2/6/2012 5:29 AM ET
(RTTNews) - Chinese online media company Sohu.com Inc. (SOHU: News ) reported Monday a plunge in fourth-quarter net income hurt by one-time charges, despite a growth in its online gaming unit Changyou.com Ltd. (CYOU: News ). Sohu's adjusted earnings increased driven by strong growth in online advertising and game revenues. Both Sohu and Changyou also issued earnings and revenue forecast for their respective first quarters.
Sohu's fourth-quarter net income attributable to the company slid to $26.86 million from last year's $43.98 million. Earnings per share declined to $0.65 from $1.07 a year ago. The latest quarterly results included non-cash charges of $27.5 million related to goodwill impairment and impairment of acquired intangibles via acquisition of businesses.
Adjusted attributable net income went up 10 percent to $52.86 million or $1.36 share from $47.89 million or $1.23 per share last year.
On average, 11 analysts polled by Thomson Reuters expected earnings per share of $1.24 for the quarter. Analysts' estimates typically exclude one-time items.
Changyou.com's fourth-quarter attributable net income grew 20 percent to $64.33 million versus $53.44 million last year. The company said prior-year results were restated. Net income per ADS was $1.21, up from $1 last year. Adjusted earnings per ADS were $1.33, higher than $1.04 in the prior-year, while analysts projected earnings of $1.09 per share.
Quarterly revenues of the parent climbed 42 percent to $246.15 million from $173.16 million a year ago, while analysts estimated revenues of $243.75 million. Changyou.com's revenues reached $137.65 million, up 39 percent from last year, while analysts projected $124.16 million.
For the quarter, Sohu's online advertising revenues climbed 51 percent driven by 29 percent increase in brand advertising revenues and 248 percent increase in Sogou revenues. Online game revenues rose 34 percent.
Gross margin was 71 percent, lower than last year's 74 percent, while operating margin plunged to 20 percent from 38 percent a year ago.
Sohu.com Chairman and CEO Charles Zhang said, "We are pleased to report a strong fourth quarter that helped us finish a solid year for 2011. For online advertising, our conscientious efforts in growing online video and search businesses are bringing strong growth in revenues, users and traffic. These businesses, along with our portal business, are contributing to give the Sohu Group a powerful integrated online marketing platform. In 2012, we aim to make this platform even more dominant in China's internet market."
Looking ahead for the first quarter of 2012, Sohu expects adjusted attributable net income between $19.5 million and $21.5 million, and earnings per share of $0.50 - $0.55 on total revenues of $219 million - $225 million. Analysts project first-quarter earnings of $1.13 per share on $238.15 million revenues.
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