Sohu Disappoints Again, LDK Cuts Inspire 搜狐再次令人失望，江西赛维裁员鼓舞人心

By newsdoug on May 2, 2012

Sohu's Sogou running out of bark As China returns to work after a long May Day holiday, the latest earnings released from online portal Sohu (Nasdaq: SOHU) and struggling solar firm LDK (NYSE: LDK) are showing that numbers don’t always tell the complete story, or at least not by themselves. In Sohu’s case, many of the numbers look good on the surface, but closer examination points to a sharp advertising slowdown that is already showing signs of hitting the broader Internet sector. Meanwhile, a highly troubled LDK has encouraged investors simply by filing its long-delayed fourth quarter report just before the final deadline, and also by announcing mass layoffs. Let’s look at Sohu first, which reported that revenue rose 30 percent in the first quarter of this year, but that its profit fell by a similar amount. (company announcement) The profit decline obviously wasn’t very helpful, nor was guidance that showed advertising growth would continue to slow. What’s more, Sohu said revenue from its Sogou search engine, hyped in previous quarters as a major new growth area, would roughly double in the current quarter — down sharply from the 184 percent growth in the first quarter and the nearly 250 percent jump in last year’s third quarter. The broader message was clearly not very positive, prompting a sell-off that has seen Sohu shares sink 10 percent since the results were announced. That followed a trend set by online search leader Baidu (Nasdaq: BIDU), whose shares have sagged 5 percent since it delivered a similar message with its latest earnings last week. (previous post) Look for other ad-dependent firms like leading portal Sina (Nasdaq: SINA) and social networking leader Renren (NYSE: RENN) to follow with similar messages in the weeks ahead. Meantime, LDK’s battered shares received a minor but surprising lift from the company’s latest results, in which it reported a massive $600 million loss in last year’s fourth quarter, as net revenue plunged by about half and looked set to tumble further in the current quarter as the global solar industry struggles in its worst-ever downturn. (company announcement) Some might say there was little to be excited about, but clearly some investors saw some light in the report, bidding up LDK’s shares by 7 percent the day after the numbers came out. Investors were apparently encouraged by comments that LDK has cut more than 5,000 jobs this year, and some were also undoubtedly happy that the company managed to file its fourth-quarter report before an April 30 deadline, after which it would have faced possible delisting. The storm is hardly over for LDK, though early signs of improvement for the entire solar sector could eventually help the company to pare its losses if it can managed to stay in business.

Bottom line: Sohu’s latest results point to a sharp advertising slowdown in the months ahead, while LDK will survive for another quarter after managing to report its results just before a deadline.

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