Quarterly Pro Forma Net Loss Narrowed by 23% and
Revenues Increased by 122% Year-on-Year

BEIJING, CHINA, October 30, 2001 - SOHU.COM (Nasdaq: SOHU), China's leading online media, communications and commerce company, today reported results for the third quarter ended September 30, 2001.
Business Highlights
· Another record quarter with revenues of US$3.6 million, a 122% increase year-on-year, and 24% sequentially
· Pro forma net loss narrowed to US$2.7 million, a 23% improvement year-on-year and 18% sequentially
· Continued diversification of revenues, with non-advertising revenues reaching almost one-third of total revenues
· Successful monetization strategy: steady growth of users and revenues at no incremental cost
· Gross margins improved to 33%, substantially above 21% in the prior quarter
· New registered users reached another all-time quarterly high of 7.8 million, bringing total registered users to 33.2 million
· Continued industry leadership: Ten consecutive months as No. 1 China Web Property (source: iamasia)

In addition, SOHU expects total revenues for the fourth quarter 2001 to be US$3.9 million, with gross margins in line with third quarter levels, and pro forma net loss of not more than US$2.7 million.

"SOHU continues to demonstrate that, in China, a large user base can be successfully monetized. We've shown yet another quarter of strong user and revenue growth, delivered at no incremental cost," said Charles Zhang, CEO and president of SOHU.COM. "Our strategy is sound and continues to drive us closer towards profitability."

SOHU reported record total revenues of US$3.6 million for its third fiscal quarter ended September 30, 2001. Gross margins grew from 21% in the second quarter 2001 to 33% in the third quarter. Pro forma net loss was US$2.7 million or US$0.08 per share for the third quarter 2001, a 23% improvement over the third quarter 2000 pro forma net loss of US$3.5 million. *

* Pro forma net loss excludes non-cash charges for amortization of intangibles, write off of other assets, impairment of goodwill and stock-based compensation. Based upon a valuation analysis conducted by SOHU of the carrying amount of goodwill arising from the October 2000 acquisition of ChinaRen Inc., SOHU made a US$17.7 million one-time non-cash write down of the related intangible assets. Taking into account these non-cash charges, the net loss attributable to common stockholders for the third quarter of 2001 was US$25.0million or US$0.70 loss per share, compared to US$4.2 million or US$0.16 loss per share for the same period last year, and US$7.65 million or US$0.21 loss per share for the second quarter of 2001.

Business Results
For the third quarter of 2001, SOHU's advertising revenue grew 9% to US$2.4 million. Gross margins for ad revenues improved significantly from 21% in the previous quarter to 35% in the third quarter, primarily due to the continued efficacy of SOHU's sales team and brand leveraging. Domestic companies dominated 61% of ad revenues, with multinational corporations contributing 31% and dotcoms 8%. Domestic companies have shown a steady need for local advertising. They provide SOHU with a predictable and reliable source of advertising revenue.

Non-advertising revenue (including e-technology, e-subscriptions and e-commerce) rose 75% from the prior quarter to US$1.1 million. Non-advertising gross margins also expanded, reaching 28% this quarter compared to 20% in the previous quarter. With nearly one-third of total revenues generated outside of advertising, SOHU is quickly realizing its goal of building a sustainable and diversified business model. The rapid uptick in non-ad margins shows a sensible approach to new business development and is a further sign of SOHU's ability to monetize its user base.

While steadily growing its business and aggressively developing diversified revenue streams, SOHU also contained costs, with pro forma operating expenses remaining stable (4% reduction from previous quarter) at US$4.3 million for the third quarter. Headcount was largely unchanged. These ongoing cost controls do not jeopardize future business growth. Unique to its sector, SOHU sequentially grew revenues by 24% and registered users by 31% while reducing sales and marketing expenses by a further 6% -- evidence of effective user base monetization.

SOHU remains committed to profitability. Its third quarter pro forma net loss was further reduced to US$2.7 million, beating its own target of US$3.1 million and representing a 23% year-on-year improvement. The quarterly burn rate was at US$3.4 million, well within its target of US$3.5 million.

"SOHU is committed to corporate transparency and best-of-breed accounting practices. As such, we have decided to write off US$17.7 million of unamortized goodwill from our October 2000 ChinaRen acquisition. This is a one-off, non-cash item that does not affect our cash flows or our path to profitability. The wisdom of the ChinaRen acquisition has been clearly demonstrated over the past year by SOHU's longstanding No. 1 China Web Property ranking and uninterrupted double digit quarterly revenue growth", said Derek Palaschuk, Chief Financial Officer.

As of September 30, 2001, SOHU's total net cash balance was US$49 million.

During the third quarter of 2001, SOHU maintained market leadership over other China portals. The SOHU websites have been ranked the No. 1 China Web Property for each of the prior ten months by iamasia, the Hong-Kong based Internet measurement company. According to iamasia's latest monthly report on China web properties, SOHU reached 55% of all Chinese Internet users and commanded the largest number of page views (both total and per user). These statistics underlie SOHU's importance as a community generator, confirming the value of its superior brand to advertising and other clients.

During the third quarter of 2001, 7.8 million new registered users joined SOHU, driving the total up to an all-time high of 33.2 million, a 31% increase over the prior quarter and 564% year-on-year. The month of September set a record of three million new users in a one-month period. This was largely due to the launch of SOHU's upgraded email system. Users responded overwhelmingly to its convenience, reliability and user-friendly format.

World events such as Beijing being selected as the 2008 Olympic Host City and the terrorist attack in the United States underscored the importance of SOHU's ability to provide uninterrupted instant news updates and a needed sense of community, both through its websites and via Short Messaging Services. This past quarter, SOHU furthered its efforts in improving the quality of its product, and remains committed to providing the most enriching Internet experiences to its users.

Business Outlook
SOHU is confident that it can sustain its momentum of continued revenue growth and intelligent spending controls to reach profitability by the fourth quarter of 2002, unchanged from previous management announcements. As such, SOHU provides the following guidance for the upcoming fourth quarter 2001:
SOHU expects total revenues for the fourth quarter 2001 to be US$3.9 million, with advertising revenues of US$2.5 million and non-advertising revenues of US$1.4 million. Gross margins in the fourth quarter 2001 are expected to be in line with third quarter levels. Fourth quarter pro forma net loss is estimated to be not more than US$2.7 million ($0.08 per share). Based on fourth quarter capital expenditures of US$1.3 million, SOHU expects the quarterly cash burn rate to be not more than US$2.9 million.
"We are extremely proud to have a team with such vision and enthusiasm. With our consistent and forward-looking plans and team efforts, SOHU is the clear leader over our competition," Charles Zhang said. "SOHU is a growth company operating in a growth economy."

Third Quarter 2001 Conference Call
Live web cast of conference call on October 30, 2001 at 9:30 AM Hong Kong time
(or 8:30 PM EST on October 29) will be broadcast at http://www.sohu.com/about/English/conference.html
or
http://www.videonewswire.com/event.asp?id=1788

Conference call dial-in details: TELEPHONE: (852) 2258-4002 or from within U.S.A.: (1-800) 365-8460, 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/