So Far, So Good, Sohu
By
Rick Aristotle Munarriz
October 30, 2007
|
Things are going so well in China that even a once-moribund media company like Sohu.com (Nasdaq: SOHU) is roaring back into growth. The company posted blowout third-quarter results last night. Revenue soared 46% higher to $51.5 million. Earnings before stock-based compensation climbed 37% higher to $0.30 a share.
Wall Street was looking for a profit of just $0.21 a share with $46.5 million on the top line. Brand advertising and online games posted healthy year-over-year gains, more than offsetting weakness in wireless and sponsored search.
The uptick in online games is noteworthy. That segment soared 473% higher to $12.7 million. That is still a small slice of the revenue mix pie at Sohu. This isn't the second coming of stronger online gaming players like NetEase.com (Nasdaq: NTES), Shanda (Nasdaq: SNDA), and The9 (Nasdaq: NCTY). However, online gaming revenue is now nearly double that of the wireless segment that once defined the company.
It was just a few years ago when Sohu, SINA (Nasdaq: SINA), and NetEase became market darlings on the strength of wireless entertainment services. That was before the government and cell phone carriers began to regulate and eat into the once-lucrative niche.
There are still players like Tom Online and KongZhong (Nasdaq: KONG) specializing in wireless leisure services, but the original players have diversified into faster-growing areas like Web portals and online multiplayer fantasy games.
The strong quarter isn't a blip at Sohu. The party will continue, going by the company's refreshing guidance. Sohu is looking to earn between $0.33 a share and $0.35 a share on $53.5 million to $55.5 million in revenue next quarter.
Too slow, Wall Street. The market was only expecting the company to earn $0.24 a share on $49.1 million in revenue during the quarter. Look higher, analysts. A lot higher.
Well done, Sohu. Now just make sure you don't get tripped by the pros down below.
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