Sohu Posts Third-Quarter Loss of $65 Million on Dividend Payment

Sohu.com Inc. (SOHU), the owner of China’s third-largest Web portal, posted a third-quarter loss because of a special dividend paid to certain shareholders of its search engine business.

The loss was $65 million, the Beijing-based company said in a statement today. Operating profit fell 18 percent to $52 million, compared with the average $56 million estimate of nine analysts compiled by Bloomberg.

Sohu has invested in mobile apps and video content, buying programs including reality singing contest Voice of China, as more users surf the Web through smartphone and tablet devices. Tencent Holdings Ltd. (700), Asia’s largest Internet company, purchased 36.5 percent of Sohu’s Sogou search unit in September, an acquisition that also grants Sogou access to the larger company’s mobile user base.

“The largest costs come from its video and search department,” Luke Xu, an analyst at Shanghai-based IResearch, said before the earnings. “Sohu bought some hit shows like the Voice of China, which lifted costs.”

The American depositary receipts of Sohu fell 0.2 percent to $81.419 on the Nasdaq Oct. 25. The stock has gained 72 percent this year.

Revenue grew 29 percent to $368 million, boosted by more advertisements sold on its platform.

Sohu today forecast fourth-quarter revenue of $378 million to $390 million. That compares with the $375.9 million average of seven analyst estimates.

In China, Sohu’s Web portal had 323 million unique visitors in June, trailing behind Tencent’s qq.com and Sina Corp. (SINA)’s portal business.

Tencent’s purchase of Sogou shares comes with an option to increase the stake to 40 percent. Sohu remains the controlling shareholder.

Sogou accounted for 4.8 percent of search-engine queries in China in the quarter ended June, according to data compiled by Bloomberg. Baidu Inc. (BIDU) was the market leader with 81 percent, followed by Qihoo 360 Technology Co. (QIHU) with 10.1 percent.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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