Sohu.com Reports Fourth Quarter and Fiscal Year 2012 Unaudited Financial Results

   Sohu.com Reports Fourth Quarter and Fiscal Year 2012 Unaudited Financial
                                   Results

Fourth Quarter of 2012:

Record Total Revenues of US$299 Million, Up 22% Year-over-Year and 5%
Quarter-over-Quarter, Exceeding the High End of Group Guidance by US$6
Million;

GAAP Fully Diluted EPS of US60 Cents; Non-GAAP Fully Diluted EPS of US73
Cents, Exceeding the High End of Group Guidance by US8 Cents

Fiscal Year 2012:

Record Total Revenues of US$1,067 Million, Up 25% Year-over-Year

GAAP Fully Diluted EPS of US$2.03; Non-GAAP Fully Diluted EPS of US$2.54

PR Newswire

BEIJING, Feb. 4, 2013

BEIJING, Feb. 4, 2013 /PRNewswire/ -- Sohu.com Inc. (NASDAQ: SOHU), China's
leading online media, search, gaming, community and mobile service group,
today reported unaudited financial results for the fourth quarter and fiscal
year ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20100201/CNM013LOGO )

Fourth Quarter Highlights

  oRecord total revenues and record revenues in brand advertising, Sogou[1]
    and online game businesses.
  oTotal revenues were US$299 million, up 22% year-over-year and 5%
    quarter-over-quarter.
  oBrand advertising revenues were US$82 million, up 6% year-over-year and 5%
    quarter-over-quarter.
  oSogou revenues were US$41 million, up 78% year-over-year and 10%
    quarter-over-quarter.
  oOnline game revenues were US$159 million, up 29% year-over-year and 5%
    quarter-over-quarter.
  oGAAP net income attributable to Sohu.com Inc. was US$23 million, or
    US$0.60 per fully diluted share. Non-GAAP net income attributable to
    Sohu.com Inc. was US$28 million, or US$0.73 per fully diluted share.

Fiscal Year 2012 Highlights

  oRecord total revenues and record revenues in brand advertising, Sogou, and
    online game businesses.
  oTotal revenues were US$1,067 million, up 25% year-over-year.
  oBrand advertising revenues were US$290 million, up 4% year-over-year.
  oSogou revenues were US$131 million, up 108% year-over-year.
  oOnline game revenues reached US$575 million, up 32% year-over-year.
  oGAAP net income attributable to Sohu.com Inc. was US$78 million, or
    US$2.03 per fully diluted share. Non-GAAP net income attributable to
    Sohu.com Inc. was US$98 million, or US$2.54 per fully diluted share.

[1] Sogou operates search and others business and offers Internet value-added
services ("IVAS") with respect to Web games developed by third-party
developers. Search and others business include search and Sogou Web
Directory. In statements of operations, revenues from search and Sogou Web
Directory are recorded as "search and others" revenue, and revenue from IVAS
is recorded as "others" revenue.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "We ended 2012
with an encouraging fourth quarter. Looking at 2012, despite the slowdown in
China's economic growth, I'm pleased that the Sohu Group's total annual
revenues rose 25% year-on-year and surpassed the $1 billion mark for the first
time in our history, setting an important milestone for the Sohu Group."

Dr. Zhang added, "By business units, for online video, we achieved initial
success of our newly established dedicated sales team as the business returned
to growth in the fourth quarter, and we expect the performance to further
accelerate in 2013. Sogou once again achieved triple-digit year-on-year
revenue growth in 2012, and we were thrilled with some notable breakthrough
products on the mobile side that have been well received by users. For
Changyou, strong performance from both MMO and web games helped post a new
record for revenues."

Ms. Belinda Wang, Co-President and COO added, "The recent data shows that the
number of visitors and page views of Sohu.com homepage both grew about 25% in
the past 12 months, demonstrating our position as one of the most influential
online media in China. In the fourth quarter, our brand advertising revenues
were at the high end of our prior guidance. This was mainly due to solid
performance from the auto, online video and real estate sectors. In
particular, we expect the sales growth momentum in our video business to
continue in 2013."

Fourth Quarter Financial Results

Revenues

Total revenues for the fourth quarter of 2012 were US$299 million, up 22%
year-over-year and 5% quarter-over-quarter.

Total online advertising revenues, which include revenues from brand
advertising and search and others businesses for the fourth quarter of 2012,
were US$121 million, up 20% year-over-year and 7% quarter-over-quarter.

Brand advertising revenues for the fourth quarter of 2012 totaled US$82
million, up 6% year-over-year and 5% quarter-over-quarter. The increases were
mainly contributed by the revenue increase derived from real estate
advertisers.

Search and others revenues for the fourth quarter of 2012 were US$39 million,
up 68% year-over-year and 10% quarter-over-quarter. The year-over-year
increase was mainly contributed by pay-for-click services, as well as online
marketing services on the Sogou Web Directory, both as a result of increased
traffic and improved monetization of traffic.

Online game revenues for the fourth quarter of 2012 were US$159 million, up
29% year-over-year and 5% quarter-over-quarter.

Wireless revenues for the fourth quarter of 2012 were US$13 million, down 13%
year-over-year and 12% quarter-over-quarter. The decreases were mainly due to
the influence of new operator policies to reduce customer complaints.

Gross Margin

Both GAAP and non-GAAP gross margin was 69% for the fourth quarter of 2012,
compared with 66% in the third quarter of 2012 and 71% in the fourth quarter
of 2011.

Online advertising gross margin for the fourth quarter of 2012 was 52%,
compared with 49% in the third quarter of 2012 and 59% in the fourth quarter
of 2011. Non-GAAP online advertising gross margin for the fourth quarter of
2012 was 53%, compared with 50% in the third quarter of 2012 and 59% in the
fourth quarter of 2011.

Both GAAP and non-GAAP gross margin for brand advertising in the fourth
quarter of 2012 was 56%, compared with 52% in the third quarter of 2012 and
61% in the fourth quarter of 2011. The year-over-year decrease in gross margin
was primarily due to increases in content and bandwidth costs. The
quarter-over-quarter increase in gross margin was primarily due to decrease in
content costs.

Both GAAP and non-GAAP gross margin for search and others business in the
fourth quarter of 2012 were 44%, compared with 44% in the third quarter of
2012 and 53% in the fourth quarter of 2011. The year-over-year decrease in
margin was mainly due to higher traffic acquisition costs.

Both GAAP and non-GAAP gross margin for online games in the fourth quarter of
2012 were 86%, compared with 86% in the third quarter of 2012 and 87% in the
fourth quarter of 2011.

Both GAAP and non-GAAP gross margin for the wireless business for the fourth
quarter of 2012 were 34%, compared with 34% in the third quarter of 2012 and
37% in the fourth quarter of 2011. The year-over-year decrease was primarily
due to increased revenue sharing rate with partners.

Operating Expenses

For the fourth quarter of 2012, operating expenses totaled $142 million, up
12% year-over-year and 13% quarter-over-quarter. Non-GAAP operating expenses
were $138 million, up 46% year-over-year and 14% quarter-over-quarter. Both
the year-over-year and quarter-over-quarter increases were primarily due to an
increase in salaries and compensation expenses as a result of increased
headcount, and higher expenses associated with marketing and promotion
activities.

Operating Profit

Operating profit for the fourth quarter of 2012 was US$64 million, up 33%
year-over-year and up 1% quarter-over-quarter. Operating margin was 22% for
the fourth quarter of 2012, compared with 22% in the previous quarter and 20%
in the fourth quarter of 2011.

Non-GAAP operating profit for the fourth quarter of 2012 was US$68 million,
down 15% year-over-year and up 1% quarter-over-quarter. Non-GAAP operating
margin was 23% for the fourth quarter of 2012, compared with 24% in the
previous quarter and 33% in the fourth quarter of 2011.

Income Tax Expense

For the fourth quarter of 2012, GAAP income tax expense was US$20 million.
Excluding a non-cash income tax expense of US$2 million recorded for the
utilization of tax benefits from excess tax deductions related to share-based
awards, non-GAAP income tax expense was US$18 million, compared with US$18
million in the previous quarter.

Net Income

Before deducting the share of net income pertaining to the Non-controlling
Interest, GAAP net income for the fourth quarter of 2012 was US$51 million, up
8% year-over-year and down 1% quarter-over-quarter. Non-GAAP net income for
the fourth quarter of 2012 was US$57 million, down 26% year-over-year and 3%
quarter-over-quarter.

GAAP net income attributable to Sohu.com Inc. for the fourth quarter of 2012
was US$23 million, or US$0.60 per fully diluted share, down 9% year-over-year
and 4% quarter-over-quarter. Non-GAAP net income attributable to Sohu.com
Inc. for the fourth quarter of 2012 was US$28 million, or US$0.73 per fully
diluted share, down 47% year-over-year and 4% quarter-over-quarter.

Cash Balance

As of December 31, 2012, Sohu Group had cash and cash equivalents of US$834
million, compared with US$733 million as of December 31, 2011.

Fiscal Year 2012 Financial Results 

Revenues

Total revenues for fiscal year 2012 were US$1,067 million, up 25% compared
with 2011.

Total online advertising revenues, which include revenues from brand
advertising and search and others businesses for fiscal year 2012 were US$415
million, up 21% compared with 2011.

Brand advertising revenues for fiscal year 2012 were US$290 million, up 4%
compared with 2011. The year-over-year increase was mainly contributed by the
revenue increase derived from the fast-moving consumer goods ("FMCG")
advertisers.

Search and others revenues for fiscal year 2012 were US$124 million, up 98%
compared with 2011. The year-over-year increase was mainly contributed by
pay-for-click services, as well as online marketing services on the Sogou Web
Directory, both as a result of increased traffic and improved monetization of
traffic.

Online game revenues for fiscal year 2012 were US$575 million, up 32% compared
with 2011.

Wireless revenues for fiscal year 2012 were US$56 million, up 7% compared with
2011.

Gross Margin

Both GAAP and non-GAAP gross margin was 65% for fiscal year 2012, compared
with GAAP and non-GAAP gross margin of 72% in 2011.

Both GAAP and non-GAAP gross margin for online advertising gross margin for
fiscal year 2012 was 44%, compared with GAAP gross margin of 58% and non-GAAP
gross margin of 59% in 2011.

Brand advertising gross margin for fiscal year 2012 was 44%, compared with 62%
in 2011. Non-GAAP brand advertising gross margin for fiscal year 2012 was 45%,
compared with 62% in 2011. The decreases in gross margin were primarily due to
increases in content and bandwidth costs, including the impairment loss
recognized for the video content related long-lived assets in the second
quarter of 2012.

Both GAAP and non-GAAP gross margin for search and others business for fiscal
year 2012 were 43%, compared with 44% in 2011.

Both GAAP and non-GAAP gross margin for online games for fiscal year 2012 were
86%, compared with 89% in 2011.

Both GAAP and non-GAAP gross margin for the wireless business for fiscal year
2012 were 34%, compared with 39% in 2011. The decline was primarily due to
increased revenue sharing rate with partners.

Operating Expenses

For fiscal year 2012, operating expenses totaled US$474 million, up 33%
compared with 2011. Non-GAAP operating expenses were US$458 million, up 46%
compared with 2011. The year-over-year increase was primarily due to an
increase in salaries and compensation expenses as a result of increased
headcount and higher expenses associated with marketing and promotion
activities.

Operating Profit

Operating profit for fiscal year 2012 was US$223 million, down 12% compared
with 2011. Operating margin was 21% for fiscal year 2012, compared with 30% in
2011.

Non-GAAP operating profit for fiscal year 2012 was US$240 million, down 20%
compared with 2011. Non-GAAP operating margin was 23% for fiscal year 2012,
compared with 35% in 2011.

Income Tax Expense

For fiscal year 2012, GAAP income tax expense was US$76 million. Excluding a
non-cash income tax expense of US$5.6 million recorded for the utilization of
tax benefits from excess tax deductions related to share-based awards and
deferred tax liability impact on intangible asset impairment of US$0.6
million, non-GAAP income tax expense was US$71 million.

Net Income

Before deducting the share of net income pertaining to the Non-controlling
Interest, GAAP net income for fiscal year 2012 was US$177 million, down 22%
compared with 2011. Non-GAAP net income for fiscal year 2012 was US$201
million, down 26% compared with 2011.

GAAP net income attributable to Sohu.com Inc. for fiscal year 2012 was US$78
million, or US$2.03 per fully diluted share, down 49% compared with 2011.
Non-GAAP net income attributable to Sohu.com Inc. for fiscal year 2012 was
US$98 million, or US$2.54 per fully diluted share, down 49% compared with
2011.

Ms. Carol Yu, Co-President and CFO of Sohu.com Inc. commented, "We are
delighted that in 2012, the efforts made by each of our business units
strengthened their respective market positions. For 2013, we will continue to
invest in key initiatives to capture the great opportunities ahead of us."

Supplementary Information for Online Game Results

Fourth Quarter 2012 Operational Results

  oAggregate registered accounts for Changyou's games[2] , excluding 7Road's
    games, increased 41% year-over-year and 11% quarter-over-quarter to 248.1
    million.
  oAggregate peak concurrent users ("PCU") for Changyou's games, excluding
    7Road's games, decreased 6% year-over-year and increased 1%
    quarter-over-quarter to 1.10 million.
  oAggregate active paying accounts ("APA") for Changyou's games, excluding
    7Road's games, decreased 31% year-over-year and 9% quarter-over-quarter to
    2.20 million. The year-over-year and quarter-over-quarter decreases
    reflected a decline in the number of low-spending active paying accounts
    that did not make a purchase in the fourth quarter of 2012 as Changyou
    continued the strategy of the previous two quarters of giving away virtual
    items and reducing in-game promotions in TLBB.
  oAverage revenue per active paying account ("ARPU") for Changyou's games,
    excluding 7Road's games, increased 60% year-over-year and 11%
    quarter-over-quarter to RMB353. The year-over-year and
    quarter-over-quarter increases were mainly due to the decline in TLBB's
    low-spending active paying accounts and TLBB's advanced level players
    increasing their spending in the fourth quarter of 2012.

[2] Excludes 7Road's games and comprises the following games operated in
China: Tian Long Ba Bu ("TLBB"), Duke of Mount Deer ("DMD"), Blade Online,
Blade Hero 2, Tao Yuan, Da Hua Shui Hu, Zhong Hua Ying Xiong, Immortal Faith,
and Legend of Ancient World.

Business Outlook

For the first quarter of 2013, Sohu estimates:

  oTotal revenues to be between US$290 million and US$299 million.
  oBrand advertising revenues to be between $78 million and $80 million;
    this implies a sequential decrease of 2% to 5% and an annual increase of
    28% to 31%.
  oSogou revenues to be between $34 million and $36 million; this implies a
    sequential decrease of 12% to 17% and an annual growth of 50% to 59%.
  oOnline game revenues to be between US$160 million and US$165 million. This
    implies a sequential increase of 1% to 4% and an annual growth of 26% to
    29%.
  oBefore deducting the share of non-GAAP net income pertaining to the
    Non-Controlling interest, non-GAAP net income to be between US$46 million
    and US$49 million.
  oNon-GAAP net income attributable to Sohu.com Inc. to be between US$19
    million and US$21 million, and non-GAAP fully diluted earnings per share
    to be between US$0.50 and US$0.55.
  oAssuming no new grants of share-based awards, we estimate that
    compensation expenses and income tax expenses relating to share-based
    awards to be around US$3 million to US$4 million. The estimated impact of
    this expense is expected to reduce Sohu's fully diluted earnings per share
    for the first quarter of 2013 under US GAAP by 9 to 11 US cents.

Re-defined Responsibilities of Xiaochuan Wang

Given the growing significance of Sogou and the substantial size ofits
operations, Mr. Xiaochuan Wang will focus full-time as the Chief Executive
Officer of Sogou,and will no longer act in the dual capacity as Sohu Group's
Chief Technology Officer.

Non-GAAP Disclosure

Beginning in the fourth quarter of 2011, Sohu revised its non-GAAP reporting
methodology to exclude income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact, in addition to its historical
practice of excluding share-based awards from non-GAAP results.

To supplement the unaudited consolidated financial statements presented in
accordance with accounting principles generally accepted in the United States
of America ("GAAP"), Sohu's management uses non-GAAP measures of gross profit,
operating profit, income tax expense, net income attributable to Sohu.com.Inc.
and net income attributable to Sohu.com.Inc. per share, which are adjusted
from results based on GAAP to exclude the impact of share-based awards, which
consist mainly of share-based compensation expenses and non-cash tax benefits
from excess tax deductions related to share-based awards, income/expense from
the adjustment of contingent consideration previously recorded for
acquisitions and goodwill impairment and impairment of intangibles via
acquisitions of businesses and the related tax impacts. These measures should
be considered in addition to results prepared in accordance with GAAP, but
should not be considered a substitute for, or superior to, GAAP results.

Sohu's management believes excluding the impact of share-based awards,
non-cash tax benefits from excess tax deductions related to share-based
awards, income/expense from the adjustment of contingent consideration,
goodwill impairment, impairment of intangibles via acquisitions of businesses
and the related tax impact from its non-GAAP financial measure is useful for
itself and investors. Further, the impact of share-based awards, utilization
of non-cash tax benefits from excess tax deductions related to share-based
awards, income/expense from the adjustment of contingent consideration,
goodwill impairment, impairment of intangibles via acquisitions of businesses
and the related tax impact cannot be anticipated by management and business
line leaders and these expenses were not built into the annual budgets and
quarterly forecasts, which have been the basis for information Sohu provides
to analysts and investors as guidance for future operating performance. As the
impact of share-based awards, non-cash tax benefits from excess tax deductions
related to share-based awards, income/expense from the adjustment of
contingent consideration, goodwill impairment, impairment of intangibles via
acquisitions of businesses and the related tax impact does not involve
subsequent cash outflow, Sohu does not factor this in when evaluating and
approving expenditures or when determining the allocation of its resources to
its business segments. As a result, in general, the monthly financial results
for internal reporting and any performance measure for commissions and bonuses
are based on non-GAAP financial measures that exclude the impact of
share-based awards, non-cash tax benefits from excess tax deductions related
to share-based awards,income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact.

The non-GAAP financial measures are provided to enhance investors' overall
understanding of Sohu's current financial performance and prospects for the
future. A limitation of using non-GAAP gross profit, operating profit, income
tax expense, net income attributable to Sohu.com Inc. and net income
attributable to Sohu.com Inc. per share, excluding the impact of share-based
awards, non-cash tax benefits from excess tax deductions related to
share-based awards, income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact is that the impact of share-based
awards and non-cash tax benefits from excess tax deductions related to
share-based awards have been and will continue to be a significant recurring
expense in Sohu's business for the foreseeable future, income/expense from the
adjustment of contingent consideration, goodwill impairment, impairment of
intangibles via acquisitions of businesses and the related tax impact may
recur in the future. In order to mitigate these limitations Sohu has provided
specific information regarding the GAAP amounts excluded from each non-GAAP
measure. The accompanying tables include details on the reconciliation between
the GAAP financial measures that are most directly comparable to the non-GAAP
financial measures that have been presented.

Notes to Financial Information

Financial information in this press release other than the information
indicated as being non-GAAP is derived from Sohu's unaudited interim financial
statements prepared in accordance with GAAP.

Mezzanine equity consists of non-controlling interests in 7Road and a put
option that gives the non-controlling shareholders the right to put their
shares to Changyou at a pre-determined price if 7Road achieves specified
performance milestones before the expiry of the put option and 7Road does not
complete an initial public offering on NASDAQ, the New York Stock Exchange or
The Stock Exchange of Hong Kong. The put option will expire in 2014.
Non-controlling interests of 7Road and the put option are classified as
mezzanine equity in Changyou's consolidated balance sheets, as redemption of
the non-controlling interests is not solely within the control of Changyou.

In accordance with ASC subtopic 480-10, Changyou accretes the balance of
non-controlling interests to its redemption value over the period from the
date of the 7Road acquisition to the earliest exercise date of the put right.
Any subsequent changes in the redemption value are considered to be changes in
accounting estimates and are also recognized over the same period as net
income attributable to mezzanine classified non-controlling interests.

In the third quarter of 2012, Changyou estimated that based on 7Road's
performance in the first three quarters of 2012, 7Road will likely exceed its
originally estimated performance for year 2012 and 2013, which will be the
basis to determine the exercise price of the put option. As a result, the
Company has increased the estimated redemption value of the mezzanine
classified non-controlling interests in 7Road. The increase in the redemption
value was recognized prospectively over the period from the date of the change
in estimate to the earliest exercise date of the put right as an increase in
net income attributable to mezzanine classified non-controlling interests.

Safe Harbor Statement

This announcement contains forward-looking statements. It is currently
expected that the Business Outlook will not be updated until release of Sohu's
next quarterly earnings announcement; however, Sohu reserves right to update
its Business Outlook at any time for any reason. Statements that are not
historical facts, including statements about Sohu's 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, the current
global financial and credit markets crisis and its potential impact on the
Chinese economy, the uncertain regulatory landscape in the People's Republic
of China, fluctuations in Sohu's quarterly operating results, and Sohu's
reliance on online advertising sales, online games and wireless services (most
wireless revenues are collected from a few mobile network operators) 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, 2011, and
other filings with the Securities and Exchange Commission.

Conference Call and Webcast

Sohu's management team will host a conference call on the same day at 8:30
a.m. U.S. Eastern Time, February 4, 2013 (9:30 p.m. Beijing/Hong Kong time,
February 4, 2013) following the quarterly and fiscal year results
announcement.

The dial-in details for the live conference call are:

US Toll-Free:  +1-866-519-4004
International: +1-718-354-1231
Hong Kong:     +852-2475-0994
China Mainland +86-800-819-0121 / +86-400-620-8038
Passcode:      SOHU

Please dial in 10 minutes before the call is scheduled to begin and provide
the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the
conference call at 10:30 a.m. Eastern Time on February 4 through February 11,
2013. The dial-in details for the telephone replay are:

International: +1-646-254-3697
Passcode:      89774802

The live webcast and archive of the conference call will be available on the
Investor Relations section of Sohu's website at http://corp.sohu.com/.

About Sohu.com

Sohu.com Inc. (NASDAQ: SOHU) is China's premier online brand and indispensable
to the daily life of millions of Chinese, providing a network of web
properties and community based/web 2.0 products which offer the vast Sohu user
community a broad array of choices regarding information, entertainment and
communication. Sohu has built one of the most comprehensive matrices of
Chinese language web properties and proprietary search engines, consisting of
the mass portal and leading online media destination www.sohu.com; interactive
search engine www.sogou.com; #1 games information portal www.17173.com; the
top real estate website www.focus.cn; #1 online alumni club www.chinaren.com;
wireless value-added services provider www.goodfeel.com.cn; leading online
mapping service provider www.go2map.com; and developer and operator of online
games www.changyou.com/en/.

Sohu corporate services consist of online brand advertising on its matrix of
websites as well as bid listing and home page on its in-house developed search
directory and engine. Sohu also offers wireless value-added services such as
news, information, music, ringtone and picture content sent over mobile
phones. Sohu's online game subsidiary, Changyou.com (NASDAQ: CYOU) has a
diverse portfolio of online games that includes Tian Long Ba Bu, one of the
most popular massively multi-player online ("MMO") games in China, and DDTank
and Wartune (also known as Shen Qu), which are two popular web games in China.
Sohu.com, established by Dr. Charles Zhang, one of China's internet pioneers,
is in its seventeen year of operation.

For investor and media inquiries, please contact:

In China:

Mr. Eric Yuan
Sohu.com Inc.
Tel: +86 (10) 6272-6593
E-mail: ir@contact.sohu.com

In the United States:

Mr. Jeff Bloker
Christensen
Tel: +1 (480) 614-3003
E-mail: jbloker@ChristensenIR.com



SOHU.COM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                                          Three Months Ended            Twelve Months Ended
                                                                                          Dec.      Sep.      Dec.      Dec. 31,    Dec.
                                                                                          31,       30,       31,       2012        31,
                                                                                          2012      2012      2011                  2011
Revenues:
Online advertising
 Brand advertising                                                               $ 82,051  $ 77,874  $ 77,736  $ 290,205   $ 279,189
 Search and others                                                                 38,705    35,284    22,979    124,389     62,981
 Subtotal                                                                     120,756   113,158   100,715   414,594     342,170
Online games                                                                              158,942   151,093   123,249   574,653     435,508
Wireless                                                                                  12,632    14,312    14,456    55,893      52,015
Others                                                                                    7,162     6,815     7,733     22,061      22,394
 Total revenues                                                         299,492   285,378   246,153   1,067,201   852,087
Cost of revenues:
Online advertising
 Brand advertising (includes stock-based

compensation expense of $155, $150, $438, $324 and                                        35,864    37,476    30,449    161,195     107,391

$1,908, respectively)
Search and others (includes stock-based

compensation expense of $23, $21, $0, $87 and $0,                                         21,572    19,736    10,779    70,628      35,144

respectively)
Subtotal                                                                                  57,436    57,212    41,228    231,823     142,535
Online games (includes stock-based compensation                                           22,124    21,026    16,341    77,859      49,837
expense of $44, $61, $29, $237 and $102, respectively)
Wireless (includes stock-based compensation expense                                       8,358     9,474     9,154     36,893      31,882
of $0, $0, $0, $0 and $0, respectively)
Others (includes stock-based compensation expense of                                      5,625     9,037     4,734     23,083      16,093
$0, $0, $0, $0 and $0, respectively)
 Total cost of revenues                                                            93,543    96,749    71,457    369,658     240,347
Gross profit                                                                              205,949   188,629   174,696   697,543     611,740
Operating expenses:
Product development (includes stock-based
compensation expense of $1,191, $1,316, $1,635, $5,210                                    52,432    46,994    34,612    181,359     112,617
and $6,461, respectively)
Sales and marketing (includes stock-based
compensation expense of $536, $582, $859, $2,149 and                                      68,833    58,250    45,912    214,736     158,187
$3,694, respectively)
General and administrative (includes stock-based compensation expense of $1,815,          20,275    19,666    18,126    75,243      59,126
$1,713, $1,630, $5,959 and $6,487, respectively)
Goodwill impairment and impairment of acquired                                            -         -         27,511    2,906       27,511
intangibles via acquisition of businesses
 Total operating expenses                                                           141,540   124,910   126,161   474,244     357,441
Operating profit                                                                          64,409    63,719    48,535    223,299     254,299
Other income/(expense)                                                                    2,102     (111)     4,561     5,422       9,799
Interest income                                                                           5,585     5,974     5,488     25,277      15,800
Exchange difference                                                                       (704)     667       (499)     (635)       (5,003)
Income before income tax expenses                                                         71,392    70,249    58,085    253,363     274,895

                                                                                          20,290    18,727    10,828    76,171      46,552
Income tax expense
Net Income                                                                                51,102    51,522    47,257    177,192     228,343
Less: Net income attributable to the mezzanine                                            4,495     4,495     1,105     11,196      2,558
classified noncontrolling interest shareholders
 Net income attributable to the noncontrolling                                   21,219    21,146    19,295    78,837      63,044
interest shareholders
Net income attributable to Sohu.com Inc.                                                  25,388    25,881    26,857    87,159      162,741
Basic net income per share attributable to Sohu.com Inc.                                $ $0.67   $ 0.68    $ $0.71   $ $2.29     $ $4.26
Shares used in computing basic net income per share attributable to Sohu.com Inc.         38,046    38,022    38,076    38,038      38,216
Diluted net income per share attributable to Sohu.com Inc.                              $ $0.60   $ 0.63    $ $0.65   $ 2.03      $ 3.93
Shares used in computing diluted net income per share attributable to Sohu.com Inc.       38,393    38,344    38,574    38,392      38,761
Note:



(a) The classification of certain comparative figures of online advertising expenses has been changed to conform to the current period
presentation.



SOHU.COM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)
                                               As of Dec. 31,   As of Dec. 31,
                                               2012             2011
ASSETS
Current assets:
 Cash and cash equivalents         $ 833,535        $ 732,607
Restricted time deposits                       116,140          -
Short term investments                         54,901           17,560
Investment in debt securities                  79,548           79,354
 Accounts receivable, net            98,398           87,066
 Prepaid and other current assets    49,256           53,894
 Total current assets      1,231,778        970,481
Fixed assets, net                              178,951          152,652
Goodwill                                       159,215          158,905
Intangible assets, net                         70,054           69,762
Restricted time deposits                       130,699          -
Prepaid non-current assets                     291,643          270,282
Other assets                                   13,792           11,212
 Total assets        $ 2,076,132      $ 1,633,294
LIABILITIES
Current liabilities:
 Accounts payable                  $ 61,429         $ 31,179
 Accrued liabilities                 117,029          95,409
 Receipts in advance and deferred    89,687           75,809
revenue
 Accrued salary and benefits         61,722           45,300
 Taxes payable                       33,897           47,213
 Deferred tax liability              11,878           -
 Short-term bank loans               113,000          -
 Other short-term liabilities        63,352           35,816
 Contingent consideration            76               476
 Total current           $ 552,070        $ 331,202
liabilities
Long-term accounts payable                     12,684           3,612
Long-term bank loans                           126,353          -
Deferred tax liabilities                       7,998            5,146
Contingent consideration                       -                17,009
Total long-term liabilities                  $ 147,035        $ 25,767
 Total liabilities   $ 699,105        $ 356,969
MEZZANINE EQUITY                               61,810           57,254


SHAREHOLDERS' EQUITY:
 Sohu.com Inc. shareholders' equity   1,084,223        1,008,425
 Noncontrolling Interest              230,994          210,646
 Total shareholders'     $ 1,315,217      $ 1,219,071
equity
Total liabilities, mezzanine equity and
shareholders'                              $ 2,076,132      $ 1,633,294

equity



SOHU.COM INC.

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                   Three Months Ended Dec. 31, 2012                 Three Months Ended Sep. 30, 2012     Three Months Ended Dec. 31, 2011
                                                   GAAP     Non-GAAP        Non-GAAP   GAAP      Non-GAAP        Non-GAAP   GAAP      Non-GAAP        Non-GAAP
                                                            Adjustments                                       Adjustments                          Adjustments
                                                            155         (a)                                   150         (a)                      438         (a)
Brand advertising gross profit                  $ 46,187   155             46,342                $ 40,398  $ 150         $   40,548   $ 47,287  $ 438         $   47,725
Brand advertising gross margin                     56%                      56%                     52%                       52%        61%                       61%
                                                            23          (a)                                   21          (a)
Search and others gross                          $ 17,133   23              17,156                $ 15,548  $ 21          $   15,569   $ 12,200  $ -           $   12,200
profit
Search and others gross margin                     44%                      44%                     44%                       44%        53%                       53%
                                                            178         (a)                                   171         (a)                      438         (a)
Online advertising gross profit                  $ 63,320   178             63,498                $ 55,946  $ 171         $   56,117   $ 59,487  $ 438         $   59,925
Online advertising gross margin                    52%                      53%                     49%                       50%        59%                       59%
                                                            44          (a)                                   61          (a)                      29          (a)
Online games gross profit                        $ 136,818  44              136,862               $ 130,067 $ 61          $   130,128  $ 106,908 $ 29          $   106,937
Online games gross margin                          86%                      86%                     86%                       86%        87%                       87%
Wireless gross profit                            $ 4,274    -               4,274                 $ 4,838   $ -           $   4,838    $ 5,302   $ -           $   5,302
Wireless gross margin                              34%                      34%                     34%                       34%        37%                       37%
Others gross profit                              $ 1,537    -               1,537                 $ (2,222) $ -           $   (2,222)  $ 2,999   $ -           $   2,999
Others gross margin                                21%                      21%                     -33%                      -33%       39%                       39%
                                                            222         (a)                                   232         (a)                      467         (a)
Gross profit                                     $ 205,949  222             206,171               $ 188,629 $ 232         $   188,861  $ 174,696 $ 467         $   175,163
Gross margin                                       69%                      69%                     66%                       66%        71%                       71%
                                                                                                                                                   4,591       (a)
                                                            3,764       (a)                                   3,843       (a)                      27,511      (b)
Operating profit                                 $ 64,409   3,764           68,173                $ 63,719  $ 3,843       $   67,562   $ 48,535  $ 32,102      $   80,637
Operating margin                                   22%                      23%                     22%                       24%        20%                       33%
                                                                                                                                                   4,591       (a)
                                                                                                              3,843       (a)                      26,539      (b)
                                                            3,764       (a)                                   973         (c)                      1,610       (c)
                                                            2,099       (c)                                   2,195       (d)                      (3,150)     (d)
Net income before Non-
                                                 $ 51,102   5,863           56,965                $ 51,522  $ 7,011       $   58,533   $ 47,257  $ 29,590      $   76,847
Controlling
Interest
                                                                                                                                                   3,573       (a)
                                                                                                              3,043       (a)                      24,635      (b)
                                                            3,061       (a)                                   973         (c)                      1,610       (c)
                                                            2,099       (c)                                   1,471       (d)                      (2,202)     (d)
Net income attributable to
                                                 $ 23,064   5,160           28,224                $ 24,015  $ 5,487       $   29,502   $ 25,245  $ 27,616      $   52,861
Sohu.com Inc for diluted net income per share
(e)
Diluted net income per share attributable to     $ 0.60                     0.73                  $ 0.63                  $   0.77     $ 0.65                      1.36
Sohu.com Inc.
                                                                                                                                       
                                                 $ 38,393                   38,480                                            38,480                               38,794
Shares used in computing diluted net income per                                                     38,344                               38,574
share attributable to Sohu.com Inc.
Note:



(a) To eliminate the impact of share-based awards as measured using the fair value method.

(b) To adjust goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact.

(c) To adjust non-cash tax benefits from excess tax deductions related to share-based awards.

(d) To adjust income/expense from the adjustment of contingent consideration previously recorded for acquisitions.

(e) To adjust Sohu's economic interest in Changyou and Sogou under the treasury stock method and if-converted method, respectively.

(f) The classification of certain comparative figures of online advertising expenses has been changed to conform to the current period presentation.



SOHU.COM INC.

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                      Twelve Months Ended Dec. 31, 2012   Twelve Months Ended Dec. 31, 2011
                                                      GAAP     Non-GAAP        Non-GAAP   GAAP      Non-GAAP        Non-GAAP
                                                               Adjustments                          Adjustments
                                                               324         (a)                      1,908       (a)
Brand advertising gross profit                      $ 129,010  324             129,334  $ 171,798 $ 1,908       $   173,706
Brand advertising gross margin                        44%                      45%        62%                       62%
                                                               87          (a)
Search and others gross profit                      $ 53,761   87              53,848   $ 27,837  $ -           $   27,837
Search and others gross margin                        43%                      43%        44%                       44%
                                                               411         (a)                      1,908       (a)
Online advertising gross profit                     $ 182,771  411             183,182  $ 199,635 $ 1,908       $   201,543
Online advertising gross margin                       44%                      44%        58%                       59%
                                                               237         (a)                      102         (a)
Online games gross profit                           $ 496,794  237             497,031  $ 385,671 $ 102         $   385,773
Online games gross margin                             86%                      86%        89%                       89%
Wireless gross profit                               $ 19,000   -               19,000   $ 20,133  $ -           $   20,133
Wireless gross margin                                 34%                      34%        39%                       39%
Others gross profit                                 $ (1,022)  -               (1,022)  $ 6,301   $ -           $   6,301
Others gross margin                                   -5%                      -5%        28%                       28%
                                                               648         (a)                      2,010       (a)
Gross profit                                        $ 697,543  648             698,191  $ 611,740 $ 2,010       $   613,750
Gross margin                                          65%                      65%        72%                       72%
                                                               13,966      (a)                      18,652      (a)
                                                               2,906       (b)                      27,511      (b)
Operating profit                                    $ 223,299  16,872          240,171  $ 254,299 $ 46,163      $   300,462
Operating margin                                      21%                      23%        30%                       35%
                                                               13,966      (a)                      18,652      (a)
                                                               2,268       (b)                      26,539      (b)
                                                               5,591       (c)                      3,011       (c)
                                                               2,195       (d)                      (3,150)     (d)
Net income before Non-Controlling Interest          $ 177,192  24,020          201,212  $ 228,343 $ 45,052      $   273,395
                                                               11,094      (a)                      15,322      (a)
                                                               1,520       (b)                      24,635      (b)
                                                               5,591       (c)                      3,011       (c)
                                                               1,471       (d)                      (2,202)     (d)
Net income attributable to Sohu.com Inc for diluted $ 78,077   19,676          97,753   $ 152,528 $ 40,766      $   193,294
net income per share (e)
Diluted net income per share attributable to                                                                    
Sohu.com Inc.                                         2.03                     2.54
                                                    $                                   $ 3.93                  $   4.96


Shares used in computing
                                                      38,392                   38,480     38,761                    39,016
diluted net income per share

attributable to Sohu.com
Inc.
Note:



(a) To eliminate the impact of share-based awards as measured using the fair value method.
(b) To adjust goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact.
(c) To adjust non-cash tax benefits from excess tax deductions related to share-based awards.
(d) To adjust income/expense from the adjustment of contingent consideration previously recorded for acquisitions.
(e) To adjust Sohu's economic interest in Changyou and Sogou under the treasury stock method and if-converted method,
respectively.
(f) The classification of certain comparative figures of online advertising expenses has been changed to conform to the
current period presentation.








SOURCE Sohu.com Inc.

Website: http://corp.sohu.com
Website: www.sohu.com
Website: www.17173.com
Website: www.sogou.com
Website: www.focus.cn
Website: www.chinaren.com
Website: www.goodfeel.com.cn
Website: www.go2map.com
Website: www.changyou.com/en/
 
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