NEW YORK, Aug 13 (Reuters) - Chinese Internet media company Sohu.com (NasdaqNM:SOHU - News) on Friday said state-controlled China Mobile (NYSE:CHL - News) had suspended Sohu as a supplier of mobile phone picture services for one year for unsolicited marketing to its customers.
Shares of the Beijing-based company, which had been halted for trading on U.S. markets ahead of the news, tumbled as much as 17 percent once the stock reopened on the Nasdaq. Shares of four Chinese competitors fell by between 6 percent and 9 percent.
Sohu said China Mobile Communication Corp. was punishing it for an incident in Sichuan province in which Sohu sent out 1,374 solicitations for its "I WANT PHOTO" picture messaging service to customers without China Mobile's prior approval. The suspension takes effect on September 1.
Sohu said in a statement its affiliated Beijing Sohu Online Information Services Co. Ltd. was one of four service providers who were being punished by China Mobile. It did not name the other concerns.
The one-year suspension and a recent move by China Mobile to cut billing rates for messaging services provided by Sohu and others will hurt Sohu's third-quarter revenue and profit, said Chairman and Chief Executive Charles Zhang.
He said third-quarter revenue would be cut by between $1.5 million and $1.8 million, and net profits would fall by between $1.0 million and $1.3 million. In late July, Sohu had forecast revenue of between $28.1 million and $29.1 million.
Shares of Sina.com (NasdaqNM:SINA - News) dropped 8.7 percent to $19.37 on the Nasdaq market, where it was the 10th most actively traded issue on Friday.
Netease.com (NasdaqNM:NTES - News) fell 6 percent to $29.41, and Linktone Ltd (NasdaqNM:LTON - News) was off 6.3 percent at $6.45. Chinadotcom dropped 5.8 percent to $4.03. All five stocks are listed on Nasdaq.
