"We are pleased to report a solid performance in our top and bottom line for the second quarter with healthy growth in our brand advertising, a strong uptake in our search revenue as traffic on our search engine SoGou shows rapid growth, and the recovery of our wireless business well on track," said Charles Zhang, Chairman and CEO of SOHU.

Business Results
Revenues for the second quarter ended June 30, 2005 totaled US$25.9 million, compared to revenues of US$23.7 million for the first quarter ended March 31, 2005, and US$27.3 million for the second quarter ended June 30, 2004. Gross margin of 67% in Q2 2005 was down slightly from 68% in the previous quarter and slightly up from 66% in Q2 2004. Net income for the second quarter of 2005 was US$7.1 million or US$0.18 per fully diluted share. This compares to net income of US$5.7 million or US$0.15 per fully diluted share for the first quarter of 2005 and US$9.9 million or US$0.25 per fully diluted share for the second quarter of 2004.

SOHU's advertising revenues for the second quarter of 2005 totaled US$17.0 million, a 27% year-on-year improvement and 14% increase quarter-on-quarter. Advertising revenues, consisting of US$13.9 million in brand advertising and US$3.1 million in sponsored search, accounted for 66% of total revenues in the second quarter of 2005. Advertising gross margin was 75%, compared to 76% in Q1 2005 and 75% in Q2 2004.

For the second quarter of 2005 SOHU's non-advertising revenues, which are derived from wireless value-added services, online games and e-commerce, decreased by 36% year-on-year but stayed unchanged quarter-on-quarter at US$8.9 million, representing 34% of total revenues. The year-on-year decline was caused primarily by a reduction in wireless revenue of 44% year-on-year. Wireless revenue posted its second consecutive quarter of sequential growth, however, increasing 7% over the first quarter, reflecting a continuing recovery in SOHU's wireless business. Online games revenue was unchanged compared to the first quarter. A decline in e-commerce revenue due to a change in the company's e-commerce business model offset the growth in wireless revenue, resulting in overall flat quarter-on-quarter non-advertising revenue. Non-advertising gross margin was 53% compared to 55% in Q1 2005 and 58% in Q2 2004, mostly due to Unicom's increasing its percentage share of SMS revenue and charging additional service fees for its marketing services.

For the second quarter of 2005, SOHU's operating expenses totaled US$10.7 million, largely unchanged quarter-on-quarter, but an increase of 27% year-on-year. Operating profit margin of 26% was up from 23% in Q1 2005 and down from 35% in the second quarter last year. The year-on-year increase in operating expenses is mostly due to SOHU's investment in long-term growth opportunities, the rise in sales and marketing spending, and the consolidation of operating expenses from the wireless services provider Goodfeel that SOHU acquired in May 31 2004 and the mapping services provider Go2Map that SOHU acquired in May 31 2005.

In July 2005, SOHU launched the beta version of a casual game platform with nine internally developed casual games. The company intends to build a substantial user base before considering ways to monetize this casual games platform.

"We are pleased to see SOHU's improved operational results as we continue to invest in our in-house research and development program and look into strategic opportunities to leverage the Company's organic growth and drive long-term shareholder value based on sustainable growth in China's Internet opportunity," Carol Yu, SOHU's Chief Financial Officer, said.
At June 30, 2005, SOHU's cash, cash equivalents and investments in marketable debt securities balance was US$124.8 million.

Business Outlook
SOHU estimates total revenues for the third quarter 2005 to be between US$26.5 million and US$28.5 million, with advertising revenues of US$17.5 million to US$18.5 million and non-advertising revenues of US$9.0 million to US$10.0 million. Third quarter earnings per fully diluted share are expected to be between US$0.18 and US$0.22.

Note to the Financial Information
The financial information in this press release is extracted from SOHU's unaudited financial statements prepared in accordance with generally accepted accounting principles in the United States.

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 and limited operating history, the uncertain regulatory landscape in the People's Republic of China, fluctuations in SOHU's 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), online games and e-commerce for its revenues. Further information regarding these and other risks is included in SOHU's annual report on Form 10-K for the year ended December 31, 2004, Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, 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 27, 2005 (or 9:00 AM on July 28, 2005 in the Beijing/Hong Kong time zone) following the quarterly results announcement.

To listen to the conference call, please use the dial in numbers below:

CHINA Netcom Toll Free Number: 10800-852-0824
CHINA Telecom Toll Free Number: 10800-152-0824
HONG KONG Toll Number: +852-2258-4102
USA Toll Number: +1-210-795-0495
USA Backup Number: 1-210-795-0505
PASSCODE: 7515726

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

About SOHU
SOHU.COM (NASDAQ: SOHU) is China's premier online brand and indispensable to the daily life of millions of Chinese who use the portal network for their news, search, e-mail, wireless messaging, instant messaging, browsing, games and shopping. SOHU has built the most comprehensive matrix of web properties in China, consisting of the mass portal and leading online media destination www.sohu.com ; the #1 online alumni club www.chinaren.com; #1 games portal www.17173.com and top real estate website www.focus.cn. This network of web properties offers the vast SOHU user community the broadest possible choices regarding information, entertainment, communication and commerce. SOHU.com, established by Dr. Charles Zhang, one of China's Internet pioneers, is in its eighth year of operation.

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/