$	14.97
Granted		2,100		$	23.90
Exercised		(896	)	$	11.14
Cancelled/expired/forfeited		(722	)	$	11.84

December 31, 2006		4,092		$	20.95		6.14	$	32,668
Granted		84		$	49.95
Exercised		(1,138	)	$	16.73
Cancelled/expired/forfeited		(238	)	$	22.31

December 31, 2007		2,800		$	23.41		5.22	$	58,981
Granted		676		$	33.94
Exercised		(483	)	$	21.82
Cancelled/expired/forfeited		(158	)	$	29.61

December 31, 2008		2,835		$	25.85		4.39	$	4,018


Vested and expected to vest as of December 31, 2006		3,898		$	20.82		6.16	$	31,658
Exercisable as of December 31, 2006		1,882		$	18.56		6.38	$	20,015

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					Weighted Average
	Options		Weighted Average		Remaining		Aggregate
	Outstanding		Exercise Price		Contractual Life		Intrinsic Value
	(In thousands)				(in years)		(in thousands)
Vested and expected to vest as of December 31, 2007		2,711	$	23.32		5.24	$	57,321
Exercisable as of December 31, 2007		1,561	$	21.86		5.53	$	35,046
Vested and expected to vest as of December 31, 2008		2,736	$	25.63		4.38	$	4,018
Exercisable as of December 31, 2008		1,785	$	23.45		4.38	$	4,015

The weighted average estimated fair value of options granted during 2008, 2007 and 2006 was $13.75, $20.84 and $13.57, respectively. The total intrinsic value of options exercised during 2008, 2007 and 2006 was $11.6 million, $25.6 million and $14.1 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of exercise and the exercise price of the shares. Cash received from the exercises of stock option during 2008 was $10.5 million.

As of December 31, 2008, there was $15.5 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock options granted to the Company’s employees. This cost is expected to be recognized over a weighted-average period of 1.6 years. Total unrecognized compensation cost may be adjusted for future changes in estimated forfeitures.

The aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2008 was $4.0 million and $4.0 million, respectively. The aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2007 was $59.0 million and $35.0 million, respectively. The aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2006 was $32.7 million and $20.0 million, respectively. The intrinsic value is calculated as the difference between the market value as of the last day of the fiscal year and the exercise price of the shares. As reported by the NASDAQ Global Selected Market, the Company’s ending stock price as of December 31, 2008, 2007 and 2006 was $23.15, $44.31 and $28.7, respectively.

Information regarding the stock options outstanding at December 31, 2008 is summarized below:


			Weighted				Weighted		Weighted Average
	Options		Average		Options		Average		Remaining
Range of Exercise prices	Outstanding		Exercise Price		Exercisable		Exercise Price		Contractual Life
	(In thousands)				(in thousands)				(in years)
$0.5 — $23.17		1,049	$	19.33		773	$	17.96		3.87
$24.23 — $24.73		863	$	24.62		653	$	24.59		4.03
$25.57 — $33.68		743	$	32.49		278	$	31.19		5.32
$36.40 — $49.95		180	$	42.31		81	$	39.94		5.37

		2,835	$	25.85		1,785	$	23.45		4.39

Summary of Service-Based Restricted Share Units

Service-based restricted share units activities in 2008 and 2007 were as follows:


	Shares Granted			Weighted-Average Grant-Date
	(in thousands)			Fair Value
December 31, 2006		—			—
Awarded		100		$	46.83

December 31, 2007		100		$	46.83
Issued		(25	)	$	46.83

December 31, 2008		75		$	46.83

There were no service-based restricted share units granted in 2006. Restricted share units are not considered outstanding in the computation of basic earnings per share. As of December 31, 2008, there was $2.8 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested, service-based restricted share units granted to the Company’s employees. This cost is expected to be recognized over a weighted-average period of 1.6 years.

Summary of Performance-Based Restricted Share Units

Performance-based restricted share unit activities in 2008 and 2007 were as follows:


	Shares Granted			Weighted-Average Grant-Date
	(in thousands)			Fair Value
December 31, 2006		—			—
Awarded		100		$	46.83
Forfeited		(2	)		—

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	Shares Granted			Weighted-Average Grant-Date
	(in thousands)			Fair Value
December 31, 2007		98		$	46.83
Awarded		73		$	33.29
Issued		(91	)	$	41.80
Forfeited		(12	)	$	37.84

December 31, 2008		68		$	40.57

There were no performance-based restricted share units granted in 2006. Restricted share units are not considered outstanding in the computation of basic earnings per share. As of December 31, 2008, there was no unrecognized compensation cost related to non-vested, performance-based restricted share units granted to the Company’s employees.

In September 2008, the Company’s subsidiary COHT adopted a 2008 Share Incentive Plan (“2008 COHT Plan”). The 2008 COHT Plan permits the granting of stock options, share appreciation rights, restricted share units and restricted shares of COHT to employees, directors and consultants. Options with a fair value of $534,000 were granted during 2008. Stock compensation expenses related to the grant are amortized over four years on a straight-line basis, with $42,000 expensed in 2008.

15. Segment Information

Based on the criteria established by SFAS 131, “Disclosures about Segments of an Enterprise and Related Information,” the Company currently operates in three principal business segments globally—advertising, MVAS and other non-advertising. Information regarding the business segments provided to the Company’s chief operating decision maker (“CODM”) are usually at the revenue or gross margin level. The Company currently does not allocate operating costs or assets to its segments, as its CODM does not use this information to allocate resources to or evaluate the performance of the operating segments.

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


	Advertising			MVAS			Other			Total
	(In thousands)
Year ended and as of December 31, 2008:
Net revenues	$	258,499		$	103,318		$	7,770		$	369,587
Costs of revenues		100,008			48,005			2,322			150,335
Gross profit margins		61	%		54	%		70	%		59	%
Year ended and as of December 31, 2007:
Net revenues	$	168,926		$	70,489		$	6,712		$	246,127
Costs of revenues		63,466			29,339			1,897			94,702
Gross profit margins		62	%		58	%		72	%		62	%
Year ended and as of December 31, 2006:
Net revenues	$	120,067		$	86,257		$	6,530		$	212,854
Costs of revenues		42,529			34,255			2,626			79,410
Gross profit margins		65	%		60	%		60	%		63	%

The following is a summary of the Company’s geographic operations:


	China		International		Total
	(In thousands)
Year ended and as of December 31, 2008:
Revenues	$	365,959	$	3,628	$	369,587
Long-lived assets		33,005		1,106		34,111
Year ended and as of December 31, 2007:
Revenues	$	242,036	$	4,091	$	246,127
Long-lived assets		25,481		1,365		26,846
Year ended and as of December 31, 2006:
Revenues	$	209,200	$	3,654	$	212,854
Long-lived assets		25,726		1,375		27,101

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

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16. Financial Instruments

Fair Value of Financial Instruments


	Fair Value Measurements at December 31, 2008
			Quoted Prices in
			Active Market		Significant Other
			for Identical Assets		Observable Inputs
	Total		(Level 1)		(Level 2)
Money market funds (1)	$	130,155	$	130,155	$	—
Bank time deposits (2)		262,226		—		262,226
Corporate bonds and notes (3)		14,895		—		14,895

Total	$	407,276	$	130,155	$	277,121


(1)		Included in cash and cash equivalents on the Company’s consolidated balance sheets.

(2)		Included in cash and cash equivalents and short-term investments on the Company’s consolidated balance sheets.

(3)		Included in short-term investments on the Company’s consolidated balance sheets.

Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable debt securities, accounts receivables. In addition, with the majority of its operations in China, the Company is subject to RMB currency risk and offshore remittance risk, both of which the Company has no way to hedge.

The Company has approximately $361.6 million in cash and bank deposits, such as time deposits and bank notes, with large domestic banks in China, which constitute about 60% of its total cash, cash equivalent and short-term investments as of December 31, 2008. The terms of these deposits are generally up to twelve months. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests. However, China promulgated a new Bankruptcy Law that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the new Bankruptcy Law, a Chinese bank may go bankrupt. In addition, since China’s concession to WTO, foreign banks have been gradually permitted to operate in China and have become serious competitors to Chinese banks in many aspects, especially since the opening of RMB business to foreign banks in late 2006. Therefore, the risk of bankruptcy on Chinese banks in whom the Company hold cash and bank deposits has increased. In the event that a Chinese bank that holds the Company’s deposits goes bankrupt, the Company is unlikely to claim its deposits back in full since it is unlikely to be classified as a secured creditor to the bank under the PRC laws.

Accounts receivable consist primarily of advertising agencies, direct advertising customers and mobile operators. As of December 31, 2008 and 2007, approximately 99% and 98% of the net accounts receivable were derived from the Company’s operations in the PRC.

For the years ended 2008, 2007, and 2006, advertising revenues from agencies were approximately 91%, 92% and 87%, respectively, of the Company’s advertising revenues. Focus Media Holding Limited (“Focus”), a large advertising agency in China, through its subsidiaries and affiliates accounted for 14%, 15%, and less than 10% of the Company total revenues in 2008, 2007 and 2006, respectively. No individual advertising customer accounted for 10% or more of total revenues for 2008, 2007 and 2006. Focus accounted for 18% and 24% of the Company’s total accounts receivables as of December 31, 2008 and 2007, respectively. Beijing Shiji Huamei Advertising Ltd., another large advertising agency in China, accounted for 11% of the Company’s total accounts receivables as of December 31, 2008 while HY Link Advertising (BJ) Co., also a large advertising agency in China, accounted for 10% of the Company’s total accounts receivables as of December 31, 2007. No individual advertising customer accounted for 10% or more of accounts receivables as of December 31, 2008 and 2007.

With regards to the MVAS operations, revenues charged via provincial and local subsidiaries of China Mobile were 25%, 21% and 30% of the Company’s total revenues in 2008, 2007 and 2006, respectively. Revenues from the SMS product line accounted for less

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than 10%, 15% and 26% of the Company’s total revenues for 2008, 2007 and 2006, respectively. China Mobile and its provincial and local subsidiaries in aggregate accounted for 10% of the Company’s accounts receivables as of December 31, 2008, and no mobile operators accounted for 10% or more of the Company’s receivables as of December 31, 2007. Accounts receivable from third-party operators represent MVAS fees collected on behalf of the Company after deducting their billing services and transmission charges. The Company maintains allowances for potential credit losses. Historically, the Company has not had any significant direct write off of bad debts.

The majority of the Company’s net income was derived from China. The operations in China are carried out by the subsidiaries and VIEs. The Company depends on dividend payments from its subsidiaries in China for its revenues after these subsidiaries receive payments from VIEs in China under various services and other arrangements. In addition, under Chinese law, its subsidiaries are only allowed to pay dividends to the Company out of their accumulated profits, if any, as determined in accordance with Chinese accounting standards and regulations. Moreover, these Chinese subsidiaries are required to set aside at least 10% of their respective accumulated profits, if any, up to 50% of their registered capital to fund certain mandated reserve funds that are not payable or distributable as cash dividends. The appropriation to mandated reserve funds are assessed annually. As of December 31, 2008, the Company is subject to a maximum appropriation of $15.4 million to these non-distributable reserve funds. The Company’s subsidiaries and VIEs in China are subject to different tax rates. See Note 10 — Income Taxes.

The majority of the Company’s revenues derived and expenses incurred were in Chinese RMB as of December 31, 2008. The Company’s cash, cash equivalents and short-term investments balance denominated in Chinese RMB was approximately $357.9 million, which accounted for approximately 59% of its total cash, cash equivalents and short-term investments balance as of December 31, 2008. The Company’s accounts receivable balance denominated in Chinese RMB was approximately $78.1 million, which accounted for approximately 99% of its total accounts receivable balance. The Company’s current liabilities balance denominated in Chinese RMB was approximately $90.2 million, which accounted for approximately 47% of its total current liabilities balance as of December 31, 2008. Accordingly, the Company may experience economic losses and negative impacts on earnings and equity as a result of exchange rate fluctuations in the currency of the PRC. Moreover, the Chinese government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The Company may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency.

The Company performed a test on the restricted net assets of consolidated subsidiaries and VIEs (the “restricted net assets”) in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that the restricted net assets did not exceed 25% of the consolidated net assets of the Company as of December 31, 2008.

17. Convertible Debt

In 2003, the Company issued $100 million of zero-coupon, convertible, subordinated notes (the “Notes”) due 2023. During 2007, $1 million of the Notes were converted to SINA ordinary shares upon purchase’s request. The Notes were issued at par and bear 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 the quarter ended December 31, 2008, the sale price of SINA ordinary shares did not exceed the threshold set forth in item (i) above; therefore, the Notes are not convertible into SINA ordinary shares during the quarter ending March 31, 2009.

Upon a purchaser’s election to convert the Notes in the future, 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. In accordance with SFAS 78 obligations such as the Notes are considered current liabilities when they are or will be callable within one year from the balance sheet date, even though liquidation may not be expected within that period. These notes were accounted for in accordance with FASB Staff Position No. APB14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” which the Company adopted on January 1, 2009. See Note 2 Significant Accounting Policies — Convertible debt and Recent accounting pronouncements.

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18. Commitments and Contingencies

Operating lease commitments include the commitments under the lease agreements for the Company’s office premises. The Company leases office facilities under non-cancelable operating leases with various expiration dates through 2013. For the years ended December 31, 2008, 2007 and 2006, rental expenses were $6.5 million, $4.9 million and $3.6 million, respectively. Based on the current rental lease agreements, future minimum rental payments required as of December 31, 2008 were as follows:


			Less than one		One to		Three to		More than
	Total		year		Three years		five years		five years
					(In thousands)
Operating lease commitments	$	8,874	$	5,317	$	3,221	$	336	$	—

Purchase commitments mainly include minimum commitments for Internet connection fees associated with websites production, content fees associated with websites production and MVAS, advertising serving services and marketing activities. Purchase commitments as of December 31, 2008 were as follows:


			Less than one		One to		Three to		More than
	Total		year		Three years		Five years		five years
					(In thousands)
Purchase commitments	$	33,458	$	26,183	$	6,819	$	432	$	24

In fourth quarter of 2008, the board authorized, but did not obligate, the Company to repurchase of up to US$100 million of the Company’s ordinary shares on an opportunistic basis. Stock repurchases under this program may be made through open market purchases, in negotiated transactions off the market, in block trades pursuant to a 10b5-1 plan, which would give a third party independent discretion to make purchases of the Company’s ordinary shares, or otherwise and in such amounts as management deems appropriate. No shares had been repurchased as of December 31, 2008. As of June 10, 2009, the Company had repurchased 2,454,956 shares in the open market, at an average price of $20.37 for a total consideration of $50 million. Additional shares up to a maximum of $50 million may be purchased under this program through the end of 2009.

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 such restrictions currently in place, but in addition regulations are unclear as to in which specific segments of these industries companies with foreign investors, including us, 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 its financial position, results of operations and cash flows.

As of the date the Company filed the Original Form 20-F, there are no legal or arbitration proceedings that have had in the recent past, or to the Company’s knowledge, may have, significant effects on the Company’s financial position or profitability.

19. Subsequent Events

(a) June 29, 2009

In fourth quarter of 2008, the board authorized, but did not obligate, the Company to repurchase of up to $100 million of the Company’s ordinary shares on an opportunistic basis. Stock repurchases under this program may be made through open market purchases, in negotiated transactions off the market, in block trades pursuant to a 10b5-1 plan, which would give a third party independent discretion to make purchases of the Company’s ordinary shares, or otherwise and in such amounts as the Company deems appropriate. No shares had been repurchased as of December 31, 2008. As of June 10, 2009, the Company has repurchased 2,454,956 shares in the open market, at an average price of $20.37 for a total consideration of $50 million. Additional shares up to a maximum of $50 million may be purchased under this program through the end of 2009.

(b) December 23, 2009 (unaudited)

F-31

consulting services and the Company’s online real estate business (the “Transaction”). E-House’s real estate information and consulting services are operated by China Real Estate Information Corporation (“CRIC”), a subsidiary of E-House. Under the Agreement, SINA would contribute its online real estate business into its majority-owned subsidiary China Online Housing, and CRIC would issue its own ordinary shares to SINA to acquire SINA’s equity interest in China Online Housing in exchange for shares in CRIC. On October 16, 2009, the Transaction was consummated following the listing of CRIC’s American depositary shares on the NASDAQ Global Select Market. As of the closing of the Transaction, SINA is the second largest shareholder of CRIC, with approximately 33% interest in CRIC. The Company intends to account for its interest in CRIC using the equity method of accounting.

In December 2009, the Company awarded 42,000 shares of service-based restricted share units to non-employee directors, which are expected to vest on a straight-line basis over four years.

F-32

EXHIBIT 99.8

RISK FACTORS RELATING TO CHINA REAL ESTATE INFORMATION CORPORATION

The following risk factors were included in the prospectus for the initial public offering of China Real Estate Information Corporation. In this Exhibit 99.8, except where the context otherwise requires and for purposes of this Exhibit 99.8 only:

	•		“we,” “us,” “our company,” “the Company,” “our” and “CRIC” refer to China Real Estate Information Corporation, its subsidiaries, and, in the context of describing CRIC’s operations and consolidated financial information, include CRIC’s consolidated variable interest entities (“VIEs”) in China;

	•		“E-House” refers to E-House (China) Holdings Limited and its subsidiaries, including E-House’s VIEs in China, but excluding CRIC;

	•		“SINA” refers to SINA Corporation and its subsidiaries, including SINA’s VIEs in China;

	•		“China” or “PRC” refers to the People’s Republic of China solely for the purpose of this Exhibit 99.8, and do not include the Hong Kong Special Administrative Region, the Macau Special Administrative Region or Taiwan;

	•		“ADS” refer to American depositary receipts for CRIC’s ordinary shares; and

	•		all references to “RMB” or “renminbi” are to the legal currency of China, and all references to “$,” “dollars,” “US$” and “U.S. dollars” are to the legal currency of the United States.

Risks Related to Our Real Estate Information, Consulting and Advertising Services

Our limited operating history makes evaluating our business and prospects difficult.

Our CRIC system had been used as an internal resource to support E-House’s real estate agency and brokerage services and consulting and information services prior to the second half of 2006, when we began to commercialize our CRIC system by selling subscriptions. In addition, we had not previously provided real estate advertising services or operated a real estate Internet business prior to 2008. Furthermore, our business strategy has not been proven over time and we cannot be certain that we will be able to successfully operate and grow our business as a stand-alone operation separate from E-House. Therefore, our limited operating history as part of E-House may not provide a meaningful basis for you to evaluate our business and prospects.

To date, a limited number of real estate developers have contributed a substantial portion of our revenues due to the large size of their contracts with us; if we fail to continue to secure large contracts from existing, new or former clients, this could materially and adversely impact our revenues, results of operations and financial condition, or contribute to fluctuations in our revenues, which may make it difficult to predict our results of operations from period to period.

In the past, a limited number of real estate developers have contributed a substantial portion of our revenues. Our top three developer clients in 2008, namely Evergrande Real Estate Group (“Evergrande”), Shanghai Urban Development (Group) Co., Ltd. and Sky East Resources Ltd. (including their subsidiaries and branches), accounted for 56.6%, 15.6% and 10.3%, respectively, of our total revenues in 2008. Evergrande accounted for 46.9% of our total revenues for the six months ended June 30, 2009, while no other client accounted for more than 10% of our total revenues during such period. Neither Shanghai Urban Development (Group) Co., Ltd. nor Sky East Resources Ltd. has sought further services from us in 2009 to date. While our overall revenues continued to grow in the first half of 2009 as compared to the same period in 2008 despite these two developers not renewing or entering new contracts with us in 2009, there remains the risk that if we fail to continue to secure large contracts from existing, new or former clients, our revenues, results of operations and financial condition may be materially and adversely affected. In addition, whether or not we secure new large contracts or renew existing large contracts may also contribute to fluctuations in our revenues, which may make it difficult to predict our results of operations from period to period.

Generally, we maintain business relationships with national and regional real estate developers’ local subsidiaries or branches, and enter into individual contracts with each subsidiary or branch. However, in limited cases, such as our relationship with Evergrande, we maintain the business relationship with the headquarters of the real estate developer. We entered into a strategic cooperation agreement in December 2007 with Evergrande. Under this agreement, we were engaged as the exclusive provider of real estate information system and market consulting services to 37 of Evergrande’s real estate projects under development for one year. In December 2008, Evergrande renewed the strategic cooperation agreement for an additional year, again for 37 of Evergrande’s real estate projects under development. Evergrande could refuse to renew the agreement with us upon expiration of its term in December 2009, terminate the agreement before its expiration, substantially reduce its business with us in the future, or become unable or refuse to pay our fees or continue to engage our services due to financial difficulties it may experience or for other reasons. If any of the foregoing occurs, our results of operations and financial condition would be materially and adversely affected.

We may not be able to successfully execute our growth strategy of expanding our client base and increasing the average spending of our clients on our services, which could have a material adverse effect on our results of operations and prospects.

To continue to grow our revenues derived from our services, we will need to expand our client base and increase the average spending of our clients on our services. These efforts will involve aggressively marketing our services to real estate developers and also other client groups, such as governmental agencies, universities, research institutes and financial institutions, and promoting additional, premium services to our existing clients. Our CRIC system may not be well received by our targeted prospective clients, or we may not be successful in selling additional, premium services to our existing clients. If our efforts to expand our client base and increase the average spending of our clients on our services are not successful, our results of operations and prospects could be materially and adversely affected.

We may not be able to successfully execute our strategy of expanding into new geographical markets in China, which may have a material adverse effect on our business, results of operations and prospects.

We currently provide real estate information, consulting and advertising services in 56 cities in China and plan to expand our operations to more cities. Expanding into new geographical markets imposes additional burdens on our research, systems development, sales, marketing and general managerial resources. As China is a large and diverse market, client trends and demands may vary significantly by region and our experience in the markets in which we currently operate may not be applicable in other parts of China. As a result, we may not be able to leverage our experience to expand into other parts of China. If we are unable to manage our expansion efforts effectively, if our expansion efforts take longer than planned or if our costs for these efforts exceed our expectations, our results of operations may be materially and adversely affected. In addition, if we incur significant costs to expand data coverage for our existing markets but are not successful in marketing and selling our services in these markets, our data expansion efforts may have a material adverse effect on our financial condition by increasing our expenses without increasing our revenues.

We are not likely to sustain the high growth rate we have experienced up to now; if we cannot manage our growth effectively and efficiently, our results of operations and profitability could be materially and adversely affected.

Our revenues have grown significantly in a relatively short period of time. We have experienced substantial growth since 2006, when E-House began to commercialize the CRIC system in select cities to provide real estate information services. Our revenues increased from $5.4 million in 2006 to $8.2 million in 2007 and $50.0 million in 2008 and increased from $19.3 million for the six months ended June 30, 2008 to $31.2 million for the six months ended June 30, 2009. Over the same years, we increased the number of cities covered by our CRIC system from five as of December 31, 2006 to 22 as of December 31, 2007 and 54 as of December 31, 2008. The number of our clients increased from 46 in 2006 to 294 in 2007 and 1,599 in 2008.

We intend to continue to expand our operations. We are not likely, however, to sustain a similar growth rate in revenues or net income in future periods due to a number of factors, including, among others, the greater difficulty

of growing at sustained rates from a larger revenue base and the potential increases in costs and expenses as a stand-alone public company. Accordingly, you should not rely on our historical growth rate as an indication of our future performance.

Our expansion has placed, and will continue to place, substantial demands on our managerial, operational, technological and other resources. Our planned expansion will also place significant demands on us to maintain the quality of our CRIC system and related services to ensure that our brand does not suffer as a result of any deviations, whether actual or perceived, in the quality of our information and consulting services. In order to manage and support our growth, we must continue to improve our existing operational, administrative and technological systems and our financial and management controls, and recruit, train and retain additional qualified personnel, particularly as we expand into new markets. As our operations expand into more cities throughout China, we will face increasing challenges in managing a large and geographically dispersed group of employees. We may not be able to effectively and efficiently manage the growth of our operations, recruit and retain qualified personnel and integrate new expansion into our operations. As a result, our reputation, business and operations may suffer.

Our business is susceptible to fluctuations in the real estate market of China, which may materially and adversely affect our revenues and results of operations.

Our business depends substantially on the conditions of the real estate market in China. Demand for private residential real estate in China has grown rapidly in the past decade but such growth is often accompanied by volatility in market conditions and fluctuations in real estate prices. For example, following a period of rising real estate prices and transaction volume in most major cities from 2003 to 2007, the industry experienced a downturn in 2008, with transaction volume in many major cities declining significantly compared to 2007. Average selling prices also declined in many cities during 2008. Fluctuations of supply and demand in China’s real estate market are caused by economic, social, political and other factors.

Since early 2009, China’s real estate market has rebounded and many cities have experienced increases in real estate prices and transaction volumes. This rebound has coincided with a sharp rise in the volume of bank loans as part of China’s response to the global economic crisis. Bank regulators in China have expressed concern about excessive lending for real estate investments. Excessive development fueled by cheap credit could cause an oversupply of inventory leading to a significant market correction, which could materially and adversely affect the business of our developer clients. On the other hand, any efforts by bank regulators to curb excessive lending, if taken too far, might prevent developers from raising funds they need to start new projects.

To the extent fluctuations in the real estate market significantly affect demand for real estate information and consulting services from our clients, which are primarily real estate developers, our revenues and results of operations may be materially and adversely affected.

The real estate information and consulting services sector in China is relatively new and rapidly evolving. If our business model proves to be inappropriate or suboptimal or if new competitors emerge to better serve the real estate industry, our business may be materially and adversely affected.

The real estate information and consulting services sector in China is relatively new and rapidly evolving, and we cannot predict how this industry will develop in the future. The development of the real estate information and consulting services sector will depend to a large extent on continued and growing demand by real estate developers and other industry participants for such services. Our business model may prove to be inappropriate or suboptimal as the industry develops. In addition, new competitors may emerge that are better adapted to serve the real estate industry as it evolves, which could cause us to lose market share in key market segments. Any failure on our part to adapt to changes in the real estate information and consulting services sector may materially and adversely affect the growth of our business.

Our results of operations may fluctuate or otherwise be materially and adversely affected due to seasonal variations and the project-by-project nature of some of our real estate consulting projects.

Our operating income and earnings have historically been substantially lower during the first quarter than other quarters. This results from the relatively low level of real estate activities during the winter and the Chinese New Year holiday period, which falls within the first quarter each year.

We generated a majority of our total revenues from services provided to real estate developers in 2006, 2007, 2008 and the six months ended June 30, 2009. We expect to continue to rely on real estate developers to generate a significant portion of our revenues for the foreseeable future. Revenues from our services to real estate developers, especially revenues from our consulting services, are typically generated on a project-by-project basis. For some of our consulting projects in relation to land acquisition and property development, we agree to a fixed fee arrangement conditional upon the delivery of a final product, such as closing a land acquisition transaction or providing a market study report. We recognize revenues on this type of consulting projects when we have completed our performance obligations under the service contract, the customer accepts the contract deliverable and the payment terms are no longer contingent. Because such projects may take anywhere from a month to a year to perform, the timing of recognition may cause fluctuations in our quarterly revenues and even our annual revenues. Furthermore, difficulty in predicting when these projects will begin and how long it will take for us to complete them makes it difficult for us to forecast revenues and maintain appropriate working capital levels, which could cause short-term financing problems.

Our business is sensitive to the current global economic crisis. A severe or prolonged downturn in the global economy could materially and adversely affect our business and results of operations.

Recent global market and economic conditions have been unprecedented and challenging with recession in most major economies persisting in 2009. Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical issues, the availability and cost of credit, and the global housing and mortgage markets have contributed to increased market volatility and diminished expectations for economic growth around the world. The difficult economic outlook has negatively affected business and consumer confidence and contributed to volatility of unprecedented levels.

The Chinese economy also faces challenges. The stimulus plans and other measures implemented by the Chinese government may not work effectively or quickly enough to maintain economic growth in China or avert a severe economic downturn. If economic growth slows or an economic downturn occurs, real estate development may slow and real estate developers may spend less on real estate information and consulting services, which may materially and adversely affect our business and results of operations.

If we are not able to obtain and maintain accurate, comprehensive and reliable data in our CRIC system, we could experience reduced demand for our services.

Our success depends on our clients’ confidence in the accuracy, comprehensiveness and reliability of the data contained in our CRIC system. The task of establishing and maintaining accurate and reliable data is challenging. We rely on third-party data providers for a significant amount of the information in our CRIC system. While we attempt to ensure the accuracy of our data by using multiple sources and performing quality control checks, some of the data we are provided may be inaccurate. If our data, including the data we obtain from third parties, is not current, accurate, comprehensive or reliable, we could experience reduced demand for our services or legal claims by our customers, which could adversely affect our business and financial performance. Our staff use integrated standard internal processes to update our CRIC system. Any inefficiencies, errors or technical problems with related applications could reduce the quality of our data, which may result in reduced demand for our services and a decrease in our revenues.

Technical problems that affect our customers’ ability to access our services, or temporary or permanent outages of our computers, software or telecommunications equipment, could lead to reduced demand for our services, lower revenues and increased costs.

A significant portion of our business is conducted over the Internet and through the use of software applications. As a result, our business depends upon the satisfactory performance, reliability and availability of our software applications, especially our CRIC system software, the Internet and telecommunications services we use. Problems with our CRIC system, the Internet or the services provided by our telecommunications service providers could result in slower Internet connections for our customers or interfere with our customers’ access to our services. If we experience technical problems in delivering our services, we could experience reduced demand for our services, lower revenues and increased costs.

In addition, our operations depend on our ability to protect our database, computers and software, telecommunications equipment and facilities against damage from potential dangers such as fire, power loss, security breaches, computer viruses and telecommunications failures. Our computer servers perform automatic data backup on a daily basis. In addition, we periodically conduct manual backup of all data onto CDs and store the CDs in a secure off-site location. We also monitor our CRIC system in an effort to detect and prevent unauthorized access and to provide reliable access to our clients. Our main servers are located in the Internet data centers of the local telecommunications carrier in Shanghai. If our main servers go down, our backup servers are designed to be up and running within 30 minutes. Any temporary or permanent loss of one or more of these systems or facilities from an accident, equipment malfunction or some other cause could harm our business. If we experience a failure that prevents us from delivering our services to clients, we could experience reduced demand for our services, lower revenues and increased costs.

We may not be able to achieve the benefits we expect from recent and future acquisitions and business partnerships, which may have an adverse effect on our ability to manage our business prospects.

Strategic acquisitions and business partnerships have been, and may continue to be, an important factor in the growth and success of our business. For example,

	•		in September 2008, we acquired a 60% interest in Wushi Consolidated (Beijing) Advertising Media Co. Ltd., or Wushi Advertising, a provider of real estate advertising design services;

	•		in October 2008, we acquired Guangzhou Integrated Residential Building Industry Facility Co., Ltd., or Guangzhou Integrated, a provider of real estate consulting and training services; and

	•		in July 2009, we acquired a 90% interest in Shenzhen Fangyou Software Technology Co., Ltd., or Fangyou Software, a software company specializing in the development of software management systems for real estate agencies and brokers.

These and any future acquisitions and business partnerships may expose us to potential risks, including, among other things:

	•		unidentified issues not discovered in our due diligence process, such as hidden liabilities and legal contingencies;

	•		distraction of management’s attention from normal business operations during the integration process;

	•		failure to effectively integrate acquired assets and talent into our corporate structure and culture;

	•		diversion of resources from our existing businesses and technologies; and

	•		failure to realize the synergies expected from the acquisitions or business partnerships.

In addition, we may fail to identify or secure suitable acquisition and business partnership opportunities or our competitors may capitalize on such opportunities before we do. Moreover, identifying such opportunities could demand substantial management time and resources, and negotiating and financing acquisitions and business partnerships involve significant costs and uncertainties. If we fail to continue to successfully source, execute and integrate acquisitions and business partnerships in the future, our overall growth could be impaired, and our results of operations could be adversely affected.

For risks relating to our acquisition of SINA’s online real estate business, see “Risks Related to Our Acquisition of SINA’s Online Real Estate Business and Our Combined Real Estate Internet Operations.”

A decrease in demand for advertising services in general, and for our real estate advertising services in particular, could materially and adversely affect our ability to generate advertising revenues, which in turn could adversely affect our financial condition and results of operations.

Demand for our advertising services is particularly sensitive to changes in general economic conditions and the real estate sector, and real estate advertising expenditures typically decrease during periods of economic downturn. Real estate developer advertisers may also reduce their spending on our advertising services for a number of other reasons, including:

	•		a decline in the number of their new development projects or temporary or more permanent halts to development projects under construction in the cities in which we operate;

	•		a decline in economic conditions in the cities in which we operate;

	•		a decision to shift advertising expenditures to other available advertising media; and

	•		a decline in advertising spending in general.

Our business may be materially and adversely affected by government measures affecting China’s real estate industry.

The real estate industry in China is subject to government regulations. Until 2008, the real estate markets in a number of major cities in China had experienced rapid and significant growth. Before the global economic crisis began to affect major economies worldwide in 2008, the PRC government had adopted a series of measures to restrain what it perceived as unsustainable growth and speculation in the PRC real estate market. From 2003 to 2007, the PRC government introduced a series of specific administrative and credit-control measures including, but not limited to, setting minimum down payment requirements for residential and commercial real estate transactions, limiting availability of mortgage loans, and tightening governmental approval process for certain real estate transactions. For example, in 2006, the State Council and other related government agencies introduced regulations that increased mandatory minimum down payment from 20% to 30% of the purchase price for properties with a floor area of more than 90 square meters and imposed a business tax on total proceeds from the resale of properties held for less than five years.

Since 2008, the PRC government has relaxed such restrictions and introduced measures aimed at stimulating residential property purchases by individuals and stabilizing the real estate market. On October 22, 2008, the Ministry of Finance, the State Administration of Taxation and the People’s Bank of China lowered transaction taxes, minimum down payment requirements, and the mortgage interest rate for certain residential real estate transactions. In December 2008, the General Office of the State Council promulgated rules that exempted certain residential real estate transactions from business tax.

However, despite the recent government measures aimed at maintaining the long-term stability of the real estate market, the PRC government may adopt new measures in the future that may result in short-term downward adjustments and uncertainty in the real estate market. Our business may be materially and adversely affected as a result of decreased transaction volumes or real estate prices that may follow these adjustments or market uncertainty, which may in turn negatively affect real estate developers’ business and reduce their demand for real estate information and consulting services.

Failure to enhance our brand recognition could have a material adverse effect on our business and results of operations.

We have benefited from the strong brand recognition of E-House in China. We have yet to establish an equally well-recognized brand separate from the E-House brand within the real estate industry in China. We will need to expend significant time, effort and resources to continue to enhance our brand recognition and our own independent identity. Developing our brand is integral to our sales and marketing efforts. If we fail to enhance our brand recognition, it could have a material adverse effect on our ability to acquire new clients and thus affect our business and results of operations. In addition, while we expect to derive significant benefit from our acquisition of SINA’s online real estate business and close affiliation with SINA, given the strength of SINA’s brand in China, it is possible that the SINA brand may hinder our ability to grow the CRIC brand as an independent and successful brand that can stand alongside, and not be eclipsed by, the SINA and E-House brands. Furthermore, as we promote the SINA, E-House and CRIC brands together as they relate to our business, any negative publicity or damage to the SINA or E-House brand, even if as a result of events unrelated to our business, could adversely impact our CRIC brand.

If we fail to develop a positive public image and reputation, our existing business with our clients could decline and we may fail to develop additional business, which could in turn adversely affect our prospects and results of operations.

We may face increased competition and, if we are unable to compete successfully, our financial condition and results of operations may be harmed.

The real estate information and consulting services sector in China is at an early stage of development and is highly fragmented. As such industry develops, we may face increased competition. Competition in this industry is primarily based on the quality, breadth and depth of the underlying database, client service and support, industry expertise and reputation of the research and consulting professionals, quality and breadth of the services offered, brand recognition and overall client experience.

In the real estate information service sector, we compete with both national and local real estate information service providers, including Soufun.com, an Internet real estate portal that primarily targets consumers but also provides real estate market data as part of its service offerings. In the real estate consulting service market, we compete with international real estate consulting companies, such as DTZ, CB Richard Ellis and Jones Lang LaSalle, domestic real estate consulting companies, such as World Union Real Estate Consultancy (China) Ltd., and individual consulting brands.

The advertising industry is relatively developed in China. Our real estate advertising business faces intense competition in both our advertising design and sales services areas. In the area of advertising design services, we compete with local advertising design firms in places where we have operations. In the area of advertising sales services, we compete with both national and local advertising agencies.

We may not be able to continue to compete effectively with our existing competitors, maintain our current fee arrangements, or compete effectively with new competitors in the future. In addition, some of our competitors have more financial and other resources than we do. If we fail to compete effectively, our business operations and financial condition will suffer.

Substantial defaults by our clients on accounts receivable could have a material adverse effect on our business, results of operations and financial condition.

Our accounts receivable as of June 30, 2009 were $13.2 million, representing 42.2% of our total revenues for the six months ended June 30, 2009. Although the service agreements with our developer clients are generally silent in this regard, we typically settle the payments for consulting services with our developer clients after the completion of the consulting projects, which generally last several months. Therefore, our working capital levels are affected by the time lag between the time we provide services, bill our clients and collect the payments owed to us, which is reflected in our accounts receivable and has from time to time resulted in negative operating cash flows. Receivables from the two clients with the largest accounts receivable outstanding as of June 30, 2009, namely Xi’an ChanBa Construction and Development Co., Ltd. and Shanghai Dingtong Investment Co., Ltd., accounted for 33.6% of our total accounts receivable as of that date. If these or other clients which owe us accounts receivable were to become insolvent or otherwise unable to pay for our services or make payments in a timely manner, our liquidity would be adversely affected and we would have to write off accounts receivable or increase provisions made against our accounts receivable, any of which could adversely affect our business, results of operations and financial conditions.

If we fail to hire, train and retain qualified managerial and other employees, our business and results of operations could be materially and adversely affected.

We place substantial reliance on the real estate industry experience and knowledge of our senior management team as well as their relationships with other real estate industry participants. Mr. Xin Zhou, our co-chairman and chief executive officer, is particularly important to our future success due to his substantial experience and reputation in the real estate industry. Mr. Zuyu Ding, our co-president, has also been instrumental in growing our business due to his substantial experience in the areas of real estate—related research and technology. Mr. Jun Luo, our co-president, has been the general manager of SINA’s online real estate business since 2007 and has extensive experience in China’s Internet industry. We do not carry, and do not intend to procure, key person insurance on any of our senior management team. The loss of the services of one or more members of our senior management team due to their departure, or otherwise, could hinder our ability to effectively manage our business and implement our growth strategies. Finding suitable replacements for our current senior management could be difficult, and competition for such personnel of similar experience is intense. If we fail to retain our senior management, our business and results of operations could be materially and adversely affected.

Our information and consulting services are supported and enhanced by a team of research staff. They are critical to maintaining the quality and consistency of our services and our brand and reputation. It is important for us to attract qualified employees who have experience in real estate research, information and consulting, and are committed to our service approach. There may be a limited supply of qualified individuals in some of the cities in China where we have operations and other cities into which we intend to expand. We must hire and train qualified managerial and other employees on a timely basis to keep pace with our rapid growth while maintaining consistent quality of services across our operations in various geographic locations. We must also provide continuous training to our managerial and other employees so that they are equipped with up-to-date knowledge of various aspects of our operations and can meet our demand for high-quality services. If we fail to do so, the quality of our services may deteriorate in one or more of the markets where we operate, which may cause a negative perception of our brand and adversely affect our business.

Any failure to protect our brand, trademarks, software copyrights, trade secrets and other intellectual property rights could have a negative impact on our business.

We believe our brand, trademarks, software copyrights, trade secrets and other intellectual property rights are critical to our success. Although we have applied for trademark registration of “CRIC” and other related trademarks in China, we may not be able to register such trademarks, or register them with the scope we seek. Any unauthorized use of our brand, trademarks, software copyrights, trade secrets and other intellectual property rights could harm our competitive advantages and business. Historically, China has not protected intellectual property rights to the same extent as the United States, and infringement of intellectual property rights continues to pose a serious risk of doing business in China. Monitoring and preventing unauthorized use is difficult. The measures we take to protect our intellectual property rights may not be adequate. Furthermore, the application of laws governing intellectual

property rights in China is uncertain and evolving, and could involve substantial risks to us. If we are unable to adequately protect our brand, trademarks and other intellectual property rights, we may lose these rights and our business may suffer materially.

The success of our business depends in large part on the intellectual property involved in our methodologies, databases, services and software. We rely on a combination of trade secret, copyright, trademark and other laws, nondisclosure and non-competition provisions, license agreements and other contractual provisions and technical measures to protect our intellectual property rights. However, current law may not provide adequate protection of our intellectual property, including databases and the actual data.

In addition, legal standards relating to the validity, enforceability and scope of protection of proprietary rights in Internet-related businesses are uncertain and evolving, and we cannot assure you of the future viability or value of any of our proprietary rights in Internet-related businesses. As the right to use Internet domain names is not rigorously regulated in China, other companies have incorporated in their domain names elements similar in writing or pronunciation to our trademarks and domain names. This may result in confusion between those companies and our company and may lead to the dilution of our brand value, which could adversely affect our business. Our business could be significantly harmed if we are not able to protect our content and our other intellectual property.

Copyright infringement and other intellectual property claims against us may adversely affect our business and our ability to operate our CRIC system.

We have collected and compiled in our CRIC system real estate—related news articles, reports, floor plans, architectural drawings, maps and other documents and information prepared by third parties. Because the content in our database is collected from various sources and distributed to others, we may be subject to claims for breach of contract, defamation, negligence, unfair competition, copyright or trademark infringement, or claims based on other theories. Although we do not use the information we obtain from clients during the course of providing real estate consulting services, the same information derived from other sources may be found in our database. In such cases, we could be subject to breach of confidentiality or similar claims, whether or not having merit, by those clients. We could also be subject to claims based upon the content that is displayed on our websites or accessible from our websites through links to other websites or information on our websites supplied by third parties.

We have in the past been subject to claims by individuals claiming rights in certain of the maps, drawings and documents made available on the CRIC system or otherwise provided to our clients. Any lawsuits or threatened lawsuits in which we are involved, either as a plaintiff or as a defendant, could cost us a significant amount of time and money and distract management’s attention from operating our business. Any judgments against us in such suits, or related settlements, could have a material impact on our ability to operate or market our CRIC system, harm our reputation and have a material adverse affect on our results of operations. If a lawsuit against us is successful, we may be required to pay damages or enter into royalty or license agreements that may not be based upon commercially reasonable terms, or we may be unable to enter into such agreements at all. As a result, the scope of the data we offer to our clients could be reduced, or our methodologies or services could change, which may adversely affect the usefulness of our CRIC system and our ability to attract and retain clients.

Failure to obtain or keep requisite licenses and permits for our business operations may subject us to significant financial penalties and other government sanctions.

Due to the broad geographic scope of our operations and the variety of services we provide, we are subject to numerous national, regional and local laws and regulations specific to the services we perform, including laws and regulations that set forth requirements to hold various licenses and permits. These laws and regulations are subject to interpretation and implementation by local authorities that may vary from place to place and from time to time, and we may be required to obtain licenses and permits we do not currently hold.

Currently we provide access to our CRIC database through the Internet. If relevant PRC governmental authorities deem this to be provision of Internet information services under applicable PRC laws and regulations, they may require us to obtain a value-added telecommunications business operating license, or ICP license, to continue to provide access to our CRIC database through the Internet. We believe, based in part on communications with relevant Shanghai governmental authorities, that our current real estate information services business does not

require us to obtain an ICP license because access to the CRIC database is not offered to the general public. However, if relevant PRC governmental authorities require us to hold an ICP license for this business as currently conducted, Shanghai CRIC Information Technology Co., Ltd. (“Shanghai CRIC”), our main operating subsidiary, could be subject to fines and penalties relating to operating this business without the proper license. Moreover, because wholly foreign-owned enterprises such as Shanghai CRIC are not permitted to obtain an ICP license, we would need to restructure our operations to carry out our real estate information services business through the same type of contractual arrangements through which we operate our advertising services business and will operate our real estate Internet business. Our real estate information services business would then be subject to the risks associated with this contractual arrangement structure described in “Risks Related to Our Corporate Structure.”

In addition, relevant PRC authorities may deem certain of Shanghai CRIC’s business activities involving the collection of data for our CRIC database to be “market survey” activities. In such a case, because wholly foreign-owned enterprises such as Shanghai CRIC are not permitted to engage in “market survey” activities in China, Shanghai CRIC could be subject to fines and penalties and we would be required to restructure our operations to have one of our consolidated affiliated entities holding a business license with such business scope in its business license to undertake these activities.

If we fail to properly obtain or maintain the licenses and permits or complete the filing and registrations required to conduct our business, our affected subsidiaries, consolidated affiliated entities and branch offices in China may be warned, fined, have their licenses or permits revoked, or ordered to suspend or cease providing certain services, or subject to other penalties, sanctions and liabilities.

Any natural or other disasters, including outbreaks of health epidemics and other extraordinary events could severely disrupt our business operations.

Our operations are vulnerable to interruption and damage from natural and other types of disasters, including earthquakes, fire, floods, environmental accidents, power loss, communications failures and similar events. On May 12, 2008, a severe earthquake occurred in Sichuan province of China, resulting in significant casualties and property damage and a sharp decline in real estate transactions in the affected areas. If any other disaster or extraordinary events were to occur in the future, our ability to operate our business could be seriously impaired.

Our business could be materially and adversely affected by the outbreak of influenza A (H1N1), commonly referred to as “swine flu,” avian influenza, severe acute respiratory syndrome, or SARS, or another epidemic. A recent outbreak of swine flu in North America could spread to China and there have been a number of confirmed cases of swine flu in China. Any prolonged occurrence of swine flu, avian influenza, SARS or other adverse public health developments in China could severely disrupt our staffing and otherwise reduce the activity levels of our work force, thus causing a material and adverse effect on our business operations.

We do not have any business liability, disruption or litigation insurance, and any business disruption or litigation we experience might result in our incurring substantial costs and diversion of resources.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products and do not, to our knowledge, offer business liability insurance. While business disruption insurance is available to a limited extent in China, we have determined that the risks of disruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. As a result, except for fire insurance, we do not have any business liability, disruption or litigation insurance coverage for our operations in China. Any business disruption or litigation may result in our incurring substantial costs and diversion of resources.

Risks Related to Our Acquisition of SINA’s Online Real Estate Business and
Our Combined Real Estate Internet Operations

There may be risks inherent in our acquisition of SINA’s online real estate business.

Although we have beneficially owned 34% of China Online Housing Technology Corporation (“China Online Housing”) since its establishment and have conducted due diligence with respect to our acquisition of SINA’s online

real estate business, there may still be unidentified issues and hidden liabilities, which could have a material adverse effect on our business, financial condition and results of operations. While SINA has made extensive representations and warranties to us regarding the business we are acquiring, and we are entitled to seek indemnification from SINA for any breach of those representations and warranties, actions to seek indemnification or enforce indemnification could be costly and time-consuming and may not be successful. Moreover, our ongoing business partnership with SINA may discourage us from seeking such indemnification.

Our acquisition of SINA’s online real estate business may not yield the benefits we anticipate, which could materially and adversely affect our business and results of operations.

We expect substantial synergies between our operations and SINA’s online real estate business. We also intend to integrate our recently launched real estate websites with SINA’s real estate websites. However, we may encounter difficulties in integrating acquired operations, services, corporate culture and personnel into our existing business and operations. These activities may divert significant management attention from existing business operations, which diversion may harm the effective management of our business. In addition, this acquisition would require that our management develop expertise in new areas, manage new business relationships and attract new types of customers. Failure to generate the synergies we anticipate from the combination of our current operations and SINA’s online real estate business could materially and adversely affect our business and results of operations.

We will incur non-cash charges in relation to our acquisition of SINA’s online real estate business, which will have a material adverse impact on our results of operations.

In connection with our acquisition of SINA’s online real estate business, we acquired certain intangible assets from SINA and grant options to certain employees of SINA who have joined or will join us. As a result, we will incur substantial non-cash charges arising from amortization of intangible assets recorded at fair value and share-based compensation, which would materially and adversely affect our results of operations for the quarterly and annual periods.

In addition, we expect to allocate a significant portion of our purchase price for SINA’s online real estate business to goodwill, representing the excess of such purchase price over the fair value of net tangible assets and the identifiable intangible assets of the acquired business. We perform a goodwill impairment test annually and evaluate intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We may incur significant impairment expenses in relation to the intangible assets or to goodwill attributable to the acquisition from time to time in the future, which may materially and adversely affect our results of operations.

We have no experience in operating a real estate Internet business as a stand-alone company and will rely on our cooperation with SINA to a large extent. If we fail to maintain our relationship with SINA in relation to our real estate Internet operations, our business and results of operations could be materially and adversely affected.

We do not have experience in operating a real estate Internet business as a stand-alone company. To a large extent, the future operations and revenues of our real estate Internet business will rely on our cooperation with SINA. The domain names of the major websites of the acquired online real estate business will be owned by SINA and licensed to us, and we expect a significant proportion of users of these websites to link to them through SINA’s other websites. Under an advertising agency agreement between us and SINA, we will be the exclusive agent of SINA for selling advertising to the real estate advertisers. Although China Online Housing and SINA have entered into an advertising agency agreement, a domain name and content license agreement, a trademark license agreement and a software license and support services agreement, we may not receive the same level of support from SINA as SINA’s online real estate business did prior to the acquisition. If for any reason SINA terminates the advertising agency agreement or any other of these foregoing agreements or otherwise reduces its support for our online real estate operations, our business and results of operations may be materially and adversely affected.

Any negative development in SINA’s market position, harm to SINA’s brand or SINA’s operations, or regulatory actions or legal proceedings affecting SINA’s intellectual properties on which our real estate Internet business relies, could materially and adversely affect our business and results of operations due to our dependence on SINA for our Internet operations.

The marketing and promotion of our real estate Internet business will benefit significantly from our association with the SINA brand. Any negative development in SINA’s market position or brand recognition may materially and adversely affect our marketing efforts and the popularity of our real estate Internet business. We expect to derive a significant proportion of the revenues of our real estate Internet business from selling advertising on SINA’s channels other than the real estate and home furnishing channels or SINA’s non-real estate channels, under our advertising agency arrangement with SINA. Any negative development in SINA’s Internet operations or attractiveness to users or advertisers may materially and adversely affect our business and results of operations. Moreover, as our real estate Internet operations will continue to rely on certain domain names, trademarks, contents, software and other intellectual properties licensed to us by SINA, any regulatory actions or legal proceedings against SINA related to such domain names, contents and other intellectual properties could have a significant impact on our ability to operate our real estate Internet business.

If the online advertising market fails to grow as quickly as expected, or if we fail to implement our growth strategies for our real estate Internet operations, our business will be materially and adversely affected.

Our real estate Internet operations will rely on online advertising as its main source of revenue. However, online advertising in China is still a relatively new business and many of our potential advertising clients have limited experience using the Internet for advertising purposes. In particular, advertisers in the real estate sector in China have traditionally relied more heavily on other advertising media, such as newsprint, magazines and outdoor advertising. If the Internet does not continue to develop as a viable marketplace for real estate and home—related contents and information, our online advertising business may be negatively affected.

Even if the online advertising market in China does continue to grow, if we fail to implement our growth strategies for our real estate Internet operations, our business may not grow as quickly as we expect. Our future growth depends on our ability to attract and retain employees who understand both the real estate industry and the online advertising industry, to increase the user traffic of our websites, to develop new advertising offerings and increase marketing effectiveness, to increase fees we can charge for online advertising, and to maintain and enhance relationships with our advertising clients. The current and potential clients of our real estate Internet business may choose not to advertise on our websites if they do not perceive our online advertising services to be effective or our user demographics to be desirable.

Failure to maintain or expand the number and quality of property listings on our real estate Internet websites, and our reliance on local business partners to source these listings, could materially and adversely affect our business and results of operations.

We believe having a large number of high-quality property listings attracts users to our real estate Internet websites, thereby enhancing its attractiveness to advertisers and other real estate market participants. In addition to its own on-the-ground capabilities, SINA’s online real estate business has been relying on local business partners to develop primary property listings. It has also engaged third parties to provide secondary and rental property listing data, and uses the database in our CRIC system for its property listings. We expect that our real estate Internet operations will continue to rely on local business partners or other third parties to source property listings. However, these business partners or third party information providers may for certain reasons terminate their agreement with us or otherwise cease providing property listings to us. Moreover, we have limited control over these business partners, and actions by them could harm our business reputation or otherwise negatively affect our business. If our real estate Internet business experiences reduced listings or if our websites are perceived to be less attractive or popular among real estate market participants, the competitive position of our real estate Internet business could be significantly weakened and our business, financial condition and results of operations may be materially and adversely affected.

SINA’s online real estate business has relied on a limited number of advertising agencies, which reliance may materially and adversely affect the results of operations and financial condition of our real estate Internet business.

SINA’s online real estate business has relied on a limited number of advertising agencies for a significant majority of its revenues. For the nine months ended on December 31, 2008 and six months ended June 30, 2009, the three largest advertising agencies of SINA’s online real estate business, namely Beijing Jiahua Hengshun Media Advertising Company Limited, Shanghai Xindu Advertising Media Company Limited and Shangtuo Zhiyang International Advertising (Beijing) Company Limited, accounted for over 75% and 65% of its advertising revenues, respectively. In the future, these advertising agencies may not continue to engage our services at the same level, or at all. Should these advertising agencies terminate or substantially reduce their business with our real estate Internet operations and we fail to find alternative clients to provide us with revenue generating business or they are unable to timely pay on their receivables outstanding, the results of operations and financial condition of our real estate Internet business may be materially and adversely affected.

If our real estate Internet business fails to compete successfully against its existing or future competitors, our financial condition and results of operations may be materially and adversely affected.

Our real estate Internet business will face significant competition from other companies in each of its primary business activities. In particular, the online real estate services markets in China may become increasingly competitive. The barriers to entry for establishing Internet-based businesses are low, making it possible for new competitors to proliferate rapidly. We expect more companies to enter the online real estate services industry in China and a wider range of online real estate services to be introduced. As the online real estate services industry in China is relatively new and constantly evolving, existing or future competitors of our real estate Internet business may be better able to position themselves to compete as the industry matures. In particular, any of these competitors may offer products and services that provide significant performance, price, scope, creativity or other advantages over those offered by our real estate Internet business. These products and services may weaken the market strength of our brand name and achieve greater market acceptance than those of our real estate Internet operations. Increased competition in the online real estate services industry in China could make it difficult for our real estate Internet business to retain existing clients and attract new clients, and could force us to reduce our fee rates. The current competitors of SINA’s online real estate business include certain vertically-integrated real estate Internet websites, such as Soufun.com, and real estate channels of Internet portals in China, such as Sohu.com Inc.’s focus.cn , which provide, among other things, competing real estate–related content and advertising services. These websites may have a larger user base, better brand recognition or stronger market influence. It is also possible that websites with large traffic may decide to provide real estate–related listing and other advertising services. In addition, regionally and locally focused websites providing regional real estate listings together with localized services have offered and may continue to offer strong competition in the regions that we operate. Moreover, any of the existing or future competitors of our real estate Internet business may receive investments from or enter into other commercial or strategic relationships with larger and well-established companies and therefore obtain significantly greater financial, marketing and content licensing and development resources than our real estate Internet business has. Our real estate Internet business may not be able to charge higher fees for online advertising due to existing and potential competition. If our real estate Internet business is unable to compete effectively in the online real estate services markets in China, our financial condition and results of operations could be materially and adversely affected.

If we fail to obtain ICP licenses for the operation of www.dichan.com , fy.dichan.com and www.winfang.com , we may not be able to commercialize these three websites in the future due to PRC restrictions on foreign ownership in Internet information services, which could materially and adversely affect our business and results of operations.

Applicable PRC laws and regulations classify Internet information services as value-added telecommunication services and further divide them into commercial Internet information services and non-commercial Internet information services. Providers of commercial Internet information services are required to obtain an operating license, or ICP license, from the Ministry of Industry and Information Technology or its relevant provincial counterparts, whereas providers of non-commercial Internet information services are only required to make a filing with the local counterpart of the Ministry of Industry and Information Technology. Shanghai CRIC is currently operating www.dichan.com ; Fangyou Software, being 90% owned by Shanghai CRIC, operates fy.dichan.com; and

Guangzhou Integrated, a wholly-owned subsidiary of Tian Zhuo Advertising, operates www.winfang.com . Although the required filings have been made with the relevant government authorities, no ICP license has been obtained for the operation of these three websites as we have not commercialized them.

However, we plan to charge certain fees in the future for using these websites to conduct real estate–related transactions. We will not be able to do so if we fail to obtain ICP licenses for these websites. If for any reason we fail to obtain ICP licenses for the three websites, we will not be able to generate revenues from these websites as anticipated and our business and results of operations may be materially and adversely affected.

If we fail to further expand the online advertising operation of our real estate Internet business outside of Beijing, our growth of revenues, results of operations and business could be materially and adversely affected.

SINA’s online real estate business has historically relied on the Beijing area for a substantial portion of its revenues. More recently, its revenue growth has been increasingly driven by the expansion of its advertising business outside of Beijing. We plan to continue to expand into geographical areas outside Beijing in order to increase the revenues of our real estate Internet business. However, consumer trends and demands may vary significantly by region and our experience in the Beijing market may not be applicable in other localities outside Beijing. As a result, we may not be able to leverage our experience in Beijing to expand into other areas outside Beijing. When we enter new markets, we may face low levels of acceptance for online advertising in new geographic markets, or intense competition from companies with greater experience or an established presence or from other companies with similar expansion targets. As part of our expansion strategy, we outsource the operation of certain regional websites to local business partners. Actions by these business partners, or a failure by them to comply with relevant laws and regulations, could materially and adversely affect our ability to expand our business or the popularity and reputation of our real estate Internet operations. We may be unable to provide sufficient local content or maintain a sufficient number of local business hosting partners. Therefore, we may not be able to grow our revenues in new cities which we enter into while incurring substantial costs, and our revenue growth, results of operations and online real estate advertising business could be materially and adversely affected.

The operations of our real estate Internet business could be disrupted by unexpected network interruptions caused by system failures, natural disasters or unauthorized tampering with its systems.

The continual accessibility of websites and the performance and reliability of the network infrastructure for our real estate Internet business are critical to its reputation and its ability to attract and retain users and advertisers. Any system failure or performance inadequacy that causes interruptions in the availability of its services or increases the response time of its services could reduce the appeal our real estate Internet business to advertisers and consumers. Factors that could significantly disrupt the operations of our real estate Internet business include: inadequate bandwidth, 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 its computer systems; and security breaches related to the storage and transmission of proprietary information, such as credit card numbers or other personal information.

Our real estate Internet operations have limited backup systems and redundancy. Repeated disruptions or any of the foregoing factors could damage our real estate Internet business’s reputation, require it to expend significant capital and other resources and expose it to a risk of loss or litigation and possible liability. Accordingly, our revenues and results of operations may be materially and adversely affected if any of the above disruptions should occur.

If any of our subsidiaries or consolidated affiliated entities operating our real estate Internet business fails to obtain or maintain the applicable licenses and approvals required under the complex regulatory environment for Internet-based businesses and advertising businesses in China, our business, financial condition and results of operations could be materially and adversely affected.

The Internet and advertising industries in China are highly regulated by the PRC government. Various regulatory authorities of the central government, such as the State Council, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the State Press and Publication Administration,

the State Administration of Radio, Film and Television and the Ministry of Public Security, are empowered to issue and implement regulations governing various aspects of the Internet and advertising industries.

For example, Beijing Yisheng Leju, China Online Housing’s consolidated affiliated entity operating SINA’s online real estate business, is required to obtain and maintain applicable licenses or approvals from different regulatory authorities in order to provide its current services, including an ICP license. These licenses are essential to the operation of SINA’s online real estate business and are generally subject to annual review by the relevant governmental authorities. Advertising is included in the business scope indicated in the business license of Beijing Yisheng Leju, which allows it to provide advertising services. This type of business scope is also essential to the operations of SINA’s online real estate business. In addition, Beijing Yisheng Leju may be required to obtain additional licenses, such as an Internet publication license, an Internet news information services license, an Internet bulletin board service license and an Internet and network transmission video and audio program license, if it is deemed by the government authorities to conduct the relevant businesses. If Beijing Yisheng Leju fails to obtain or maintain any of the required licenses or approvals, its continued business in the Internet and advertising industries may subject it to various penalties, including, but not limited to, confiscation of illegal revenues, fines and the discontinuation or restriction of its operations. Any such disruption in the operations of our real estate Internet business could materially and adversely affect our financial condition and results of operations.

We could face liability for information on our websites and for products and services sold over our real estate Internet websites.

In addition to our real estate Internet websites, SINA’s online real estate business provided, and our combined real estate Internet operations provide, third-party content such as real estate listings, links to third-party websites, online advertisements or content provided by users of community-oriented services. China has enacted laws and regulations governing the distribution of news, information or other content, as well as products and services, through the Internet. If any Internet content we provide or will provide on our websites were deemed by the PRC government to violate any such laws or regulations, we would not be able to continue providing such content and could be subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses. We could be held liable for defamation, negligence or other wrongful actions brought by third parties providing such content or operating websites linked to our websites. We may also face assertions that content on our websites or information contained in websites linked to our websites contains errors or omissions, and consumers may seek damages for losses incurred if they rely upon such information.

SINA’s online real estate business has taken certain precautionary measures in this regard. However, such measures may not be adequate to exonerate it from relevant civil, administrative or criminal liabilities. Any claims, with or without merit, could be time-consuming to defend and result in litigation and significant diversion of management’s attention and resources. Even if these claims do not result in liability to us, we could incur significant costs in investigating and defending against these claims.

Risks Related to Our Carve-out from E-House and Our Relationship with E-House

We have no experience operating as a stand-alone public company.

We were incorporated on August 21, 2008 in the Cayman Islands as a wholly-owned subsidiary of E-House. We have no experience conducting our operations as a stand-alone public company. Prior to our initial public offering, E-House has provided us with tax, accounting, treasury, legal and human resources services, and also has provided us with the services of a number of its executives and employees. As a stand-alone public company we expect E-House to continue to provide us with certain support services, but to the extent E-House does not continue to provide us with such support, we will need to create our own financial, administrative and other support systems or contract with third parties to replace E-House’s systems. We may encounter operational, administrative and strategic difficulties as we adjust to operating as a stand-alone public company, which may cause us to react slower than our competitors to industry changes, may divert our management’s attention from running our business or may otherwise harm our operations.

In addition, as a public company, our management team will need to develop the expertise necessary to comply with the numerous regulatory and other requirements applicable to stand-alone public companies, including

requirements relating to corporate governance, listing standards and securities and investor relations issues. While we were a subsidiary of E-House, we were indirectly subject to requirements to maintain an effective internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. However, as a stand-alone public company, our management will have to evaluate our internal control system independently with new thresholds of materiality, and to implement necessary changes to our internal control system. We cannot guarantee that we will be able to do so in a timely and effective manner.

Our financial information included in our prospectus dated October 15, 2009 may not be representative of our financial condition and results of operations if we had been operating as a stand-alone public company.

The consolidated financial statements included in our prospectus dated October 15, 2009 were prepared on a carve-out basis. We made numerous estimates, assumptions and allocations in our financial information because E-House does not account for us, and we did not operate, as a separate, stand-alone company for any period prior to the completion of our initial public offering.

Prior to the establishment of Shanghai CRIC in July 2006, the operations of our real estate information and consulting services were carried out by various companies owned or controlled by E-House. For periods both before and after July 2006, our consolidated financial statements include the assets, liabilities, revenues, expenses and changes in shareholders’ equity and cash flows that were directly attributable to our real estate information and consulting services business whether held or incurred by E-House or by us. In cases involving assets and liabilities not specifically identifiable to any particular operation of E-House, only those assets and liabilities transferred to us are included in our consolidated balance sheets. With respect to costs of operations of the real estate information and consulting services business, an allocation of certain general corporate expenses of E-House that are not directly related to the real estate information and consulting services operations and an allocation of certain advertising and other expenses provided by E-House to us were also included. These allocations were made using a proportional cost allocation method based on revenues, expenses and headcount as well as estimates of actual time spent on the provision of services attributable to us. The transactions are measured at the amount of consideration established and agreed to by the related parties. Although our management believes that the assumptions underlying our financial statements and the above allocations are reasonable, our financial statements may not necessarily reflect our results of operations, financial position and cash flows as if we had operated as a stand-alone public company during the periods presented. In addition, as a stand-alone public company, we will establish our own financial, administrative and other support systems or contract with third parties to replace E-House’s systems, the cost of which could be significantly different from cost allocation with E-House for the same services. Therefore, you should not view our historical results as indicators of our future performance.

We may not be able to continue to receive the same level of support from E-House.

E-House is a leading real estate services company in China, and our real estate information and consulting services business has benefited significantly from E-House’s strong real estate market position in China and its expertise in real estate agency and research. For example, we have benefited from marketing our CRIC system and consulting services to E-House’s developer clients. In addition, E-House’s experienced real estate research team has contributed reports and data to our CRIC system, improving the depth and breadth of the information we can provide our clients.

Although we have entered into a series of agreements with E-House relating to our ongoing business partnership and service arrangements with E-House, we cannot assure you we will continue to receive the same level of support from E-House as a stand-alone public company. Our current clients and partners may react negatively to our carve-out from E-House. This effort may not be successful, which could materially and adversely affect our business.

Our agreements with E-House may be less favorable to us than similar agreements negotiated between unaffiliated third parties. In particular, our non-competition agreement with E-House limits the scope of business that we are allowed to conduct.

We have entered into a series of agreements with E-House, and the terms of such agreements may be less favorable to us than would be the case if they were negotiated with unaffiliated third parties. In particular, under the

non-competition agreement we have entered into with E-House, we have agreed during the non-competition period (which will end on the later of the three years after E-House no longer owns in aggregate at least 20% of the voting power of our then outstanding voting securities and five years after the date that the registration statement for our initial public offering was first publicly filed with the U.S. Securities and Exchange Commission (the “SEC”)) not to compete with E-House in the business of primary real estate agency services, secondary real estate brokerage services and any other businesses conducted by E-House, as described in its periodic filings with the SEC. Such contractual limitations significantly affect our ability to diversify our revenue sources and may materially and adversely impact our business and prospects should the growth of real estate information and consulting services in China slow down. In addition, pursuant to our master transaction agreement with E-House, we have agreed to indemnify E-House for, among other things, liabilities arising from litigation and other contingencies related to our business and assumed these liabilities as part of our carve-out from E-House. The allocation of assets and liabilities between E-House and our company may not reflect the allocation that would have been reached by two unaffiliated parties. Moreover, so long as E-House continues to control us, we may not be able to bring a legal claim against E-House in the event of contractual breach, notwithstanding our contractual rights under the agreements described above and other inter-company agreements entered into from time to time.

Our marketing and promotion have benefited significantly from our association with E-House. Any negative development in E-House’s market position or brand recognition may materially and adversely affect our marketing efforts and the popularity of our brand.

We are a subsidiary of E-House and continue to be an affiliate of E-House after the offering, as E-House is expected to remain our controlling shareholder. We have benefited significantly from E-House in marketing our services. For example, we have benefited from E-House by providing services to E-House’s clients. We also benefit from E-House’s strong brand recognition in China, which has provided us credibility and a broad marketing reach. If E-House loses its market position, the effectiveness of our marketing efforts through our association with E-House may be materially and adversely affected. In addition, any negative publicity associated with E-House will likely have an adverse impact on the effectiveness of our marketing as well as our reputation and our brand.

E-House will control the outcome of shareholder actions in our company.

E-House held 50.04% of our ordinary shares and voting power upon the completion of our initial public offering. E-House has advised us that it does not anticipate disposing of its voting control in us in the near future. E-House’s voting power gives it the power to control actions that require shareholder approval under Cayman Islands law, our memorandum and articles of association and NASDAQ requirements, including the election and removal of a majority of our board of directors, significant mergers and acquisitions and other business combinations, changes to our memorandum and articles of association, the number of shares available for issuance under share incentive plans, and the issuance of significant amounts of our ordinary shares in private placements.

E-House’s voting control may cause transactions to occur that might not be beneficial to you as a holder of ADSs, and may prevent transactions that would be beneficial to you. For example, E-House’s voting control may prevent a transaction involving a change of control of us, including transactions in which you as a holder of our ADSs might otherwise receive a premium for your securities over the then-current market price. In addition, E-House is not prohibited from selling a controlling interest in us to a third party and may do so without your approval and without providing for a purchase of your ADSs. If E-House is acquired or otherwise undergoes a change of control, any acquirer or successor will be entitled to exercise the voting control and contractual rights of E-House, and may do so in a manner that could vary significantly from that of E-House.

We may have conflicts of interest with E-House and, because of E-House’s controlling ownership interest in our company, may not be able to resolve such conflicts on favorable terms for us.

Conflicts of interest may arise between E-House and us in a number of areas relating to our past and ongoing relationships. Potential conflicts of interest that we have identified include the following:

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Indemnification arrangements with E-House. We have agreed to indemnify E-House with respect to lawsuits and other matters relating to our real estate information and consulting services business, including

			operations of that business when it was a business unit of E-House. These indemnification arrangements could result in our having interests that are adverse to those of E-House, for example, different interests with respect to settlement arrangements in a litigation matter. In addition, under these arrangements, we have agreed to reimburse E-House for liabilities incurred (including legal defense costs) in connection with any litigation, while E-House will be the party prosecuting or defending the litigation.

	•		Non-competition arrangements with E-House. We and E-House have each agreed not to compete with the core business of each other. E-House has agreed not to compete with us in the business of providing real estate information and consulting services, real estate advertising services, and operating business to business and business to consumer Internet websites targeting participants in the real estate industry anywhere in the world. We have agreed not to compete with E-House in primary real estate agency services, secondary real estate brokerage services and any other businesses conducted by E-House, except real estate information and consulting services and related support services.

	•		Employee recruiting and retention. Because both E-House and we are based in Shanghai, and both E-House and we are engaged in real estate services in China, we may compete with E-house in the hiring of new employees, in particular with respect to real estate information and research. We have a non-solicitation arrangement with E-House that would restrict either E-House or us from hiring any of the other’s employees.

	•		Our board members or executive officers may have conflicts of interest. Mr. Xin Zhou, our co-chairman and chief executive officer, is currently also serving as E-House’s chairman. Some of our board members and executive officers also own shares or options in E-House. E-House may continue to grant incentive share compensation to our board members and executive officers from time to time. These relationships could create, or appear to create, conflicts of interest when these persons are faced with decisions with potentially different implications for E-House and us.

	•		Sale of shares in our company. E-House may decide to sell all or a portion of our shares that it holds to a third party, including to one of our competitors, thereby giving that third party substantial influence over our business and our affairs. Such a sale could be contrary to the interests of certain of our shareholders, including our employees or our public shareholders.

	•		Allocation of business opportunities. Business opportunities may arise that both we and E-House find attractive, and which would complement our respective businesses. E-House may decide to take the opportunities itself, which would prevent us from taking advantage of the opportunity ourselves.

	•		Developing business relationships with E-House’s competitors. So long as E-House remains as our controlling shareholder, we may be limited in our ability to do business with its competitors, such as other real estate services companies in China. This may limit our ability to market our services for the best interest of our company and our other shareholders.

Although our company is a stand-alone public company, we expect to operate, for as long as E-House is our controlling shareholder, as an affiliate of E-House. E-House may from time to time make strategic decisions that it believes are in the best interests of its business as a whole, including our company. These decisions may be different from the decisions that we would have made on our own. E-House’s decisions with respect to us or our business may be resolved in ways that favor E-House and therefore E-House’s own shareholders, which may not coincide with the interests of our other shareholders. We may not be able to resolve any potential conflicts, and even if we do so, the resolution may be less favorable to us than if we were dealing with an unaffiliated shareholder. Even if both parties seek to transact business on terms intended to approximate those that could have been achieved among unaffiliated parties, this may not succeed in practice.

Risks Related to Our Corporate Structure

If the PRC government finds that the agreements with our consolidated affiliated entities that establish the structure for operating our advertising services business and real estate Internet business in China do not comply with applicable PRC governmental restrictions on foreign investment, we could be subject to severe penalties.

PRC laws and regulations currently do not allow foreign entities with less than at least two years of direct experience operating an advertising business outside of China to invest in an advertising business in China. Because we have no direct experience operating an advertising business outside of China, we may not invest directly in a PRC entity that provides advertising services in China, and our PRC foreign-invested subsidiaries may not provide advertising services in China. As such, our real estate advertising business is primarily provided through our contractual arrangements with our consolidated affiliated entity in China, Tian Zhuo Advertising, and its subsidiaries. Tian Zhuo Advertising is 90% owned by Mr. Xin Zhou, our co-chairman and chief executive officer and the chairman of E-House, and 10% owned by Mr. Xudong Zhu, our director. Tian Zhuo Advertising and its subsidiaries provide real estate advertising design services for real estate development projects and may enter into other services related to real estate advertising. We have depended and expect to continue to depend on Tian Zhuo Advertising and its subsidiaries to operate our real estate advertising business. We have entered into contractual arrangements with Tian Zhuo Advertising, pursuant to which we, through Shanghai CRIC, provide technical support and consulting services to Tian Zhuo Advertising. In addition, we have entered into agreements with Tian Zhuo Advertising and its shareholders, which provide us with the substantial ability to control Tian Zhuo Advertising and make us a primary beneficiary of Tian Zhuo Advertising.

Moreover, PRC laws and regulations currently prohibit foreign investors from holding more than 50% of a foreign-invested telecommunications enterprise that provides Internet information services, which are one type of value-added telecommunications services. Because of such restriction and the above-mentioned restrictions on foreign investment in advertising businesses, China Online Housing is operating www.leju.com and our real estate advertising business and real estate Internet business through a consolidated affiliated entity in China, Beijing Yisheng Leju. Beijing Yisheng Leju is 80% owned by Mr. Xudong Zhu, our director, and 20% owned by Mr. Jun Luo, our co-president. China Online Housing’s wholly-owned indirect subsidiary, Shanghai SINA Leju Information Technology Co., Ltd., or Shanghai SINA Leju, has entered into contractual arrangements with Beijing Yisheng Leju, pursuant to which, Shanghai SINA Leju provides technical support to Beijing Yisheng Leju. In addition, Shanghai SINA Leju has entered into agreements with Beijing Yisheng Leju and its existing shareholders, which provide Shanghai SINA Leju with the substantial ability to control Beijing Yisheng Leju and make it a primary beneficiary of Beijing Yisheng Leju. We operate our real estate Internet business through our contractual arrangements with Beijing Yisheng Leju and its shareholders.

In the opinion of Fangda Partners, our PRC legal counsel as of October 21, 2009,

	•		The ownership structures of Tian Zhuo Advertising and Beijing Yisheng Leju described above are in compliance with existing PRC laws and regulations;

	•		The contractual arrangements governed by PRC law between Shanghai CRIC and Tian Zhuo Advertising and its shareholders establishing the corporate structure for operating our PRC advertising services business are valid and binding, will not result in any violation of current PRC laws or regulations, and are enforceable in accordance with their terms; and

	•		The contractual arrangements governed by PRC law among Shanghai SINA Leju, Beijing Yisheng Leju, Mr. Xudong Zhu and Mr. Jun Luo, which establish the corporate structure for operating our real estate Internet business, are valid, binding and enforceable in accordance with their terms based on the currently effective PRC laws and regulations, and do not result in any violation of current PRC laws or regulations.

Our PRC legal counsel has also advised us, however, that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations and there can be no assurance that the

relevant PRC regulatory authorities will not in the future take a view that is contrary to the opinion of our PRC legal counsel.

As part of the contractual arrangements described above, we entered into an equity pledge agreement pursuant to which the two shareholders of Tian Zhuo Advertising pledged their respective equity interests in Tian Zhuo Advertising to Shanghai CRIC. Furthermore, we entered into an equity pledge agreement among Shanghai SINA Leju, Beijing Yisheng Leju, Mr. Xudong Zhu and Mr. Jun Luo, pursuant to which the two shareholders of Beijing Yisheng Leju pledged their respective equity interest in Beijing Yisheng Leju to Shanghai SINA Leju. According to the PRC Property Rights Law, effective as of October 1, 2007, these pledges will be effective upon registration with the relevant local office for the administration for industry and commerce. We are in the process of registering the above pledges with the relevant governmental authorities. Before the completion of the registration procedures of these pledges, we cannot assure you that the effectiveness of these pledges can be recognized in PRC courts if disputes arise regarding the pledged equity interest or that Shanghai CRIC’s interests or Shanghai SINA Leju’s interests as pledgees will prevail over those of third parties.

If we, Shanghai CRIC, Tian Zhuo Advertising, Shanghai SINA Leju or Beijing Yisheng Leju is found to be in violation of any existing or future PRC laws or regulations or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities, including the State Administration for Industry and Commerce, which regulates advertising companies, and the Ministry of Industry and Information Technology, which regulates Internet information services companies, would have broad discretion in dealing with such violations, including:

	•		revoking the business and operating licenses of our PRC subsidiaries and affiliates;

	•		discontinuing or restricting our PRC subsidiaries’ and affiliates’ operations;

	•		imposing fines or confiscating the income of our PRC subsidiaries or affiliates;

	•		imposing conditions or requirements with which we or our PRC subsidiaries and affiliates may not be able to comply;

	•		requiring us or our PRC subsidiaries and affiliates to restructure the relevant ownership structure or operations; or

	•		taking other regulatory or enforcement actions that could be harmful to our business.

The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business, and adversely affect our financial condition and results of operations.

We rely on contractual arrangements with Tian Zhuo Advertising, Beijing Yisheng Leju and their respective shareholders for a portion of our operations, which may not be as effective as direct ownership in providing operational control.

We rely on contractual arrangements with Tian Zhuo Advertising, Beijing Yisheng Leju and their respective shareholders to operate our real estate advertising business and real estate Internet business. These contractual arrangements may not be as effective as direct ownership in providing us with control over Tian Zhuo Advertising or Beijing Yisheng Leju. Under these contractual arrangements, as a legal matter, if any consolidated affiliated entity in PRC or its shareholders fail to perform their respective obligations under these contractual arrangements, we may have to incur substantial costs and resources to enforce such arrangements, and rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective.

These contractual arrangements are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC

legal system could limit our ability to enforce these contractual arrangements, which may make it difficult to exert effective control over Tian Zhuo Advertising and Beijing Yisheng Leju, and our ability to conduct our business may be negatively affected.

The shareholders of Tian Zhuo Advertising and Beijing Yisheng Leju may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

Tian Zhuo Advertising is jointly owned by Mr. Xin Zhou, our co-chairman and chief executive officer, and the founder and chairman of E-House, and Mr. Xudong Zhu, our director. Conflicts of interests between Mr. Zhou’s role as a shareholder of Tian Zhuo Advertising and his duties to our parent company may arise. We cannot assure you that when conflicts of interest arise, such individual will act in the best interests of our company or that conflicts of interests will be resolved in our favor. In addition, Mr. Zhou may breach or cause Tian Zhuo Advertising and its subsidiaries to breach or refuse to renew the existing contractual arrangements that allow us to effectively control Tian Zhuo Advertising and its subsidiaries, and receive economic benefits from them. Currently, we do not have existing arrangements to address potential conflicts of interest between Mr. Zhou and our company.

In addition, the laws of the Cayman Islands and China both provide that a director or member of management owes a fiduciary duty to the company he directs or manages. Mr. Zhou is the chairman and chief executive officer of our parent company, E-House. Mr. Zhou must therefore act in good faith and in the best interests of E-House and must not use his position for personal gain. These laws do not require him to consider our best interests when making decisions as a director or member of management of E-House. If we cannot resolve any conflicts of interest or disputes between us and the shareholders of Tian Zhuo Advertising, we would have to rely on legal proceedings, which could result in disruption of our business and substantial uncertainty as to the outcome of any such legal proceedings.

Beijing Yisheng Leju is 80% owned by Mr. Xudong Zhu, our director, and 20% owned by Mr. Jun Luo, our co-president, and they may potentially have the same conflicts of interests as described above.

Contractual arrangements we have entered into or may enter into with Tian Zhuo Advertising and Beijing Yisheng Leju may be subject to scrutiny by the PRC tax authorities and a finding that we, Tian Zhuo Advertising or Beijing Yisheng Leju owe additional taxes could reduce our net income and the value of your investment.

Under PRC laws and regulations, arrangements and transactions among related parties may be audited or challenged by the PRC tax authorities. We could face material and adverse consequences if the PRC tax authorities determine that the contractual arrangements we have entered into with Tian Zhuo Advertising or Beijing Yisheng Leju, do not represent an arm’s-length price and adjust the income of Tian Zhuo Advertising, Beijing Yisheng Leju or their subsidiaries in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expenses deductions recorded by Tian Zhuo Advertising, Beijing Yisheng Leju or their subsidiaries, which could in turn increase their tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties to our consolidated affiliated entities for under-paid taxes. Our consolidated net income may be materially and adversely affected if our consolidated affiliated entities’ tax liabilities increase or if they are found to be subject to late payment fees or other penalties.

Risks Related to Doing Business in China

Adverse changes in economic and political policies of the PRC government could have a material and adverse effect on overall economic growth in China, which could adversely affect our business.

We conduct substantially all of our business operations in China. As the real estate industry is highly sensitive to business and personal discretionary spending levels, it tends to decline during general economic downturns. Accordingly, our results of operations, financial condition and prospects are subject, to a significant degree, to economic developments in China. China’s economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant growth in the past 30 years, growth has been uneven across different periods, regions and among various economic sectors of

China. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources. For example, on January 3, 2008, the State Council issued a Notice on Promoting Economization of Land Use, which urges the full and effective use of existing construction land and the preservation of farming land. While some of these measures benefit the overall PRC economy, they may have a negative effect on the real estate industry in China.

The PRC government also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. From late 2003 to mid-2008, the PRC government implemented a number of measures, such as increasing the People’s Bank of China’s statutory deposit reserve ratio and imposing commercial bank lending guidelines that had the effect of slowing the growth of credit, which in turn may have slowed the growth of the Chinese economy. In response to the recent global and Chinese economic downturn, the PRC government has promulgated several measures aimed at expanding credit and stimulating economic growth. Since August 2008, the People’s Bank of China has decreased the statutory deposit reserve ratio and lowered benchmark interest rates several times. Beginning in January 2009, the volume of new lending in China has increased greatly. Total new lending reached RMB7.4 trillion in the first six months of 2009, representing an increase of RMB2.5 trillion from the lending made in all of 2008, according to the People’s Bank of China. It is unclear whether PRC economic policies will be effective in stimulating growth, and the PRC government may not be effective in creating stable economic growth in the future.

Uncertainties with respect to the Chinese legal system could adversely affect us.

We conduct our business primarily through our subsidiaries and consolidated affiliated entities in China. Our operations in China are governed by PRC laws and regulations. Our subsidiaries are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently-enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, the interpretation and enforcement of these laws and regulations involve uncertainties. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until some time after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

PRC governmental restrictions on currency conversion may limit our ability to utilize our revenues and funds effectively and the ability of our PRC subsidiaries and consolidated affiliated entities to obtain financing.

Restrictions on currency exchanges between RMB and other currencies may limit our ability to utilize our revenues and funds, in particular in relation to capital account transactions such as investments and loans. Under current PRC regulations, RMB is convertible for “current account transactions,” which include among other things dividend payments and payments for the import of goods and services, subject to compliance with certain procedural requirements. Although the RMB has been fully convertible for current account transactions since 1996, we cannot assure you that the relevant PRC government authorities will not limit or eliminate our ability to purchase and retain foreign currencies for current account transactions in the future. Conversion of RMB into foreign currencies and of foreign currencies into RMB, for payments relating to “capital account transactions,” which principally include investments and loans, generally requires the approval of the State Administration of Foreign Exchange, or SAFE, and other relevant PRC governmental authorities. Restrictions on the convertibility of the RMB for capital account transactions could affect the ability of our PRC subsidiaries and affiliated PRC operating companies to make investments overseas or to obtain foreign exchange through debt or equity financing, including by means of loans or capital contributions from us.

Fluctuation in the value of the RMB may have a material adverse effect on your investment.

The value of the RMB against the U.S. dollar, Euro and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar. However, the People’s Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. Following the removal of the U.S. dollar peg, the RMB appreciated more than 20% against the U.S. dollar over the following three years. Since reaching a high against the U.S. dollar in July 2008, however, the RMB has traded within a narrow range against the U.S. dollar, remaining within 1% of its July 2008 high but never exceeding it. As a consequence, the RMB has fluctuated significantly since July 2008 against other freely traded currencies, in tandem with the U.S. dollar. It is difficult to predict how long the current situation may last and when and how RMB exchange rates may change going forward.

As our costs and expenses are mostly denominated in RMB, a resumption of the appreciation of the RMB against the U.S. dollar would further increase our costs in U.S. dollar terms. In addition, as our operating subsidiaries and consolidated affiliated entities in China receive substantially all of their revenues in RMB, any significant depreciation of the RMB against the U.S. dollar may have a material adverse effect on our revenues in U.S. dollar terms and financial condition, and the value of, and any dividends payable on, our ordinary shares. For example, to the extent that we need to convert U.S. dollars into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us. In addition, because the RMB is the functional currency of our PRC operating subsidiaries and consolidated affiliated entities, fluctuations in the RMB-U.S. dollar exchange rate could cause us to incur foreign exchange losses to the extent these operating subsidiaries and consolidated affiliated entities hold U.S. dollar cash balances. The foreign exchange losses of $0.5 million and $1.3 million we incurred in 2007 and 2008, respectively, were primarily due to this reason. These and other effects on our financial data resulting from fluctuations in the value of the RMB against the U.S. dollar could have a material adverse effect on the market price of our ADSs and your investment.

If we are required to obtain prior approval from the China Securities Regulatory Commission for the listing and trading of our ADSs on the NASDAQ Global Market, we may be subject to administrative penalties

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the China Securities Regulatory Commission, or the CSRC, the State Administration for Industry and Commerce, the SAFE, the State Assets Supervision and Administration Commission and the State Administration for Taxation, promulgated a regulation that became effective on September 8, 2006 and was amended on June 22, 2009, or the M&A Regulation. This regulation requires, among other things, that special purpose vehicles, or SPVs, formed through acquisitions of PRC domestic interests held by the PRC domestic companies or individuals controlling such SPVs, obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. Under this regulation, an SPV refers to a company formed outside of China that is directly or indirectly controlled by one or more PRC domestic companies and/or PRC nationals for overseas listing of domestic corporate interests held by such PRC domestic companies and/or PRC nationals.

	•		neither the M&A Regulation itself, nor the administrative practices under the M&A Regulation made public as of the date of our prospectus dated October 15, 2009, clearly indicate the application of the M&A Regulation in connection with listing and trading of our ADSs on the NASDAQ Global Market;

	•		the CSRC currently has not issued any definitive rule or interpretation pertaining to whether offerings such as ours are subject to the CSRC approval procedures; and

	•		prior approval from the CSRC is not required under the M&A Regulation for the listing and trading of our ADSs on the NASDAQ Global Market, unless we are clearly required to do so by subsequent CSRC rules.

Our PRC legal counsel also advises us, however, that there is still uncertainty as to how the M&A Regulation will be interpreted and implemented. If the CSRC, or other PRC regulatory agencies, subsequently determines that the CSRC approval was required for our initial public offering, we may need to apply for remedial approval from the CSRC, which we may not be able to obtain, and we may be subject to administrative penalties and sanctions administered by these regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from our initial public offering into the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. Consequently, if you engage in market trading or other activities in anticipation of, and prior to, settlement and delivery, you do so at the risk settlement and delivery may not occur.

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

The SAFE issued a public notice in October 2005 requiring PRC residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies, referred to in the notice as a “special purpose company.” PRC residents who are beneficial owners of special purpose companies and have completed round trip investments but did not make foreign exchange registrations for overseas investments before November 1, 2005 were retroactively required to register with the local SAFE branch before March 31, 2006. PRC resident beneficial owners of special purpose companies are also required to amend their registrations with the local SAFE branch in certain circumstances.

We have requested our beneficial owners who are PRC residents to make the necessary applications, filings and amendments as required by the SAFE, but we cannot provide any assurances that all of our beneficial owners who are PRC residents will make or obtain any applicable registrations or approvals required by these SAFE regulations. The failure or inability of our PRC resident beneficial owners to comply with SAFE rules and the registration procedures set forth therein may subject these beneficial owners or our PRC subsidiaries to fines and legal sanctions; restrict our cross-border cash flows; limit our PRC subsidiaries’ ability to distribute dividends, repay foreign loans or make other outbound payments; limit our ability to make capital contributions, or foreign exchange-denominated loans to our PRC subsidiaries or other inbound payments; or otherwise adversely affect our business. Moreover, failure to comply with SAFE registration requirements could result in liabilities under PRC laws for evasion of foreign exchange restrictions.

As it is uncertain how the SAFE regulations will be interpreted or implemented, we cannot predict how these regulations will affect our business operations or future strategy. For example, we may be subject to more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign currency-denominated borrowings, which may adversely affect our results of operations and financial condition. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the SAFE regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In December 2006, the People’s Bank of China promulgated the Administrative Measures for Individual Foreign Exchange, which set forth the respective requirements for foreign exchange transactions by PRC individuals under either the current account or the capital account. In January 2007, the SAFE issued the Implementation Rules of the Administrative Measures for Individual Foreign Exchange, which, among other things, specified approval requirements for certain capital account transactions such as a PRC citizen’s participation in the employee stock ownership plans or stock option plans of an overseas publicly-listed company. On March 28, 2007, the SAFE

promulgated the Processing Guidance on Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plans or Stock Option Plans of Overseas-Listed Companies. Under this rule, PRC citizens who are granted stock options by an overseas publicly-listed company are required, through a qualified PRC domestic agent or PRC subsidiary of such overseas publicly-listed company, to register with the SAFE and complete certain other procedures. We and our PRC citizen employees who have been granted stock options will be subject to this rule. If we or our PRC optionees fail to comply with these regulations, we or our PRC optionees may be subject to fines and other legal or administrative sanctions.

PRC regulations relating to foreign acquisitions may subject us to requisite approval by the Ministry of Commerce, and the failure to obtain such approval could have a material and adverse effect on our business, operating results, reputation and trading price of our ADSs.

The M&A Regulation promulgated by six PRC regulatory agencies on August 8, 2006 and amended on June 22, 2009 includes provisions that purport to require approval of the Ministry of Commerce for acquisitions by offshore entities established or controlled by domestic companies, enterprises or natural persons of onshore entities that are related to such domestic companies, enterprises or natural persons. In December 2008, the Ministry of Commerce circulated an updated handbook on its guidance on the administration of foreign investment access. This handbook includes provisions that tentatively limit the acceptance by the Ministry of Commerce of applications for the approval of such foreign acquisitions among related parties under the M&A Regulation to those in which the offshore company is either a listed company or a company duly established overseas that conducts the acquisition with the profit generated from its own operation. However, the interpretation and implementation of the M&A Regulation remain unclear with no consensus currently existing regarding the scope and applicability of the Ministry of Commerce approval requirement on such foreign acquisitions among related parties.

In 2008, for the purpose of a series of our acquisitions of advertising services and future businesses that may otherwise be restricted for foreign investments, we, through Shanghai CRIC, entered into contractual arrangements with Tian Zhuo Advertising, our consolidated affiliated entity, and its shareholder, which provide us with substantial ability to control Tian Zhuo Advertising. After the transfer of 10% equity interests in Tian Zhuo Advertising from Mr. Xin Zhou to Mr. Xudong Zhu in July 2009, we entered into a series of new or amended contractual arrangements with Tian Zhuo Advertising and its shareholders which continue to provide us with substantial ability to control Tian Zhuo Advertising.

Our PRC legal counsel, Fangda Partners, has advised us, based on their understanding of the current PRC laws, rules, regulations and administrative practices under the M&A Regulation up to the date of our prospectus dated October 15, 2009, that neither the M&A Regulation itself nor the PRC laws, rules, regulations and administrative practices under the M&A Regulation made public as of the date of our prospectus dated October 15, 2009 have clearly indicated the application of the M&A Regulation in connection with the contractual arrangements between Shanghai CRIC and Tian Zhuo Advertising and its shareholders, and it is not necessary for us to submit an application to the Ministry of Commerce for its approval in connection with such contractual arrangements.

We have been advised by our PRC legal counsel, however, that there are still uncertainties as to how the M&A Regulation will be interpreted or implemented. If the Ministry of Commerce subsequently determines that Ministry of Commerce approval was required for such contractual arrangements, we may need to apply for a remedial approval from the Ministry of Commerce. There can be no assurance that we will be able to obtain such approval or waiver of such approval from the Ministry of Commerce. Our inability to obtain such approval or waiver from the Ministry of Commerce may have material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. Further, we may be subject to certain administrative punishments or other sanctions from the Ministry of Commerce. The Ministry of Commerce or other regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from our initial public offering into the PRC, or take other actions that could have further material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.

Failure to comply with PRC laws and regulations relating to the advertising industry may subject us to fines and legal or administrative sanctions, government actions and civil claims, or otherwise adversely affect our operation.

PRC advertising laws and regulations require advertisers, advertising agencies and advertising distributors to ensure that the contents of the advertisements they prepare or distribute are fair and accurate and are in full compliance with applicable laws. Violation of these laws or regulations may result in penalties, including fines, confiscation of advertisement fees, orders to cease dissemination of the advertisements and orders to publish an announcement correcting the misleading information. In circumstances involving serious violations, the PRC government may revoke a violator’s license for advertising business operations and the violator may even be subject to criminal prosecutions. We are obligated under PRC laws and regulations to monitor the content of advertisements that we serve onto print media, websites or other media for compliance with applicable laws. In addition, where special government review or government approval is required for specific product advertisements, we are separately obligated to confirm that such review has been performed and approval has been obtained. We have taken measures to comply with such requirements, including requesting relevant documents from the advertisers. Our reputation will be damaged and our results of operations may be materially and adversely affected if advertisements served by us are in violation of relevant PRC advertising laws and regulations or have not received required approval from the relevant government authorities or are not compliant in contents. If we are found to be liable in any government proceedings or civil actions against us, our business could be materially and adversely affected.

We rely principally on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.

We are a holding company, and we rely principally on dividends from our subsidiaries in China for our cash requirements, including any debt we may incur. Current PRC regulations permit our subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside a certain amount of its after-tax profits each year, if any, to fund certain statutory reserves. These reserves are not distributable as cash dividends. Furthermore, if our subsidiaries in China incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements we currently have in place in a manner that would materially and adversely affect our subsidiaries’ ability to pay dividends and other distributions to us. Any limitation on the ability of our subsidiaries to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business.

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC operating subsidiaries.

As an offshore holding company of our PRC operating subsidiaries, we may make loans to our PRC subsidiaries. Any loans to our PRC subsidiaries are subject to approval by relevant governmental authorities in China and other requirements under relevant PRC regulations.

We may also decide to finance our PRC subsidiaries by means of capital contributions. According to the relevant PRC regulations on foreign-invested enterprises in China, depending on the amount of total investment and the type of business in which a foreign-invested enterprise is engaged, capital contributions to foreign-invested enterprises in China are subject to approval by the Ministry of Commerce or its local branches. We may not obtain these government approvals on a timely basis, if at all, with respect to future capital contributions by us to our PRC subsidiaries. If we fail to receive such approvals, our ability to capitalize our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

The discontinuation of any of the preferential tax treatments currently available to us in the PRC or imposition of any additional PRC taxes on us could adversely affect our financial condition and results of operations.

China passed a new PRC Enterprise Income Tax Law and its implementing rules, both of which became effective on January 1, 2008. The PRC Enterprise Income Tax Law significantly curtails tax incentives granted to foreign-invested enterprises under its predecessor. The PRC Enterprise Income Tax Law, however, (i) reduces the

statutory rate of enterprise income tax from 33% to 25%, (ii) permits companies established before March 16, 2007 to continue to enjoy their existing tax incentives, adjusted by certain transitional phase-out rules, and (iii) introduces new tax incentives, subject to various qualification criteria.

The PRC Enterprise Income Tax Law and its implementing rules permit certain “high-technology enterprises” to enjoy a reduced 15% enterprise income tax rate subject to certain new qualification criteria. In the fourth quarter of 2008, Shanghai CRIC was recognized by the local provincial level Municipal Science and Technology Commission, Finance Bureau, and State and Local Tax Bureaus as a “high and new technology enterprise” under the Administrative Rules for the Certification of High and New Technology Enterprises jointly issued by the State Administration of Taxation, the Ministry of Science and Technology and the Ministry of Finance on April 18, 2008, and was further approved by the local tax authorities on April 13, 2009 to be eligible to the reduced 15% enterprise income tax rate for the term commencing on January 1, 2008 and ending on December 31, 2010, as long as it maintains its qualification as a “high and new technology enterprise.” The continued qualification of a “high and new technology enterprise” will be subject to annual evaluation and a three-year review by the relevant government authority in China. If Shanghai CRIC fails to maintain the “high and new technology enterprise” qualification or renew such qualification when the valid term expires, its applicable enterprise income tax rate may increase to up to 25%, which could have a material adverse effect on our financial condition and results of operations.

Preferential tax treatment granted to our subsidiaries by the local governmental authorities is subject to review and may be adjusted or revoked at any time. The discontinuation of any preferential tax treatments currently available to us and our wholly-owned subsidiaries will cause our effective tax rate to increase, which could have a material adverse effect on our financial condition and results of operations. We cannot assure you that we will be able to maintain our current effective tax rate in the future.

Our business benefits from tax-related government incentives and discretionary policies. Expiration of, or changes to, these incentives or policies could have a material adverse effect on our operating results.

Since 2009, Shanghai CRIC has been granted certain governmental financial subsidies by the Zhabei District government in Shanghai. Local governments may decide to reduce or eliminate subsidies at any time. In addition, we cannot assure you of the continued availability of the government incentives and subsidies currently enjoyed by some of our PRC subsidiaries and consolidated affiliated entities. Furthermore, local implementations of tax laws may be found in violation of national laws or regulations, and as a consequence, we may be subject to retroactive imposition of higher taxes. Starting from year 2007, we are required under Financial Accounting Standards Board Interpretation No. 48 to accrue taxes for these contingencies. The change in accounting requirement for reporting tax contingencies, any reduction or elimination of subsidies and any retroactive imposition of higher taxes could have an adverse effect on our results of operations.

Dividends payable to us by our PRC subsidiaries may be subject to PRC withholding taxes, we may be subject to PRC taxation on our worldwide income, and dividends distributed to our non-PRC investors may be subject to PRC withholding taxes under the PRC Enterprise Income Tax Law.

Under the PRC tax laws effective prior to January 1, 2008, dividends paid to foreign investors by foreign-invested enterprises, such as dividends paid to us by our PRC subsidiaries, were exempt from PRC withholding tax. Under the PRC Enterprise Income Tax Law and its implementation rules effective on January 1, 2008, all domestic and foreign-invested companies in China are subject to a uniform enterprise income tax at the rate of 25% and dividends from a PRC subsidiary to its foreign parent company are subject to a withholding tax at the rate of 10%, unless such foreign parent company’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax, or the tax is otherwise exempted or reduced pursuant to the PRC tax laws.

Under the PRC Enterprise Income Tax Law, enterprises organized under the laws of jurisdictions outside China with their “de facto management bodies” located within China are considered PRC resident enterprises and therefore be subject to PRC enterprise income tax at the rate of 25% on their worldwide income. Under the implementation rules of the PRC Enterprise Income Tax Law, “de facto management bodies” is defined as the bodies that have material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and treasury, and acquisition and disposition of properties and other assets of an enterprise. In addition, a recent circular issued by the State Administration of Taxation on April 22, 2009

provides that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a “resident enterprise” with its “de facto management bodies” located within China if the following requirements are satisfied: (i) the senior management and core management departments in charge of its daily operations function mainly in the PRC; (ii) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (iii) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (iv) more than half of the enterprise’s directors or senior management with voting rights reside in the PRC.

The PRC Enterprise Income Tax Law and its implementation rules are relatively new and ambiguities exist with respect to the interpretation of the provisions relating to resident enterprise issues. Although our offshore holding companies are not controlled by any PRC company or company group, we cannot assure you that we will not be deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law and its implementation rules. If we are deemed to be a PRC resident enterprise, we will be subject to PRC enterprise income tax at the rate of 25% on our worldwide income. In that case, however, dividend income we receive from our PRC subsidiaries may be exempt from PRC enterprise income tax because the PRC Enterprise Income Tax Law and its implementation rules generally provide that dividends received by a PRC resident enterprise from its directly invested entity that is also a PRC resident enterprise is exempt from enterprise income tax. However, as there is still uncertainty as to how the PRC Enterprise Income Tax Law and its implementation rules will be interpreted and implemented, we cannot assure you that we are eligible for such PRC enterprise income tax exemptions or reductions.

In addition, the PRC Enterprise Income Tax Law and its implementation rules are relatively new and ambiguities exist with respect to the interpretation of the provisions relating to identification of PRC-sourced income. If we are deemed to be a PRC resident enterprise, dividends distributed to our non-PRC entity investors by us, or the gain our non-PRC entity investors may realize from the transfer of our ordinary shares or ADSs, may be treated as PRC-sourced income and therefore be subject to a 10% PRC withholding tax pursuant to the PRC Enterprise Income Tax Law.

If we became a PRC resident enterprise under the new PRC tax system and received income other than dividends, our profitability and cash flows would be adversely affected due to our worldwide income being taxed in China under the PRC Enterprise Income Tax Law. Additionally, we would incur an incremental PRC dividend withholding tax cost if we distributed our profits to our ultimate shareholders. There is however not necessarily an incremental PRC dividend withholding tax on the piece of the profits distributed from our PRC subsidiaries, since they would have been subject to PRC dividend withholding tax even if we were not a PRC tax resident.

Risks Related to Our ADSs

There had been no public market for our ordinary shares or ADSs prior to our initial public offering, and you may not be able to resell our ADSs at or above the price you paid, or at all.

Prior to our initial public offering, there was no public market for our ordinary shares or ADSs. We have listed our ADSs on the NASDAQ Global Market. Our ordinary shares will not be listed or quoted for trading on any exchange. If an active trading market for our ADSs does not develop, the market price and liquidity of our ADSs will be materially and adversely affected.

The initial public offering price for our ADSs was determined by negotiations between us and the underwriters and may bear no relationship to the market price for our ADSs after the initial public offering. We cannot assure you that an active trading market for our ADSs will develop or that the market price of our ADSs will not decline below the initial public offering price.

The market price for our ADSs may be volatile.

The market price for our ADSs may be volatile and subject to wide fluctuations in response to factors including the following:

	•		actual or anticipated fluctuations in our quarterly operating results;

	•		changes in financial estimates by securities research analysts;

	•		conditions in the real estate and/or advertising industries in China;

	•		changes in the economic performance or market valuations of other real estate services companies;

	•		announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;

	•		addition or departure of key personnel;

	•		fluctuations of exchange rates between the RMB and U.S. dollar or other foreign currencies;

	•		potential litigation or administrative investigations;

	•		sales or repurchases of our ADSs or ordinary shares; and

	•		general economic or political conditions in China.

In addition, the securities markets in the United States, China and elsewhere have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our ADSs.

We may need additional capital, and the sale of additional ADSs or other equity securities could result in additional dilution to our shareholders.

We believe that our current cash and cash equivalents, anticipated cash flow from operations and the proceeds from our initial public offering will be sufficient to meet our anticipated cash needs for the foreseeable future. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If these resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

Substantial future sales of our ADSs in the public market, or the perception that these sales could occur, could cause the price of our ADSs to decline.

Additional sales of our ordinary shares in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. In addition, we, E-House and SINA have agreed to enter into an agreement that will provide E-House and SINA certain rights to cause us to register the sale of shares held by E-House and SINA. Registration of the sale of these shares under the Securities Act of 1933, as amended, would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the sale of such shares pursuant to the effective registration. Sales of these registered shares in the public market could cause the price of our ADSs to decline.

We will be a “controlled company” within the meaning of the NASDAQ Stock Market Rules and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

E-House owns more than 50% of the total voting power of our company and we are a “controlled company” under the NASDAQ Stock Market Rules. We intend to rely on certain exemptions that are available to controlled companies from NASDAQ corporate governance requirements, including the requirement that a majority of our

board of directors consist of independent directors. We are not required to and will not voluntarily meet these requirements. As a result of our use of the “controlled company” exemptions, you will not have the same protection afforded to shareholders of companies that are subject to all of NASDAQ’s corporate governance requirements.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because we are incorporated under Cayman Islands law, conduct substantially all of our operations in China and all of our officers reside outside the United States.

We are incorporated in the Cayman Islands. We conduct substantially all of our operations through our subsidiaries outside of the United States and in China. In addition, all of our officers reside outside the United States and some or all of the assets of those persons are located outside of the United States. As a result, it may be difficult for you to bring an original action against us or against these individuals in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, there is uncertainty as to whether the courts of the Cayman Islands or China would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States and it is uncertain whether such courts in the Cayman Islands or China would be competent to hear original actions brought in the Cayman Islands or China against us or such persons predicated upon the securities laws of the United States or any state in the United States.

Our corporate affairs are governed by our memorandum and articles of association and by the Companies Law of Cayman Islands (2009 Revision) and common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the federal courts of the United States.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a public company incorporated in a jurisdiction in the United States.

Our management will have considerable discretion as to the use of the net proceeds from our initial public offering.

We have not allocated the majority of the net proceeds we received from our initial public offering to any particular purpose. Rather, our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of our initial public offering. The net proceeds may be used for corporate purposes that do not improve our efforts to maintain profitability or increase our share price. The net proceeds from the offering may be placed in investments that do not produce income or that lose value.

Exhibit 99.9

SINA CORPORATION
Operating and Financial Review and Prospects
For the Six Months Ended June 30, 2009

This information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” the negative of such terms or other comparable terminology. All forward-looking statements included in this document are based on information available to us on the date hereof, and we undertake 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 the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2009 included as Exhibit 99.2 to the Form 6K to which this exhibit is included. We caution you that our business and financial performance are subject to substantial risks and uncertainties, including the factors identified in “Risk Factors Relating to SINA and CRIC,” included in the Form 6K to which this exhibit is included, “Item 3. Key information — D. Risk Factors” included in our annual report in Form 20F filed on June 29, 2009 and our other filings that could cause actual results to differ materially from those in the forward-looking statements. Other filings with the SEC contain important information regarding events, developments and updates to certain of our expectations that have occurred since the filing of our annual report on Form 20-F for the year ended December 31, 2008 on June 29, 2009.

Overview

We (“SINA” or the “Company”) are an online media company and mobile value-added services (“MVAS”) provider in China and for the global Chinese communities. Advertising and MVAS are currently the major sources of our revenues, and we derive the majority of these revenues from our operations in China.

Our advertising business in China was robust in recent years because of a strong local economy, growth in Internet users and a shift of advertising budgets from traditional media to online media. Our advertising revenues in 2008 were boosted in part by the coverage of major international sporting events, such as the 2008 Beijing Olympics and the UEFA Euro 2008, neither of which will be repeated in 2009. In addition, the growth rate of the Chinese economy has slowed significantly in 2009, exacerbated by the recent global financial crisis. For the first three quarters of 2009, our unaudited online advertising revenues declined 13% from the same period last year. For the fourth quarter of 2009, our preliminary guidance released in the earnings announcement on November 16, 2009, which is subject to change without further notice, assumes that our online advertising revenues will grow year-over-year. On a sequential basis, the advertising market in China has steadily recovered from the low in the first quarter of 2009. Although we believe content consumption in China will continue to shift toward the Internet and online media will continue to outperform traditional media in the near future, further improvement of the advertising market in China is dependent on a continuing recovery of the Chinese economy.

	•		ability to compete with other Internet properties, including social networking sites, video sites and search for brand influence and market share;

	•		increased competition and potential downward pressure on online advertising prices and limitations on web page space;

	•		the maintenance and enhancement of our brands in a cost effective manner;

	•		development and retention of a large base of users possessing demographic characteristics attractive to advertisers;

	•		expansion of our content portfolio, product offerings and network bandwidth in a cost effective manner;

	•		the change in government policy that would curtail or restrict our online advertising services; and

	•		the consolidation of advertising agencies leading to increased bargaining power of larger advertising agencies.

Our MVAS business rebounded since 2008, resulting mainly from a relatively stable operating environment following years of abrupt changes in operator policies and government regulations. However, we believe policy changes from operators continue to be a key risk for our MVAS business in the near future. Our ability to cope with these sudden operator policy changes and stabilize our MVAS revenues is dependent on our ability to quickly react with new services or through new channels that meet the requirements of the new policies and are accepted by the market. During 2008, the

Chinese government distributed 3G licenses to the three major telecom operators in China, which we believe will be positive for mobile consumers and will bring new opportunities to mobile service providers over the long run. We are uncertain of the impact from recent slowdown of the Chinese economy to our MVAS business and will continue to monitor the situation. The changing operator policies coupled with the fierce competition in the MVAS space have caused our MVAS business to experience declining gross margins in recent years.

In September 2009, we entered into a definitive agreement for a private equity placement of SINA’s ordinary shares with New Wave Investment Holding Company Limited (“New-Wave”), a British Virgin Islands company established and controlled by Charles Chao, our Chief Executive Officer, and other members of our management. At the closing in November 2009, SINA received gross proceeds of $180 million, and New-Wave received approximately 5.6 million ordinary shares in SINA. We are currently evaluating the accounting treatment for the private equity placement, which may require us to recognize compensation expense.

In October 2009, we carved out our online real estate advertising business and merged it with China Real Estate Information Corporation (“CRIC”) to form a leading online and offline real estate information and consulting platform in China, which listed on the NASDAQ on October 16, 2009. The valuations of China Online Housing and CRIC are expected to be marked to fair value at CRIC’s IPO date, and we expect to absorb significant amortization of intangible assets from the step up in valuation over the lives of these intangible assets. In the event of a material reduction in the market value of CRIC’s American depositary receipts, we could be required to record an impairment charge in intangible assets and goodwill, which would adversely affect our consolidated financial position and results of operation. Our interest in the equity of CRIC is valued at approximately $572 million based on the initial IPO offering price, which would have represented approximately 43% of our total assets on a pro forma basis as of June 30, 2009.

As of June 30, 2009 and December 31, 2008, we had accumulated earnings of $201.7 million and $178.6 million, respectively. Our total cash, cash equivalent and short-term investments as of June 30, 2009 and December 31, 2008 were $582.0 million and $603.8 million, respectively. We have funded our operations and capital expenditures primarily using the net proceeds raised through the sale of preference shares prior to our initial public offering and the sale of our ordinary shares in the initial public offering and cash generated from operations. We raised additional capital through the issuance of zero-coupon, convertible, subordinated notes in July 2003. We repurchased approximately 2.5 million SINA ordinary shares in the open market for total consideration of $50 million in the first quarter of 2009. We received $180 million from the private equity placement in the fourth quarter of 2009. We intend to continue our investment in the development and enhancement of our products, content and services, as well as investment in sales and marketing. If we are unable to generate sufficient net income from our operations in the future, we may have to finance our operations from the current funds available or seek equity or debt financing.

Critical Accounting Policies, Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009, which have been prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates, judgments and assumptions 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 and judgment areas, including those related to revenues, customer programs and incentives, bad debts, intangible assets and goodwill, stock-based compensation, income taxes, financing operations, advertising expenses, estimated useful lives of assets, foreign currency, 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. For further information on our critical accounting policies, see the discussion in the section titled “Recent Accounting Pronouncements” below and Note 2 to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009:

Allowance for doubtful accounts

The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts based on factors such as historical experience, credit-worthiness and age of receivable balances. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, or if the operators decide not to pay the Company, additional allowances may be required which could materially impact our financial position and results of operations. Allowances for doubtful accounts charged to income were $2.5 million and $1.8 million for the six months ended June 30 2009 and 2008, respectively.

Property and Equipment

Impairment of goodwill and long-lived assets

We test goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis, or more frequently, if facts and circumstances warrant a review. We make judgments about goodwill whenever events or changes in circumstances indicate that an impairment in the value of goodwill recorded on our balance sheet may exist. The timing of an impairment test may result in charges to our statements of operations in our current reporting period that could not have been reasonably foreseen in prior periods. Application of an impairment test of goodwill requires judgment, including the identification of reporting units, assigning assets and liabilities to the reporting units, assigning goodwill to reporting units and estimating the fair value of each reporting unit. Changes in these estimates and assumptions could materially affect the determination of fair value of each reporting unit which could trigger impairment. More conservative assumptions of the anticipated future benefits from these reporting units could result in impairment charges, which would decrease net income and result in lower asset values on our balance sheet. Conversely, less conservative assumptions could result in smaller or no impairment charges, higher net income and higher asset values. See Note 3 “ Goodwill and intangible assets ” in the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009 for additional information on goodwill.

Revenue recognition

Advertising

MVAS

We mainly rely on third-party operators for billing, collection and transmission of our MVAS to our users. We also rely on other service providers to provide content and to distribute MVAS or other services for us. MVAS revenues are recorded on a gross basis when most of the gross indicators are met, such as the fact that we are considered the primary obligor in the arrangement, design and develop (in some cases with the assistance of third-parties) the MVAS, have reasonable latitude to establish price, have discretion in selecting the operators to offer our MVAS, provide customer services related to the MVAS and take on the credit risks associated with the transmission fees. Conversely, revenues are recorded on a net basis when most of the gross indicators are not met. The determination of whether we are the primary obligor for a particular type of service is subjective in nature and is based on an evaluation of the terms of the arrangement. If the terms of the arrangement with operators were to change and result in the gross indicators not being met, we would have to record our MVAS revenues on a net basis. Consequently, this would cause a significant decline in our net revenues, but should not have a significant impact on our gross margin. During the first half of 2009, approximately 88% of our MVAS revenues were recorded on a gross basis.

Advertising expenses

Stock-based compensation

Under the fair value recognition provisions of the guidance, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis, net of estimated forfeitures, over the requisite service period, which is generally the vesting period. We use the Black-Scholes option pricing model to determine the fair value of share options. The determination of the fair value of stock-based compensation awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including our expected stock price volatility over the term of the awards, actual and projected employee share option exercise behaviors, risk-free interest rate and expected dividends. If we use different assumptions for estimating stock-based compensation expense in future periods or if we decide to use a different valuation model, the change in our stock-based compensation expense could materially affect our operating income, net income attributable to SINA and net income per share attributable to SINA.

See Note 8 Shareholders’ Equity under Notes to Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009 for information regarding the stock-based compensation disclosures.

Income taxes

We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Management must make assumptions, judgments and estimates to determine our current provision for income taxes and our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. Our judgments, assumptions and estimates relative to the current provision for income tax take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in our Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009. Our assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations. Actual operating results and the underlying amount and category of income in future years could render our current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate. Any of the assumptions, judgments and estimates mentioned above could cause our actual income tax obligations to differ from our estimates, and thus materially impact our financial position and results of operations.

In accordance with accounting guidance, undistributed earnings of a subsidiary are presumed to be transferred to the parent company and are subject to withholding taxes, unless the parent company has evidence of specific plans for reinvestment of undistributed earnings of a subsidiary which demonstrate that remittance of the earnings will be postponed indefinitely. The current policy adopted by the Company’s Board of Directors allows the Company to distribute PRC earnings offshore only if the Company does not have to pay a dividend tax. Based on the Enterprise Income Tax Law, which became effective on January 1, 2008, such policy would require the Company to indefinitely reinvest all earnings made in China since 2008 onshore or be subject to a 10% withholding tax should it decides to distribute earnings accumulated since 2008 offshore.

We make assumptions, judgments and estimates in the recognition and measurement of a tax position taken or expected to be taken in a tax return. These judgments, assumptions and estimates take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts of unrecognized, uncertain tax positions, if any, provided or to be provided for in our Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009.

Foreign currency

Our reporting currency and functional currency are the U.S. dollar and our subsidiaries and Variable Interest Entities (“VIEs”) in China, Hong Kong and Taiwan use their respective local currencies as their functional currencies. An entity’s functional currency is the currency of the primary economic environment in which the entity operates. Management must use judgment in determining an entity’s functional currency, assessing economic factors including cash flow, sales price, sales market, expense, financing and inter-company transactions and arrangements. Impact from exchange rate changes related to transactions denominated in currencies other than the functional currency is recorded as a gain and loss in our unaudited interim condensed consolidated statements of operations, while impact from exchange rate changes related to translating a foreign entity’s financial statements from the functional currency to our reporting currency, the U.S. dollar, is disclosed and accumulated in a separate component under the equity section of our unaudited interim condensed consolidated balance sheets. Translation gains or losses are not released to net income unless the associated net investment has been sold, liquidated or substantially liquidated. Management uses judgment in determining the timing of recognition of translational gains or losses. Such determination requires assessing whether translational gains or losses were derived from the sale or complete or substantially complete liquidation of an investment in a foreign entity. Different judgments or assumptions resulting in a change of functional currency or timing of recognition of foreign exchange gains or losses may materially impact our financial position and results of operations. For the first half of 2009, our translation adjustment and our net transaction loss were immaterial.

Recent accounting pronouncements

A. Operating Results

Net revenues


	Six Months ended June 30,
	2009				2008				% of Change
	(in thousands, except percentages)
Net revenues
Advertising	$	100,926	62	%	$	112,776	69	%		-11	%
Non-advertising:
MVAS		59,864	36	%		46,208	29	%		30	%
Others		3,233	2	%		3,651	2	%		-11	%

Subtotal		63,097	38	%		49,859	31	%		27	%

Total net revenues	$	164,023	100	%	$	162,635	100	%		1	%

The year-over-year increase in total net revenues for the first half of 2009 was 1%. The increase from the first half of 2008 to the first half of 2009 was mainly due to the year-over-year increase in MVAS revenues, offset by the decline in advertising revenues. Advertising revenues as a percentage of total net revenues decreased to 62% in the first half of 2009 from 69% in the same period last year, while MVAS revenues grew to 36% in the first half of 2009 from 29% in the same period last year.

Advertising. Advertising revenues declined 11% year-over-year in the first half of 2009. The global financial crisis impacted the Chinese economy and the advertising sector in China in particular during the first half of 2009. Advertising revenues from China accounted for 99% of our total advertising revenues in the first half of 2009, which is consistent with the same period last year. Total number of advertisers in China was approximately 900 in the first half of 2009, compared to approximately 840 in the same period last year. Average revenue per advertising customer in China was approximately $111,000 in the first half of 2009, as compared to approximately $132,000 in the same period last year. Our top ten customers in the aggregate generated approximately 17% and 16% of our advertising revenues in the PRC in the first half of 2009 and 2008, respectively. Automobile, real estate and FMCG were the top three advertising sectors in the first half of 2009, accounting for approximately 59% of total advertising revenues.

Non-advertising. Non-advertising revenues consist of MVAS and, to a lesser extent, fee-based revenues.

MVAS


	Six Months ended June 30,
	2009				2008				% of Change
	(In thousands, except percentages)
2.0G products	$	42,651	71	%	$	26,946	58	%		58	%
2.5G products		17,213	29	%		19,262	42	%		-11	%

Total MVAS revenues	$	59,864	100	%	$	46,208	100	%		30	%

MVAS revenues increased 30% year-over-year in the first half of 2009. The year-over year increase in MVAS revenues was mainly due to the increased promotional activities and relatively more stable operator policies, government regulations and business environment.

Revenues from 2.0G products include short messaging service (“SMS”), interactive voice response system (“IVR”) and color ring back tone (“CRBT”), increased 58% year-over-year in the first half of 2009. Revenues from SMS and IVR accounted for 43% and 25%, respectively, of MVAS revenues in the first half of 2009. Revenues from SMS and IVR increased 126% and 9%, respectively, year-over-year in the first half of 2009. The year-over-year change in product mix between SMS and IVR in the first half of 2009 mostly reflected the allocation of promotional activities to maximize the return on our marketing efforts.

Revenues from 2.5G products include multimedia messaging service (“MMS”), wireless application protocol (“WAP”) and Kjava, decreased 11% in the first half of 2009. Revenues from Kjava increased 25%, while MMS and WAP decreased 28% and 17%, respectively, year-over-year in the first half of 2009. Revenues from Kjava increased year-over-year in the first half of 2009 mainly due to increased game offerings, sales promotion effect and general market demand. Revenues from MMS decreased 28% year-over-year in the first half of 2009 mostly reflected the allocation of promotional activities to maximize the return on our marketing efforts.

In the past, operators have made significant changes to their policies on mobile value-added services in accordance with policy derivatives from the Ministry of Information Industry (“MII”). The policy changes by the operators have significantly reduced our ability to acquire new MVAS subscribers and increased the churn rate of our existing monthly MVAS subscribers. In addition, our MVAS business has been impacted by other regulatory arms in China, such as the State Administration of Radio, Film and Television (“SARFT”). The key policy changes made by operators in recent years include the following:

• In November 2009, China Mobile Communication Corporation (“China Mobile”) implemented a series of measures targeted at eliminating offensive or unauthorized content for the WAP product line. As part of this effort, China Mobile has suspended billing customers of WAP services, including those that do not contain offensive or unauthorized content, on behalf of third-party service providers of such services. The ultimate impact of these measures to the Company’s MVAS revenues is currently unknown. For the third quarter of 2009, approximately 9% of the Company’s MVAS revenues were derived from WAP services. China Mobile has not yet indicated how long its new measures will last or whether it would expand its current measures.

• In August 2007, the MII tightened the regulations over direct advertising in China. This change reduced the effectiveness of our direct advertising on MVAS and increased the difficulties of new user recruitment. We have not been able to accurately estimate the impact of such change on our results of operations, cash flows and financial condition, but believe it has had and will continue to have a significant negative impact to our MVAS business. Revenues from direct-advertising-based MVAS in the first half of 2009 accounted for approximately 22% of our MVAS revenues.

• In April 2007, China Unicom Co., Ltd. (“China Unicom”) changed its service fee settlement method with service providers from estimated collection to actual collection. As a result of the switch, fee settlement with China Unicom, based on the receipt of billing statements, has taken up to four months, which has negatively impacted our cash flow. In addition, if we are unable to rely on historical confirmation rates from China Unicom in the future as a result of the change in fee settlement method, we may need to defer recognition of such revenues until the billing statements are received. Revenues billed via provincial and local subsidiaries of China Unicom in the aggregate in the first half of 2009 were 11% of our MVAS revenues.

• In July 2006, China Mobile made significant changes to their policy on subscription-based MVAS, which were intended to address a number of issues, including reducing subscriber complaints, increasing customer satisfaction and promoting healthy development of MVAS industry in China. The key changes include requiring double confirmations on new MVAS subscriptions as well as sending SMS reminders to existing monthly subscribers of SMS, MMS and WAP to inform them of their MVAS subscriptions and fee information. In September 2006, China Unicom began enforcing double confirmations on new subscription services. We have not been able to estimate the impact of these policy changes on our results of operations, cash flows and financial conditions, but believe it has reduced and will continue to significantly reduce our ability to acquire new monthly MVAS subscribers and increase the churn rate of our existing monthly MVAS subscribers. Revenues from subscription-based MVAS in the first half of 2009 accounted for approximately 15% of our MVAS revenues.

Other non-advertising revenues

Other non-advertising revenues, which include enterprise services, such as paid search and directory listings, e-commerce and fee-based services, such as paid email services and causal games, decreased 11% year-over-year in the first half of 2009.

Costs of revenues


	Six Months ended June 30,
	2009		2008		% of Change
	(In thousands, except percentages)
Costs of revenues:
Advertising	$	45,874	$	42,718		7	%
Non-advertising:
MVAS		28,421		20,453		39	%
Other		825		1,191		-31	%

Subtotal		29,246		21,644		35	%

Total costs of revenues	$	75,120	$	64,362		17	%

Costs of revenues increased 17% year-over-year in the first half of 2009. Both advertising cost and MVAS cost contributed to higher cost of revenues in the first half of 2009.

Costs of advertising revenues increased 7% year-over-year in the first half of 2009. Compared to the same period last year, web production costs increased $1.9 million in the first half of 2009, driven by an increase in headcount and personnel related expenses, and Internet connection costs associated with additional bandwidth increased $3.2 million, partially offset by a decrease in business taxes of $1.7 million, attributable to lower advertising revenues. The increases were driven by the need to provide additional resources to support our web traffic and advertising revenue growth. Costs of advertising revenues for the first half of 2009 and 2008 included stock-based compensation of $1.3 million and $1.6 million, respectively.

Costs of MVAS revenues increased 39% year-over-year in the first half of 2009. Compared to the first half of 2008, fees paid to third-party content and service providers increased $5.4 million and fees retained by or paid to operators increased $2.6 million in 2009.

Costs of other non-advertising revenue also include costs for providing our enterprise services, e-commerce and fee-based services.

Gross profit margins


	Six Months ended June 30,
	2009			2008
Gross profit margins:
Advertising		55	%		62	%
Non-advertising:		54	%		57	%
MVAS		53	%		56	%
Other		74	%		67	%
Overall		54	%		60	%

Compared to the prior year period, overall gross margin declined six percentage points to 54% in the first half of 2009.

Advertising. The year-over-year decline in advertising gross profit margin in the first half of 2009 were mainly due to decreased advertising revenues and increased content fees and Internet connection cost. Stock-based compensation for the first half of 2009 and 2008 accounted for approximately 1% of our advertising revenues. We expect to continue to increase our investments in the production of web content and Internet connection in absolute dollars to maintain our competitiveness.

Non-advertising. The majority of the costs associated with non-advertising revenues are variable costs. Gross margin for non-advertising revenues declined three percentage points from the first half of 2008 to 54% in the first half of 2009. Gross margin for MVAS also decreased three percentage points year-over-year in the first half of 2009. The decline was mainly driven by the increase in content and channel distribution costs. We expect further increases in fees paid to content providers and channel distributors as a percentage of MVAS revenues, which will result in continuing decline in MVAS gross margin in the future.

Operating expenses


	Six Months ended June 30,
	2009					2008					% of change
	(In thousands, except percentages)
			% of net					% of net
			revenues					revenues
Sales and marketing expenses	$	36,947		23	%	$	36,099		22	%		2	%
Product development expenses	$	15,319		9	%	$	13,399		8	%		14	%
General and administrative expenses	$	13,480		8	%	$	15,235		9	%		-12	%

Sales and marketing expenses. Sales and marketing expenses consist primarily of compensation expenses, sales commissions, advertising and promotional expenditures and travel expenses. Compared to the first half of 2008, payroll-related expenses, such as salaries and welfare expenses increased $2.4 million in the first half of 2009, while sales

commission decreased $0.4 million and corporate branding spending and MVAS promotions decreased $1.1 million. We expect sales and marketing expenses to continue to increase in absolute dollars in the near future.

Product development expenses. Product development expenses consist primarily of personnel-related expenses incurred for the enhancement to and maintenance of our websites as well as costs associated with new product development and enhancement for products such as social networking services and audio and video streaming. Compared to the first half of 2008, personnel-related expenses increased $1.8 million in the first half of 2009, depreciation expenses increased $0.2 million, resulting from purchases of new capital equipment, while stock-based compensation decreased $0.2 million. We expect product development expenses to continue to increase in absolute dollars in the near future.

General and administrative expenses. General and administrative expenses consist primarily of personnel compensation costs, professional service fees 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 the PRC to our subsidiaries. Compared to the first half of 2008, expenses relating to the transfer of the economic benefits generated from our VIEs in the PRC to our subsidiaries decreased by $3.9 million in the first half of 2009, the provision for allowance for doubtful accounts increased $0.8 million, professional fees increased $0.5 million and personnel-related expenses increased $0.2 million.

Amortization of intangible assets . Amortization of intangibles in the first half of 2009 and 2008 was approximately $0.8 million and $0.5 million, respectively, or less than 1% of total net revenues. As of June 30, 2009, the net carrying amount of our intangible assets represents purchased technology, database and software. See Note 3 to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009 for further information on intangible assets, including estimates of amortization expenses for future periods.

Interest and other income


	Six Months ended June 30,
	2009			2008
	(In thousands)
Interest income	$	5,261		$	7,102
Other income		(205	)		1,310

	$	5,056		$	8,412

The year-over-year decrease in interest income in the first half of 2009 was due to lower interest rates, despite higher balances of cash, cash equivalent and short-term investments in the first half of 2009 compared to the same period in 2008. Net currency transaction loss (shown under “Other income”) for the first half of 2009 was approximately $0.1 million. Net currency transaction gain for the first half of 2008 were approximately $2.2 million, arising from the Chinese renminbi appreciating against the U.S. dollar.

Gain on the sale of noncontrolling interest in a subsidiary

In April 2008, the Company sold a 34% interest of its restructured real estate online advertising business, China Online Housing Technology Corporation, and recorded a gain of $3.1 million, or 2% to total net revenues, from the step up of its sold interests to fair value.

Provision for income taxes


	Six Months ended June 30,
	2009			2008
	(In thousands)
Income tax expenses applicable to China operations	$	4,043		$	7,825
Income from China operations	$	38,437		$	48,357
Effective tax rate for China operations		11	%		16	%

Based on our current operating structure and preferential tax treatments available to us in China, the effective income tax rate for our China operations in the first half of 2009 was 11%, compared to 16% in the first half of 2008.

Effective January 1, 2008, the new Enterprise Income Tax Law (the “EIT Law”) in China unifies the enterprise income tax rate for VIEs and Foreign-Invested Enterprises (“FIEs”) at 25%. The EIT Law provides a five-year transitional period for certain entities that enjoyed a favorable income tax rate of less than 25% and/or a preferential tax holiday under the previous income tax law and were established before March 16, 2007, to gradually increase their rates to 25%. In addition, new and high technology enterprises continued to enjoy a preferential tax rate of 15%. The EIT Law also provides grandfathering treatment for new and high technology enterprises that received special tax holidays under the previous income tax law to continue to enjoy their tax holidays until expiration. For the first half of 2008, there were uncertainties on the interpretation and implementation of the EIT Law and the Administration Measures for Recognition of New and High Technology Enterprises, including whether certain of our FIEs in China would receive the new and high technology enterprise status under the EIT Law. Therefore, for the first half of 2008, we made an income tax provision without considering the tax benefits as a qualified new or high technology enterprise.

In December 2008, two of our subsidiaries in China, SINA.com Technology (China) Co. Ltd. and Beijing New Media Information Technology Co. Ltd., qualified as new and high technology enterprises under the new EIT Law. In February 2009, another subsidiary of ours, Shanghai SINA Leju Information Technology Co., Limited was granted software enterprise status, which qualifies the subsidiary to be exempted from income taxes for 2009, followed by a 50% reduction in income tax rate from 2010 through 2012. These changes resulted in lower effective income tax rate for our China operations in the first half of 2009 compared to the same period last year.

The EIT Law provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law defines the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, we do not believe that it is likely that our operations outside of the PRC would be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history the EIT Law, should PRC tax authorities determine that SINA should be treated as a resident enterprise for PRC tax purposes, we would be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to January 1, 2008.

The EIT Law also imposes a withholding income tax of 10% on dividends distributed by an FIE to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the previous income tax law. The Cayman Islands, where the Company incorporated, does not have such tax treaty with China. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a FIE in China to its direct holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5%. A majority of our FIEs’ operations in China are invested and held by Hong Kong registered entities. In accounting for income taxes, all undistributed earnings are presumed to be transferred to the parent company and are subject to the withholding taxes unless certain conditions are met. Based on the subsequently issued interpretation of the new EIT, Article 4 of Cai Shui [2008] Circular No. 1, dividends on earnings prior to 2008 but distributed after 2008 are not subject to withholding income tax. The current policy approved by our Board allows us to distribute earnings offshore only if we do not have to pay a dividend tax. Such policy may require us to reinvest all earnings made since 2008 onshore indefinitely or be subject to 10% withholding tax should our policy change to allow for earnings distribution offshore. If we were to distribute our FIEs’ earnings from January 1, 2008 to June 30, 2009, we would be subject to a withholding tax expense of approximately $6.3 million.

See also Note 6 “ Income Taxes ” to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009 for further discussion on income taxes.

B. Liquidity and Capital Resources


	Six Months ended June 30,
	2009		2008
	(In thousands)
Cash and cash equivalents and short-term investments	$	581,957	$	603,824
Working capital	$	486,641	$	498,524
SINA shareholders’ equity	$	601,416	$	620,505

On July 7, 2003, we issued $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 bear no interest. The Notes are 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. During 2007, one million dollars of the Notes were converted as SINA ordinary shares, resulting in a balance of $99.0 million in outstanding Notes as of June 30, 2009. 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. 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.

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. The closing price of our ordinary shares on September 30, 2009 was $37.96. For the quarter ended September 30, 2009, 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 for the quarter ending December 31, 2009 in accordance with threshold (i) described above. Upon a purchaser’s election to convert the Notes in the future periods, we have the right to deliver cash in lieu of ordinary shares, or a combination of cash and ordinary shares.

As of June 30, 2009, we had $582.0 million in cash and cash equivalents and short-term investments to meet the future requirements of our operating 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 or to increase our cash reserve for future acquisitions. 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.

In the fourth quarter of 2008, the board authorized, but did not obligate, the Company to repurchase up to $100 million of the Company’s ordinary shares on an opportunistic basis. Stock repurchases under this program may be made through open market purchases, in negotiated transactions off the market, in block trades pursuant to a 10b5-1 plan, which would give a third party independent discretion to make purchases of the Company’s ordinary shares, or otherwise and in such amounts as we deem appropriate. No shares had been repurchased as of December 31, 2008. In the first quarter of 2009, we repurchased 2,454,956 shares in the open market, at an average price of $20.37 for a total consideration of $50 million. No further shares were repurchased as of December 23, 2009. Additional shares up to a maximum of $50 million may be purchased under this program through the end of 2009.

In September 2009, we entered into a definitive agreement for a private equity placement of SINA’s ordinary shares with New-Wave, a British Virgin Islands company established and controlled by Charles Chao, our Chief Executive Officer, and other members of our management. At the closing in November 2009, SINA received gross proceeds of $180 million, and New-Wave received approximately 5.6 million ordinary shares in SINA. We expect to use the proceeds of the financing for future acquisitions and general corporate purposes. We are currently evaluating the accounting treatment for the private equity placement, which may require us to recognize compensation expense.

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


	Six Months ended June 30,
	2009			2008
	(In thousands)
Net cash provided by operating activities	$	34,695		$	45,499
Net cash provided by (used in) investing activities		64,707			(23,565	)
Net cash (used in) provided by financing activities		(48,822	)		8,416
Effect of exchange rate changes on cash and cash equivalents		(2,039	)		9,774

Net increase in cash and cash equivalents		48,541			40,124
Cash and cash equivalents at beginning of period		383,320			271,666

Cash and cash equivalents at end of period	$	431,861		$	311,790

Operating activities

Net cash provided by operating activities for the first half of 2009 was $34.7 million. This was attributable to our net income of $23.3 million, adjusted by non-cash related expenses including depreciation of $8.1 million, stock-based compensation of $6.6 million, allowance for doubtful accounts of $2.5 million, foreign exchange loss from liquidated subsidiaries of $2.0 million and amortization of intangible assets of $1.0 million offset by a net decrease in cash from working capital items of $8.9 million. The net decrease in cash from working capital items was mainly due to the decrease in accrued liabilities, such as sales commissions, bonuses, marketing expenses, deferred revenues and business tax payable, partially offset by the decrease in account receivables resulting from lower advertising revenues in the first half of 2009.

Net cash provided by operating activities for the first half of 2008 was $45.5 million. This was attributable to our net income of $36.7 million, adjusted by non-cash related expenses including depreciation of $7.6 million, stock-based compensation of $7.1 million, allowance for doubtful accounts of $1.8 million, partially offset by foreign exchange gains from liquidated subsidiaries of $1.9 million, gains on the sale of a noncontrolling interest in a subsidiary of $3.1 million and a net decrease in cash from working capital items of $3.3 million. The net decrease in cash from working capital items was mainly due to the increase in account receivables resulting from higher advertising revenues in the first half of 2008, partially offset by the increase in accrued liabilities, such as content fees, bandwidth costs, sales commissions, marketing expenses, deferred revenues and income tax payable.

Investing activities

Net cash provided by investing activities for the first half of 2009 was $64.7 million. This was due to the proceeds from the maturities of short-term investments of $116.3 million, offset by the purchase of short-term investments of $45.5 million, equipment purchases of $1.9 million and investments and prepayments on investments of $4.3 million.

Net cash used in investing activities for the first half of 2008 was $24.0 million. This was due to the purchase of short-term investments of $95.7 million and equipment purchases of $10.9 million, offset by the proceeds from the maturities of short-term investments of $83.0 million.

Financing activities

Net cash used in financing activities for the first half of 2009 was $48.8 million. Payments for repurchase of SINA ordinary shares was $50.1 million and payment for other financing activities were $0.3 million. Proceeds from the exercise of share options were $0.9 million and capital contribution from noncontrolling interests was $0.6 million. Net cash provided by financing activities for the first half of 2008 was $8.4 million. Proceeds from the exercise of share options were $6.0 million, capital contribution from E-House for its noncontrolling interest in a subsidiary of ours was $2.5 million and payments for other financing activities were $0.1 million.

C. Research and Development, Patents and Licenses, etc.

Not applicable.

D. Trend Information

Other than as disclosed elsewhere in this information, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2009 to June 30, 2009 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E. Off-Balance Sheet Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated 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 Unaudited Interim Condensed Consolidated Financial Statements for the six months ended June 30, 2008 and 2009. 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.

F. Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2009:


	Payments due by period
			Less than one		One to		Three to		More than
	Total		year		three years		five years		five years
	(In thousands)
Operating lease obligations	$	6,002	$	2,922	$	2,950	$	130	$	—
Purchase commitments		48,159		37,943		10,115		89		12
Other long-term liabilities		3,785		512		769		—		2,504

Total contractual obligations	$	57,946	$	41,377	$	13,834	$	219	$	2,516

Operating lease obligations include the commitments under the lease agreements for our office premises. We lease office facilities under non-cancelable operating leases with various expiration dates through 2013. Rental expenses for the first half of 2009 and 2008 were $3.7 million and $2.9 million, respectively. Based on the current rental lease agreements, future minimum rental payments required as of June 30, 2009 are $2.1 million, $1.8 million and $1.0 million for the six months ending December 31, 2009 and years ending December 31, 2010 and 2011, respectively. The majority of the commitments are from our office lease agreements in the PRC.

Exhibit 99.10

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in SINA Corporation’s Registration Statements on Form S-8 (No. 333-36246, No. 333-47720, No. 333-107359, No.333-129460 and No. 333-144890) of our report dated June 29, 2009, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the change in accounting for non-controlling interests and convertible debt instruments described in Note 2, as to which the date is December 23, 2009, relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears on Form 6-K filed with the Securities and Exchange Commission on December 23, 2009.

/s/ PricewaterhouseCoopers Zhong Tian CPAs Limited Company
PricewaterhouseCoopers Zhong Tian CPAs Limited Company

Beijing, the People’s Republic of China

December 23, 2009