Chinese online media company Sohu.com
Although the Street may not be in Sohu's favor right now, this just may not be reason enough for you to write off the company yet.
Reasons to be positive
Sohu's net income declined by almost 40%, but this was due to a one-time impairment charge on its previous acquisitions. Without this one-time cost, net income in the fourth quarter rose by 24% to $54.3 million.
China has significant market potential with increasing number of Internet users, which has recently exceeded the 500-million mark. With Google yet to gain a strong foothold there, Sohu -- along with Baidu
Sohu's efforts to grow its business have obviously paid off well. In the previous year, it acquired licenses for 400 movie titles from News Corp.'s 20th Century Fox. Sohu has also been profiting from its online gaming division, Changyou
The Foolish bottom line
While China's economy is slowing down, Sohu's still projected to grow by about 8.1% this year compared with 9.2% in 2011. I don't think 8.1% is that bad.
So, Sohu's revenues might take a hit in the near term, but the secular rise in online advertising powered by the growing number of people going online would ensure future growth for the company. Sohu should make it in the long run.
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