June 20, 2008 / 7:31 AM / 11 years ago

UPDATE 1-China's Sohu expects ad revenue to slow in fiscal 2009

(Add details, comments from executive)

By Vinicy Chan

HONG KONG, June 20 (Reuters) - Chinese media firm Sohu.com (SOHU.O) expects core advertising revenue to grow up to 45 percent this year as corporations vie for consumers during the Beijing Olympics, but it warned on Friday growth may taper off to about 20 to 30 percent in 2009.

Co-President Belinda Wang expects online advertising revenue at Sohu, whose name means “search fox” in Chinese, to account for as much as half of the firm’s turnover this fiscal year, with much of the rest coming from an online games operation.

Sohu is vying with the likes of Shanda SNDA.O and Sina.com (SINA.O) in a $1.3 billion Chinese Internet market that consultancy Nielsen estimates is still just a 10th of the United States’ but expected to grow as much as 50 percent this year.

“The Olympic Games is the major driver for growth in online advertising,” Wang said.

“Given Sohu is the biggest Internet firm on the mainland, our advantage of strong content will enable the company to achieve a 40 percent or more year-on-year growth in advertising revenue.”

The firm, which also vies with Baidu.com (BIDU.O), accounts for advertising revenue in two parts: so-called brand advertising, which is more than 90 percent of total online ad sales, and ad revenue from its search engine business.

Wang said a three-day suspension of its online games service, in memory of victims of the May 12 earthquake in Sichuan that was the country’s deadliest disaster in decades, would not affect second-quarter revenue much.

It maintained guidance on online gaming revenue of up to $45 million and for advertising at up to $41 million.

Guidance for total revenue in the second quarter, including other revenue sources, was maintained at up to $96 million, she said. (Reporting by Vinicy Chan; editing by Anne Marie Roantree)

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