Chinese Internet portal Sohu.com Wednesay reported about one third revenue growth in the second quarter as the SARS outbreak boosted online advertising and mobile phone short messaging service (SMS).

The NASDAQ-listed company said Wednesday that its turnover in the second quarter reached US$19.3 million with 35 per cent quarter-on-quarter growth.

It also reported profits for the fourth consecutive quarter, totalling US$7.5 million or US$0.19 per diluted share.

"We are taking our revenue power to a new level," said Charles Zhang, chairman and chief executive officer of Sohu.

The outbreak of the deadly SARS epidemic in China from April to June became a boost to the development of the Chinese Internet business, as more people worked at home and communicated with the Internet and mobile messages.

Sohu's incomes from online advertising rose by 52 per cent quarter-on-quarter to US$6.8 million.

At the same time, its revenues from non-advertising services also grew by 28 per cent to US$12.5 million over the previous quarter.

The e-subscription service, mainly including SMS, accounted for US$11.5 million of Sohu's total non-advertising incomes and the other US$1 million was contributed by e-commerce, which actually dropped by US$200,000 in the past three months.

Although Sohu made the commercial launch of its first online game Knight Online in the past quarter, it did not generate any material revenue.

Sohu had US$55.4 million cash reserves by June 30, which did not include the US$87.75 million proceeds from the issuance of no-interest convertible bonds in early July.

However, the company remained cautious over the prospect of this quarter.

Sohu's Chief Financial Officer Derek Palaschuk predicted revenue growth of his company would be between 4 per cent to 10 per cent, or US$20 million and US$21.3 million.

It could be the first time in 13 quarters that Sohu may see growth of less than 10 per cent.

The profits were expected to be around US$5.2-US$6.2 million, or US$0.13-US$0.16 per diluted share.

Sohu's revenue will be negatively affected by a decision made by China Mobile, Chief Operating Officer Victor Koo said.

China's biggest mobile telecom operator has required all its SMS service providers, including Sohu, to stop their Website Union, through which smaller SMS providers can charge users via Sohu. China Mobile was concerned that some of these smaller companies have spread pornographic content through SMS.

Sohu's common stocks on the NASDAQ fell by 1.78 per cent to US$39.85.

Sohu's arch-rival Sina is expected to announce its second quarter result Thursday

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