Separating important businesses and creating independent listing opportunities is a common practice for large companies.
However, Zhang Chaoyang, chairman of Sohu’s board of directors, should have some feelings. After the November earnings season, the independent Sogou Q3 earned 200 million in the quarter, while the parent company Sohu lost more than 100 million yuan.
Bai Yan, chairman of Baidu, should be able to breathe a sigh of relief. Although the spin-off of Baidu take-out, Baidu Finance and other businesses was unsuccessful, the split Iqiyi Q3 revenue growth was obvious, and there are profit expectations, which is expected to become Baidu’s new growth pole.
The most successful spin-off should be Taobao and Alipay. Alibaba’s chairman and CEO Zhang Yong once revealed at Lakeside University in 2017: Alipay’s entire share, third-party share has been on par with Taobao… “points” are better than “no matter”, the market opportunities it brings, Absolutely not seen in the original scene.
In 2019, the dividends in the second half of the Internet disappeared, and many new scene businesses required Red Sea competition and long-term investment, and the spin-off business became a new trend.
As the saying goes, as long as the decision is right or wrong, it is difficult to disassemble and not dismantle it.
The “thin dead” camel is smaller than the horse
As the old owner of Sogou, Sohu has to hug the thigh of Sogou. I don’t know if Zhang Chaoyang, who even wanted to sell Sogou, would feel what he thought so far.
On November 4, Sohu and Sogou both released their Q3 earnings report for 2019. Sohu Q3 had a total revenue of $482 million, while Sogou’s total revenue was $315 million. Sogou brought 65% of total revenue to Sohu. Compared with the annual earnings report for 2017 and 2018, Sogou’s share of Sohu’s total revenue increased from 48% to 60%.
Not only Sogou’s share of Sohu’s revenue contribution has been increasing. What is even more embarrassing is that the net profit attributable to Sogou in the third quarter of 2019 was $36.6 million, a 53% increase over the same period of the previous year. Although Sohu’s loss narrowed year-on-year, it still lost $17 million.