Qihoo Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Qihoo 360 (NYSE: QIHU  ) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Chinese tech company Qihoo is best known for its anti-virus software. But recently, it has taken on a giant in the Chinese Internet space, going head-to-head with its own new search engine. Let's take an early look at what's been happening with Qihoo over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on Qihoo

Analyst EPS Estimate	$0.17
Change From Year-Ago EPS	(15%)
Revenue Estimate	$93.7 million
Change From Year-Ago Revenue	50%
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

Will Qihoo find what investors are looking for this quarter?
Analysts haven't budged on their calls for Qihoo's earnings, keeping estimates unchanged both for the just-finished quarter as well as full-year 2013. But the stock has risen sharply, up 16% since early December, in the wake of promising news for the young, fast-growing business.

Until very recently, Qihoo did well in its security niche, with software to protect computers against virus attacks. But when Qihoo added a self-created search engine to be the default search option for its Internet browser last summer, it took on the biggest player in Chinese search, Baidu (NASDAQ: BIDU  ) . Qihoo saw its search market share vault to between 10% and 15%, a huge gain in such a short time.

But in January, the Chinese government came down hard on Qihoo, alleging acts of unfair competition that included making its security software hard to uninstall, issuing warnings that non-Qihoo browsers are unsafe, and tricking users into downloading its browser while masquerading as an official software update. Given that Qihoo is attacking Baidu, Sohu.com, and other Chinese companies, the government has a vested interest in stopping the infighting. Moreover, Baidu is now considering going after Qihoo on its home turf by buying an online-security company.

In Qihoo's quarterly report, look for signs of what the company's next step will be in its ongoing fight. If the company backs down in the face of government pressure, then the negative impact on sales could be devastating for investors.

Qihoo has helped contribute to Baidu's share-price plunge, but will the search giant bounce back? Find out in our premium report on Baidu, which highlights whether Baidu is a must-buy after its big drop. Just click here to access it now.

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