The WSJ has focused on the rise of three Chinese SMS portals in the friday issue. sohu.com and NetEase.com have developed hundreds of SMS applications from the basic, such as graphics and ring-tone downloads, to the more sophisticated, such as news bulletins, dating services, classmate finders and mobile games. For example, for Rmb30 (� 0.03) per month sina.com will beam daily news bulletins to subscribers' handsets.
All the three have been close to bankruptcy in 2001. The strongest of the trio, sohu.com reported for this year's second quarter, a net income of $7.53 million as revenue more than tripled from a year earlier to $19.3 million; the company's stock price has risen more than 1,300% since August 2002. The revenue from SMS was more than 55% of the total. Strikingly enough as an SMS costs about � 0.01! sohu.com has a revenue sharing with the mobile providers securing 85% of the SMS revenue.
Finally a laudation from ebusinessforum

"Consider a Merrill Lynch report of October 2000 (Three Kingdoms) that outlined the investment case for Sohu.com, Sina and NetEase. Co-written by ex-analyst Matei Mihalca, a dotcom supporter, it weaves through the portals' stories in the vague terms current at that time. It speaks hopefully of ADPV (average daily page views) figures and CPM (cost per thousand ad impressions), and somehow gleans from these figures forecasts of the portals' revenues and profits.

The amazing thing is that the report underestimated the companies' potential. It predicts the portals would not be profitable until 2004, and then only just. The portals beat those estimates by a full two years, as they are beating the report's estimates on gross profit margins. They have plenty of cash, little debt and are impressing investors with their growth and profitability. Few portals in the world are finding themselves in such a blessed place, and in China there are three of them.