Renren (RENN) Updates on Q4 Revs, Outlook; Will Shift Investment into Mobile Tech, Products

Renren Inc. (NYSE: RENN) announced preliminary selected unaudited financial results for the fourth fiscal quarter ended December 31, 2011. These preliminary results are subject to change as the Company is in the process of finalizing the financial statements for the fourth quarter. The Company expects to issue the earnings release for the fourth fiscal quarter and full year ended December 31, 2011 on March 8, 2012, after market hours.

• Revenues in the fourth quarter of 2011 are estimated to be within the previously forecasted range of US$31 million to US$33 million. The Street sees $32.6 million.
  
  
• Operating losses on a non-GAAP basis in the fourth quarter, which excludes share-based compensation expenses, impairment and amortization of intangible assets, are estimated to be between US$15 million to US$17 million. The losses were primarily due to increased investments across the Company's business lines as well as the consolidation of 56.com, the UGC video-sharing website that the Company acquired in October 2011.
  
  
• The Company expects to incur a one-off US$2 million to US$3 million non-cash expense due to impairment charges of certain intangible assets, mainly including Xiaonei.com, the internet domain name acquired by the Company in 2006 which is no longer in use.
  
  
• Meanwhile, the Company expects to record approximately US$51 million of one-off realized capital gain from its sales of e-Long securities in the fourth quarter.

"As previously discussed in our third quarter earnings release, given the competitive environment and growth opportunities of our sectors, we have decided to step up our investment in various areas of our businesses, particularly in mobile technology and products. In addition, we are also upgrading the bandwidth and servers for 56.com, the video assets we recently acquired, in order to improve our user experience. As a result, we have budgeted an incremental amount of US$60 million to US$70 million for investments this year compared to previous projections made a year ago," commented Joseph Chen, Chief Executive Officer of Renren.

"Based on our current visibility, we expect our full year revenue in 2012 to grow 50-55%, similar to the pace we achieved in 2011," added Mr. Chen. "While we will not be profitable in 2012, our business is fundamentally sound and staged for growth in China's social networking sector. We are confident that we are following the right course in creating long-term value for our shareholders and building a truly sustainable business."

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