This excerpt taken from the SOHU 8-K filed Feb 9, 2005.
Now Id like to discuss progress in our Online Games, our third business line.
Our revenues for online games in Q4 came in precisely as guided. This is the first quarter in which online games represent 5% of overall revenues. We are committed to online games for the long term and we are encouraged by this incremental progress. Since the commercial launch of latest game Blade Online early in the fourth quarter, on October 17 to be precise, the user numbers have stabilized at a level of 20,000 Average Concurrent Users. We believe this is a modestly successful game that will bring in some stable and recurring revenue in coming quarters, together with our first game, Knight, which is now in a mature stage.
Fourthly, our Wireless Revenues
By now, SOHUs short messaging services have been switched onto China Mobiles new billing platform MISC in 11 out of 13 provinces. Only the provinces Jiangxi and Jilin have not yet switched to MISC. That means that 95% of our SMS revenue is already on MISC. So from now on, we expect MISC for our SMS to have very little impact on us.
As has been the case every quarter, it is very difficult to give any specific outlook for our wireless business going forward. For each of the four quarters in 2004, we experienced a substantial and continued downturn of our wireless revenues, due to reasons such as tighter billing controls from operators and suspension of our MMS service. Often these new regulatory developments were difficult to foresee. We do believe we have hit the bottom of our wireless decline in the fourth quarter and are now back on the road to recovery.
Specific measures taken over the past few quarters, which we expect will bear fruit starting the first quarter of 2005, are
Finally, our fifth business line of E-commerce
This was another good quarter for our e-commerce. We strongly believe in the long-term opportunity for e-commerce in China. At this early stage we are willing to sacrifice some gross margins for revenues to make our mark in this promising but still nascent online sector.
Before we move to the financial presentation, let me brief you on our operational progress:
I would specifically like to mention three of our recent operational highlights:
Now, Id like to give the floor to our Chief Financial Officer, Carol Yu, for a financial review.