BEIJING, CHINA, January 21, 2003 - SOHU.COM Inc. (Nasdaq: SOHU), China's leading online media, communications, commerce and mobile value-added services company, today reported results for the fourth quarter ended December 31, 2002 and fiscal year 2002.

Business Highlights
Highlights for the fourth quarter 2002:

· US GAAP profitability of US$1.9 million, or US$ 0.06 per share
· Revenues rise 157% year-on-year and 41% quarter-on-quarter to US$10.6 million beating company guidance of US$8.2 million

· 10 consecutive quarters of double-digit quarterly sequential revenue growth

· Advertising revenues rise 72% year-on-year to US$4.3 million, reflecting growing online marketing spend in China

· Non-advertising revenues soar 291% year-on-year to US$6.3 million through sustained conversion of SOHU’s user base into consumers

· Gross margins reach record high of 61%

Highlights for fiscal 2002:
· Record total revenues of US$28.7 million, a 121% increase year-on-year

· Revenue diversification for the year of 48%-52% mix between advertising and non-advertising business lines meets company guidance

· Positive cash flow from operations for the full year of 2002

· Proven monetization strategy and scalability: revenues more than doubled with 6% reduction in operating expenses in 2002 compared to 2001

· Consistent business strategy, management stability and proven execution track record
“2002 has been a year of unstoppable momentum for SOHU. Both our consumer products and online advertising business lines flourished as users and advertisers alike recognized the Internet as a mainstream media and entertainment platform in China. SOHU’s stellar performance throughout 2002 proves that our business model of diversified revenue on a scalable cost base has lead towards sustainable profitability,” commented Charles Zhang, CEO and Chairman of SOHU.

SOHU reported record revenues of US$10.6 million for its fourth quarter ended December 31, 2002, an increase of 157% year-on-year. Gross margins rose to 61% in Q4 2002. The Q4 2002 US GAAP (Generally Accepted Accounting Principles) net income of US$1.9 million or US$0.06 per share was a US$1.8 million improvement from the Q3 2002 net profit of US$112,000 and a US$4.4 million improvement from the Q4 2001 net loss of US$2.5 million.

SOHU’s fiscal year 2002 revenues totaled US$28.7 million, representing a 121% increase over revenues of US$13.0 million in 2001. Gross margins rose to 53% in 2002, up from 28% in 2001. The US GAAP net loss for 2002 was US$1.0 million or US$0.03 per share compared to a net loss of US$13.3 million or US$0.37 per share in 2001 (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 an accelerated pace in the fourth quarter, the Company is realizing its goal of building a sustainable and diversified business model on two strong pillars: a stable home-market corporate advertising base and a massive, paying user population.

For the fourth quarter of 2002, SOHU’s advertising revenue totaled US$4.3 million, a 72% year-on-year improvement and a 17% increase from US$3.7 million in Q3 2002, beating company guidance by US$630,000. Advertising revenue gross margins improved sequentially from 60% in Q3 to 65% in Q4, underscoring how SOHU successfully operates on a scalable cost structure.

As in previous quarters, domestic advertising clients, including TCL, Capitel and Dopod mobile phone manufacturers, Top Sun Pharmaceuticals and Fujian Industrial Bank, provided a dominant 82% share of advertising revenue. Multinational companies, among them Motorola and IBM, accounted for 18% of ad revenues.

In fiscal year 2002, SOHU’s advertising revenues surged 50% from US$9.2 million in 2001 to US$13.9 million as a result of domestic corporations adopting the Internet as a necessary means of advertising to young urban Chinese under growing competition in many sectors of the economy.

“We were able to improve on our Q3 record sales because SOHU offers its corporate clients a powerful online branding platform with the much sought-after market segment of young, urban consumers. Our latest success in partnering with the National Basketball Association underscores the extent to which SOHU can help companies reach consumers in a most effective, appealing way,” Victor Koo, COO of SOHU.COM, observed.

For the fourth quarter of 2002, SOHU’s non-advertising revenues grew 291% year-on-year to US$6.3 million and 63% from the prior quarter’s US$3.8 million, beating guidance by US$1.8 million. Non-advertising revenue gross margins reached a record high of 59%.
Non-advertising revenues from consumer services, consisting of e-subscriptions (mainly mobile services and short messaging) and e-commerce sales, contributed 59% of total revenues in Q4 2002. Through e-subscriptions, SOHU is monetizing its vast user base of over 50 million registered users and leveraging existing products. This organic growth was attributable to converting SOHU’s users into paying consumers with over 2/3 of e-subscriptions revenue now derived from monthly subscriptions for news, community, email and alumni club services.

In fiscal year 2002, SOHU’s non-advertising revenues rose three-fold from US$3.8 million in 2001 to US$14.9 million as a result of unprecedented fast-paced user acceptance of paid online and wireless services.

“SOHU’s central focus on our consumer business during 2002 has paid off. Our registered users have become paying consumers for mobile services, which are an important part of their daily lifestyle. SOHU’s millions of registered users and China’s 200 million plus mobile phone users form a strong basis for long-term growth prospects of our e-subscriptions,” said Charles Zhang.

SOHU remains committed to profitability through revenue growth and controlled spending. Q4 2002 operating expenses of US$4.8 million went up by 10% from Q4 2001. Operating expenses for fiscal year 2002 were down 6% over fiscal year 2001, while revenues have increased by 121% in the same period.

Q4 2002 US GAAP net income reached US$1.9 million, a US$1.8 million improvement over US$112,000 in Q3 2002.

In fiscal year 2002 cash flow from operating activities was US$5.3 million, as compared to negative US$10 million in fiscal year 2001. Q4 2002 cash flow from operating activities improved over the previous quarter by US$3.5 million.

At December 31, 2002, SOHU’s cash and marketable debt securities balance was US$44.2 million, an increase of US$1.1 million from the previous quarter’s balance of US$43.1 million.

“Due to the strong execution ability of our employees, SOHU has delivered its second consecutive profitable quarter well ahead of plan. The combination of the opportunities offered by the Chinese Internet industry and our loyal employees lays a strong foundation for sustainable profitability,” commented Derek Palaschuk, Chief Financial Officer of SOHU.

Business Outlook
In 2003, SOHU expects that advertising revenues will grow as both domestic and multinational companies continue to adopt the Internet to reach the rapidly growing Internet population. E-subscriptions (ie our consumer-based products) will remain the fastest growing area of the business and we expect non-advertising revenues for 2003 to account for 65 to 70% of total revenues.

SOHU believes that it can sustain its momentum of continued revenue growth and controlled spending to achieve first quarter net income no less than US$1.9 million ($0.06 per share). SOHU expects total revenues for Q1 2003 to be US$12.5 million, with advertising revenues of US$4.3 million and non-advertising revenues of US$8.2 million. Gross margin percentages in Q1 2003 are estimated to be similar to Q4 2002. First quarter capital expenditures are expected to be US$2.0 million.

“SOHU’s solid execution, stable management and high employee morale have been crucial factors contributing to the 2002 achievements. I am confident we can reach our financial and operational targets for 2003 by maintaining our strategic direction and continue to bring into play the dynamic business opportunities in the Chinese Internet industry,” concluded Charles Zhang, CEO and Chairman 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, 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
SOHU's management team will host a conference call at 7:30 PM EST, January 20, 2003 (8:30 AM on January 21, 2003 in the Hong Kong/China time zone) following the quarterly results announcement.
Conference call dial-in details: TELEPHONE: from Asia at (852) 2258-4002 or from within U.S.A.: (1-630) 395-0018, PASSCODE: 4570216, LEADER: Caroline Straathof.
Instant replay dial-in numbers (available for 24 hours): TELEPHONE: from Asia at (852) 2802-5151 or from within U.S.A.: (1-402) 220-1046, PASSCODE: 761922.
The conference call will be available on web cast live and replay at: http://www.sohu.com/about/English/conference.htm

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/