BEIJING, CHINA, October 22, 2002 - SOHU.COM (Nasdaq: SOHU), China's leading online media, communications, commerce and wireless services company, today reported results for the third quarter ended September 30, 2002.

Business Highlights
· US GAAP profitability of US$112,000 achieved well ahead of schedule
· Positive cash flow from operations for the first nine months of 2002
· Revenues rise 111% year-on-year to US$7.5 million beating company guidance of US$6.7 million
· 9 consecutive quarters of double-digit quarterly sequential revenue growth
· Non-advertising and advertising revenue contribute to a balanced, diversified 51%-49% revenue mix ahead of schedule
· Advertising revenues grow by 52% year-on-year to US$3.7 million, reflecting widening domestic client base
· Non-advertising revenues soar 237% year-on-year to US$3.8 million through sustained conversion of SOHU's user base into consumers
· Gross margins reach record high of 55%
· Q4 2002 and full year 2003 US GAAP profitability guidance maintained

"Achieving US GAAP profitability is truly a milestone for the Company and our shareholders. Over two years ago, at the time of our initial public offering, SOHU committed to reaching profitability in the fourth quarter of 2002 and has succeeded in achieving this milestone one quarter early," said Charles Zhang, CEO and President of SOHU.COM.

SOHU reported record revenues of US$7.5 million for its third quarter ended September 30, 2002, an increase of 111% year-on-year. Gross margins rose to an unprecedented high of 55%. The Q3 2002 US GAAP (Generally Accepted Accounting Principles) net income of US$112,000 was a US$1 million improvement from the Q2 2002 net loss of US$870,000 and a US$3.2 million improvement from the Q3 2001 net loss of US$3.1 million (after adjusting for the effects of amortization of intangibles and a one-time write down of intangible assets).

Business Results
With SOHU's revenues from advertising and consumer business growing at a robust pace in the third quarter, the Company is realizing its goal of building a sustainable and diversified business model on two strong pillars: a steadfast home-market corporate advertising base and a massive, paying user population.

For the third quarter of 2002, SOHU's advertising revenues totaled US$3.7 million, a 52% year-on-year improvement and a 9% increase from US$3.4 million in Q2 2002, beating company guidance by US$0.4 million. Advertising revenue gross margins reached an unprecedented high of 60%.

"We are proud that our team was able to beat our record Q2 performance when in Q3 it did not have the benefit of a major event like the World Cup. SOHU was able to grow sales in Q3 because clients know that SOHU helps them reach one of the most attractive consumer market segments in China. In addition, increased competition in a number of industries, such as the consumer products, telecom, financial services and automotive sectors, and other changes related to China's WTO membership are further stimulating the growth in online advertising," explained Victor Koo, Chief Operating Officer of SOHU.

Domestic advertising clients provided an all-time high 84% share of advertising revenue and for the second consecutive quarter dominated SOHU's top 10 advertisers list. Advertisers included leading companies such as TCL (computers), Capitel (handsets), Taiweishi (electronics), Huanqiu (sporting products), Yangshengtang (consumer products), and the Everbright Bank of China.

As in the previous two quarters, advertising revenues were further supported by the success of SOHU.NET, a marketing platform for small and medium sized enterprises (SME). SOHU.NET provides its clients cost-effective and efficient ways to conduct business online, market their product and reach targeted audiences.

For the third quarter of 2002, SOHU's non-advertising revenues grew 237% year-on-year to US$3.8 million and 39% from the prior quarter's US$2.8 million, beating guidance by US$0.4 million. Non-advertising revenue gross margins reached a record high of 51%.

Non-advertising revenues from consumer services, consisting mainly of e-subscriptions (premium services and short messaging) and e-commerce sales, contributed 51% of total revenues in Q3 2002, overtaking advertising revenues for the first time as the largest source of revenues. Through e-subscriptions, SOHU is monetizing its vast user base of over 50 million registered users and leveraging existing products such as email, alumni club and news.

SOHU remains committed to profitability through revenue growth and controlled spending. Q3 2002 operating expenses of US$4.3 million were unchanged from Q3 2001 (after adjusting for the effects of amortization of intangibles and a one-time write down of intangible assets), while revenues have increased by 111% in the same period.

Q3 2002 US GAAP net income reached US$ 112,000 as compared to a US GAAP net loss in Q2 2002 of US$870,000. In the nine months ending September 30, 2002 cash flow from operating activities was US$1.7 million, as compared to negative US$10 million in the corresponding period of 2001. Q3 2002 cash flow from operating activities improved over the previous quarter by US$1.7 million.

At September 30, 2002, SOHU's cash and marketable debt securities balance was US$43.1 million, an increase of US$1.7 million from the previous quarter's balance of US$41.4 million.

"Through sound implementation, SOHU has made outstanding financial progress resulting in us delivering US GAAP profitability well ahead of plan. Our intelligent spending combined with strong revenue growth brought about a significant US$1 million improvement in our bottom-line results from the previous quarter. We expect the fixed nature of our costs and scalability of our business model to continue, which gives us the visibility to achieve full year US GAAP profitability in 2003," commented Derek Palaschuk, Chief Financial Officer of SOHU.COM.

Business Outlook
SOHU believes it can sustain its revenue growth momentum and controlled spending to achieve full year profitability in fiscal 2003.

For the fourth quarter of 2002, SOHU provides guidance as follows. SOHU expects total revenues for Q4 2002 to be US$8.2 million, with advertising revenues of US$3.7 million and non-advertising revenues of US$4.5 million. Gross margins in Q4 2002 are estimated to be similar to Q3 2002. Fourth quarter US GAAP profitability is expected to be maintained. Fourth quarter capital expenditures are expected to be no more than US$1.1 million.

"This landmark quarter was achieved as a result of the unstoppable momentum in both our advertising and consumer business. We will continue along our current strategic direction based on these two strong pillars of growth to bring about sustainable, long-term profitability. We believe that we have the edge over the competition because of our brand and user base strength, our balanced and diversified business model, and our commitment to profitability," concluded Charles Zhang.

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, and the company's reliance on online advertising sales, e-subscriptions (most of which are collected from a few telecom operators) and e-commerce for 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.

Conference Call
Live web cast of Q3 conference call on October 22, 2002, at 9:00 AM Hong Kong time (or 9:00 PM EST on October 21, 2002 in the United States) will be broadcast at:
http://www.sohu.com/about/English/conference.htm

Conference call dial-in details: TELEPHONE: from Beijing: 10-800-852-0607; from Hong Kong: (852) 2258-4002 or from within U.S.A.: (1-800) 365-8460; PASSCODE: 8924528, 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/