Sohu.com (NASDAQ:SOHU)

First Quarter Financial Results

• Total revenues were US$308 million, up 36% year-over-year and 3% quarter-over-quarter.
• GAAP 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$24 million, or US$0.62 per fully diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "I am pleased to report our Group's three key properties, namely online media, including portal and online video, Sogou and Changyou are all making strong starts into 2013. For the first quarter, the Group revenues were up 36% year-on-year, exceeding our expectations. By business unit, online video, delivered double digit sequential revenue growth in a typical slowest quarter of the year. Sogou business was solid as its core products continued to gain user traction. Changyou set new records for both top-line and bottom-line, driven by decent performance of its MMO and web games."

Dr. Zhang added, "According to iResearch, the Sohu Group now has approximately 450 million users on a monthly basis, and this puts us as a solid No.3 in China's internet industry. Traffic growth for our PC internet services is stable while our mobile products are gaining strong traction as the total user base of two of our popular mobile APPs surpassed 100 million mark."

Ms. Belinda Wang, Co-President and COO added, "Recognizing Internet sector's profound shift from PC to mobile, Sohu Group has made mobile one of the most important parts of our strategy. And thanks to our early investments, the Group now owns a number of leading mobile applications across our business lines, including Sohu News Mobile App and Sohu Video App for our online media businesses, as well as Sogou Pinyin and Sogou Voice Assistant for Sogou. Our range of products are becoming indispensable for tens of millions of China's mobile Internet users.

Business Outlook

For the second quarter of 2013, Sohu estimates:

• Total revenues to be between US$333 million and US$342 million.
• Brand advertising revenues to be between $98 million and $100 million; this implies a sequential increase of 22% to 25% and an annual increase of 41% to 44%.
• Sogou revenues to be between $48 million and $50 million; this implies a sequential increase of 22% to 27% and an annual growth of 58% to 65%.
• Online game revenues to be between US$165 million and US$170 million.
• Before deducting the share of non-GAAP net income pertaining to the Non-Controlling interest, non-GAAP net income to be between US$53 million and US$56 million.
• Non-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.
• Assuming no new grants of share-based awards, we estimate that compensation expenses relating to share-based awards to be around US$2 million to US$3 million. The estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share for the second quarter of 2013 under US GAAP by 5 to 7 US cents.

BEIJING, China, March 6, 2013 /PRNewswire/ -- Sohu.com Inc. (NASDAQ: SOHU), China's leading online media, search, gaming, community and mobile service group, responded today to rumors circulating in the market, which were apparently instigated by an article published by the South China Morning Post. The Company announced that, contrary to the assertions in the article, it is not talking to investment banks and private equity funds about a possible plan to take the company private and/or delist its common stock from the NASDAQ Global Select Market. "No such discussions are in progress or currently contemplated," confirmed Ms. Carol Yu, Co-President and Chief Financial Officer of Sohu.

Fourth Quarter Highlights

• Total revenues were US$299 million, up 22% year-over-year and 5% quarter-over-quarter.
• GAAP 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

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."

Business Outlook

For the first quarter of 2013, Sohu estimates:

• Total revenues to be between US$290 million and US$299 million.
•  Brand 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%.
• Sogou 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%.
• Online 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%.
• Before 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.
• Non-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.
• Assuming 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.

Third Quarter Highlights

• Total revenues were US$285 million, up 23% year-over-year and 12% quarter-over-quarter.
• Sogou[1] revenues were US$37 million, up 102% year-over-year and 23% quarter-over-quarter.
• Online game revenues reached quarterly record high of US$151 million, up 30% year-over-year and 10% quarter-over-quarter.
• GAAP net income attributable to Sohu.com Inc. was US$24 million, or US$0.63 per fully diluted share. Non-GAAP net income attributable to Sohu.com Inc. was US$30 million, or US$0.77 per fully diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "We are pleased with the solid financial results we achieved in the third quarter. Total revenues surpassed our expectations, rising 23% year-on-year. Brand advertising revenues met the high end of our guidance and online gaming revenues came in well ahead of our expectations."

Dr. Zhang added, "By business unit, for online video, our newly set-up dedicated sales team is bringing in results and we expect fourth quarter advertising revenue to be back on growth track. Sogou maintained triple-digit year-on-year revenue growth which was supported by improved monetization. For Changyou, strong performance by both MMO and web games helped post new records for both revenues and profit."

Ms. Belinda Wang, Co-President and COO added, "In the third quarter, thanks to solid demand from FMCG sector and the recovery of real estate sector, our brand advertising revenues reached the high end of our prior estimate. For the fourth quarter, although we see some weakening signals from the auto sector where Japanese car makers cut spending as a result of sharp decline in their sales volume, the impact is expected to be offset by the contribution from other sectors."

Business Outlook

For the fourth quarter of 2012, Sohu estimates:

• Total revenues to be between US$288 million and US$293 million.
• Brand advertising revenues to be between $80 million and $82 million; this implies a sequential and annual increase of 3% to 5%.
• Sogou revenues to be around US$40 million; this implies a sequential increase of 7% and an annual growth of 74%.
• Online game revenues to be between US$152 million and US$155 million. This implies a sequential increase of 1% to 3% and represents an annual growth of 23% to 26%.
• Before deducting the share of non-GAAP net income pertaining to the Non-Controlling interest, non-GAAP net income to be between US$48 million and US$51 million.
• Non-GAAP net income attributable to Sohu.com Inc. to be between US$23 million and US$25 million, and non-GAAP fully diluted earnings per share to be between US$0.60 and US$0.65.
• Assuming 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$3.5 million to US$4.5 million. The estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share for the fourth quarter of 2012 under US GAAP by 9 to 11 US cents.

Second Quarter Highlights

• Total revenues were US$256 million, up 29% year-over-year and 13% quarter-over-quarter.
• Brand advertising revenues were US$69 million, up 2% year-over-year and 14% quarter-over-quarter.
• Sogou[1] revenues were US$30 million, up 123% year-over-year and 34% quarter-over-quarter.
• Online game revenues reached quarterly record high of US$137 million, up 35% year-over-year and 8% quarter-over-quarter.
• GAAP net income attributable to Sohu.com Inc. was US$11 million, or US$0.28 per fully diluted share. Non-GAAP net income attributable to Sohu.com Inc. was US$16 million, or US$0.42 per fully diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "We had a solid second quarter with total revenues rising nearly 30% from last year, despite challenges faced in our brand advertising business. As China's economic growth continued to decelerate and we initiated some operational transitions in our online video business, revenues from brand advertising recorded only a low single-digit year-on-year increase."

Dr. Zhang added, "But overall, we are pleased with our performance at the group level as our search and online game segments both remained on a solid upward path. For search, Sogou again posted triple-digit revenue growth on a year-over-year basis. Our online game subsidiary Changyou achieved record results at both the top and bottom-line, supported by strong performance from its MMO and web-based game franchises. We believe the blended results help demonstrate the resilience of our business mix and the benefit of having diversified operations."

Ms. Belinda Wang, Co-President and COO added, "The year 2012 is a critical year of transition for the Sohu Group. As we continue to make heavy but necessary investments across our strategically important business lines, we are confident to see a payoff in 2013. "

Business Outlook

For the third quarter of 2012, Sohu estimates:

• Total revenues to be between US$272 million and US$277 million.
• Brand advertising revenues to be between $76 million and $78 million; this implies a sequential increase of 10% to 13%, and flattish with the same period of last year to an annual increase of 2%. This includes revenues from 17173 of US$11 million to US$12 million, which implies a sequential increase of 21% to 32% and an annual increase of 14% to 24%.
• Sogou revenues to be around US$37 million; this implies a sequential increase of 22% and an annual growth of 101%.
• Online game revenues to be between US$141 million and US$144 million. This implies a sequential increase of 3% to 5% and represents an annual growth of 22% to 24%.
• Before deducting the share of non-GAAP net income pertaining to the Non-Controlling interest, non-GAAP net income to be between US$42 million and US$45 million.
• Non-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.
• Assuming 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$4.5 million to US$5.5 million. The estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share for the third quarter of 2012 under US GAAP by 12 to 14 cents.

First Quarter Highlights

• Total revenues were US$227 million, up 30% year-over-year and down 8% quarter-over-quarter.
• Brand advertising revenues were US$61 million, up 7% year-over-year and down 22% quarter-over-quarter.
• Sogou[1] revenues were US$23 million, up 184% year-over-year and down 1% quarter-over-quarter.
• Online game revenues reached quarterly record high of US$127 million, up 34% year-over-year and 3% quarter-over-quarter.
• GAAP net income attributable to Sohu.com Inc. was US$20 million, or US$0.53 per fully diluted share. Non-GAAP[2] net income attributable to Sohu.com Inc. was US$24 million, down 46% year-over-year, or US$0.61per fully diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "In the first quarter, our financial results were mixed. Our brand advertising business got off to a slow start mainly due to the early Chinese New Yearholiday and the softening macroeconomic conditions in China."

Dr. Zhang added, "Good news is search revenues and our overall Sogou business continued to deliver solid growth. And we are pleased with the better than expected results of Changyou, our online game subsidiary. Changyou's flagship games, TLBB and DDTank, continued to rank among the top games in China in the MMO and Web-based game categories, respectively. Shen Qu, a new Web-based game, was well-received by gamers upon launch, adding to the top-line results. For the remainder of 2012, Changyou has four new games due for launch that feature different genres and graphic styles, and are expected to draw new communities of users while expanding the user base."

Business Outlook

For the second quarter of 2012, Sohu estimates:

• Total revenues to be between US$244 million and US$250 million.
• Brand advertising revenues to be between $68 million and $71 million; this implies a sequential increase of 12% to 16%, and a year-over-year increase of 0.4% to 5%. This includes revenues from 17173 of US$8.5 million to US$9.5 million, which implies a sequential increase of 4% to 16% and a year-over-year increase of 3% to 15%.
• Sogou revenues to be around US$29 million; this implies a sequential increase of about 28% and an annual growth of about 113%.
• Online game revenues to be between US$130 million and US$133 million. This implies a sequential increase of 2% to 4% and represents an annual growth of 28% to 31%.
• Before deducting the share of non-GAAP net income pertaining to the Non-Controlling interest, non-GAAP net income to be between US$34 million and US$37 million.
• Non-GAAP net income attributable to Sohu.com Inc. to be between US$15.5 million and US$17.5 million, and non-GAAP fully diluted earnings per share to be between US$0.40 and US$0.45.
• Assuming 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 second quarter of 2012 under US GAAP by 8 to 10 cents.

Fourth Quarter 2011

• Record total revenues and record revenues in brand advertising, Sogou(1) and online game businesses.
• Total revenues were US$246 million, up 42% year-over-year and 6% quarter-over-quarter.
• Total online advertising revenues which include revenues from brand advertising and Sogou business were US$101 million, up 51% year-over-year and 6% quarter-over-quarter.
• Brand advertising revenues were US$78 million, up 29% year-over-year and 2% quarter-over-quarter.
• Sogou revenues were US$23 million, up 248% year-over-year and 25% quarter-over-quarter.
• Online game revenues reached US$123 million, up 34% year-over-year and 6% quarter-over-quarter.
• GAAP net income attributable to Sohu.com Inc. was US$25 million, or US$0.65 per fully diluted share. GAAP net income included non-cash charges of US$27.5 million related to goodwill impairment and impairment of acquired intangibles via acquisition of businesses. Non-GAAP(2) net income attributable to Sohu.com Inc. was US$53 million, up 10% year-over-year and 8% quarter-over-quarter or US$1.36 per fully diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "We are pleased to report a strong fourth quarter that helped us finish a solid year for 2011. For online advertising, our conscientious efforts in growing online video and search businesses are bringing strong growth in revenues, users and traffic. These businesses, along with our portal business, are contributing to give the Sohu Group a powerful integrated online marketing platform. In 2012, we aim to make this platform even more dominant in China's internet market."

Dr. Zhang added, "For online game business, in 2011 Changyou achieved healthy growth in its MMO game portfolio and diversified into other fast growing areas such as Web-based games. In 2012, with our leading game information portal 17173.com under its leadership, Changyou will jumpstart a platform-based initiative."

Commenting on Sohu's brand advertising business, Ms. Belinda Wang, Co-President and COO added, "We had a strong year in our brand advertising business. In 2011, the internet population in China exceeded 500 million and we witnessed a continuing trend where marketing spending by brand advertisers has been shifting from offline to online."

Fiscal Year 2011 Financial Results

Revenues

Total revenues for fiscal year 2011 were US$852 million, up 39% compared with 2010.

Total online advertising revenues for fiscal year 2011 were US$342 million, up 48% compared with 2010.

Brand advertising revenues for fiscal year 2011 totaled US$279 million, up 32% compared with 2010.

Sogou revenues for fiscal year 2011 were US$63 million, up 238% compared with 2010.

Online game revenues for fiscal year 2011 were US$436 million, up 33% compared with 2010.

Wireless revenues for fiscal year 2011 were US$52 million, down 1% compared with 2010.

Business Outlook

For the first quarter of 2012, Sohu estimates:

• Total revenues to be between US$219 million and US$225 million.
• Brand advertising revenues, including those from 17173.com, to be between $60 million and $63 million; this implies a sequential decrease of 19% to 23%, and an increase of 5% to 10% year-over-year.
• Sogou revenues to be around US$21 million; this implies a sequential decrease of about 9% and an annual growth of about 163%.
• Online game revenues to be between US$121 million and US$124 million.
• Before deducting the share of non-GAAP net income pertaining to the Non-Controlling interest, non-GAAP net income to be between US$38 million and US$41 million.
• Non-GAAP net income attributable to Sohu.com Inc. to be between US$19.5 million and US$21.5 million, and non-GAAP fully diluted earnings per share to be between US$0.50 and US$0.55.
• Assuming 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 2012 under US GAAP by 8 to 10 cents.

Completion of Sale of 17173 Business to Changyou.com

On December 15, 2011, the registrant (“Sohu”) completed its previously announced sale of the business of 17173.com, a leading game information portal in China (the “17173 Business”), to Changyou.com Limited, an indirect majority-owned subsidiary of the registrant (“Changyou”).

The sale was made pursuant to a Master Transaction Agreement (the “Transaction Agreement”), dated as of November 29, 2011, between, on the one hand, Sohu and certain of its subsidiaries and variable interest entities as Sellers, and, on the other hand, Changyou and certain of its subsidiaries and variable interest entities as Buyers. A brief description of the terms and conditions of the Transaction Agreement may be found in the registrant’s Current Report on Form 8-K filed with the SEC on December 1, 2011, which description is qualified in its entirety by reference to the full text of the Transaction Agreement filed as Exhibit 10.1 thereto.

LONGMONT, CO--(Marketwire - Dec 8, 2011) - DigitalGlobe (NYSE: DGI), a leading global provider of high-resolution earth imagery solutions, today announced that China's leading online media, search, gaming, community and mobile service group, Sohu.com Inc. ("Sohu"), has renewed its annual subscription for DigitalGlobe imagery and expanded its coverage from 44 cities to 100 cities.

This will enable Sohu to provide its end-users with more up-to-date maps, greater coverage of the Chinese landscape, and increased functionality in its personal navigation devices.

"Sohu is pleased to continue its partnership with DigitalGlobe to provide the most current and most extensive imagery of the Chinese landscape to our end-users," said Bill Kong, director of Sohu Map. "With this partnership, we can continue to deliver an even richer, more engaging experience across our entire portfolio of online, gaming, and mobile services."

Third Quarter 2011 Results

BEIJING, August 29, 2011 /PRNewswire-Asia/ -- Sohu.com Inc. (NASDAQ: SOHU), China's leading online media, search, gaming, community and mobile service group, today announced that its Board of Directors has authorized a combined share purchase program of up to US$100 million of the outstanding American Depositary Shares (ADS) of Changyou.com Limited (NASDAQ: CYOU), Sohu's online game subsidiary, and/or outstanding shares of common stock of Sohu over a one-year period from September 1, 2011 to August 31, 2012.

"This program underscores our continued confidence in Changyou's and Sohu's long term growth prospects as well as an ongoing commitment to increase Sohu shareholder value," said Dr. Charles Zhang, Chairman and Chief Executive Officer of Sohu.com. "Our Board of Directors believes that this program represents a wise use of some of our abundant cash reserves and that our consistent, healthy operating cash flow is sufficient to support our multiple growth objectives."

BEIJING, April 25, 2011 /PRNewswire-Asia/ -- Sohu.com Inc. (NASDAQ: SOHU), China's leading online media, search, gaming, community and mobile service group, today announced that its massively multi-player online role-playing game ("MMORPG") subsidiary, Changyou.com Limited ("Changyou") (NASDAQ: CYOU) has recently entered into a definitive agreement with Shenzhen 7Road Technology Co., Ltd. under which it will acquire 68.258% of the equity of Shenzhen 7Road Technology Co., Ltd. and its affiliates ("7Road"), a reputable web-based game company in China. The acquisition accelerates Changyou's position in China's online games industry and adds a new category of games to its growing product portfolio.

Changyou will acquire 68.258% of the equity of 7Road for fixed cash consideration of approximately US$68.26 million, plus additional variable cash consideration of up to a maximum of US$32.76 million that is contingent upon the achievement of specified performance milestones through December 31, 2012. The acquisition is expected to be completed by June 30, 2011, subject to regulatory approvals and other customary conditions specified in the agreement.

First Quarter Results:

• Record total revenues and record revenues in search and online game businesses. All such operating parameters exceeded the Group's expectations.
• Total revenues were US$174.4 million, up 35% year-over-year and 1% quarter-over-quarter.
• Online brand advertising revenues were US$57.2 million, up 45% year-over-year and down 5% quarter-over-quarter, exceeding the high end of Group guidance.
• Search revenues were US$8.0 million, up 183% year-over-year and 21% quarter-over-quarter.
• Online game revenues reached US$94.9 million, up 32% year-over-year and 3% quarter-over-quarter, exceeding the high end of Group guidance.
• After deducting the share of net income pertaining to the Non-controlling Interest, GAAP net income was US$39.3 million, up 41% year-over-year and down 5% quarter-over-quarter, or US$1.01 per fully diluted share. Non-GAAP net income was US$44.0 million, up 30% year-over-year and down 8% quarter-over-quarter, or US$1.13 per fully diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu, commented, "In addition to our solid financial results, there are a few areas in particular that I would like to highlight. First, on online video, our conscientious efforts to expand our library of authorized and self-produced premium content have increased our market share in terms of total time users spent watching online video from 13% in December 2010 to 16% in March 2011. This ranks us second in the market according to iResearch. Second, Sogou's business continues its momentum, and over the first quarter of 2011 active users of Sogou's browser, search traffic and search revenue all grew north of 20% quarter-over-quarter. And third, on online games, while our leading game franchise, Tian Long Ba Bu, or TLBB, continues to attract new, existing and returning players to its community, today also marks two significant events for our online game subsidiary Changyou.  First, Changyou just unveiled an updated version of its upcoming game Duke of Mount Deer, or DMD and will launch the most-anticipated game this summer. Second, we have entered into a definitive agreement to acquire a majority stake in Shenzhen 7Road Technology Co., Ltd. and its affiliates, or 7Road, a reputable web-based game developer that created DDTank, one of the most popular web-based games in China.  This will expand Changyou's product portfolio to cover not only MMORPG games but also web-based games."

For the second quarter of 2011, Sohu estimates:

• Total revenues to be between US$188.0 million and US$193.0million.
• Online brand Advertising revenues to be between US$65.5 million and US$67.5 million. This implies a sequential growth of 15 % to 18%, and 23% to 27% year-over-year growth.
• Search revenues to be around US$11 million.
• Total revenues from Changyou to be between US$97.0 million and US$100.0 million, including online games revenues of US$95.0 million to US$97.0 million.
• Before deducting the share of non-GAAP net income pertaining to the Non-controlling Interest, Sohu estimates its pro forma non-GAAP net income to be between US$59.0 million and US$61.5 million.
• After deducting the share of non-GAAP net income pertaining to the Non-controlling Interest, Sohu estimates non-GAAP net income to be between US$44.0 million and US$46.0 million and non-GAAP fully diluted earnings per share to be between US$1.13 and US$1.18.
• Assuming no new grants of share-based awards, Sohu estimates that compensation expenses and income tax expenses relating to share-based awards will be around US$4.0 million to US$4.8 million. The estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share for the second quarter of 2011, under US GAAP, by 10 to 12 cents.

We believe our current liquidity and capital resources are sufficient to meet anticipated working capital needs (net cash used in operating activities), commitments and capital expenditures over the next twelve month.  We may, however, require additional cash resources due to changes in business conditions and other future developments, or changes in general economic conditions.

• Record total revenues and record revenues in each of the Group's brand advertising, online game and search businesses. All such operating parameters exceeded the Group's expectations.
• Total revenues were US$173.2 million, up 27% year-over-year and 6% quarter-over-quarter.
• After deducting the share of net income pertaining to the Noncontrolling Interest, GAAP net income was US$41.5 million, up 41% year-over-year and 7% quarter-over-quarter, or US$1.07 per fully diluted share. Non-GAAP net income wasUS$47.9 million, up 34% year-over-year and 6% quarter-over-quarter, or US$1.23 per fully diluted share.
  

Fiscal Year 2010 Highlights

• Record total revenues and record revenues in each of the Group's brand advertising, online game and search businesses.
• Total revenues reached US$612.8 million, up 19% compared with 2009.
• After deducting the share of net income pertaining to the Noncontrolling Interest, GAAP net income was flat compared with 2009, reaching US$139.3 million, or US$3.62 per fully diluted share. Non-GAAP net income was up 6% compared with 2009, reaching US$164.3 million, or US$4.21 per fully diluted share.
• Cash balance was US$678.4 million as of December 31, 2010, representing an increase of US$114.6 million fromDecember 31, 2009.

Dr. Charles Zhang, Chairman and CEO of Sohu, commented, "While I am encouraged by these strong results across our multiple business lines, I am even more excited when we look beyond our financial performance. First, our conscientious efforts in online video and our strategy to secure high quality authorized content have brought our market share from 3.4% to 13.4% in a mere 12-month period. Second, while TLBB continues to be a strong and popular game, Changyou will unveil the full trial version of the highly anticipated Duke of Mount Deer to players once it officially kicks off the game's marketing campaign in March. And third, with its new capital structure in place, Sogou's business is quickly picking up momentum. Over the fourth quarter of 2010, active users of the Sogou browser, related search traffic and search revenue, all grew north of 20% quarter-to-quarter."

For the first quarter of 2011, Sohu estimates:

• Total revenues to be between $164.5 million and $169.5 million
• Brand Advertising revenues to be between $55.0 million and $57.0 million. This implies a sequential decline of 5% to 8%, and 39% to 44% year-over-year growth.
• Total revenues from Changyou to be between US$92.0 million and US$95.0 million, of which revenues from online games, which are revenues exclusive of revenues from Jing Mao, are expected to be between US$91.0 million and US$93.0 million.
• Search revenues to be around $6.5 million.
• Before deducting the share of non-GAAP net income pertaining to the Noncontrolling Interest, Sohu estimates its pro forma non-GAAP net income to be between $54.5 million and $57.0 million.
• After deducting the share of non-GAAP net income pertaining to the Noncontrolling Interest, Sohu estimates non-GAAP net income to be between $40.0 million and $42.0 million and non-GAAP fully diluted earnings per share to be between $1.03 and $1.08.

Assuming no new grants of share-based awards, Sohu estimates that compensation expenses and income tax expenses relating to share-based awards will be around $5.0 million to $6.0 million, which includes $1.5 million to $2.0 million for Changyou. Considering Sohu's shares in Changyou, the estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share for the first quarter of 2011, under US GAAP, by 11 to 13 cents.

Third Quarter 2010 Highlights

• Record high total revenues and record high revenues for brand advertising, search and online games. All such operating parameters exceeded high end of Group guidance.
• Total revenues were US$164.1 million, up 20% year-on-year, and 12% quarter-over-quarter.

• Before deducting the share of net income pertaining to the Non-Controlling Interest, GAAP net income for the third quarter of 2010 was US$54.0 million, up 15% year-over-year and 19% quarter-over-quarter. Non-GAAP net income was US$61.3 million, up 19 % year-over-year and up 17% quarter-over-quarter, exceeding high end of Group guidance.

• After deducting the share of net income pertaining to the Non-Controlling Interest, GAAP net income was US$38.7 million, up 12%  year-over-year and 24% quarter-over-quarter,  or US$1.01 per fully diluted share, and non-GAAP net income was US$45.2 million, up 21% year-over-year and quarter-over-quarter, or US$ 1.16 per fully diluted share, exceeding high end of Group guidance.

Dr. Charles Zhang, Chairman and CEO of Sohu.com, commented, "I'm pleased to report that we had a record quarter, with strong growth in each of our major business segments.  Online video, our potential future revenue driver, is gaining significant traction as we add high-definition content and leverage the synergies of the Sohu platform to make our video products even more attractive to both users and advertisers. Also we believed that the introduction of strategic investors to our Sogou search business leaves our search business in a more competitive position and offers great promise for future collaboration and services with China's largest e-commerce website."  

"Our largest business segment, online games, powered by the successful release of new expansion packs for our proprietary flagship product and the launch of new licensed games, once again achieved solid results. The results also demonstrated the merits of using feedback to direct research and development efforts in our games. We continue to invest in employee recruitment and training. We are positive on the outlook of the industry and look to bring more proprietary games to market with an expanded team of talented engineers."

Business Outlook

For the fourth quarter of 2010, Sohu estimates:

• Total revenues to be between US$163 million and US$168 million, with advertising revenues of US$64 million to US$66 million.

• Non-GAAP net income before deducting the share of non-GAAP net income pertaining to the Non-Controlling Interest to be between US$59 million and US$61.5 million.

• Non-GAAP net income after deducting the share of non-GAAP net income pertaining to the Non-Controlling Interest to be between US$43 million and US$45 million.

• Non-GAAP fully diluted earnings per share to be between US$1.10 and US$1.15. 

Dr. Charles Zhang, Chairman and CEO of Sohu.com, commented, "Our results for the second quarter of 2010 surpassed our expectations as we established record total revenues and set new highs in our brand advertising and online game businesses. For our brand advertising business, we continue to place emphasis on online video and are convinced this will be an area of significant future growth. We have successfully expanded and diversified our collection of licensed and in-house produced quality video content, and develop innovative applications that cater to various devices, including the most sought after iPad. We are very encouraged by the fast-growing user base and new advertisers. For our online game business, Changyou demonstrated that the ongoing strategic release of feedback-driven content and a diverse portfolio of games are helping retain existing users, attract new ones, and reinforce the popularity of our games. We are optimistic about our ability to build on our momentum this year and add value over the long term.

Sohu estimates total revenues for the third quarter of 2010 to be between US$153.0 million and US$158.0 million, with advertising revenues of US$61.0 million to US$63.0 million.

Sohu estimates brand advertising revenues for the third quarter of 2010 to be between US$57.0 million and US$59.0 million.

Sohu estimates online game revenues for the third quarter of 2010 to be between US$80.0 million and US$83.0 million.

Sohu estimates non-GAAP net income for the third quarter of 2010, before deducting the share of non-GAAP net income pertaining to the Non-Controlling Interest, to be between US$54.0 million to US$56.5 million. After deducting the share of non-GAAP net income pertaining to the Non-Controlling Interest, Sohu estimates non-GAAP net income for the third quarter of 2010 to be between US$39.0 million to US$41.0 million, and non-GAAP fully diluted earnings per share for the third quarter of 2010 to be between US$1.00 and US$1.05.

Assuming no new grants of share-based awards, Sohu estimates compensation expense and income tax expense related to share-based awards for the third quarter of 2010 to be between US$6.5 million and US$7.5 million, which includes Changyou's share-based compensation expense for the third quarter of 2010 estimated to be between US$1.5 million and US$2.0 million. Considering Sohu's share in Changyou, the estimated impact of this expense under US GAAP is expected to reduce Sohu's fully diluted earnings per share for the third quarter of 2010 by 16 US cents to 18 US cents.

^a The above forecasts reflect the Company's current and preliminary views and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

^b Non-GAAP EPS figures generally exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to its financial press releases. The GeoTeam® non-GAAP figures may, from time to time, differ from company supplied figures.

^a The above forecasts reflect the Company's current and preliminary views and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

^b Non-GAAP EPS figures generally exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to its financial press releases. The GeoTeam® non-GAAP figures may, from time to time, differ from company supplied figures.

Guidance Report:

Ms. Carol Yu, Co-President and CFO of Sohu.com, commented, 'We believe that the results for fiscal year 2008 speak for themselves, with revenues of 2.3 times 2007 revenues, non-GAAP net income 3.9 times that of 2007, non-GAAP operating margin expansion to 41% in 2008 from 22% in 2007, and our cash balance increasing by US$191.7 million during 2008. These results also speak for our belief that management will have the ability to capture opportunities as they arise notwithstanding the more challenging economic environment expected in 2009. '

First Quarter Fiscal 2009 Guidance Ending March

EPS figures exclude non-operating gains and losses. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information.For a more complete explanation of the company's definition of non-GAAP please refer to their Fourth Quarter financial press release. 

Source: PR Newswire (February 9, 2009)