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China's Sohu.com to Axe More Than 100 Jobs-Source
Struggling Chinese Web portal Sohu.com Inc will slash more than 100 jobs, or roughly a sixth of its work force, a company source said on Monday.
The lay-offs would be mainly in redundant administrative and content production positions following Sohu's acquisition of Chinaren.com in October, said the source, who declined to be identified.
Jay Chang, head of Internet research for Asia at Credit Suisse First Boston in Hong Kong, welcomed the move which he said was long overdue.
But he doubted it would have much near-term impact on Sohu's battered share price.
"I think it's positive they're realizing that they have to rationalize their cost structure," he said.
"They still need to prove that the top line is still growing and that margins are increasing," he said.
Sohu spokeswoman Caroline Straathof confirmed lay-offs would be announced later on Monday, but declined to give a figure.
"We would be unnecessarily heavy if we keep them on board," said Straathof, who added that the move would ease "general and administrative spending".
Independent surveys rank Sohu's flagship Web site, www.sohu.com.cn, as one of the three most popular in China.
But the firm has struggled in a fierce battle for scarce advertising revenue, and its Nasdaq share price has plummeted to $2 13/16 after listing in July at $13.
The company in October failed to meet quarterly earnings forecasts by industry analysts.
Its share performance has been the worst among the three big Chinese Internet portals listing on Nasdaq, including Netease.com and Sina.com.
The Chinaren acquisition was aimed at driving traffic to Sohu's family of Web sites.
Chang said only a dramatic announcement, such as a takeover of Sohu by a major international Internet company, would revive the firm's share price in the short term.
"It's going to take a couple of quarters to gain investor confidence back for these guys," he said.
He added that the company, whose owners include Dow Jones & Co Inc, Intel Corp and Boston-based media group IDG, had enough cash to operate comfortably until at least the end of next year.
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