Sohu.com should go private and delist from the Nasdaq, given its startup portal business has gradually lagged behind major competitors including Sina.com.cn in China.
The suggestion came from Li Wanqiang, CEO of Chinese smartphone maker, Xiaomi. However, he noted that Sohu's online games unit Changyou.com, which is also listed in the U.S., is very profitable. Its online video Web site as well as search engines are both well-developed businesses, and may aim for initial public offering independently in the future. The delisting of the parent company should not affect its capital-raising efforts at all, said Li.
Xie Wen, a Chinese IT critic who briefly worked as president of Yahoo China in 2006, said he would not rule out the possibility of Sohu's delisting plan after the recent wave of privatizations among Chinese companies, including Shanda Interactive, Alibaba, and Focus Media.
Delisting will alleviate Sohu's market pressures and allow the company to carry out major plans in the future, according to Xie.
According to a March 6 report by Hong Kong-based English newspaper South China Morning Post, citing anonymous sources, Sohu.com reportedly was in talks with investment banks and private equity funds about a "possible financing plan to take the company private".
One source told the newspaper both Charles Zhang--founder, chairman and CEO of the company--and his bankers believed Sohu was "significantly undervalued" in terms of share price performance.
The company later dismissed the rumor.
Sohu listed on Nasdaq in July 2000 and Zhang has had a tense relation with Wall Street and U.S. investors. In 2004, Zhang openly called U.S. investors "stupid", and in 2005, said analysts in Wall Street were making accurate judgments of U.S. enterprises 95 percent of the time, but were doing likewise only 10 percent of the time on Chinese companies.