Sohu sees bright 4th quarter after record turnover

PUBLISHED : Tuesday, 01 November, 2011, 12:00am
UPDATED : Tuesday, 01 November, 2011, 12:00am


Mainland internet media and entertainment giant Sohu forecasts a new high in quarterly revenue at the end of this year, riding the momentum gained from its record turnover in the third quarter.

Sohu, which operates one of the country's most visited portals, yesterday reported a 19 per cent rise in third-quarter net income to US$64.3 million, up from US$54 million a year earlier, due to the solid performance of its core online advertising and gaming businesses.

Total revenue climbed 42 per cent to US$232.9 million, from US$164.1 million.

According to a note from JP Morgan Asia-Pacific Equity Research, Sohu's turnover last quarter beat the market consensus of US$225.9 million by 3.1 per cent. It also exceeded the top end of Sohu's earlier guidance of US$225 million to US$230 million in third-quarter revenue.

Brand advertising revenue last quarter was up 30 per cent year on year to a new high of US$76.6 million, due largely to robust advertising demand from the information technology and property sectors.

Charles Zhang Chaoyang, the chairman and chief executive of Beijing-based Sohu, said the company's two fastest-growing areas for online advertising were internet search service Sogou and Sohu Video.

Increased search traffic last quarter helped Sogou revenue jump 244 per cent year on year to US$18.4 million.

It continued to rank a distant third, with a 2.1 per cent share of the mainland's online search market, behind Baidu and Google, according to internet consultancy iResearch.

Sohu's online game revenue, from subsidiary, was up 35 per cent year on year to US$115.8 million in the third quarter. The gaming unit's net income grew 17 per cent to US$52.8 million.

'Changyou once again exceeded its top-line and bottom-line financial goals, while making planned investments in marketing and promotion of [new self-developed 3D online game] Duke of Mount Deer,' Zhang said.

This fourth quarter, Sohu expects total revenue to be between US$241 million and US$246 million. That would be higher than the estimated market consensus of US$232.5 million, the JP Morgan research note said.

Sohu chief financial officer Carol Yu said the company would continue to maintain a strong balance sheet and ample cash to further develop and develop its businesses.

The Nasdaq-listed firm has a debt-free balance sheet, with US$707.4 million in cash as of September 30.