Despite the chill that is overshadowing Wall Street, Sohu still stepped up the pace with a plan to list its online gaming unit.

The online portal submitted the prospectus to the US Securities and Exchange Commission yesterday, aiming to raise up to US$120 million through the listing of its online gaming unit, Changyou.com, on Nasdaq.

If approved, Sohu will become the first Chinese Internet company to have two listed subsidiaries.

Sohu has reorganized its business recently, making Changyou.com into a separate unit. This allows Sohu to focus on traditional business while Changyou will specialize in online gaming.

The reorganization will not affect Sohu's overall profits as it remains the controlling company of Changyou.com.

As the traditional online advertising business shrinks due to the global economic crisis, online gaming has become a big growth engine for Sohu.

"Online gaming was the most important new growth area for Sohu last year," said Fu Xinghua, senior analyst with Analysys International, a Beijing-based technology consultancy.

"China's online gaming sector is expected to face increasing competition this year. A company engaging in the sector needs adequate capital to keep its development sound," Fu said. "The Nasdaq IPO will provide capital for Changyou over the next two years."

However, some analysts claim that Changyou lacks sufficient variety in its products to support its development. The company's income relies largely on its role-playing game "Tian Long Ba Bu". "Lu Ding Ji," another more recent game developed by the company, has failed to meet expectations.

(China.org.cn March 19, 2009)