(Nasdaq: SOHU) shares soared nearly 15% yesterday, as the Chinese new-media company delivered yet another quarter of market-thumping results. You can't say that I didn't try my best to tip you off.

Last Friday, I examined a rarely explored momentum trend that was working in Sohu's favor heading into yesterday morning's report -- the growing divergence between what analysts predicted and what Sohu delivered:

EPS Est.

EPS Actual

% Difference

Q2 2007




Q3 2007




Q4 2007




It seems the trend is once again Sohu's friend. Analysts were expecting earnings to more than triple, to $0.37 a share. However lofty that may have seemed, yesterday's report found Sohu earning $0.55 a share, or $0.64 a share on a non-GAAP basis.

Revenue jumped 156% to $84.8 million -- also well above Wall Street's consensus. The biggest driver was the company's online gaming revenue. Fueled by the success of the company's internally developed Tian Long Ba Bu game, online gaming revenue has gone from being nearly nonexistent a year ago to nearly half of the revenue mix today.

Multiplayer fantasy games are huge in China, with young gamers hitting Internet cafes or using the growing number of home-based connections to play. Sohu's strong report was enough to send stand-alone players in this niche -- Giant Interactive (NYSE: GA), Shanda (Nasdaq: SNDA), (Nasdaq: NTES), and Perfect World (Nasdaq: PWRD) -- between 4% and 13% higher yesterday.

This doesn't mean that Sohu is losing focus on its bread-and-butter Web properties. Online brand advertising clocked in 41% higher, and this is an area that should improve in the coming months, given Sohu's official online-reporting role during the Olympic Games in Beijing.

The gaming success is gravy -- the kind of thick and chunky gravy that analysts find themselves drowning in again and again with Sohu. When will they learn?

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Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin online stocks for a long time. He does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.