Updated from Feb. 7

Sina's ( SINA - Get Report) wireless phone business will take a dive in the first quarter, the Chinese Internet portal said Monday.

The news, which came as Sina announced mixed fourth-quarter results, sent the company's shares down 24% in premarket trading Tuesday.

The news came only a few hours after fellow Chinese portal company Sohu.com ( SOHU - Get Report) disappointed investors with its own outlook. As is the case with Sohu.com's hobbled wireless phone business, Sina's warning illustrates the particular risks of investing in China, where government edicts and the policies of wireless carriers such as China Mobile ( CHL) can suddenly impact business operations.

Sina's shares, which fell 5 cents to $27.35 in normal trading Monday, were recently $6.45 to $20.90 on Instinet.

In its earnings release issued Monday, Sina forecast that its "mobile value-added services" revenue targeted at wireless phone users will drop 20% to 30% from fourth-quarter levels.

That category of revenue amounted to $35.7 million, or 63%, of the $56.9 million in total revenue that Sina reported for the fourth quarter.

Those mobile services had grown 56% from the fourth quarter of 2003, and were up 14% from the third quarter of 2003.

Behind the pessimistic forecast are two different, major developments.

In late January, Sina said, the Chinese State Administration of Radio, Film and Television, the broadcasting regulator in China, told broadcasters that advertisements for wireless phone "fortune-telling" services are prohibited as of Monday, Sina said.

This ban, says Sina, will stop "almost all" of its current promotional efforts for its usage-based Short Message Service (SMS) products on radio and TV.

Separately, says Sina, China Mobile last month changed its billing process for another category of wireless services, Multimedia Messaging Service, and plans to migrate MMS onto another delivery platform. The MMS changes, says Sina, may result in a 30% to 50% reduction of MMS revenues.

The actions from the broadcast regulator and from China Mobile clearly threaten the wireless business's growth prospects. Sina says that "substantially all" of its revenue growth for mobile value-added services in the second half of 2004 came from either SMS products promoted through broadcast advertising or from MMS.