Sohu's Drop Cracks China Net Sector
Sohu.com, which gains most of its revenue these days from online advertising, forecast first-quarter sales in the range of $22.5 million to $23.5 million, short of the Thomson First call expectations of $25 million.
The company also forecast earnings per share of 14 cents to 16 cents, below the First Call number of 17 cents.Sohu.com's outlook calls for sequential growth in ad revenue but flatness in its nonadvertising business comprising wireless value-added services, online games and e-commerce. The company's wireless business fell off a cliff last year upon China Mobile's (CHL) initiation of a one-year suspension in some of Sohu.com's wireless business for violations of China Mobile's operational guidelines. China Mobile also insisted Sohu.com make price cuts in other services. Monday's numbers illustrate some of the fundamental challenges for investors in Chinese new-media content companies. While the size of China's population and the prevalence of wireless phones holds out the promise of Google (GOOG)-like growth, the relevant companies aren't necessarily able to come through on that growth as quickly as investors might hope. In addition, investors have to contend with the fact that business rules are different in China. That one-year suspension for Sohu.com, after all, was punishment for the company's sending out an unauthorized marketing message to 1,374 customers that resulted in 23 subscriptions to a service costing $1.20. It seems unlikely that a punishment as draconian as what Sohu.com suffered -- it said at the time that wireless revenue would be cut $1.5 million to $1.8 million in the third quarter of 2003 alone -- would be enforced by a U.S. wireless carrier in response to any similar policy violation by a content provider.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV