Sohu Coming of Age

When I first came to the US in 1997, there is no Chinese web portals. We read Chinese news primarily through BBS. The Chinese language support for the browser was not widely available either. I remember a friend told me something about installing the “Chinese version of DOS” on the PC so that he can read the Chinese. Then comes the RichWin (the Sina), the Sohu and Netease. And the Internet Explorer incorporated the Chinese language support so we don’t need to install NJStar for the PC.

It’s interesting to think about this after I listened to the Sohu Q4 2006 conference call yesterday. They did not deliever the number (revenue and earning) as good as Wall Street expected. The main problem, I think is this (portal, web advertising) is tough place to grow. Without the success of a search engine (sogou), Sohu is just another Internet advertising company. I know from my own experience I read Chinese news from “Baidu news” these days. Baidu has much clean interface and does not has all the nonsense stuffs in the traditional web portals.  

I noticed Sohu used “the surplus cash” to buy the building they leased in Beijing. Maybe the management thinks that “investing in the real estate, plus the saving of rental expense” will have a better return than “investing in its core business”? Remember Sohu was not shy spending cash on “acquisitions” in the past. It bought some good Chinese web sites such as ChinaRen, go2map and focus (real estate) in recent years. It spent lot of money on “sogou”, its next generation search engine to compete against Baidu. So far most of those investments did not turn out to be good. It did win some good publicity such as “the Beijing 2008 Olympics IT/web content sponsor”, and its World Cup socceer coverage last year was good. But those are its traditional strong hold.

I’d be interesting to hear from Sina, the No.1 web 1.0 company on Wednesday evening. 

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