NEW YORK, NY--(Marketwire -08/08/12)- Chinese internet stocks surged Monday after Sohu.com and its subsidiary, Changyou.com, released earnings that beat analysts' expectations. The results came as a surprise as China's economic slowdown had begun to raise growth concerns for the industry. TickerSpy's China Internet Stocks Index (CHDOT) gained 5.3 percent Monday. Five Star Equities examines the outlook on Chinese internet stocks and provides equity research on Sohu.com Inc. (SOHU) and Changyou.com Ltd. (CYOU).
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Despite China's broader economy facing one of the worst slowdowns in years, China's online advertising revenues have been surprisingly strong. According to Analysys, a research firm, total revenue increase 54 percent in the second quarter when compared with the year ago quarter. Internet companies have benefited from new regulations, which were put in place at the beginning of the year, which banned companies from placing advertisements during prime-time TV dramas. Nielsen, a TV and Internet advertising research firm, stated that the new regulations have resulted in increased advertising on online video sites.
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Sohu.com is China's premier online brand and indispensable to the daily life of millions of Chinese, providing a network of web properties and community based/web 2.0 products which offer the vast Sohu user community a broad array of choices regarding information, entertainment and communication. Total revenues for the second quarter were US$256 million, up 29% year-over-year and 13% quarter-over-quarter.
Changyou.com reported second quarter revenues reached a record of $147.3 million, beating analysts' estimates of $142.7 million. "Our strong financial performance demonstrates the resilience of the online games business to business cycles and the current economic slowdown," Tao Wang, Changyou's CFO, said. "Looking ahead, the outlook for online games is strong, particularly as gamers globally increasingly demand quick access to games online and as new game formats, like Web games, gain popularity."
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