After years of losses, internet stalwart Sohu.com Ltd. (Nasdaq: SOHU) is finally remembering what it’s like to be profitable again without a money-losing dog on its back. More precisely, one of China’s oldest New York-listed internet companies has just reported its third consecutive quarterly profit since officially announcing its intent to dump its money-losing Sogou search engine, whose name means “search dog.” Without Sogou on its books, Sohu certainly looks much lighter and more attractive. This company has gone through quite a lot since its 2000 IPO, when it was one of a trio of China’s first internet companies to list in the U.S. along Sina and NetEase. Fast forward two decades when dozens of Chinese internet companies have followed in the footsteps of that pioneering group, including giants like Alibaba and JD.com. After years of being scorned by investors, the slimmed-down Sohu’s stock may actually look like a good buy right now. That’s not necessarily because of its growth prospects, as this company really hasn’t shown much potential in that regard for years. Instead, it’s because Sohu’s return to profitability could make it an attractive target for either a buyer or management-led group looking to take the company private. Investors seemed to like the latest chapter in Sohu’s turnaround story, bidding up the company’s stock up by 4.5% after it posted its latest results for the second quarter. The stock has roughly tripled since May last year, with most of the gains coming before it announced its plan to sell its Sogou search engine to internet giant Tencent in July. Still, it’s quite likely that rumors of the sale were around in the market as early as May, and speculation about the sale was almost certainly major factor in the stock’s rise. Following announcement of the sale, which has yet to close, Sohu has been reporting its earnings over the last few quarters excluding Sogou’s performance. That allowed the company to return to the profit column in last year’s fourth quarter. Before that, Sohu had reported annual losses for five consecutive years, with its last annual profit coming in 2015. Two analysts polled by Yahoo Finance expect the company to report a profit of $1.54 per share this year, which would translate to a price-to-earnings (PE) ratio of 13. By comparison, NetEase trades at a PE of 31 based on last year’s profit, while online portal operator Phoenix New Media trades at a paltry 1.8. Game Operator One of the best peer comparisons for Sohu might be Hong Kong-listed game developer CMGE, which is worth about $1.4 billion and has a PE of 28. That’s because following its pending disposal of Sogou, Sohu will essentially rely on games for the big majority of its revenue. Here it’s helpful to quickly trace Sohu’s history to its current form. The company started as a web portal, and accordingly earned most of its revenue from advertising. It later added search to its business mix, as well as games and video. Following its Sogou sale, it will get nearly all of its revenue from advertising on its video and portal sites, as well as from games. That leads us into the actual latest earnings report, which shows the company’s second-quarter revenue from continuing operations grew 28% year-on-year to $204 million. To put that in perspective, Sohu reported revenue of $421 million in last year’s second quarter, which included Sogou. So we can say the Sogou sale has roughly cut Sohu’s revenue in half. Within Sohu’s slimmed-down revenue pie, games accounted for about three quarters of the total at $151 million, up 43% year-on-year. Most of the rest came from advertising, which totaled $37 million, down 3% year-on-year. With Sogou off its books, Sohu was able to post a $22 million profit from continuing operations in the second quarter, reversing an $11 million loss a year earlier. The dumping of Sogou also helped Sohu to improve its margins considerably. Its second-quarter gross margin came in at 76%, up sharply from 67% a year earlier. The registration as a buyer is completely free! To reduce Sohu VIP Accounts prices set by sellers, we reduced our seller fees and offset this by having buyers pay the transaction cost for whatever payment gateway they choose at checkout. So, you can find our products are almost 30% cheaper than our rivals! You are guaranteed delivery, or your money back. https://www.z2u.com/sohu/accounts-5-16472 is also optimized for your convenience, and our 24/7 customer support team is always here to help.