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Sohu.com Posts Loss In Q3 On Charge

Sohu.com Posts Loss In Q3 On Charge
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Sohu.com Inc. (SOHU: Quote), a China-based web-portal and online game developer, Monday reported a net loss for the third quarter, hit by a charge related to a special dividend paid by its search subsidiary Sogou amid higher expenses.

Meanwhile, Changyou.com Ltd (CYOU: Quote), Sohu's online game developer subsidiary, reported a marginal slide in third-quarter profit, amid higher revenues as well as increased expenses.

Sohu.com said its net loss attributable to the company was $64.19 million or $1.69 per share, compared to net profit of $25.88 million or $0.63 per share last year.

The latest results included Sohu's proportionate share, as the controlling shareholder of Sogou, of a charge of $82 million relating to a special dividend paid by Sogou to non-controlling preferred shareholders on September 17.

Non-GAAP net income attributable to the company for the third quarter was $19.84 million or $0.51 per share, while it totaled $29.50 million or $0.77 per share last year.

On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share. Analysts' estimates typically exclude special items.

Total revenues for the quarter climbed 29 percent to $368.3 million from $285.38 million. Analysts expected revenues of $364.74 million for the quarter.

Total online advertising revenues, which include revenues from brand advertising and search and other businesses, surged 56 percent to $177 million.

Brand advertising revenues increased 60 percent to $125 million, recording the highest growth rate since the third quarter of 2008, mainly due to the revenue increase in online video and real estate businesses.

Online game revenues advanced 7 percent to $161 million, amid growth momentum of Wartune and revenues from the new MMO game Dou Po Cang Qiong.

Operating expenses jumped 53 percent to $191 million, primarily due to an increase in the number of employees and higher expenses associated with marketing and promotion activities, especially for the mobile products of Sohu's brand advertising and online games businesses.

For the fourth quarter, the company expects adjusted net loss attributable to the company to be between $0.30 loss per share and $0.35 loss per share. Total revenues for the quarter are expected to be between $378 million and $390 million.

Analysts expect the company to report earnings of $0.48 per share and revenues of $369.85 million for the fourth-quarter.

SOHU settled down 0.2 percent on Friday at $81.42 and added around 2 percent in the extended trade.

Meanwhile, Changyou.com Ltd. (CYOU), an online game developer and operator in China, posted third-quarter net income attributable to the company of $72.83 million or $1.36 per ADS, compared to $72.93 million, or $1.37 per ADS last year.

Changyou began operations as a business unit within Sohu.com in 2003, and became a separate, stand-alone company in December 2007.

On a non-GAAP basis, earnings per ADS attributable to Changyou.com totaled $1.37, while it amounted to $1.42 last year. Analysts expected earnings per share of $1.36 for the quarter.

Quarterly revenues climbed 10 percent to $183.07 million from $165.78 million. Analysts estimated revenues of $183.35 million for the quarter.

Online game revenues increased 7 percent to $161.5 million, in line with the company's guidance.

Total average monthly active accounts of the company's games dropped 21 percent to 31 million, mainly driven by a decrease in active accounts of TLBB and a decrease in active accounts of DDTank as the game has entered into a relatively mature phase.

The company had decided not to release new game features in TLBB's third quarter expansion pack that are typically popular with players, due to the imminent release of the major expansion pack 'New TLBB' in October.

Total operating expenses climbed 69 percent to $71.4 million, mainly due to the hiring of game engineers and an increase in salary and benefits expenses.

Looking ahead to the fourth quarter, Changyou expects adjusted earnings per ADS between $0.34 and $0.41 and total revenues ranging from $193 million to $199 million. Analysts project fourth-quarter earnings per share of $1.39 on $190.25 million in revenues.

CYOU closed down 4.6 percent on Friday at $35.71.

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by RTT Staff Writer

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