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Sohu Results Match Forecast, Job Cuts Unveiled
Chinese portal Sohu.com announced fourth quarter results Thursday that were largely in line with analyst forecasts and simultaneously unveiled new staff cuts to offset sluggish online advertising sales.
The Web portal operator, which has been struggling to improve its financial conditions relative to rivals NetEase.com Inc and Sina.com, reported a net loss of US$4.7 million in the fourth quarter.
That was a 34 percent increase over the previous quarter, but smaller than most analysts expected.
"It's good to see they met expectations," said Matt Adams, an analyst who tracks the company at Credit Suisse First Boston in Hong Kong.
"They've made another lap around the track successfully, but it's a long race," he added.
Revenues for the quarter were in line with forecasts at US$2.17 million, 36 percent up from the previous quarter and 297 percent higher year on year.
Increases in revenues and net losses were mainly attributable to Sohu's merger in October with Web portal ChinaRen.com.
While Sohu said the integration of ChinaRen was "now substantially complete", the new job cuts appeared to reflect a continuing need to rein in the costs of the merger.
Last December, the company announced it would slash jobs by 20 percent before March, from 641 positions to 515. The company said Thursday it would reduce jobs by a further 9 percent before the end of this year, to 470.
Sohu also raised its gross profit margin to 4.8 percent from 1.5 percent in the previous quarter -- an improvement, but still far below the rate of rivals Sina and NetEase.
The company reported cash on hand of US$62.5 million, down from US$70 million at the end of the third quarter. If the current burn rate continued indefinitely, the company would be nearly broke by 2003 -- the year it has targeted for making its first profit.
The company said in a statement it aimed to reduce its burn rate to pre-merger levels by the second quarter of this year.
Source: chinadaily.com.cn
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