On a y-o-y basis Sohu.com Inc. (Sohu) reported a healthy set of 3Q 09 results with robust revenue growth in the Online Game segment, offsetting weakness in Brand advertising revenues. However revenues from Games segment were comparatively weaker than previous quarters, despite healthy signs of economic recovery. We believe the company may face difficulty in showing consistent growth from the games segment on account of increased competition in the Chinese market. At the same time Management provided soft guidance for 4Q 09 revenues. However, as Sohu is a renowned online content provider with a large user base and strong brand awareness, it is well positioned to attract new advertisers and drive revenue growth in the future. Hence, at current levels we maintain our BUY rating on the NASDAQ common stock until we reassess this in our next update report in the coming weeks. We expect to take a 6-24 month horizon as we now anticipate a significant positive currency impact on the European stock over the long term. Hence coupled with our fundamental outlook we upgrade our rating from a SELL to a HOLD on the European stock.

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