Wednesday, July 21, 2010

Charles Zhang: Sohu is looking for the next opponent

April 28, Sohu announced first quarter 2008 earnings. Sohu in the first quarter total revenue of 84.8 million U.S. dollars, net profit reached 21.6 million U.S. dollars. Filing shows Sohu in the total income and the various types of income, including brand advertising, online games, net income and other indicators have a record.

While other portals Sina have not yet announced 2008 first quarter earnings, but Sohu CEO Charles Zhang seems, Sohu has become the first Chinese Internet portal. Beyond Sina, he had set out to find the next opponent.

Online games and portals can coexist

Reporter: For the portal, the first quarter, online advertising is usually the low season, but the first quarter of this year, Sohu's online advertising revenue has achieved rapid growth rate, what are the reasons?

Charles Zhang: In the first quarter, Sohu's online advertising revenue grew 41%, breaking the law off-season. Sohu to earn such a success, on the one hand, thanks to a growing number of traditional advertisers began to target advertising to the Internet, on the other hand, Sohu, as sponsor of the Olympic Games, the advantages in terms of content to attract more advertising Lord ads on Sohu's platform.

Reporter: Sohu in three consecutive quarters of revenue has been the rapid growth, Sohu team is how to do this?

Charles Zhang: Sohu has committed to itself as a strong media platform, in particular, the Beijing 2008 Olympic Games, Sohu content sponsors, our production levels in the content quite a lot of effort, so in Sohu's home page, news and various channels of traffic growth, especially fast, which directly stimulate the Sohu brand advertising revenue growth. Other slightly narrower business, such as the wireless business, also achieved growth. Most made me feel glad that Sohu's success in the online games business, "Tian Long Ba Bu" This game has greatly increased the success of Sohu's revenues.

Reporter: The industry has a view that "there must be no online game portal," you think these words apply to the Sohu the right one?

Charles Zhang: There seems to very few Internet companies rule the roost in both areas simultaneously. In the first quarter, Sohu's advertising revenue to 33.2 million U.S. dollars, while the online game revenue more than the advertising revenue to reach 41 million U.S. dollars. So many people would think, Sohu input energy to operate the game will definitely affect the construction of the portal. I do not agree with this view, can make the two operations in harmony with a company, depending on the company's management leadership and execution, and the characteristics of the business itself. I have full confidence in Sohu's management, while building and game portal Sohu not conflict.

Reporter: Sohu worried that the game business, revenue decline during the Olympics?

Charles Zhang: We have planned to install the game page score of the Olympic Games broadcast system, this way, players can play the game in the Olympic events while understanding the situation, to ensure that players will not leave the game page, this is the other online games that are not have a strong advantage. In addition, during the Spring Festival, "Tian Long Ba Bu" down while online, but no decline in subscribers, our hard-core gamers, no matter at all times continue to play our game. Therefore, Sohu Olympic Games will not cause significant negative impact on revenue.

Sohu in the search for the next opponent

Reporter: Sohu released earnings, far more than the well-known investment bank Goldman Sachs had forecast, Citibank Sohu Sohu earnings release before the stock from "hold" up to "buy", target price is also from the 56 U.S. dollars raised to 80 U.S. dollars. Earlier, the U.S. investment firm SIG analyst C. Ming Zhao reiterated Sohu shares "bullish" rating and price target raised to 68 U.S. dollars 61 U.S. dollars. Sohu does not understand the past on Wall Street, it has begun to value Sohu?

Charles Zhang: I have always thought that Wall Street do not know Sohu, Sohu, but they slowly realized the value.

Reporter: Not long ago, you said that Sohu's income before the start of the Olympic Games will be more than Sina. Now Sina has not released financial report, we do not seem to have a good judge than Sina Sohu in the end?

Charles Zhang: Sohu Sina is not beyond doubt. As far as I know, Sina income can not exceed a quarter of us have more than the market value of Sina. Beyond Sina is a very proud thing.

Reporter: decide a number one portal What are the key indicators?

Charles Zhang: first look at the site of total revenue and profitability, while the profitability of the site depends on income is not sustainable, in these areas, Sohu have an absolute advantage.

Reporter: If as you say, Sohu has surpassed Sina, Sohu beyond Sina then, the next step to do?

Charles Zhang: Now the old outdated concept of the three major portals, so we need to look for competitors.

Sohu brand born from decades since, due to the needs of users on the Internet has grown from a simple access to information to instant messaging, search, personal space, entertainment, developing in many ways, only to meet the needs of users more Internet companies to farther and farther in the competition. Tencent and Baidu's success is a good example.

At the same time, a single model of Internet companies, has been difficult in the increasingly fierce competition advantage, or even to survive, China has entered the Internet gateway to a wide range of new era. Today, Sohu carry content, space, games, search engines and other leading-edge Internet products, has been pulling away from the many years of competition. However, competition could be developed, Sohu must find new competitors.

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