Fuxing Sohu: implementation and persistence are the key

Sohu achieved profit in this quarter. As for the reasons why the company can make profits, Zhang Chaoyang, chairman of Sohu company, said in an interview with the media: the profits brought by the return of Changyou and the decline of media video business losses are superimposed, so Q2 is profitable. In the financial report, Changyou’s privatization will be completed on April 17, 2020. After the transaction takes effect, Changyou’s net profit and loss completely belongs to sohu.com. < p > < p > before Q4 in 2019, Sohu had 16 consecutive quarters of financial losses. The profit of Q4 in 2019 is evaluated by Zhang Chaoyang as “a flash in the pan”. “At that time, Changyou and Sogou made great contributions, and the profit in the second quarter of this year was more significant, which was a turning point for Sohu.” According to the financial report, under the non-U.S. general accounting standards, the net profit of Sohu Q2 in 2020 is 12 million US dollars, compared with a loss of 41 million US dollars in the same period of last year, and 8 million US dollars in the last quarter. However, this data excludes the losses caused by Sogou, including Sogou, and sogu’s net profit in this quarter is 11 million US dollars. < p > < p > for a long time, Zhang Chaoyang has said in various public occasions that Sohu is about to make a profit. Transferring Sogou to Tencent has also become one of his processes to make Sohu profitable. According to relevant announcements, Zhang Chaoyang, as the actual holder of relevant shares, signed mutual covenant and agreement with Tencent on July 27. Under the agreement, Zhang will cause its affiliate to be sold to Tencent or its affiliate. Sogou said Mr. Zhang did not sign the agreement in his capacity as a senior manager and director. In general, the data of Sohu increased and decreased in this quarter. The highest revenue share of search related advertising revenue business performance was poor, with a year-on-year decrease of 13% and a growth of only 1% compared with the previous quarter. Zhang Chaoyang, chairman and CEO of Sohu, said: “in the second quarter of 2020, our brand advertising business performed well, and brand advertising revenue achieved considerable growth. In this quarter, we combine the brand advantage and influence of media portal with the advanced broadcasting technology of Sohu Video. These initiatives enable us to deliver and generate content more effectively. ” < / P > < p > “our costs have not increased, and in terms of revenue, Q2 may enter the open source state faster than the industry. As soon as the epidemic situation has eased, we have used video split screen live broadcast technology to hold the UAV competition conference, 5g technology summit, news marathon, etc., as well as the promotion of online drama, so that people can participate in the live broadcast mode. We did make some innovations in open source. ” Zhang said. < / P > < p > however, for the next quarter, the forecast is a loss. Sohu estimates that in the third quarter of 2020, brand advertising revenue will be between 37 million US dollars and 4, Between $2 million, a year-on-year decrease of 9% to 20%, and a month on month decrease of 3% to 11%; < / P > < p > the online game revenue was between 85 million and 95 million US dollars; the year-on-year decrease was 12% to 21%, and the month on month decrease was 10% to 20%; < / P > < p > excluding the profit and loss generated by Sogou, the net loss of non US GAAP attributable to Sohu company was between us $10 million and US $20 million. < / P > < p > “the main reason for the loss is that Changyou will incur expenses for promoting new games, so the cost of Q3 will be higher and Q4 will return to normal.” Zhang Chaoyang explained in a media interview. After that, Sohu will become one of the core profits of Sogou. “We hope to continue to make profits, make profits every quarter, and ensure that 2020 will be a profitable year. I also hope that the epidemic can quickly pass away and that the stock price can recover. ” Zhang Chaoyang, chairman of Sohu company, has made it clear that he is eager for profits. According to the financial report, Changyou’s operating profit in the second quarter of 2020 was $37 million, compared with $56 million in the previous quarter under non US GAAP. Compared with Sohu’s current single quarter profit of 12 million US dollars, Changyou is the key to realize the profit of Sohu. As to whether Changyou, which has completed its privatization, will be listed in the Asian market next, Zhang Chaoyang said, “there is such a plan, but it is not a matter of this year.” < p > < p > in the post epidemic era, Changyou’s performance is not good enough. According to the financial report, in the second quarter of 2020, Changyou’s average total active accounts in PC games were 1.9 million, down 5% year-on-year and 10% month on month. < p > < p > the financial report pointed out that the reason for the decline of Changyou’s operation data was: after the domestic government relaxed the restrictions on the new crown epidemic situation, it resumed work in this quarter, leading to a decline in player activity. As for the progress of Changyou’s new game, Zhang Chaoyang said that at present, it is indeed developing a new navigation game, and a Tetris leisure game will be launched. On the other hand, Sogou’s financial data is also declining. According to the financial report, Sogou’s total revenue in the second quarter was 261.2 million US dollars, down 14% year-on-year. Under non US GAAP, the net loss attributable to Sogou was $5.5 million. < / P > < p > in this quarter, the average daily users of Sogou input method mobile edition were 484 million, an increase of 6% year-on-year, ranking the third largest mobile phone application in China and the largest voice application in China, handling 1.4 billion voice requests every day. In the background of having enough users, Sogou’s profitability has more potential. In the financial report conference call at the beginning of this year, Sogou CEO Wang Xiaochuan said: in the second half of this year, Sogou will release an AI product, and it is expected that the proportion of hardware revenue in the total revenue will increase this year, and it is expected to achieve profit next year. < p > < p > in the second quarter of this year’s financial report, Wang Xiaochuan also described the company’s future development direction as: while continuously promoting technological progress, it will further enhance the AI authorization and synergy of the whole business. According to Sogou’s announcement, Sogou has recently received a non binding offer from Tencent, and Tencent intends to purchase the remaining shares of Sogou at a price of $9 per share. If the transaction is completed, Sogou will become a private holding and indirectly wholly-owned subsidiary of Tencent, and Sogou will be delisted from the New York Stock Exchange. The market value of Sogou is about 3.7 billion US dollars at the price of 9 US dollars. Sohu holds about 33.8% of Sogou’s shares. At a purchase price of $3.7 billion, Sohu will increase cash by $1.25 billion if it is sold to Tencent. The assets held by Sohu also include four office buildings with a total area of more than 130000 square meters. The market price of Sohu network building and Sohu media building, located in Wudaokou and Zhongguancun, has exceeded US $700 million by conservative estimation. < p > < p > netizens commented that Zhang Chaoyang’s Sohu can be copied or replaced completely, while the land in the core area of the central urban area of China’s capital can not be copied. As of June 30, 2020, the cash and cash equivalents and short-term investments held by Sohu, after deducting short-term bank loans, amounted to US $1.35 billion. As of August 12, Sohu’s share price was about $20.65, and its market value was about $811 million, which was far lower than the three items totaling $3.3 billion. The market value of Sohu is lower than that of cash and cash equivalents, so Sohu has become a “cigarette butt stock”, which reflects two problems: on the one hand, the market value of Sohu is underestimated; on the other hand, the prospect of Sohu is questioned by the capital market. At present, Sohu’s main business is divided into four parts, namely, the portal website dominated by advertising revenue, Sogou dominated by search advertising business, Changyou dominated by game business, and Sohu Video Based on video business. < / P > < p > compared with its competitors, the performance of Sohu’s four major sectors can be said to be mediocre. After Sogou went public, its share price went down all the way, and Changyou’s performance was also unsatisfactory before privatization. In 2020, Sohu has been listed for 20 years. As the most famous Internet company in China, Sohu has not been at the peak of China’s Internet for a long time. The revival of Sohu is the expectation of the outside world. With a total assets of 3.3 billion US dollars, it is not enough for Sohu to revive Sohu. In the past 20 years, Sohu has tried all kinds of Chinese Internet business, and what Sohu lacks is not the direction. < / P > < p > in many emerging Internet business areas, Sohu used to be one of the most powerful players, such as search, games, video, etc., but in the process of these business maturity, Sohu has gradually lagged behind. < / P > < p > this is not the problem of Sohu alone, but also the problem faced by all Innovators: when former innovators compete with new innovators, the winners are often barefoot new innovators. < p > < p > < p > Jobs said, “stay hungry, stay folish”. The biggest obstacle is that the former innovators are rich and smart. Science Discovery