It's pretty cool when hype delivers. For China Web portal Sohu (NASDAQ:SOHU), living up to the past two years of stock-price gains hasn't been easy. The stock has run from $1.08 to nearly $40 in that time.

That's why last night's earnings report is significant. The company earned $0.28 a share in the fourth quarter and looks to earn a similar amount in the current quarter. Impressively, while Sohu saw its revenues nearly triple to just over $80 million in 2003, operating overhead inched just 33% higher. That's the kind of scalability that got folks excited about stateside dot-com heavies eBay (NASDAQ:EBAY) and Yahoo! (NASDAQ:YHOO).

This is not to say that Sohu is alone. Fellow publicly traded portals in China like Sina (NASDAQ:SINA) and NetEase (NASDAQ:NTES) are sharing slices of the world's most populous country, and they too have drawn the investor crowd. Thanks to paid searches and text messaging deals with wireless providers, the three players have scorched the market.

As for Sohu, it is not guiding beyond the current quarter. Still, the company should have no problem topping the $0.66 a share it earned in 2003. In fact, Wall Street thinks the company will be good for $1.32 a share in profits. Yes, that's more than the company's entire market cap two years ago!

The lone analyst making a first-quarter call was pegged at $0.30, while the company's projected range is between one and three pennies lower. At the same time, 14 straight quarters of double-digit sequential revenue growth will end as Sohu expects only marginal sequential gains for the March period. That may help explain why the stock got knocked down to $33 in after-hours trading.

After two years of crazy gains, have the fundamentals finally caught up to Sohu? Definitely. Even if it earns just $1.20 a share this year, you won't find too many high-octane growers selling for less than 30 times year-ahead profits. You also won't find too many companies beyond Microsoft (NASDAQ:MSFT) rivaling the 33% net margins Sohu posted last year.

Sohu has grown up. Yes, there are substantial political and economic risks when buying into a company like Sohu. Yet, on a valuation basis, it finally looks like a risk worth taking.

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