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Shares of Sohu.com (NASDAQ:SOHU) surged almost 6% in extended trading Tuesday, adding to a 3% gain during regular hours, after China's number-three internet portal raised its Q4 earnings forecast on strong gains in its non-advertising business. Sohu now expects adjusted EPS of $0.36 to $0.38 a share, up $0.03 from previous estimates. The firm also raised revenue guidance to $55.5 million to $57.5 million on stronger-than-expected non-advertising revenue. Previous revenue guidance was between $53.5 million and $55.5 million. Analysts polled by Thomson had been expecting EPS of $0.29 on revenue of $55 million.

"We are excited about the way the fourth quarter is shaping up, with on-track advertising business and a stronger than expected performance," CEO Dr. Charles Zhang said. "We believe that this is a direct result of our continued focus on the development of our core technological strengths and advancements. Fueled by the increased contribution from our online games business, we are able to further reinvest strategically into our technology and our portal business so as to continue to create and enhance shareholder value." The government-sponsored Internet Society of China forecasts that sales in China's online game market could rise to 9 billion yuan ($1.2 billion) in 2008 from 7.2 billion yuan this year. Sohu's main competitors are Baidu.com (NASDAQ:BIDU) and Sina Corp. (NASDAQ:SINA).

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Source: Sohu Jumps on Improved Outlook