Sohu (Nasdaq:sohu) third-quarter results in line with Goldman Sachs expectations

Third quarter results:

Sohu 2013 fiscal year third quarter revenue of 3.68 billion U.S. dollars, the chain growth of 9%, year-on-year growth of 29%, and our expectations, and Bloomberg surveyed analyst average expected height of 1%. Based on non-US general accounting standards, the US depository shares ' diluted earnings of $0.51 trillion, down 33% per cent year-on-year, are consistent with our expectations, with an average of 0.04 dollars lower than analysts surveyed by Bloomberg. In the quarter, Sohu expects revenue to reach $378 million to $390 million, the median is 3% higher than our forecast, and 2% higher than the average analyst surveyed by Bloomberg.

Analysis：

1) Sohu estimates that, based on non-US general accounting standards, the fourth quarter of the U.S. depository shares in the United States will be diluted earnings to 0.30 U.S. dollars to 0.35 U.S. dollars, the expected to a large extent reflects the company's gaming subsidiary of Sohu will spend money to promote new games and mobile applications.

2 The third-quarter revenue and the diluted earnings per share are consistent with expectations. Game revenue rose 7% Year-on-year, mainly thanks to the "Divine Comedy" and other games strong performance. Management also said, "Tianlong eight" new information film released, user feedback is good. In addition, the tour will launch a series of new games for PCs, web and mobile platforms.

3 brand advertising revenue increased 60% year-on-year. Sohu video revenue growth twice times year-on-year, the promotion of brand advertising revenue rose to the highest record in 2008 years, mainly thanks to the "good voice of China," the success of the second quarter. Vertical businesses such as automobiles, real estate and 17173.com are also doing well.

4 Sogou revenue grew 53% year-on-year. As for strategic cooperation with Tencent, management is expected to complete the transaction by the end of the year by integrating the search traffic, services and operations with the Sogou in the next two months.

5 Operating profit margin of 15%, which is 1% higher than our expectation, is based on non-US general accounting standards. The net profit margin is 5.4%, consistent with our expectations.

Valuation: Sohu will hold its earnings call tonight, after which we will give Sohu's stock rating and target share price.