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Sohu spin-off reaches a high score on its debut in New York

ONLINE video games maker Ltd closed 25 percent higher after jumping more than 50 percent on its trading debut on Thursday in the Nasdaq.

"This would give Changyou more focus on its online game business. Sohu will focus on monetizing our business such as online advertising, search advertising, video and may even charge for content," CEO and Chairman of Inc, Charles Zhang, said in New York. Zhang also noted that the strong debut was due to the deal's pricing as well as Sohu's track record. It has been listed on the Nasdaq for nine years.

The Sohu spin-off rose US$4.02 to close at US$20.02 on its first trading day. It was only the third initial public offering in the United States since August 2008, and the largest Chinese IPO on a US exchange since December 2007. The company raised a total of US$120 million by selling 7.5 million American Depository Shares at US$16 per share.

Changyou operates the online, role-playing martial-arts game "Tian Long Ba Bu." The game, launched in May 2007, generated revenue of US$188.9 million in 2008, making up more than 44 percent of Sohu's total revenue.

"Domestic high-tech companies had to go to overseas stock markets before the Growth Enterprise Market was set up but now the situation is different. The spin off of Changyou from Sohu will provide experience for these enterprises," Wang Yuquan, an analyst at Dongxing Securities, noted.

"Sohu doesn't want the rapid-growing online game division to affect its advertising business and now that Changyou has its own financing measures Sohu can have larger space and capital to develop the portal in order to maintain growth in advertising income. This would provide a rather good example for Internet companies in China," according to iResearch Inc.

Sohu filed the registration statement of its subsidiary on March 17 and the estimate offering price was US$14 to US$16. Sohu will retain a 71-percent stake.



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