"It is truly a milestone for Sohu and our shareholders," said Charles Zhang, Sohu's chief executive officer following the announcement of the third-quarter results.

The company said it has reaped US$112,000 in net profits in the past quarter from pre-tax profits of US$77,000 in the second quarter.

In July, Netease, announced US$4,631 profits and became the first of the three Chinese NASDAQ-listed Internet portals to achieve profits.

Sohu's revenues reached US$7.5 million in the past quarter, surpassing a forecast of US$6.7 million.

Non-advertising revenues including e-subscription, short messaging service (SMS) for mobile phones and an online shopping mall exceeded revenues from online advertising for the first time at US$3.8 million, more than doubling the figures from the same period last year.

Sohu made US$3.7 million from advertising, a rise of 9 per cent quarter-on-quarter. It accounts for 49 per cent of Sohu's total income.

The firm's cash flow from operations was US$1.7 million for the first nine months, from zero in the second quarter and negative US$10 million from the same period last year.

Sohu had US$43.1 million cash and equivalent at hand, US$1.7 million higher than in the second quarter.

Derek Palaschuk, Sohu's chief financial officer, said his company would maintain profitability for this quarter and the whole of 2003.

He also added that while Sohu will expand its online stock trading business from Shanghai to other parts of China, this may not have a major effect on revenues until 2005.

"It is surprising that Sohu achieved profits in the past quarter, and it is also good news to its shareholders," said Lu Weigang, an Internet industry analyst in Beijing.

(China Daily October 23, 2002)