Sohu on Being Official Internet Content Sponsor for the Beijing 2008 Olympic Games (SOHU 3Q05 Conf Call Quotes)

Last week Sohu (ticker: SOHU) was "chosen" as official Internet content sponsor for the Beijing 2008 Olympic Games. During last night's Q3 2005 earnings results conference call an analyst asked about the costs of gaining the Olympic sponsorship as well as any direct revenue opportunities arising from having it. CEO Charles Zhang and CFO Carol Yu had this to say:

The Olympic Web site, which is at Beijing 2008.com....and right now there is not clear opportunity for SOHU to advertise on that site so we'll build that site but SOHU has the responsibility to market that site....

And also if you look at a SOHU web site today, it's already with a SOHU logo and a combined logo of the Olympics, regional Olympics and that brings trust and basically endorsement from the BOCOG. That will give our current advertisers and those Olympic sponsors and partners confidence in SOHU platform and believer that this SOHU.com and its affiliated work site are trusted platforms so this will not immediate, but on long term for the few years will have impact on our advertising clients.

....the Olympics site, the Bokoff (editor: BOCOG - Beijing Organizing Committee Olympic Games) site, site belongs to Bokoff. We helped him and we'll provide exclusive service to help them construct and maintain and host that site. The site belongs to Bokoff so is the advertising space on that site so SOHU does not host the advertising space on that site but as Charles has mentioned, we provide links to that site.

....regarding how much we paid for this, it is confidential.

(Quotes are from the CCBN StreetEvents transcript.)

Comment: On the call, management also discussed its strong advertising revenue growth. Its sequential brand advertising growth was largely driven by increased spending in the real estate, information technology and automobiles sectors.

However, the company saw modest sequential growth from its search business due largely to an increasingly competitive search environment. Any wonder the always bullish Charles Zhang is so excited about the Olympic sponsorship that has no clear rewards and may have cost him a bundle to secure? Sounds like his search business did not have the quarter he had hoped for!

Related:

• All China Stock Blog articles on SOHU.
• The complete list of China stocks (and links to articles about them) covered by The China Stock Blog.

SOHU chart.

Comments

[David Oliver_:]

It also gives Charles Zhang the chance to mix with famous athletes and stars, which is something he likes doing.

BTW, Bokoff is actually BOCOG (Beijing Organizing Committe Olympic Games). It will have cost them a lot to secure the deal but they should be able to find a way to make money out of it as Chinese advertisers are going crazy on Olympic-related advertising in the runup to 2008.

2005 Nov 09 12:54 PM

[timezero:]

The interesting thing about this firm is its founder, chairman and CEO Charles Zhang. He has an ego that is bigger than the firm and everyone else in the firm. He feels so good about being a celebrity. And, he does not like men, at least, those men acting like a man. So, he is pretty much surrounded by girls and subdued men. I personally talked to many Sohu employees. No one likes him. They said he is too obsessed with his fame. Please pay attention: that is his fame, not his firm's. If he does care about the latter, it is because the firm is a vehicle for him to be more famous. So, basically, the ones left at the firm are those who only say yes to him and flatter him.

Let us hope this King of Chinese Internet (at least he thinks so) will do someting good for the other investors. Would somone tell him stop exercising his low-exercisng-price options as a way to encourage other investors to buy? Did any one find after all these stock-buyback crap, sohu's shares out. has been steady? Why? Check out the insider tradings. So, the whole buy-back thing is to use other shareholder's money to push up the stock price in the open market while he buys at price below 5. Forget his open-market buying. Those are trivial compared to his option exercising.

Overall, this MIT Ph.D. graduate has got rewarded both psychologically and financially in a very sleek way. Does him remeber Sohu's IPO price in 1999 is 13?

I am not saying he is sort of evil like his counterpart at DHB, David Brooks. I am just saying without monitoring and power restriction, even a angel could turn into a demon. Charlce is well on his way to destroy value. Get a close look at Sohu's content offering's performance category-by-category, you will know what I am saying. And, think why Sohu owns five Top-50 sites in China but still got much less ads. revenue than Sina.

2005 Nov 10 10:47 AM