Stellar 2001 Performance; Revenues Double & Industry Leadership Entrenched

BEIJING, CHINA, February 5, 2002 - SOHU.COM (Nasdaq: SOHU), China's leading online media, communications and commerce company, today reported results for the fourth quarter ended December 31, 2001 and fiscal year 2001.

Business Highlights
Highlights for the fourth quarter 2001:

· Another record quarter with revenues of US$4.1 million, up 15% quarter-to-quarter and 88% year-on-year, beating company guidance

· Gross margins jumped to 37% from 33% in the prior quarter

· Pro forma net loss narrowed to US$2.5 million, a 47% improvement year-on-year and 8% sequentially, ahead of company guidance

· A dramatic 41% increase in non-advertising revenues fueled by monetization of SOHU's consumers through e-subscriptions and e-commerce, reaching 39% of total revenues

· New registered users reached another all-time quarterly high of 9.8 million, bringing total registered users to 43 million

· Positive pro forma EBITDA Company guidance for Q4 2002

Highlights for fiscal 2001:
· Primary objective achieved: a relentless drive to profitability via sustainable growth and stringent cost control

· Double-digit quarter-to-quarter revenue growth sustained for the full year; record total revenues of US$ 13.0 million, a 118% increase year-on-year

· Revenue diversification for the year outstrips company guidance, generating 29% of revenues from non-advertising business lines

· Proven monetization strategy: strong revenue growth and record high of 43 million registered users at no incremental cost

· Entrenched industry leadership, management stability and proven execution track record

"2001 has been a year of unstoppable momentum for SOHU. Alone among our peers, SOHU delivered uninterrupted double-digit revenue growth for each quarter in 2001. Moreover, SOHU has brought revenue diversification to levels unmatched in the China Internet industry, with non-advertising services growing from 5% in Q4 of 2000 to 39% in Q4 of 2001. SOHU's outstanding performance throughout 2001 proves that our business model of diversified revenue on a scalable cost base can lead towards sustainable profitability. Indeed, we are firmly on track to achieve our goal of becoming pro forma EBITDA positive in Q4 of 2002," commented Charles Zhang, CEO and President of SOHU.COM.

SOHU reported record revenues of US$4.1 million for its fourth quarter ended December 31, 2001, a quarterly sequential increase of 15% over the US$3.6 million booked in Q3 2001. Gross margins grew from 33% in Q3 2001 to 37% in Q4 2001. Pro forma and US GAAP net loss was further narrowed to US$2.5 million or US$0.07 per share for the fourth quarter 2001.

SOHU's 2001 revenues totaled US$13.0 million, representing a 118% increase over revenues of US$6.0 million in 2000. Pro forma net loss for 2001 was US$12.7 million or US$0.36 per share compared to a pro forma net loss of US$14.8 million or US$0.50 per share in 2000. **

Business Results
For the fourth quarter of 2001, SOHU's advertising revenue grew 3% to US$2.5 million. Advertising revenue gross margins improved sequentially from 35% in Q3 to 42% in Q4, underscoring how SOHU successfully operates on a scalable cost structure. Domestic advertising clients, including well-known companies such as telecom firms China Unicom and Capitel, drinks manufacturer Wahaha, the Haier Group and First Auto Works-Volkswagen, provided a dominant 59% share of advertising revenue. Multinational companies, which accounted for a healthy 37% of ad revenues, included Sun Microsystems, Motorola, Compaq and Siemens.

In 2001, SOHU's advertising revenues soared 58% from US$ 5.8 million in 2000 to US$ 9.2 million led by domestic corporations adopting the Internet as a necessary means of advertising to young urban Chinese. "SOHU's premier position in the Chinese Internet industry makes it the first choice for domestic companies that use SOHU's broad range of products for tailor-made branding and advertising campaigns to reach millions of affluent consumers," Victor Koo, COO of SOHU.COM, remarked.

Monetization of SOHU's users through e-subscriptions (short messaging and premium services) and e-commerce fueled a dramatic 41% quarterly sequential increase in revenues from the prior quarter's US$1.1 million to US$1.6 million. Non-advertising gross margins also expanded, reaching 30% in the fourth quarter compared to 28% in the previous quarter, demonstrating SOHU's solid business development. With 39% of total revenues generated outside of advertising in the fourth quarter, SOHU is quickly realizing its goal of building a sustainable and diversified business model by leveraging its strong brand, large user population and sound client base.

"Our 43 million registered users are becoming consumers through short messaging services and e-commerce. The size of China's mobile phone market - already the largest in the world - makes the long-term growth prospects of short messaging highly predictable. Our first mover and leadership position in e-commerce also offers sustainable revenue growth. SOHU's consumer business was proven in 2001 and will be central to our strategy moving forward," explained Charles Zhang.

While steadily growing its business and aggressively developing diversified revenue streams, SOHU continued its intelligent spending, with Q4 2001 pro forma operating expenses of US$4.3 million remaining unchanged from Q3 2001. Unique to its sector, SOHU sequentially increased revenues by 15 % and registered users by 30% while reducing sales and marketing expenses by a further 7% -- evidence of effective user base monetization.

SOHU remains committed to profitability. Its Q4 2001 pro forma net loss was reduced 8% sequentially from Q3 to US$2.5 million, beating the Company's guidance of US$2.7 million and representing a 47% year-on-year improvement. EBITDA (Earnings before interest, tax, depreciation and amortization) for Q4 2001 narrowed to negative US$1.6 million, a 22% sequential improvement over negative US$2.1 million for Q3.

As of December 31, 2001, SOHU's cash and marketable debt securities balance was US$46.2 million.

"SOHU's financial results demonstrate a clear path to profitability. Our chief objective is to become pro forma EBITDA positive in the fourth quarter of 2002 through ongoing advertising revenue growth, continued conversion of SOHU's millions of users into consumers and intelligent spending", declared Derek Palaschuk, Chief Financial Officer of SOHU.COM.

Business Outlook
SOHU is confident that it can sustain its momentum of continued revenue growth and controlled spending to achieve positive pro forma EBITDA by Q4 2002, and full year pro forma profitability in fiscal 2003. Our business strategy for 2002 will be focused on gaining online advertising market share, underpinned by SOHU's position as the pre-eminent online media platform in China. Our subscription services and e-commerce consumer business will be the main source of revenue growth, supported by SOHU's leadership position in wireless services.

As such, SOHU provides the following guidance for the first quarter 2002:
SOHU expects total revenues for Q1 2002 to be US$4.3 million, with advertising revenues of US$2.5 million and non-advertising revenues of US$1.8 million. Gross margins in Q1 2002 are estimated to be between 30 and 35%. Pro forma EBITDA for the first quarter is expected to be not more than negative US$1.6 million. First quarter pro forma net loss is estimated to be not more than US$2.5 million ($0.07 per share). First quarter capital expenditures are expected to be US$1.2 million.

"SOHU's solid execution and high employee morale have been crucial factors contributing to the formidable 2001 results. I am confident we can reach our financial and operational targets for 2002 by maintaining our unstoppable momentum", concluded Charles Zhang, CEO and President of SOHU.COM.

Safe Harbor Statement
This company's announcement contains forward-looking statements. It is currently expected the Business Outlook will not be updated until the release of SOHU's next quarterly earnings announcement; however, SOHU reserves the right to update its Business Outlook at any time for any reason. We may also make written or oral forward-looking statements in our periodic reports to the Securities and Exchange commission on forms 10-K, 10-Q, 8-K, etc., in our annual report to shareholders, in our proxy statements, in our offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors or employees to third parties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, SOHU's historical and future losses, limited operating history, uncertain regulatory landscape in the People's Republic of China, fluctuations in quarterly operating results, the company's reliance on online advertising sales for a significant portion of its revenues. Further information regarding these and other risks is included in SOHU's prospectus, 10K, 10Q and in its other filings with the Securities and Exchange Commission.

Pro forma Results
Pro forma results, which generally exclude non-operational, non-cash charges and benefits as well as one-time cash or non-cash charges, are provided as a complement to results provided in accordance with accounting principles generally accepted in the United States (known as "GAAP"). A reconciliation of GAAP to pro forma is included in the financial statements.

SOHU management measures the progress of the business using pro forma results, which exclude the following line items on the Company's statement of operations:

a) Amortization of goodwill arising on acquisitions
b) Accretion on mandatorily redeemable convertible preferred stock
c) Investment write-downs
d) Stock-based compensation
e) Other gains (losses), net
f) Equity in losses of equity-method investees, net
g) Cumulative effect of change in accounting principle

**Taking into account non-cash pro forma charges, mainly related to the US$30.3 million amortization and write-off of goodwill arising from the October 2000 acquisition of ChinaRen Inc., the 2001 net loss attributable to common stockholders was US$43.6 million or US$1.22 per share. The 2000 net loss attributable to common stockholders was US$23.2 million or US$1.14 per share.

Fiscal Fourth Quarter and Year End 2001 Conference Call
Live web cast of conference call on February 5, 2001 at 9:30 AM Hong Kong time (or 8:30 PM EST on February 4) will be broadcast at http://www.sohu.com/about/English/conference.html
or http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=sohu&script=1020&item_id=w,580228,0
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/