Acquisition costs slash Sohu profit
Mainland internet media, gaming and search giant Sohu.com said yesterday that charges related to acquisitions caused a 39 per cent fall in net profit last quarter, despite record turnover over the period.
Nasdaq-listed Sohu.com, which was the eighth-most visited website on the mainland last year, reported net income of US$25.2 million in the three months to December, which fell from US$41.5 million a year earlier owing to US$27.5 million in business acquisition-related impairment charges.
Fourth-quarter revenue grew 42 per cent to US$246 million from US$173.2 million the previous year on the back of strong brand advertising, search and online gaming sales.
'Our conscientious efforts in growing online video and search businesses are bringing strong growth in revenues, users and traffic,' Charles Zhang Chaoyang, the chairman and chief executive of Beijing-based Sohu.com, said.
The company's online gaming subsidiary, Changyou.com, also managed to achieve healthy growth from its portfolio of multi-player online games, such as its popular Tian Long Ba Bu martial arts title, even as it diversified into so-called web-based games like DDTank.
Its steadily expanding online games business is poised to benefit from the mainland's robust games market. Market research firm Analysys International estimated that the country's online games market would grow 20.7 per cent this year to 55.7 billion yuan (HK$68.42 billion).
'These businesses are contributing to give the Sohu Group a powerful integrated online marketing platform,' Zhang said. 'In 2012, we aim to make this platform even more dominant in China's internet market.'
Sohu.com said it expected revenue of between US$219 million and US$225 million in the first quarter of this year.
For the whole of last year, the company said total revenue climbed 39 per cent to a new record of US$852 million.
That was slightly higher than the forecast of US$850.4 million made by JP Morgan Securities in a report.
'We had a strong year in our brand advertising business,' Belinda Wang Xin, co-president and chief operating officer of Sohu.com, said.
'In 2011, the internet population in China exceeded 500 million, and we witnessed a continuing trend where marketing spending by brand advertisers has been shifting from offline to online.'
Sohu.com's brand advertising revenue in the 12 months to December rose 32 per cent year on year to US$279 million.