Sohu.com Inc. Reports Operating Results (10-Q)

Sohu.com Inc. (SOHU, Financial) filed Quarterly Report for the period ended 2010-06-30.

Sohu.com Inc. has a market cap of $1.81 billion; its shares were traded at around $47.95 with a P/E ratio of 15 and P/S ratio of 3.5. Sohu.com Inc. had an annual average earning growth of 49.2% over the past 5 years.SOHU is in the portfolios of Sarah Ketterer of CAUSEWAY CAPITAL MANAGEMENT LLC, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Wireless service fees are charged on a monthly or per message/download basis. Due to technical issues with the operators network, we might be unable to collect certain wireless service fees from an operator in certain circumstances. This un-collectability is referred to as the failure rate, which can vary from operator to operator. Wireless revenues are recognized in the month in which the service is performed, provided that no significant obligations remain. To recognize wireless revenue, we rely on China mobile network operators to provide us billing confirmations for the actual amount of services they have billed to their mobile customers. At the end of each reporting period, when an operator has not yet provided us monthly billing confirmations for the period, we use information generated from our internal system as well as historical data to estimate the failure rate, to estimate the amount of collectable wireless service fees and to recognize revenue. When we later receive the actual billing confirmation, we then record a true-up accounting adjustment. Although we believe we have the ability to make reasonable estimates, differences between the actual facts and our estimates may result in significant fluctuations in the amount and timing of the revenue recognized. Since 2002 when wireless revenues began representing a significant portion of our total revenues, the quarterly historical differences in our estimated revenue which was recorded in the financial statements compared to the actual revenue have ranged from an underestimation of $1,419,000 (gross margin underestimate of $654,000) to an overestimation of $340,000 (gross margin overestimate of $171,000). For the three months ended June 30, 2010, 64% of our estimated wireless revenues were confirmed by the monthly billing confirmations received from the mobile network operators. Generally, (i) within 15 to 120 days after the end of each month, we receive billing confirmations from each of the operators confirming the amount of wireless service charges billed to that operators mobile phone users and (ii) within 30 to 180 days after delivering billing confirmations, each operator remits the wireless service fees, net of its service fees, for the month to us.

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