Mainland Internet portal Sohu. com is confident of reaching profitability despite a small increase in net loss to US$8.46 million in the first three months of this year. The 2.39 per cent quarter-on-quarter increase in net loss came despite a 12.57 per cent rise in Sohu's revenues to US$2.45 million. On a pro forma basis - which removes the effect of depreciation of intangible assets - the company's net loss fell US$506,000 to US$4.24 million. 'Sohu's path to profitability is more visible and predictable,' said Sohu.com vice-president of finance Derek Palaschuk. Sohu's monthly spending dropped 21 per cent to US$1.5 million and the company has US$57.58 million in cash on hand. Registered users of Sohu's sites increased 50.8 per cent to 18.7 million. Some analysts were pessimistic about Sohu's ability to become profitable, saying the size of China's online advertising market was too small. Advertisers continue to prefer traditional media such as television. 'The dominant factor is the size of the online advertising market,' said one analyst. Sohu's cash pile would only enable the company 'to limp along for some time to come', he said. Credit Suisse First Boston Internet analyst Matt Adams gave a cautious welcome to Sohu's results but warned the outlook for portals was uncertain. 'A good quarter [but] let's see it continue because we don't know what the outlook for the sector is. The visibility is very limited,' he said. Sohu has increased the proportion of revenue which comes from non-advertising sources - such as e-business solutions and e-commerce - to 15 per cent from 5 per cent in the previous quarter. The company is targeting 20 per cent of its revenue to come from outside advertising by the end of this year.