(SOHU -0.41%) is still struggling to fire on all cylinders, but investors nonetheless bid shares of the dot-com pioneer higher on Friday after it posted mixed fourth-quarter results. Revenue clocked in at $482.2 million for the final three months of 2018, a 5% decline from a year earlier, but a 5% sequential improvement. 

Just one segment of the Chinese online advertising, search, and gaming specialist mustered a year-over-year gain for both the quarter and all of 2018. But investors seem to prefer the sum-of-the-parts coverage that Sohu provides. Spun-off subsidiaries Sogou (SOGO) and (CYOU) -- representing Sohu's search and gaming operations, respectively -- were inching lower hours into Friday's trading day as Sohu shares were drifting higher. logo

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Searching for growth

Sohu has now posted back-to-back quarters of declining revenue, but the report wasn't as bad as the 11% year-over-year slide it served up three months ago. Sohu actually landed on the higher end of the $465 million to $495 million revenue range that it was targeting in early November. After years of torrid top-line gains, the revenue trends have been choppy. Revenue declined for six straight quarters, then registered five periods of gains, before shifting into reverse during the second half of last year, according to data provided by S&P Global Market Intelligence.  

Sohu's Sogou-led search revenue rose 12% to $277 million for the quarter. Sogou's business now accounts for more than half of Sohu's revenue. The 12% increase isn't up to the headier growth spurts of the past, but it is ahead of the 5% to 11% uptick that Sohu was targeting for its search-related revenue.

The flagship-brand advertising arm continues to sputter for Sohu, down 20% to $57 million but flat sequentially. Lastly, we have the Changyou-fueled online gaming segment clocking in with a 14% decline to hit $94 million. Slides aren't pretty, but investors were ready. Sohu's guidance last time out called for a 16% to 23% decline in its brand advertising revenue along with a 13% to 22% decrease for its online gaming business. 

The red ink continues at Sohu. Its adjusted deficit narrowed to $59 million, or $1.50 a share, a slightly larger loss than it was modeling three months ago. 

The guidance it initiated on Friday morning isn't impressive. It sees revenue clocking in between $390 million and $415 million for the current quarter. The big sequential hit isn't a surprise. There's seasonality here given the lunar new year, and you have to go all the way back to 2008 to find the last time that revenue moved higher between the fourth and first fiscal quarters. However, we're still looking at a 9% to 14% decline from the $455 million it sported in the first quarter of last year. Sohu also sees Sogou revenue declining 3% to 7%, brand advertising slipping 11% to 20%, and online gaming checking in with a 15% to 24% drop. 

This will be Sohu's third straight quarter of declining revenue, and naturally the bottom line isn't going to get out of the red anytime soon. Sohu is forecasting an adjusted loss per share between $1.30 and $1.55. 

Check out the latest Sohu earnings call transcript.

The market's initial kind reaction to the choppy financials suggests that investors are bracing for the new normal. The stock is actually trading 37% higher than the 11-year lows it hit five months ago. If Wall Street is warming up to Sohu now, when it's not at its best, it could be a solid year for investors if it's able to start growing its revenue and keep narrowing its deficits in 2019.