The Chinese internet is so far defying the Chinese economy

Analysts and investors may be worried about the state of the Chinese economy, but China’s leading internet companies seem to be in no danger of a hard landing. 

Image courtesy Julien GONG Min: http://www.flickr.com/photos/bfishadow/

Sina is placing a large bet on Weibo. Will it pay off?

Sina  (SINAquote) and Tencent  (TCEHYquote) have posted solid results for the first quarter of 2012, though Sina remains cautious about its prospects for the second quarter.

Sina reported net revenues of $100.6 million, a 6% gain year-over-year. Advertising revenues were up 9% to $78.5 million, while non-advertising revenues were flat. The company lost $13.7 million for the quarter, which the company attributed to heavy investment in personnel, infrastructure and marketing for its Twitter-like microblogging site Weibo.com.

While the loss represents a reversal of the company’s $15 million profit in the first quarter of 2011, it was in line with analyst expectations. Social media analyst Bill Bishop told the Dow Jones Newswire, “I don’t think anyone should be surprised that personnel costs are up, because the regulatory burden has increased dramatically for Sina.”

The Chinese government has cracked down on microblogging, requiring users to register under their real names and censoring reactions to the fall of Communist party leader Bo Xilai. Weibo is still growing despite the crackdown though, adding 30 million users and increasing its daily active user count by 19% in the first quarter.

Sina warns that it is continuing to invest heavily in Weibo during the second quarter, including test trials of brand advertising based on social interest graphs. According to CEO Charles Chao, “The initial feedback from advertisers on our Weibo advertising is encouraging, and we believe it is critical that SINA continues its significant investments in social media and related initiatives.”

Tencent also announced strong growth today, with revenues increasing 21.8% quarter-over-quarter to $1.5 billion. The internet portal had a profit of $470 million, up 2.7% year-over-year. 

CEO Ma Huateng atributed the growth to “strong spending in our gaming platforms during the Chinese New Year holidays, and higher user engagement driven by our open platform initiatives.” Advertising revenue also played a role, down from the fourth quarter but nearly doubling from the previous year. 

Tencent is continuing to pursue gaming opportunities. It already owns popular properties like League of Legends, and recently announced a partnership with Gamesalad, a U.S.-based game development platform for the Apple (AAPLquote) iPhone and other mobile devices

Investor reaction to the results is mixed. SINA jumped almost 14% this morning, while TCEHY is trading lightly and is down almost 2%.

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