SOHU meets estimates on weak wireless revenue, lowers guidance

| About: Inc. (SOHU)
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value-added services company, met Q4 consensus EPS estimates of $.17. Here are the

  • Revenues for Q4 totaled $24.1 million, compared to revenues of $24.6 million for Q4 2003
  • Gross margins were 68% in Q4 2004 compared to 72% in Q4 2003
  • Net income for Q4 was $6.5 million or $0.17 per fully diluted share
    compared to net income of $11.6 million or $0.28 per fully diluted
    share for Q4 2003

Other highlights:

  • Advertising revenue for Q4 totaled $15.9 million, a 68% year-on-year improvement and 3% quarter-on-quarter
  • Advertising revenue, consisting of $13.2 million in brand
    advertising and $2.7 million in sponsored search, accounted for 66% of
    total revenues in Q4 2004
  • Advertising gross margins were 80%, compared to 77% in the same period last year
  • Non-advertising revenue, which is derived from wireless value-added
    services, online games and e-commerce, decreased by 46% year-on-year
    and 22% quarter-on-quarter to $8.2 million, representing 34% of total
    revenues. The decline was predominantly caused by loss in wireless
    revenue, which was down 64% year-on-year and 43% quarter-on-quarter
  • Non-advertising gross margins were 45% compared to 69% in Q4 2003
    largely because of the decline in relatively high-margin wireless
    product sales

Q1 2005 Guidance:

  • SOHU estimates total revenues for Q1 2005 to be between $22.5
    million to $23.5 million, with advertising revenue of $14.5 million to
    $15.0 million and non-advertising revenues of $8.0 million to $8.5
  • Earnings per diluted share are expected to be between $0.14 to $0.16 vs analyst estimates of $.18

Source: The China Stock Blog (full permission to reproduce granted).