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Sohu's net surges in 3rd quarter
( 2003-10-25 10:50) (China Daily)

Chinese Internet media firm Sohu.com reported Friday a rise in quarterly profit that beat expectations, reflecting surging sales of online advertising and data services for mobile phones.

Beijing-based Sohu.com posted third-quarter net profit of US$2.67 million, or seven cents per diluted share, compared with US$112,000, or nil per diluted share, in the same quarter a year earlier.

Revenue soared 194 per cent to US$22.1 million in the third quarter, compared to US$7.5 million a year ago, it said.

"Online advertising continues to exceed our expectations," Charles Zhang, Sohu's founder and chief executive, told analysts in a conference call. "Companies now understand that Sohu has developed into a leading mainstream online media asset."

Sohu, whose shares have soared more than 14-fold in the past year, also profited from mobile phone downloads such as ringtones, logos and news.

"Chinese consumers are demanding more value-added services besides voice," said Zhang, one of China's richest men thanks to his firm's rise amid increasing use of the Internet and mobile phones in China.

Sohu, which means "search fox" in Chinese, said it expected a fourth-quarter net profit between US$9.5 million and US$11.2 million and fourth-quarter revenue between US$24.3 million and US$25.7 million.

The firm's results bode well for its Nasdaq-listed rivals Sina.com and NetEase.com, which will report results next week.

All three, once dismissed as washed-up relics of the Internet boom, posted profits over the last year as the ranks of China's Web surfing population swelled to over 70 million users, second only to the United States.

Sohu shares, which closed down nine cents at US$32.81 in New York ahead of the results announcement, jumped as high as US$33.69 in after-hours trade.

The firm said sales of consumer services, including mobile text message-based services, jumped 248 per cent from a year earlier period to US$13.3 million, while ad sales rose 138 per cent to US$8.7 million.

Analysts said a muted quarter-on-quarter growth in consumer services, from a base of US$12.5 million in the second quarter, was expected due to a regulatory clampdown on some of Sohu's partner sites that sell racy entertainment.

But they were particularly pleased with quarterly growth in advertising sales, which were US$6.8 million in the second quarter.

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