Brandi Piacente - The Piacente Group Dr. Charles Zhang - Chairman of the Board, Chief Executive Officer Belinda Wang - Co-President, Chief Marketing Officer Dr. Gong Yu - Chief Operating Officer Carol Yu - Co-President, Chief Financial Officer

Jason Brueschke - Citigroup Dick Wei - J.P. Morgan Kathy Chang - Goldman Sachs Jenny Wu - Morgan Stanley C. Ming Zhao - Susquehanna Financial Group Eddie Leung - Merrill Lynch

Ladies and gentlemen, thank you for standing by. Welcome to the Sohu first quarter 2009 earnings conference call taking place on the fourth of May, 2009. (Operator Instructions) I will now hand the conference over to Miss Brandi Piacente with Sohu Investor Relations. Please go ahead, Madam.

Thank you for joining Sohu.com to discuss our first quarter results. On the call today are Chairman and Chief Executive Officer, Dr. Charles Zhang; Co-President and Chief Marketing Officer, Belinda Wang; Co-President and Chief Financial Officer, Carol Yu; Chief Executive Officer of Changyou.com, [Wang Tao]; Chief Financial Officer of Changyou.com, Alex Ho; and Sohu's Senior Finance Director, James [Deng]. Before management begins their prepared remarks, I would like to read you the Safe Harbor statement in connection with today’s conference call. Except for the historical information contained herein, the matters discussed in this conference call 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 statements. Potential risks and uncertainties include but are not limited to the current global financial and credit market crisis and its potential impact on the Chinese economy; the slower growth the Chinese economy experienced during the latter half of 2008 and first quarter of 2009, which could continue through the remainder of 2009; the uncertain regulatory landscape in the People’s Republic of China; fluctuations in Sohu's quarterly operating results, EPS dilution resulting from Changyou's initial public offering, Sohu's historical and possible future losses and its reliance on online advertising sales, online games, and wireless services 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, 2008, and other filings with the Securities and Exchange Commission. Now, let me turn the call over to Dr. Charles Zhang, Chairman and CEO. Charles. Dr. Charles Zhang: Thank you, Brandi. Hello, everyone. Thank you for joining us today. We are pleased to report another quarter of solid financial results, which further proves the combination of our two core businesses, namely our portal business and online game business, can enable Sohu to deliver sustainable growth through different economic cycles. Our online game business has been more resilient to the weak economic conditions and continues to show strong growth momentum. This more than offsets any temporary impact on our portal business brought by the economic weakness. For Sohu’s portal business, as always we are extremely focused on our long-term strategic vision to make Sohu one of the most powerful mainstream media platforms in China. With some indications of the potential recovery of the overall economy underway, we believe a modest macro environment provides great media-driven opportunities for Sohu. Bolstered by a rapidly growing Internet population, we will put to use our unparalleled media platform to further strengthen our position as a leading Internet company in China in 2009. Success of our online game business has been one of our proud achievements. In a short period of two years, Sohu’s online game business was developed from nascence to become one of the top massively multiplayer online role-playing game operators in China. Its success was further endorsed by the spin-off and initial public offering of our MMORPG subsidiary Changyou.com on April 2, 2009. Changyou’s public debut was one of the most successful IPOs in the U.S. markets in nearly 12 months. The successful IPO provides Changyou with the platform and resources to become a leading company in the MMORPG industry, and enables Changyou to compete head to head with first tier players. Going forward, Sohu and Changyou will continue to enjoy the same synergies as before. Sohu provides Changyou with advertising resources on the Sohu portal and its verticals, especially China’s largest gaming portal 17173.com, marketing and promotion of Changyou’s games through the use of Sohu’s web domains, single user-ID system and base of more than 250 million users, as well as Sohu’s strong brand recognition and user platforms. Meanwhile, Changyou continues to bring users to Sohu portal. Now, turning to Sohu.com’s first quarter financial performance, we are pleased to report another solid quarter of financial results. A quick snapshot of our financial performance of the first quarter is as follows: first, total revenues grew by 36% year-on-year to $115.7 million, exceeding the high-end of company guidance. Secondly, brand advertising revenue increased 18% year-on-year to $39.1 million. Our brand advertising revenue was within the guidance we gave out earlier, despite subsequent unexpected economic weakness. The global financial crisis beginning in the second half of 2008 heavily hit industries across the board. As Belinda will elaborate later on, many advertisers were cautious about their advertising spending and delayed their marketing campaigns. Thirdly, online game revenues grew by 50% year-on-year and up 6% quarter-on-quarter to a record $61.1 million, exceeding the high end of company guidance by $1.6 million. The success of our online game business derived from the overall strength of the game industry and its status as a defensive play. Even within challenging macroeconomic conditions, online gaming continues to retain existing gamers while drawing new users by providing low cost entertainment. Fourth, non-GAAP net income of Sohu was $46.9 million, or $1.20 per fully diluted share, exceeding the high end of company guidance of $1.10 by $0.10. Non-GAAP net income increased 87% year-on-year. Five, non-GAAP net income of the online game business increased 13% quarter on quarter and 100% year-on-year to $34.4 million. I will now discuss our portal business for 2009. As always, we are extremely focused on our long-term strategic vision to make Sohu one of the most powerful mainstream media platforms in China. Last year, our participation in various historical events, coupled with our successful marketing campaign, significantly elevated the public awareness and the recognition of the Sohu brand in China. In 2009, we will continue to invest in our brand name as well as differentiated content and cutting edge technology and product to further strengthen our position as an influential and innovative online media platform. Regarding our 2009 marketing initiatives, in March we initiated the launch of a massive campaign titled “Browse Sohu, Know the World”, which will continue through September. The marketing plan includes China Central television primetime commercials in its four major channels, plus banners throughout 42 multi-tier cities and a series of interactive activities with Internet users to raise Sohu's public visibility. Through this campaign, we will not only cover first and second tier cities but also third and fourth tier cities, which are experiencing rapid growth in the Internet population. On the content offering side, we recognize that Internet users have come to realize the Internet can be another effective source of timely information and a meaningful supplement to traditional media, such as local television broadcasting. Since January, we expand our content and launched a rich library of high definition online video content on Sohu's TV channel. As a result, unique visitors to Sohu's TV channel increased rapidly. In addition to acquiring content from vendors with intellectual property rights, we are also working to expand our self-developed video content, high quality authorized video products are gaining popularity and more Sohu advertisers are seeking ways to build our TV channel into our overall online marketing plans. At the same time, we are also making steady investments and progress in upgrading our other groundbreaking Internet tools, such as Sogo Pinyin, the Sogo Browser, search engine, and [adsense] social network product offerings to enhance user experience and stickiness to our portal. Belinda Wang, our Co-President and Chief Marketing Officer, will provide a review of our brand advertising business in a few moments. But first, let me briefly discuss our MMORPG business related to Changyou.com. In the first quarter of 2009, our RPG business delivered another record quarter for both revenues and profits. Total revenues grew 6% from last quarter to $61.6 million, exceeding the high-end of our guidance range. We believe the continuous growth of our two current titles, namely Tian Long Ba Bu, TLBB, and Blade Online, is a direct result of our focus on the user experience and our strive to create games that people want to play. Real-time input and feedback collected from game players enable us not only to react quickly to enhance game play experience but also to package popular features into expansion packs. For TLBB, each expansion pack release has taken key operating metrics to new record highs. The end of March expansion pack pushed Tian Long Ba Bu’s peak concurrent users to a new high of 875,000, breaking fourth quarter’s 2008 previous record of 740,000, and its registered users rose to 50 million users from the 44.7 million in the previous quarter. For Blade Online, the expansion pack released in the second quarter of 2008 had a similar effect with the momentum continued into the first quarter of 2009. Benefits from our expansion packs were maximized through effective marketing and promotional efforts. Our more than 500 on-the-ground staff who carry out offline marketing and promotional activities have increased our penetration beyond first and second-tier cities into the tier three and tier four cities. Previously, more than half of our players were from the top 40 cities in China. Here in the first quarter, a high proportion of new users were gained from tier three and tier four cities. We are also executing our overseas strategy. Revenue from overseas market currently made up of Vietnam, Taiwan, and Hong Kong, increased 14% sequentially and five times year-on-year to $2.3 million, or 3.7% of our total online game revenues. In mid-April, we launched the TLBB commercially in Malaysia and Singapore. We also plan to expand our overseas offerings beyond Tian Long Ba Bu on a selected basis. Beside spreading into new geographies, we are working to penetrate different segments of gamers through different game styles. For example, our next in-house developed title, Duke of Mountain Deer, or DMD, incorporates an entirely different look and feel from Tian Long Ba Bu, including the cartoon style graphics, sticky community, and other features. Last year we began testing the new game engine and graphic visuals of DMD. These tests went well and just last week we moved into another round of beta testing to evaluate and improve game play. Immortal Face, our next licensed game, is similarly differentiated by emphasizing competition among players, or the player-versus-player experience, as opposed to the community-based features of DMD. The development of both games is on track. Carol Yu, our Co-President and CFO, will share with you some of our games operation metrics later on. Thank you for your attention. I would like now to turn the call over to Belinda Wang, Co-President and Chief Marketing Officer, for a discussion of our progress in brand advertising. Belinda.

Thank you, Charles. Hello, everyone. We are pleased to report another solid quarter for brand advertising revenue for the first quarter of 2009 with an increase of 18% year-on-year to $39.1 million, which is within the guidance despite subsequent unexpected economic weakness. Our top three industries are automobiles, online games, and real estate, which accounted for 40% of our total brand advertising revenues for the quarter. Telecommunications, retail closing, and FMCG were the fastest growing sectors in the first quarter. As Charles mentioned earlier, the global financial crisis beginning in the second half of 2008 heavily hit industries across the board. General advertising and media business has been shadowed by weak economic conditions. Although we have seen some positive signs of economic recovery, many advertisers remain cautious about advertising spending and delayed their marketing campaign. For the end of April, only 70% of [framework] contracts have been signed as compared with the same period last year. Visibility for the full year 2009 can only be obtained probably sometime in June when the remainder of the contracts are signed. Despite a difficult economic environment, we are confident 2009 we will not expect negative growth. The following factors continue to feed the market and our business. First, Internet as a group continues to gain market share from other media sources, and second, Sohu's ongoing efforts and investment in branding, sales and marketing, technology, and content will pay off for us this year. Our current outlook for the second quarter assumes a year-on-year growth of 0% to 5%, and implies a year-on-year growth for the first half of 2009 of 8% to 11%. Now let me share with your our views on key industries. The first, as auto manufacturers continue to shift ad budget from offline to online, the auto industry will continue to be the top performing industry. Secondly, fast moving consumer goods, FMCG, is less affected by weak economic conditions and we expect FMCG to continue to show growth. Thirdly, online game will be flattish, while top game operators continue to promote their products, small operators are largely affected by weak economic conditions. And the fourth, real estate and information technology, IT, are heavily hit by the financial crisis, we anticipate a revenue decline. Thank you for your attention and with that, I would like to turn the call over to Carol Yu, our Co-President and Chief Financial Officer, for a review of Sohu's financial results. Carol.

Thank you, Belinda and hello, everyone. I will now provide a review of the financial results for the first quarter of 2009. One, revenues; starting with top line results, total revenues were $115.7 million, representing a decrease of 5% sequentially and increase of 36% year-on-year. Advertising revenues -- total advertising revenues were $40.6 million, representing a sequential decline of 13% due to seasonality and a year-on-year increase of 17%. Brand advertising revenues totaled $39.1 million, representing a sequential decline of 13% and a year-on-year increase of 18%. Sponsored search revenues were $1.5 million, representing a sequential decline of 4% and a year-on-year decline of 3%. Non-advertising revenues -- non-advertising revenues totaled $75.1 million, flat sequentially and up 50% year-on-year. Online game revenues were $61.6 million, a 6% increase quarter-on-quarter and a 50% year-on-year. The increases were mainly attributable to an increase in TLBB revenues as a result of user base expansion and enhanced user loyalty, as well as increased revenues from Blade Online. Revenues from game operations increased 5% quarter-on-quarter and 46% year-on-year to $59.3 million. The increases were mainly due to the higher APA, which reflects the growing popularity of Changyou's online games, revenues from game operations includes those generated from TLBB, which increased 6% quarter-on-quarter and 41% year-on-year to $54.4 million, and revenues for Blade Online, which increased 2% quarter-on-quarter and 139% year-on-year to $5 million. Overseas licensing revenues increased 14% quarter-on-quarter and 493% year-on-year to $2.3 million. Changyou began licensing TLBB to Vietnam in August 2007, and Hong Kong and Taiwan in April 2008. The quarter-on-quarter increase was primarily due to the successful launch in user acceptance of expansion packs in overseas markets during the first quarter of 2009. Wireless revenues were $13.4 million, a quarter-on-quarter decrease of 10% and a year-on-year increase of 56%. The sequential decrease of wireless revenues was due to a tighter regulatory environment, as we have expected. Two, gross margin; under SFAS-123R, share-based compensation expenses were charged to the quarter’s cost of revenue and operating expenses. Total share-based compensation for the first quarter was $2.3 million. We believe excluding its share-based compensation expense from our non-GAAP financial measure of net income makes a more meaningful comparison of Sohu's operational results and improves investors’ understanding of Sohu's performance, so we use non-GAAP measures in this discussion to explain margins, costs, and expense items. Non-GAAP gross margin for the first quarter was 76%, up from 75% in the previous quarter and the same as the first quarter of 2008. non-GAAP advertising gross margin was 61% for the first quarter, compared with 64% in both the previous quarter and the first quarter of 2008. Brand advertising non-GAAP gross margin for the first quarter was 65%, down from 67% in both the previous quarter and the first quarter of 2008. Sponsored search non-GAAP gross margin loss for the first quarter was 47% compared with gross margin loss of 18% in the previous quarter and gross profit margin of 6% in the same period last year. The quarter-on-quarter increase in gross margin loss was primarily due to higher server depreciation and bandwidth expenses. Non-advertising non-GAAP gross margin for the first quarter was 85%, up from 83% in the previous quarter and the same as the same quarter last year. Online game non-GAAP gross margin for the first quarter was 94%, up from 93% from the previous quarter from 92% in the same period of last year. Operating expenses -- for the first quarter of 2009, Sohu's non-GAAP operating expenses totaled $36.1 million, down 9% from $39.6 million in the previous quarter and up 17% year-on-year. The year-on-year increase was primarily due to continued investment in product development, marketing expenses for Sohu's branding, and an increase in bonuses to reward employees for their contribution to Sohu's strong performance. The quarter-on-quarter decrease reflects the higher commissions in the fourth quarter of 2008. We incurred $2.8 million marketing expenses relating to the campaign of “To Know the World at Sohu” in the first quarter of 2009, and expect related marketing expenses to be around $9 million in the second quarter of 2009. Four, operating margins -- non-GAAP operating profit margin was 45% for the first quarter, up from 43% in the previous quarter and 40% in the same period last year. Income tax expense -- for the first quarter of 2009, income tax expense was $6.6 million, and the effective tax rate was 13%, as compared to 5% for the full year of 2008. Six, net income -- non-GAAP net income, i.e. excluding share-based compensation expense, of $46.9 million, or $1.20 per fully diluted share, exceeded the high-end of the company guidance of $1.10 by $0.10. Non-GAAP net income increased 87% year-on-year. Non-GAAP net income included $34.4 million of non-GAAP net income contributed by online games business with a 13% quarter-on-quarter increase, or a 100% year-on-year increase. Seven, net margin -- non-GAAP net margin for the first quarter was 41%, compared with 49% in the previous quarter and 30% for the first quarter of 2008. Taking out the income tax adjustments of $6 million for the fourth quarter of 2008, the non-GAAP net income for the first quarter -- for the fourth quarter would have been 44%. Eight, balance sheet and cash flow position -- we continue to maintain a debt-free balance sheet. For the first quarter, our businesses generated $57 million in operating cash flow. As of March 31, 2009, our cash balance was $373.2 million. Net proceeds of $128.3 million from our successful IPO of Changyou.com in early April will add to our already outstanding financial position. All of our cash is either on demand or in time deposits with reputable banks. As of March 31, 2008, our net accounts receivable balance was $43.8 million, an increase of $6.9 million from the previous quarter. Brand advertising DSO for the first quarter were 69 days, compared to 45 days in the fourth quarter and 69 days in the first quarter of 2008. As of March 31, 2009, our bad debt provision totaled $2.2 million, with bad debt expense of only $51,000 recorded for the first quarter of 2009. As of March 31, 2009, receipts in advance and deferred revenues of our online game business was $21.3 million, as compared to $20.7 million as of the end of last quarter. Nine -- now let me go through some of the selected game operational metrics with you. Our aggregate peak concurrent users, or PCU, for both of our MMORPGs increased 16% sequentially and 47% year-on-year to $970,000. Aggregate active paying accounts, or APA, for both of our MMORPGs increased 14% sequentially and 50% year-on-year to $2.27 million, while APAs for TLBB increased 16% sequentially and 52% year-on-year to $2.11 million. Average revenue per user, or ARPU, for both MMORPGs decreased 8% sequentially and 7% year-on-year to RMB179, while ARPU for TLBB decreased 9% sequentially and 12% year-on-year, to RMB176. The decreases were as a result of Changyou's strategic efforts to hold ARPU at a level that is comfortable and affordable for the majority of Chinese gamers, with the goal of fostering a healthy in-game environment, so as to further extend the lifecycle of the games. In the future quarters, for our online games business we will only report the aggregated totals for our operational data for simplicity and to be more in line with industry standards. Ten, status of share repurchase program -- for the first quarter of 2009, no shares were repurchased under the $150 million share repurchase program approved by the Board of Directors in October 2008. As of April 30th, approximately 0.5 million shares were repurchased for a total consideration of about $20 million. Eleven -- finally, that brings me to our business outlook. For the second quarter of 2009, Sohu expects: one, total revenues to be between $121 million to $125 million, with advertising revenues of $43.5 million to $45.5 million, and non-advertising revenues of $77.5 million to $79.5 million. Two, brand advertising revenues of $42 million to $44 million. This implies a 7% to 13% quarter-on-quarter growth, or 0% to 5% year-on-year growth. Together with the actual results for the first quarter, this guidance would imply year-on-year growth for the first half of 2009 of 8% to 11%. Three, online game revenues of $63 million to $65 million. Four, as many of the sell side analysts have not yet considered the impact of non-controlling interest, previously referred to as minority interest in their models, for your easy reference and comparison, should Sohu continue to consolidate 100% of Changyou's net income for the second quarter, we would estimate our pro forma non-GAAP net income to be between $44 million to $46 million, with fully diluted earnings per share to be between $1.13 and $1.18. After deducting the share of net income pertaining to the non-controlling interest in Changyou, Sohu estimates non-GAAP net income for the second quarter to be between $31 million to $33 million, and non-GAAP fully diluted earnings per share for the second quarter to be between $0.80 and $0.85. Six, assuming no new grants of share-based awards, Sohu estimates share-based compensation expense for the second quarter to be between $6 million to $7 million, which includes Changyou's share-based compensation expense for the second quarter, estimated to be between $5.5 million to $6 million. Considering Sohu's share in Changyou, the estimated impact of this expense is expected to reduce Sohu's fully diluted earnings per share for the second quarter under U.S. GAAP by $0.10 to $0.13. Seven, in accordance with ARB-55 and FAS-160, a gain of approximately $100 million arising from Changyou's IPO will be taken to equity instead of to the profit and loss account. In summary, our first quarter results showcase Sohu's ability to deliver impressive year-on-year growth despite widespread global weakness in the economy. I would also like to take this opportunity to thank all Sohu shareholders and the investment community for their support in the Changyou IPO process. As Changyou's majority shareholder, holding approximately 68.5% of total outstanding equity interest and controlling approximately 80.8% of total voting power, Sohu will continue to provide strong leadership and support to bolster Changyou's sharpened focus on the MMORPG business and be a long-term beneficiary of Changyou's performance in the years to come. This concludes our prepared remarks for today. We will now open the floor for questions. Thank you.

(Operator Instructions) The first question comes from the line of Mr. Jason Brueschke from Citigroup. Please go ahead with your question, sir. Jason Brueschke - Citigroup: Thank you very much. Good evening Charles, Carol, Belinda, Brandi and everyone and congratulations both on the successful spin-off of Changyou and also on the quarter.

Jason, [Walter] and Alex are also around. Jason Brueschke - Citigroup: Oh, well, congratulations for a second time to them as well, an hour-and-a-half later. Carol, I think this is probably a question more for Belinda but possibly also for you and Charles and it deals with the state of advertising demand, and there’s a couple of sub-parts to it. Clearly advertising was challenged in the latter half of the first -- well, I’d say the beginning of the first quarter and at least the middle. But the underlying economy in China seems to have been, at least from the macro perspective, seems to have been improving, and I was wondering if first you could give a little bit of color as to why there is a reluctance on the part of advertisers to, in a sense, sense this improvement in the economy and go ahead and spend early in the year. The second part of the question is to the extent that 70% of the framework agreements are signed and the expectation is the remainder will be signed in the next say six or eight weeks, should we be expecting the second half of the year to end up being materially stronger than the first half since the total budget allocation seems to be back-end loaded? And then finally, could you maybe comment on how and when you expect the total business to benefit from the branding campaign that you have undertaken? Is it primarily aimed at raising profile among the general Internet population or is it also intended to strengthen your brand awareness with advertisers going forward? Thanks.

Jason, that’s many questions. The first one is about the economy, right? Jason Brueschke - Citigroup: Right.

Okay. The second is whether the second half will be better than the first half being like more framework contracts being signed and more back-end loaded, and the third one is when do we expect the branding campaign will benefit the portal business? Jason Brueschke - Citigroup: You’ll much more succinct than I am, Carol, but yeah those are the three questions.

Three, actually. Jason Brueschke - Citigroup: Right.

Jason, for your first question, I think as we mentioned earlier, although we have seen some positive signs of economic recovery, from the front line we still feel that the advertisers remain cautious about their advertising budget and patience and also some of them still delayed their marketing campaigns. For the second question, it’s about, as you said, we have signed 70% of the framework contracts -- yes, 70%, so I think we will give you more clear color some time in June when we close the remainder of the framework contracts. Jason Brueschke - Citigroup: But Belinda, just a quick follow-up here before -- I’m sorry, go ahead, Charles. Dr. Charles Zhang: And the third question is about the campaign -- it’s basically redefine, refresh the definition, the position of Sohu brand as a media platform. We have so many -- we have a matrix with so many verticals and we also do search, we also do Sohu Pinyin and other but now this campaign is about over the last five or six years, we now tell the world that Sohu is about media and this will address the general Internet population but definitely will also help with advertisers because advertisers see some strong -- see news, good news from Sohu and so they will -- especially in this economic situation when other companies are not being hurt, so it helps. Jason Brueschke - Citigroup: Great. Belinda, just a clarification -- my first question is really why -- I’m wondering why the advertisers are so cautious. I understand maybe why they were in the first quarter but why is that cautiousness extending into the second quarter in your view?

I think they are not so confident about the economic recovery. Jason Brueschke - Citigroup: Okay, great. Thanks. I’ll get back in the queue. Congratulations again.

Thank you. The next question comes from the line of Mr. Dick Wei from J.P. Morgan. Dick Wei - J.P. Morgan: Hi and congrats on a good quarter again. I’ve got two questions -- first of all, you mentioned about your marketing campaign but I wonder how would Sohu differentiate itself from the other portals and from this campaign -- I think Charles mentioned about Sohu's [inaudible] media. If you can talk, give some more color, that would be great. And the second question is about the video content, some of the in-house content, if you can give more sense of what are the costs related and what type of content, that will be helpful. Thanks. Dr. Charles Zhang: The media campaign is about -- the campaign is about telling the world that Sohu is about media, just like the slogan says, “Browse Sohu and Know the World” -- it’s about information, it’s about media and currently there are about 10 Internet companies specialize in different areas but in terms of the information and media content, there’s only Sohu and SINA are the two -- considered two major media portals and so Sohu wants to emphasize this aspect and also our commitment to continue the improvement of content and also reach to a much wider audience, especially in the tier three and tier four cities. And in terms of video content, I think we have observed rapid growth in the first quarter and up until now, especially with copyrighted content that we purchase from some hot TV series that are being aired in the TV stations. We also developed some of our own content in the past year. It’s mainly the -- called the B Channel, b.soho.com, has some talk shows and also some kind of star and entertainment news. But mainly the traffic gain is really from the recent copyright content, the launch of the high definition copyrighted TV series content and we’ll spend more on content purchased. But right now the main cost is coming from the bandwidth. The bandwidth costs fuels the lion’s share of the cost of the video content cost. Dick Wei - J.P. Morgan: Great. If I can have a follow-up regarding -- you mentioned two major portals, obviously SINA and Sohu. I guess if you can talk about how you will differentiate Sohu from SINA, if you can quickly talk about that, that would be helpful. Dr. Charles Zhang: Well, besides the traditional function of Internet information, basically fast and plenty -- basically fast and plenty -- [inaudible] -- now we -- in addition, on the base of that, we will provide more color, trendy reporting and also with the editorial front page and also selection of articles and also with special areas like entertainment and fashion and other lifestyle industries and also auto and other verticals, we will have more original content and also -- basically more editorial content and value-added observation to tell the audience about Sohu's view of the world. In addition to the previously last 10 years of development of the Internet, providing fast and plenty information. Now it’s time to turn to value content, in-depth and valued content. Dick Wei - J.P. Morgan: Great. That helps out. Thanks.

Thank you. The next question comes from the line of Kathy Chang from Goldman Sachs. Please go ahead with your question. Kathy Chang - Goldman Sachs: Thanks for the call. I have two questions -- one is a follow-up on the commentary about the framework contract. Can you share with us for the 70% that’s been signed as of April, how do the revenues trend versus last year? And can you also remind us what percentage of your total advertising revenue historically comes from framework contracts? My second question is somewhat related, regarding the non-games or non-Changyou net margin guidance given for the second quarter, is it right to assume that the quarter on quarter decline is primarily from the $9 million additional marketing expense related to the campaign? So if you take that out, it looks like that you expect quarter on quarter margins to still be up for the non-games business.

As we mentioned earlier, by the end of April, we signed 70% of our framework contracts, as compared with the same period last year. I think it has different performance in different industry categories. Some industries like auto is going up, while industries like real estate and information technology, that is, IT, is going on the down side.

And you are right, Kathy, the quarter-to-quarter decrease in margin for the non-games portion of the businesses relating to the extra expenses, the extra marketing expenses for the group as a whole is $9 million we are selling for sales and marketing; $6 million coming from the portal business and $3 million coming from the games business. Kathy Chang - Goldman Sachs: Okay, thanks. Just a follow-up on the first part, so historically can you remind us what percentage of your advertising revenues comes from the framework contracts?

We typically don’t disclose that. Kathy Chang - Goldman Sachs: Okay. Thank you.

Thank you. The next question comes from the line of Jenny Wu from Morgan Stanley. Please go ahead with your question, Madam. Jenny Wu - Morgan Stanley: Hi, how are you? Two questions -- number one is a follow-up on the marketing costs -- for this $9 million special marketing campaign costs, first would be that one of our -- or should we expect that will be the case for the rest of the year?

If we just look at the $6 million extra just relating to the marketing campaign, we do expect the cost to be hitting both Q2 and Q3 -- a similar amount would go into Q2 and Q3 and then that would tail down in Q4, probably to about $2 million. Jenny Wu - Morgan Stanley: Thanks. And the second one is just on the long-term strategy, and [inaudible] for the Olympics and this [inaudible] and besides your continued focus on improving the [inaudible] portfolio and the performance, and my question is what would be the new growth drivers for Sohu? And for all the R&D projects in place currently, which one is that performance? Dr. Charles Zhang: Well first of all, in terms of the general influence of Sohu, the product we are providing to the world, it’s about media, so the media, the new frontier is really online video. And we are seeing some advertising coming in relating to online video, although it’s still small compared to the traditional advertising but it’s really up-and-coming. We can make our video, online video successful. So as a media, when we talk about media, it’s not only about text-based media but also video, motion picture media. Of course, we are not giving up on search, so Sogou Search still 2009 is a year of building traffic and developing the advertising systems. It’s really very system dependent for the search advertising and so we still -- we’ve seen some -- after many years of trying and fail, and now we are seeing some uptake, some growth of the search traffic and so we should expect some meaningful search revenue in the long-term, probably in the year 2010. Of course, wireless is kind of flattish but this new trend of mobile Internet besides the traditional short messaging, value-added services, now mobile Internet is becoming as important as the PC Internet, it’s actually become the Internet, so wireless has become an Internet play. There will be advertising related to -- we see some good traffic on our mobile portal, the Sohu mobile portal. So there’s basically long-term, we will be a media platform regardless of devices, in either PC or mobile phone or any network computer or any devices -- anywhere, any place, anywhere, anytime, and also targeted advertising through our search efforts, Sogou Search. And also a targeted advertising system for brand advertising. And also we are launching in May, we are going to launch our social network services, which is similar to Facebook, the business model in the U.S. This is during the early stage, is in the spirit of our successful Sogou blogs. Jenny Wu - Morgan Stanley: Okay, sure. And a follow-up -- what are the major monetization approach for your video products and was the revenue contribution for videos [inaudible]? Dr. Charles Zhang: What? What’s the revenue contribution video what? Jenny Wu - Morgan Stanley: You mentioned a lot of video product and TV channels and just sum up everything together, what’s the major monetization approach for those video products and the related revenue contributions? Dr. Charles Zhang: It’s similar -- it’s really advertising, particularly, because unlike the cable industry in the U.S. where before the pre-Internet days where people charged by subscription, in the Internet time, Internet age, I believe that it’s going to be more advertising based, free viewing but advertising based. They are probably in the future maybe 10% or whatever, a small percentage in films or premium content that we can charge viewers but mostly advertising. This advertising is very similar to the TV commercials in the TV industry, but definitely it will be a model -- it will be some innovation, a creation of a combined traditional embedded text based or surrounding text advertising and the 15-second TV commercials in between the plays. There will be some moderation, there will be some -- but it’s basically the TV commercials, so that means that online videos business, we are looking at a much larger advertising industry. Jenny Wu - Morgan Stanley: Sure. And then for the time being, what’s the revenue contribution for those -- Dr. Charles Zhang: It’s still small, compared. It’s still -- we are making some progress but it’s still not big enough, so we are not disclosing it now. Jenny Wu - Morgan Stanley: Okay, sure. Thanks a lot. Dr. Charles Zhang: But our advertisers are showing some good interest. Jenny Wu - Morgan Stanley: Sure. Thanks. Thanks a lot. Dr. Charles Zhang: Automobile manufacturers and telecommunications. Jenny Wu - Morgan Stanley: Okay, very helpful. Thank you, Charles.

Thank you. Our final question comes from the line of Ming Zhao from SIG. Please go ahead. C. Ming Zhao - Susquehanna Financial Group: Thank you for the call and good evening. I have three questions -- the first two for Belinda and the last one for Carol. I’ll ask them one by one -- the first question is Belinda, you said you think the full year advertising revenue will still be up year-on-year, with the first half being up by 8% to 11% year over year. Are you really thinking about the second half of this year being down year over year or just being up by a small percentage year over year in the second half?

Good try. C. Ming Zhao - Susquehanna Financial Group: Okay.

Well, Belinda has just mentioned on our call that it’s very difficult to predict right now because she has to still have 30% framework contracts not yet signed because -- we are not saying that we will achieve zero growth, so it’s not that the second half would have negative growth to offset what we are seeing in the first half, and then we are also comfortable that we will not see a down -- a quarter with negative growth year-on-year. That is also something that we are quite confident at the present moment. So we’ll give you more updates when we move into June. C. Ming Zhao - Susquehanna Financial Group: Okay, good. My second question is Belinda, you said that within the industry sectors, you saw challenge in the real estate segment. You think that’s going to be down year over year but compared with some of the real estate industry data out there, it seems like the real estate industry is in a pretty good recovery, and why your prediction about real estate advertising is actually going to be down year over year?

From our front line [inaudible], it seems that they have a -- which they called [a reactive spring] especially in February and March, but annually speaking I think from the -- in terms of the budget allocation online, I still think it will be [downsized]. C. Ming Zhao - Susquehanna Financial Group: Okay. Last question for Carol, so I think Alex mentioned that currently Changyou has about $146 million in cash and cash equivalents on its balance sheet. Can you give us an update on Sohu's cash and cash equivalents currently on your balance sheet?

Post IPO, post [inaudible], is about 350. C. Ming Zhao - Susquehanna Financial Group: 350 million, okay that’s good. Thank you very much.

Thank you.

Thank you. There are no further questions. Please continue.

Thank you, everyone, for joining us today. Please feel free to contact us if you have further questions.

This concludes the Sohu first quarter 2009 earnings conference call. Thank you for participating. You may now disconnect.