Industry Leadership Fuels Record 1Q Revenues & Outstanding Reduction in Burn

BEIJING, CHINA, April 19, 2001 - SOHU.COM (Nasdaq: SOHU), China's leading Internet portal and online media services provider, today reported results for the first quarter ended March 31, 2001.

Business Highlights
- Record quarterly revenues of US$2.5 million, climbing13% sequentially and 191%
year-on- year
- Non-advertising revenue grows from 5% to 15% of total revenues in Q1
- All-time quarterly high of 6.3 million new registered users; 18.7 million in total
- Continued industry leadership; No.1 China Web Property (iamasia)
- Further monetization of large & expanding User Base, Brand and Technology assets
- Outstanding 21% reduction in quarterly burn rate, driven by further cost containment, cost scalability & enhanced monetization
- Top-line and bottom-line growth continues to beat market consensus

In addition, SOHU expects second quarter revenues to increase by 14% and the burn rate to decline by a further 7%.

"The record results for the first quarter of 2001 demonstrate the ability of SOHU to capture the benefits of a growing market. We have scaled our costs and increased margins across a diversified and sustainable revenue base while in a challenging economic environment," said Charles Zhang, CEO and president of SOHU.COM.

SOHU reported record total revenues of US$2.5 million for its first fiscal quarter ended March 31, 2001. Gross margins increased from 4.8% in the fourth quarter 2000 to 12.4% in the first quarter 2001. Pro forma net loss was US$4.2 million or US$0.12 per share for the first quarter 2001, a 14% improvement from the previous quarter. *

* Pro forma net loss excludes non-cash charges for amortization of intangibles, accretion on mandatorily redeemable convertible preferred stock, investment write-down, and stock-based compensation. Taking into account non-cash charges, net loss attributable to common stockholders for the first quarter of 2001 was $8.5 million or $0.24 loss per share. This compares to the net loss attributable to common stockholders of $4.1 million or $0.43 per share for the first quarter of 2000 and the net loss attributable to common stockholders of $8.3 million or $0.24 per share for the last quarter of 2000.

Business Results
For the first quarter of 2001, online advertising, at US$2.1 million, represented 85% of total revenues, compared to 95% in the previous quarter. Advertising revenue from domestic companies grew to 49% of total advertising revenues from 39% in the previous quarter, in line with SOHU's desire to capture more of the steady growth and long term contracts of domestic online advertisers over the more variable spending patterns of multi nationals and dotcoms. Consequently, revenues from dotcoms as a percentage of total advertising revenues decreased for the second consecutive quarter from 19% to 13%, while multi nationals contributed 38% in the first quarter, relative to 42% in the preceding quarter. Advertisers included Chinese blue chips Kejian and TCL, as well as Compaq, Intel and Nestle.

At March 31, 2001, SOHU enjoyed an advertising revenue backlog of US$2.5 million of which US$1.2 million is billable in the second quarter 2001. This backlog represents a 25% increase from December 31, 2000.

Non-advertising revenue (including e-business solutions and e-commerce) reached US$366,000 or 15% of total revenues, on track with SOHU's target for diversified revenues to reach 20% of total revenues by the end of 2001. E-business solutions constituted over 50% of non-advertising revenues as SOHU leveraged its technical competencies to provide corporate portal and related services. New clients included Tricon's China Pizza Hut operations, Beijing Transportation and Sinopec.

Pro forma operating expenses decreased from US$6 million in fourth quarter 2000 to US$5.3 million in first quarter 2001. This 11% reduction reflects SOHU's continued re-engineering of its cost structure, confirming its commitment to scalability and improved operating efficiencies all during a quarter of strong revenue growth. These improvements were due in part to a 15% headcount reduction to 446 employees and a 50% decrease in promotional spending. SOHU's valuable brand equity further permitted it to reduce sales & marketing expenses by 29% while growing revenues by 13%. SOHU's ability to monetize its brand is yet another key advantage over its competitors.

SOHU continued its drive to profitability by reducing its pro forma net loss by US$0.5 million from the fourth quarter of 2000. In addition, SOHU's monthly burn rate in the three months ended March 31, 2001 dropped 21% from the previous quarter to US$1.5 million, on par with its pre-ChinaRen burn rate.

"SOHU's path to profitability is more visible and predictable as a result of its proven ability to deliver on its strategy through outstanding user acceptance, cost reductions, increased scalability and consistent revenue growth backed by a substantial backlog," said Derek Palaschuk, Vice President Finance.

As of March 31, 2001 SOHU's total net cash balance was US$58 million.

During the first quarter of 2001, SOHU continued to widen its competitive lead over other China portals. SOHU was ranked the No. 1 China Web Property for each of the first three months of 2001 by iamasia, the Hong-Kong based Internet measurement company. In February, SOHU's lead over the No.2 China web property exceeded 44%, compared to a gap of 22% in December 2000. Also in February, SOHU's reach was 7.6% higher than its nearest competitor, compared to a 2.2% lead in December 2000.

SOHU's registered users totaled 18.7 million at the end of the first quarter 2001, up an impressive 51% from 12.4 million at year-end 2000. Average daily page views for SOHU.COM properties increased by 35%, from 79.2 million averaged in December 2000 to 107 million average daily page views for the month of March 2001.

Business Outlook
SOHU is confident that it can reach profitability through continued revenue growth and intelligent spending controls. As such, SOHU provides the following guidance for the upcoming second quarter 2001:

SOHU expects total revenues for the second quarter 2001 to be between US$2.8 million and US$3.1 million. Advertising revenue for the second quarter 2001 is expected to be between US$2.3 million and US$2.4 million on improving pro forma gross margins of 16%. Non-advertising revenue for the same period is expected to be between US$500,000 and US$700,000 on pro forma gross margins of 15%. Total pro forma operating expenses are expected to be not more than US$5.2 million. Second quarter pro forma net loss is estimated to be not more than US$3.9 million ($0.11 per share); the monthly cash burn rate to be not more than US$1.4 million. The 2001 budget for capital expenditure has been reduced from US$6.0 million to US$5.3 million, of which US$1.25 million was spent in the three months ended March 31, 2001.

"SOHU finished the first quarter in a strong financial position," Charles Zhang reiterated. "Solid underlying improvement in margins enabled the Company to improve financial results while maintaining a clear lead over its competitors."

First Quarter 2001 Conference Call
Live web cast of conference call on April 19, 2001 at 08:00 AM Hong Kong time (or 8:00 PM EST on April 18) will be broadcast at http://www.videonewswire.com/SOHU/041801/ or at http://www.sohu.com/about/English/earnings/index.htm. Dial-in details: TELEPHONE: (852) 2258-4002, PASSCODE: China, LEADER: Caroline Straathof.

About SOHU.com
SOHU.com is the leading Internet portal in Mainland China with current daily page views exceeding 12 million. It provides navigation/search, news, sports, business and finance, real estate channel, entertainment, chat, email and e-commerce activities for a solid and wide base of visitors. Dr. Charles Zhang founded SOHU.com in 1997. Its investors include Intel, Dow Jones, IDG, the Morningside China Group, PCCW, Legend and Hikari. Its content partners include CNET, DOW Jones and dozens of local media organizations in China.

For further information:
Dahlia Wei
SOHU Investor Relations and Communications
Tel: +86 10 6272 6598
E-mail: ir@sohu-inc.com
http://www.sohu.com/about/English/