BEIJING, CHINA, July 29, 2004 - SOHU.COM Inc. (Nasdaq: SOHU), China's leading online media, communications, commerce and mobile value-added services company, today reported results for the second quarter ending June 30, 2004.

Business Highlights
Highlights for the second quarter 2004:
· Revenues up 41% year-on-year to US$27.3 million, exceeding Company guidance
· Brand Advertising & Sponsored Search revenues up 97% year-on-year to US$13.4 million, exceeding Company guidance
· Non-advertising revenues up 11% year-on-year to US$13.9 million, in top range of guidance
· US GAAP net income is US$9.9 million, or US$0.25 per share, within guidance
· Acquisition of Goodfeel, a leading wireless service provider, strengthens Company's competitive strength in high-growth market for 2.5-generation wireless applications
· Open beta launch of new multiplayer online game is off to a promising start
· SOHU web properties rank #1 in iResearch/Alexa monthly traffic rankings for first six months of 2004
· Company buy-back of one million SOHU shares

"We are very pleased with the second quarter results. Advertising revenues exceeded our expectations reflecting SOHU's clear-cut competitive strength in corporate brand advertising and sponsored search. As we anticipated, the transition in wireless business away from short messaging services is partly cushioned by the promising growth in our 2.5-generation wireless services, which includes a modest contribution from the newly acquired wireless services company Goodfeel. On top of that, our second multiplayer online game, Blade Online, is in a encouraging open beta testing phase. In our 2.5-generation wireless services and games we are on track to reach higher ground in the second half of 2004," said Charles Zhang, Chairman and CEO of SOHU.

Business Results
SOHU reported record revenues of US$27.3 million for its second quarter ended June 30, 2004, an increase of 41% year-on-year. Gross margins of 66% in Q2 2004 were slightly down from 68% in Q2 2003. SOHU'S Q2 2004 US GAAP (generally accepted accounting principles) net income of US$9.9 million, or US$0.25 per share, was a US$2.4 million improvement from the Q2 2003 net income of US$7.5 million, or US$0.19 per share.

SOHU's advertising revenue for the second quarter of 2004 totaled US$13.4 million, a 97% year-on-year improvement and 21% quarter-on-quarter. Advertising revenue accounted for 49% of total revenues in Q2 2004. Advertising gross margins of 75% were unchanged compared to the same period last year, reflecting how the smooth integration of the two vertical online game and real estate websites, 17173.com and Focus.cn, we acquired in late 2003 allowed SOHU to continue to reap the scalability benefits from online advertising.

"2004 is shaping up to be the strongest year ever for our advertising revenues. During the second quarter we grew our advertising revenues ahead of our expectations. We are taking full advantage of the event-rich third quarter as the official online partner for the Asian Football Cup and China Tennis Open, as well as dedicated content channels for the 2004 Athens Olympic Games and the Formula One Racing in Shanghai. Sponsored search is expected to do well too in the third quarter, during which we will formally launch our all-inclusive proprietary search engine," said Victor Koo, President and COO of SOHU.
SOHU's non-advertising revenues, which are derived from consumer services, grew 11% year-on-year for the second quarter of 2004 to US$13.9 million but were down 7% quarter-on-quarter, and contributed 51% of total revenues. Q2 2004 non-advertising revenues included US$11.3 million in wireless revenues, which were previously included in e-subscriptions revenues, US$1.4 million in e-commerce sales, and US$1.2 million in other consumer services. Non-advertising gross margins were lower at 58% compared to 64% in the same quarter one year ago because of the change in business mix, cost of content, special promotions and other investment in consumer services.

In May 2004 SOHU acquired Beijing G. Feel Technology Co., Ltd. ('Goodfeel'), a leading Chinese service provider for wireless application protocol (WAP). Goodfeel is one of the leading WAP providers to China Mobile Communication Corporation's Monternet platform, with its main products being ringtone and picture logos. Goodfeel's and SOHU's wireless teams have smoothly integrated to expand and cross-promote multi-media messaging services (MMS) and WAP product offerings. Meanwhile, SOHU continued to deepen and expand its sales and marketing efforts with regional wireless operators.

Revenues from 2.5-generation products (MMS and WAP) contributed 20% of total wireless revenues during the second quarter, with the remaining 80% coming from short messaging services, or SMS.

"We believe that our 2.5-generation wireless services, which include the contributions from Goodfeel, are fast becoming a new engine of growth. We believe that SOHU is going to be a significant player in these new wireless services," said Charles Zhang, Chairman and CEO of SOHU.

In early July, SOHU launched its new multiplayer online game, the domestically produced martial arts fighting game Blade Online, for open beta. The game has so far been well received by online game players in China. The game's commercial launch is scheduled to take place in the fourth quarter of 2004.

For the second quarter of 2004, SOHU's operating expenses totaled US$8.5 million, an increase of 47% year-on-year. Operating profit margins of 35% were down from 38% in the same period last year.

"SOHU needs to invest to solidify our key competitive edge in corporate brand advertising and search, and at the same time leverage our brand strength to gain market share in the dynamic consumer business. Thanks to our prudent attitude to spending we can maintain healthy operating profit margins while we continue to invest back in the business," Carol Yu, SOHU's Chief Financial Officer, said.

During the second quarter the Company purchased one million shares under a stock repurchase program approved by the Board of Directors in April 2004. As a result of the stock buy-back SOHU currently has approximately 36.3 million shares of common stock outstanding.

"The recent stock repurchase demonstrates our confidence in the health and future prospects of the company," commented Chairman and CEO Charles Zhang.

At June 30, 2004, SOHU's cash and marketable debt securities balance was US$130.1 million.

Business Outlook
SOHU's strategy in 2004 is aimed at capturing the benefits of the rapidly growing Internet market in China. SOHU estimates total revenues for the third quarter 2004 to be between US$28.1 million and US$29.1 million, with advertising revenues of US$15.6 million to US$16.0 million and non-advertising revenues of US$12.5 million to US$13.1 million. Third quarter net income is expected to be between US$0.23 to US$0.25 per diluted share.

Safe Harbor Statement
This 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.

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 possible 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, wireless services (most wireless revenues are collected from a few mobile telecom operators) and e-commerce for its revenues. Further information regarding these and other risks is included in SOHU's Annual Report on Form 10K for the year ended December 31, 2003, and other filings with the Securities and Exchange Commission.

Conference Call
SOHU's management team will host a conference call at 9:00 PM EST, July 28, 2004 (9:00AM on July 29, 2004 in the Hong Kong/China time zone) following the quarterly results announcement.

The conference call will be available on web cast live and replay at: http://www.sohu.com/about/English/conference.htm

Conference call dial-in details for the Live conference call: For the Live conference call:
Hong Kong Toll Number: +852-2258-4002
China (North) Toll Free Number: 10800-852-0823
China (South) Toll Free Number: 10800-152-0823
U.S.A Toll Number: +1-210-234-0000
Passcode: 5294474
Conference Leader: Caroline Straathof

For the Replay of the conference call (available for 24 hours):
HK Toll Number: +852-2802-5151
US Toll Number: +1-402-220-1205
Passcode: 776260

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/