PEKING (dpa-AFX) - Chinese online media company Sohu.com Inc. (SOHU) reported Monday a sharp decline in first-quarter profit hurt by margin pressure, despite a growth in revenues. Results beat analysts' estimates.
Sohu's online gaming unit Changyou.com Ltd. (CYOU), however, reported higher results for its first quarter. Both companies also provided forecast for their respective second quarter.
Sohu's first-quarter net income attributable to the company declined to $23.11 million or $0.53 per share from $44.81 million or $1.01 per share last year. Adjusted net income, which excluded certain items, fell 46 percent to $23.67 million or $0.61 per share from $44.01 million or $1.13 per share in the previous year.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share. Analysts' estimates typically exclude special items.
Changyou's attributable net income grew 12 percent to $65.25 million or $1.22 per ADS. Adjusted earnings per ADS were $1.24, higher than last year's $1.13. Analysts expected earnings of $1.09 per share.
Sohu's total revenues rose 30 percent to $226.6 million, beating analysts' consensus of $225.81 million.
Sohu Chairman and CEO Charles Zhang said the results were mixed in the quarter. 'Our brand advertising business got off to a slow start mainly due to the early Chinese New Year holiday and the softening macroeconomic conditions in China. Good news is search revenues and our overall Sogou business continued to deliver solid growth,' he added.
Sohu noted that its brand advertising revenues grew 7 percent, despite a challenging environment. The economic slowdown in China clearly had an impact on advertiser sentiment, the company said.
Changyou's revenues in the quarter climbed 30 percent to $136.76 million, while analysts were looking for $132.14 million. Changyou's chief financial officer Alex Ho said the results exceeded financial expectations and that its top-line and bottom-line results reflected contributions from multiple areas, namely MMO games, Web-based games and the recently acquired 17173 Business.
Sohu's gross margin declined to 65 percent from 73 percent last year due to lower margins mainly at brand advertising.
Looking forward to the second quarter, Sohu expects adjusted attributable net income between $15.5 million and $17.5 million, and earnings per share between $0.40 and $0.45. Changyou anticipates second-quarter adjusted attributable net income between $58 million and $60 million and earnings per ADS between $1.08 and $1.12. Analysts expect Sohu's earnings of $0.81 per share and Changyou's earnings of $1.12 per ADS.
Also, total revenues for Sohu would be between $244 million and $250 million, compared to analysts' forecast of $250.78 million, and for Changyou between $139.5 million and $143.5 million, compared to analysts' estimate of $138.49 million.
In the U.S., Sohu shares gained 3.41 percent on Friday to close at $55.76, while Changyou lost 1.19 percent and closed at $24.15.
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