Sohu 2nd-Quarter Profit Surges on Online Ads, Gamers

By John Liu

July 28 (Bloomberg) -- Sohu.com Inc., China's third-biggest Web portal, said second-quarter profit rose sevenfold, beating analyst estimates, on higher advertising sales before next month's Beijing Olympics and an increase in online game players.

Net income climbed to $40.2 million, or $1.02 per share, from $5.7 million, or 15 cents, a year earlier, the Beijing-based company said today in a statement on its Web site. That beat the highest of six analysts' estimates compiled by Bloomberg, of $27.7 million profit, by 45 percent.

Adidas AG, Sony Corp. and other companies have bought more ads from Sohu and rivals including Sina Corp. and Tencent Holdings Ltd. before the Olympic Games to market goods ranging from sneakers to televisions to China's 253 million Internet users who'll follow the event online. Sohu's ``Tian Long Ba Bu'' online game, introduced in May 2007, also won more players after the company added new monsters and weapons to the title.

``Online ad revenues in the second quarter won't fully reflect the effect of the Olympics, which should really kick in during the third quarter,'' Dick Wei, a Hong Kong-based analyst with JPMorgan Chase & Co. said before the earnings release. Wei recommends buying Sohu shares.

Second-quarter sales more than doubled to $102 million from $39 million, Sohu said. That beat the highest of nine analysts' estimates for $101 million.

Third-quarter sales may be $112 million to $116 million, the Internet company said. That compares with the $107 million median of seven analysts' estimates.

To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net