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Sohu Sees 25% Rise in Net Profits
2005-7-29 8:50:38      China Daily
Chinese Internet company Inc saw its net profits in the second quarter rise by a quarter over the first three months, amid worries about its core advertising business.

The Beijing-based firm said yesterday that its revenues in the second quarter reached US$25.9 million, compared with US$23.7 million in the first quarter and US$27.3 million in the same period of last year.

Its net profits increased to US$7.1 million, compared with US$5.7 million in the first quarter and US$9.9 million in the same period of last year.

Its diluted earnings per share were 18 US cents, compared with 15 US cents in the first quarter.

"We are pleased to report a solid performance in our top and bottom lines for the second quarter with healthy growth in our brand advertising, a strong increase in our search revenue as traffic on our search engine SoGou shows rapid growth, and the recovery of our wireless business is well on track," said Charles Zhang, chairman and CEO of Sohu, in a statement yesterday.

The company's year-on-year drops were mainly attributed to a decline in its mobile value-added services, due to a regulatory campaign in the second half of last year.

Jim Sun, a Shanghai-based technology industry analyst with Evolution Securities, said the result was actually quite good, as Sohu's net profits rose by 25 per cent and revenues by 9 per cent quarter-on-quarter.

The growth of online advertising was a major driving force and revenues from the business reached US$17 million, 14 per cent higher than the previous quarter and 27 per cent higher than the same period of last year.

Non-advertising revenues were US$8.9 million, the same as the previous quarter and falling by more than one third over the second quarter of 2004.

However, Sun said that Sohu's low guidance for its third quarter with a growth rate of 3 to 6 per cent from advertising revenues was worthy of note.

"The third quarter is usually a golden season for advertising, but a 3 to 6 per cent growth is quite low," said Sun.

Sohu said yesterday its advertising contracts signed with a number of companies from southern China early this year might be hurt by the financial troubles of companies like Kelong, Soutech, and Start, all technology firms.

(Photo: Google)

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