Actionable news
0
All posts from Actionable news
Actionable news in SOHU: Sohu.com Inc.,

The China Search Engine That Can’t?

Other Chinese internet plays fared better: Alibaba Group Holding (BABA) rose 3% and the Guggenheim China Technology exchange-traded fund (CQQQ) rose 0.5%. But quarterly results were mixed for Sohu, the Beijing-based developer of online media, games and mobile applications under the shingles Sohu, Sogou and Changyou.

Sohu reported higher-than-expected third-quarter revenue on accelerated Internet search growth; its Sogou search engine is considered China's third-largest. But the company did not provide fourth-quarter guidance ahead of Sogou's U.S. initial public offering. Sogou, backed by Tencent Holdings (TCEHY), hopes to raise as much as $585 million in a U.S. IPO; it said in a U.S. filing that it would offer 45 million American depositary shares priced between $11 and $13.

Sogou is the default search engine in Tencent’s mobile browser. Tencent owns a 44% stake in Sogou, while Sohu holds 38%, Bloomberg reports. Benchmark analysts Fawne Jiang and Long Lin think the parent company's business will remain soft and that mobile game growth is likely to be muted in the near term. They maintain a Hold rating and write:

"... We remain cautious on SOHU's outlook in driving sustained top-line growth, given that its major business lines continue to face significant challenges amid intensifying competition and changing industry trends, including industry consolidation and secular budget shifts to mobile/social and new media. Additionally, Changyou.com (CYOU), Sohu's cash-cow online game business, is currently under evaluation for a privatization proposal. As a result, we remain on the sidelines until we get better visibility on revenue reacceleration and improved earnings potential."

October was a busy month for Chinese listings in the United States, including micro-lender Qudian (QD), whose shares initially opened with a bang this month, but slumped 4.6% Monday.

See our free posts:

Subscribers can also read our Q&A with Kevin T. Carter, the San Francisco-based founder of the Emerging Markets Internet & Ecommerce exchange-traded fund (EMQQ). See "How to Play Asia’s Internet Stock Boom."


More