Qihoo profit drops as rising costs erode ad sales

Qihoo 360 Technology Co, the maker of China's most-popular Web browser, said second-quarter profit fell 37 percent as the company boosted spending on new services such as a search engine, eroding higher advertising sales.

Net income declined to $7 million in the three months ended June 30, from $11.1 million a year earlier, Beijing-based Qihoo said in a statement on Wednesday. Profit missed the $10.1 million average of seven analysts' estimates compiled by Bloomberg. Revenue more than doubled to $72.8 million.

Qihoo is working to gain sufficient users for its search engine in China, challenging market leader Baidu Inc, to generate advertising revenue from sales of keywords. Qihoo will see "cost pressure" as the company increases spending on product development and networks, said Co-Chief Financial Officer Alex Xu.

China Daily-Agencies