Thursday, April 27, 2006

SOHU Q106 Report reported yet another good quarter, beating its own guidance and street forecasts.

Advertising: I have been checking its web sites regularly, found a strong online ad momentum after Chinese New Year. Autos, computers, cell phones, other electronics, and real estate are the strongest categories. Also given that SOHU has a network of web sites, it is good to see that some of those sites started picking up ad revenue as well, such as As Chinese economy continues growing(though many have been afraid of a 'slowdown', it will still grow much faster than the western world), it is reasonable to believe more advertising money will migrate from offline to online. SOHU still has a lot of inventory to handle more volume. The Company guides for 25% YoY ad revenue growth for 2006, I think they are trying to be conservative, and I believe 30% YoY growth is quite possible.

Search: The Company said search traffic to is up 50% sequentially. Although I disliked this search engine in the past, I noticed they have improved a lot recently. Although I think Sogou is still behind Baidu and Google in terms of search quality, the gap has been narrowed. It is good for SOHU shareholders to see more usage of SOGOU search engine. However, going forward, the search engine war in China will be a tough one, my feeling is that finally one winner will take a majority market share, with other minor players fight for remaining shares. Google and Baidu are very formidable players.

Wireless: Wireless has been on the way of slow recovery, and I think it will continue this trend.

That said, I believe SOHU is still the best pick to get Chinese Internet advertising exposure. My 12-month expectation has been increased from 27$ to 29$. Also, I feel attempted to say my 27$ price target, which I called seven months ago when the stock was trading around 16$, may soon be hit.

I sold my SOHU shares last month, I am still looking for a good entry point to get back in.

Here is my updated revenue model, I did not get time to set up 2007 projections yet, I may do so after next quarterly report.

SOHUQ106 Posted by Picasa

Friday, April 07, 2006


I picked up some AAPL shares in the past several days, it has recovered strongly from previous low on the news of Windows enabled Intel processor based Macs.

Apple has a slight 2.5% market share in world pc shipments. I tend to believe this strategic shift of letting Macs to support Windows is a huge plus for the company. I used to think of buying a Mac, but was not so comfortable to do it on the worry that I may not be able to continue to use many tools that I have in Windows. Now that worry does not exist any more. I guess more pc shoppers will focus more on Apple's brand name, elegant design, super product quality, and convenient customer support. As the Piper Jaffray research report puts it:
Even "Slight Changes In Market Share Have Significant Impact On Apple's Model."

I am long AAPL.

Webzen(WZEN) on the move

An article "Rebound of Webzen" on tells some recent development on this distressed South Korea game developer.

I believed this is a value stock at current level, its future largely depends on the upcoming roll out of its game portfolio. The biggest risk is that the uncertainty of market acceptance of these upcoming titles.

I am long WZEN.