Sohu Optimistic Over Game Pipeline

Chinese Internet company Sohu maintains an upbeat 2010 forecast amid a pipeline of upcoming games.
By Andrea Tse ,

BEIJING (

TheStreet

) -- Chinese Internet company

Sohu

(SOHU) - Get Report

posted somewhat disappointing fourth-quarter earnings, but maintains an upbeat 2010 forecast amid a pipeline of upcoming games.

Sohu estimates total revenue for the first quarter to be between $123 million and $128 million. A Thomson Reuters poll of analysts expects revenue of $139.9 million.

Sohu estimates non-GAAP net income for the first quarter of 2010 to be between $31 million to $33 million and non-GAAP fully diluted earnings per share for the first quarter to be between 78 cents and 83 cents. A survey of analysts by Thomson Reuters predicts 88 cents a share.

"We continue to position ourselves for long-term and sustainable growth through ongoing investments in our two complementary core businesses, namely our portal business and online game business," Charles Zhang, Sohu's CEO said. "We believe our emphasis on securing and developing leading Internet video content and technologies will drive impressive growth in both users and advertising revenues in 2010."

The company says its persistent efforts in fighting online video piracy have started to bear fruit. Sohu adds that its highly anticipated and diverse 2010 pipeline of five games will bring the company increasing momentum in the coming quarters.

Fourth-quarter net income attributable to Sohu fell to $32.3 million, or 76 cents a share, from $56.6 million, or $1.45 a share, a year ago.

After deducting the share of net income pertaining to Sohu's non-controlling interest in its online game subsidiary Changyou, on a fully diluted basis, non-GAAP net income for the fourth quarter of 2009 was $35.8 million, or 92 cents a share.

Total fourth-quarter revenue was $135.8 million, up 12% year-over-year.

Analysts surveyed by Thomson Reuters had expected fourth-quarter earnings of 91 cents a share on revenue of $137.4 million.

"Effective business strategies and high-quality products have allowed Sohu to overcome the sluggish economy of 2009 and gain market share in many of our key business segments," Zhang said.

-- Reported by Andrea Tse in New York

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