Sohu.com Q3 Loss Narrows; Changyou's Profit Plunges, CEO Resigns - Update

(RTTNews) - Sohu.com Inc. (SOHU), a China-based web-portal and online game developer, Monday reported a narrower loss for the third quarter, helped by 17 percent growth in revenues.

Sohu's online game developer subsidiary Changyou.com Ltd. (CYOU) said its third-quarter profit plunged from last year, on higher expenses on employees and costs related to launch of new games. The company also said its Chief Executive Officer Tao Wang resigned due to personal reasons, but will continue to be a director.

Changyou's board of directors has appointed Carol Yu, president and CFO of Sohu.com, and Dewen Chen, Changyou's president, to be Co-CEOs. Yu will maintain her position as president and CFO of Sohu in addition to her new role with Changyou.

Third-quarter net loss attributable to Sohu narrowed to $27.14 million or $0.74 per share from $64.19 million or $1.69 per share in the prior year.

On a non-GAAP basis, net loss totaled $0.61 per share for the recent quarter, while the firm posted a profit of $0.51 a year earlier.

On average, eleven analysts polled by Thomson-Reuters estimated loss to be $1.14. Analysts' estimates typically exclude one-time items.

Sohu's total revenues climbed 17 percent to $430.42 million from $368.32 million last year, but came in below analysts' estimate of $437.42 million.

Total online advertising revenues, which include revenues from brand advertising and search and others businesses climbed 40 percent to $247 million.

Brand advertising revenues were $149 million, up 19 percent from last year. Sogou, which operates the search and others business, generated revenues of $106 million, an increase of 86 percent year-over-year. Meanwhile, Online game revenues declined 7 percent to $150 million.

Charles Zhang, chairman and CEO of Sohu.com said, "We had a solid quarter, and our financial performance was largely in line with our expectations. Some of our key business lines continued to show strong momentum."

Changyou's net income plunged to $3.32 million or $0.06 per ADS, from $72.83 million or $1.36 per ADS in the previous year. Excluding share-based compensation expense, the company reported a profit of $3.84 million or $0.07 per ADS.

On average, seven analysts polled by Thomson-Reuters estimated a loss of $0.06 per share. Analysts' estimates typically exclude one-time items.

Total revenues of Changyou decreased slightly to $180.82 million from last year's $183.07 million, hurt by a decline of about $3.5 million in its core online gaming revenues. Analysts projected revenues to be $188.51 million. Total operating costs advanced to $133.05 million from $71.43 million last year.

Changyou's average monthly active users totaled 275 million in the third quarter, up 178 percent from a year ago.

Looking ahead, for the fourth quarter, Sohu expects revenues of $442 million to $462 million. Analysts are looking for revenues of $461.05 million for the quarter.

Changyou anticipates fourth-quarter revenues to be between $188 million and $198 million. Analysts see fourth-quarter revenues of $199.2 million.

Sohu closed Friday's regular trading at $48.59, up 6.09 percent. Changyou settled at $24.04, up 1.86 percent.