UPDATE 3-Sohu, Changyou shares down on weak Q4 rev view

* Q3 EPS $0.88/ADS vs est $0.89

* Sees Q4 rev $134.5-$138.5 mln vs est $140.77

* Sohu shares down 16 pct, Changyou down 7 pct (Adds details, analysts' comments, updates share movement)

BANGALORE, Oct 26 (Reuters) - Chinese Internet portal Sohu.com Inc (SOHU.O) and its recently listed gaming unit Changyou.com (CYOU.O) warned that current-quarter revenue would come in below Wall Street estimates, sending their shares down.

Changyou (CYOU.O) saw strong user additions in the third quarter but analysts were concerned that it would take three to six months before these new users converted to paying users.

Registered users for Changyou's games, which include popular multiplayer online games such as Tian Long Ba Bu and Blade Online, jumped 46 percent to 75.1 million.

"The company is not expecting much revenue from these new users in the fourth quarter and therefore the relatively weaker guidance," Think Equity analyst Atul Bagga said.

Typically, online role-playing games are free to play but users have to buy virtual enhancements to advance to higher levels. China has more than 300 million Internet users and boasts of one of the world's fastest online gaming markets. For the fourth quarter, Sohu expects revenue of $134.5 million to $138.5 million compared with analysts' estimate of $140.77 million. This includes revenue from Changyou.

Changyou is looking at revenue of $69 million to $71 million -- below analysts' estimates of $73.65 million.

The company, however, confirmed that it is still looking to launch its new game DMD in the third quarter of 2010.

This should allay some investors' concerns around development of this anticipated title, Bagga said.

The delay could mean cash flows from the game are pushed out to future, Susquehanna Financial analyst C Ming Zhao wrote in a note. "But historically, games such as NetEase's Tian Xia II and Blizzard's World of Warcraft have been delayed, and have finally worked out well. So we do not view game delay as a negative for long-term investors."

Shares of Sohu were trading down 16 percent at $60 Monday on Nasdaq. Changyou shares were down as much as 11 percent, before paring some losses to trade down 7 percent at $32.64 in afternoon trade.

IN-LINE THIRD QUARTER

For the third quarter, Sohu's net income attributable to shareholders fell to $37.35 million, or 88 cents per American Depository Share (ADS) from $40.26 million, or $1.02 per ADS, a year ago.

Revenue for the company rose 13 percent to $136.6 million.

Revenue from game operations rose 29 percent to $67 million heled by Changyou's flagship game Tian Long Ba Bu.

Average revenue per active paying account (ARPU) for its games increased 2 percent compared with the previous quarter to 190 yuan ($27.83).

Aggregate active paying accounts (APA) grew 1 percent quarter-over-quarter to 2.4 million.

"Growth in the third quarter was driven largely by improved monetization and roughly flattish APA," said Think Equity's Bagga said, noting that Changyou's ARPU is still amongst one of the lowest in the Chinese gaming space.

Analysts on average were looking for a profit of 89 cents per ADS, before special items, on revenue of $136.4 million, according to Thomson Reuters I/B/E/S.

For the related alerts double click [ID:nWNAB3887] [ID:nWNAB3888] (Reporting by Mansi Dutta in Bangalore; Editing by Pradeep Kurup and Saumyadeb Chakrabarty)