Sohu.com, the mainland's second-largest online portal, says it will list its games business in the United States after reporting a sevenfold increase in second-quarter profit.
With sales of online games and advertising soaring, Beijing-based Sohu is taking advantage of growing investor appetite for the mainland internet industry.
Boasting 253 million internet users, the mainland has passed the US as the largest Web market in the world, according to China Internet Network Information Centre.
Sohu reported net income of US$40.2 million in the second quarter, compared with US$5.7 million a year earlier. Diluted earnings per share reached US$1.02, well ahead of market estimates of 67 US cents. Revenue increased 161.6 per cent to US$101.98 million, beating market estimates of US$96.5 million.
'Both online games and online advertising are doing extremely well,' said Dick Wei, a mainland internet analyst at JP Morgan.
The new company in the US will be named Changyou.com and focus on online games and related strategic opportunities. Sohu will remain Changyou's majority shareholder. Other details of the share sale plan were not disclosed.
'It is great that Sohu is spinning off its online game business,' said Bryan Yuan, an analyst at IDC China. 'After all, operating games are quite different from running a portal. Games target individual consumers while portals target companies.'
