China's second-biggest Web portal Sohu.com Inc. said its fourth-quarter earnings fell 32 percent, weighed down by higher costs, causing shares to drop in U.S. after-hours trading. Quarterly earnings dropped to $6.1 million, or 16 cents per share, from $8.9 million, or 23 cents per share a year earlier. Analysts polled by Thomson Financial forecast a profit of 17 cents per share.

Revenue rose 16 percent to $34.4 million from the same period of 2005, but missed Wall Street's expectation for $35.5 million. Sohu, which trails Sina.com among Chinese Internet content providers as measured by revenue, said the bulk of its sales came from online advertising. Ad revenue grew 23 percent year-over-year.

But results were hurt in part by a sharp rise in advertising costs. Brand advertising costs rose 66 percent to $7.1 million, while search-ad costs increased by 56 percent to $1.7 million over the previous year.

Costs for wireless services also were higher than expected due to more stringent Chinese regulations on registration and billing, said Carol Yu, the company's co-president and chief financial officer. CEO Charles Zhang said Sohu is looking for revenue growth from an online video service that debuted in 2006 and has carried NBA basketball games. "Sohu is much more innovative than our competitors," he said. "We are leading in video content, which our competitors don't have.

The company also introduced a new version of its Sogou search engine in an effort to compete with Chinese search leader Baidu.com. Sohu shares tumbled $2.04, or 7.6 percent, to $24.90 in after-hours trading on the Nasdaq stock market. For the full fiscal year, Sohu.com said profit fell 13 percent to $25.9 million, while revenue rose 28 percent to $134.2 million.

Advertising revenue rose 35 percent year-over-year to $91.8 million, helped by heightened activity related to the soccer World Cup over the summer, Sohu.com said.

Source:未知