Do not regret Sogou, Sohu’s loss and gain

With 18 years of company growth, Sogou will finally bid farewell to Sohu.

With 18 years of company growth, Sogou will finally bid farewell to Sohu.

On July 13, the State Administration for Market Regulation announced that it had unconditionally approved Tencent Holdings Co., Ltd. to acquire Sogou shares. If the transaction is completed, Sogou will become a wholly-owned subsidiary of Tencent.

Affected by this news, the share prices of Tencent, Sogou, and Sohu have all increased. Among them , Sohu’s share price has been the biggest boost. After the opening of the US stock market on July 13, Sohu’s share price has risen from the previous $19 to $24.

From the perspective of industry insiders, the completion of this acquisition, whether it is Tencent, Sogou, or Sohu, the three parties can get better development from the transaction and achieve a win-win situation.

But for Sohu, it also lost Sogou, an old comrade that has been fighting together for many years.

The development of the Internet is changing, and sometimes it is necessary to make a certain cut-off. Although following the trend , it is unavoidable to regret.

Farewell to Sohu

In 2003, Sohu’s internal entrepreneurship gave birth to Sogou. From this, Sohu has supported and witnessed the whole process of Sogou’s growth from the search business, to the three-level rocket strategy, and to the transformation of AI.

But now, maybe it’s time to let go.

On the one hand, Sogou itself needs better development, and Tencent, as the target of Sogou’s investment since 2013, has also had a lot of intersections between the two in these years. In terms of business, whether it is from search or input method Look, Tencent is also Sogou’s best undertaking, and the agreement between the two parties is also an important reason for this acquisition.

The acquisition of Sogou will also enable Sogou to make better use of Tencent’s traffic pool and funds, whether it is Sogou’s own business development and business model exploration, or cooperation with Tencent in the mobile search market to grab more mobile search market share. It is an opportunity. At least, Tencent can better optimize its WeChat search.

Do not regret Sogou, Sohu's loss and gain

On the other hand, Sohu, which is slowly “letting go”, is also working hard to turn around losses in recent years. With the divestiture of Sogou, Sohu’s business has also moved on to a path of sustained profitability. In 2021, Q1 net profit is 37 million U.S. dollars, and Q4 net profit in 2020 is 53 million U.S. dollars.

After the disclosure of the acquisition news, the sharp rise in Sohu’s stock price can also reflect that Sohu’s market value is underestimated. Zhang Chaoyang himself has also talked about this issue. He said that because of continuous losses, Sohu’s market value has been underestimated. He also Means:

After two years of struggle, we first stopped our high investment in online dramas, and now the group’s cash flow is positive. This is good news. If we can show our profitability in the future, the performance of the stock price should be good. This is a matter of time.

The question of time is left to time to answer. Judging from the financial reports in the fourth quarter of last year and the first quarter of this year, to a certain extent, Sohu has achieved continuous breakthroughs along the established strategic route.

Of course, Sogou is also underestimated by the market. Judging from this acquisition, Tencent has obviously taken a big advantage in acquiring Sogou during this time period.

Between gains and losses

Sogou bid farewell to Sohu, which also means that Sohu has lost its search business in the country’s second largest market, as well as the flow of the country’s largest input method business.

We cannot say that these businesses are not important to Sohu, but the choice is very important to Sohu. What is Sohu’s main business? It is PC, Mobile, Sohu News Client, Sohu Video and Huyou, and of course AI-related technologies. In essence, Sohu is still a media company. Zhang Chaoyang emphasized more than once that Sohu is a media platform.

By selling Sogou, Sohu will get ample cash flow. This also means that Sohu, which holds ample cash flow in its hands, can better pursue the development of its core business. This is also Sohu’s strategic layout.

For example, when adding social, video, live broadcast and AI, these funds can provide Sohu with more imagination, and Sohu can also let go of its hands and do more internal incubation and innovation.

In fact, Sohu has always been a good platform for innovation and incubation. Sogou and Changyou in the past are the best examples of incubation. As for innovation, whether it is to engage in short video, live broadcast, or to study the implementation of AI technology, you can find that Sohu is also working hard.

As China’s oldest Internet company, there is no shortage of jianghu status and user base, and if it obtains ample cash flow blessing, the future will be promising.

This is also a good thing for Sohu, which has entered the profit cycle.

Get together

Come to think of it, Sohu’s emotions should be the most complicated.

This complex emotion is multifaceted. Coming from the PC era, Tencent and Netease have become game companies among the four major portals . Sina has broken down Weibo and portals. Only Sohu has continued to invest in video, SNS and AI. It can be said that Sohu witnesses After a great era of vicissitudes, I am in it, and there are some things I can only take advantage of.

Do not regret Sogou, Sohu's loss and gain

Since the launch of Sogou in 2003 and 2004 until now, the domestic search market is actually quite harsh. Tencent and Alibaba have all lost. However, Sogou has persevered, as a search technology company born as a portal site. Sogou has made search, browser, input methods, and even AI products such as translators. Among them, Sohu, who has accompanied Sogou all the way, has made great contributions.

It’s only after 18 years that it’s finally time to separate. I am afraid that only Sohu can understand it.

Watching Sogou, which he hatched with one hand, throwing himself into Tencent’s arms, the acquisition cannot be measured by gains or losses alone.

Although it is said that for Sogou, this acquisition is more like the second coming-of-age gift, and it is also for the three parties to have a better future and better development, but it also needs to be admitted that Sohu, which has been running for 18 years, is very regret.

Yes, this is the story of today’s Internet world, there is a time for gathering and dispersing.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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