Chinese media firm Sohu.com Inc posted second quarter results that beat market expectations, as brand advertising revenue soared on the back of the Beijing Olympic Games, and forecast a strong third quarter.

The company also announced plans for an initial public offering of its online games unit, Changyou.com Ltd.

Sohu's quarterly profit rose nearly seven-fold to $40.2 million, or $1.02 a share, from $5.7 million, or 15 cents a share, a year earlier. Excluding share-based compensation expenses, it earned $1.07 in the latest second quarter.

Revenue rose 162 percent to $102 million.

Analysts on average expected Sohu to post earnings of 70 cents a share, before special items but including stock-based compensation, on revenue of $97.2 million, according to Reuters Estimates.

"The growing momentum reflects the overall expansion of the China Internet market, increased shift in advertising budgets from offline to online, the robust pace of advertising spending leading up to the Beijing 2008 Olympic Games, as well as our significant traffic increase," Belinda Wang, chief marketing officer of Sohu said in a statement.

For the third quarter, the company forecast profit of $1 to $1.05 a share, excluding the share-based compensation expense, which is expected to reduce Sohu's reported profit by 6 cents to 7 cents a share.

Beijing-based Sohu, which means "search fox" in Chinese, sees total revenue of $112 million to $116 million for the period. 

Analysts expect earnings of 72 cents a share, before items but including share-based compensation, on revenue of $107.4 million.

ONLINE GAMES IPO IN THE OFFING

Sohu plans to submit a draft registration statement to the U.S. Securities and Exchange Commission regarding a possible initial public offering of its online games business unit, Changyou, on a confidential basis, the company said in its earnings news release.

The number and dollar amount of American Depositary Shares to be offered and sold have not yet been determined, Sohu said.

The IPO would enable Sohu to concentrate on its core online media, search, and mobile services, while Changyou could focus on online games. Sohu would remain the majority shareholder in Changyou, it said.

"The IPO is expected to commence as market conditions permit," Sohu said.

Source:Reuters