Sohu.com (SOHU)

Sales and Marketing Expenses

Sales and marketing expenses increased by $0.7 million to $16.8 million for the three months ended March 31, 2009 as compared to $16.1 million for the three months ended March 31, 2008. The increase primarily consists of a $0.4 million increase in personnel expenses resulting from an increase in headcount, salaries and sales commission, $0.2 million increase in travel and entertainment expenses and a $0.1 million increase in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $37.2 million to $84.7 million for the year ended December 31, 2008, as compared to $47.5 million for the year ended December 31, 2007. The increase primarily consisted of a $26.0 million increase in advertising and promotion expenses, which was mainly due to the relevant marketing expenses surrounding the Beijing 2008 Olympic Games, a $7.7 million increase in personnel expenses resulting from an increase in headcount, salaries and sales commission, a $1.4 million increase in travel and entertainment expenses, a $1.4 million increase in communication expenses, a $1.2 million increase in facilities expenses, a $0.8 million increase in depreciation of servers and computer equipment and a $0.1 million decrease in other expenses, offset by a $1.2 million decrease in bad debt expenses.

Sales and
Marketing Expenses

Sales and marketing expenses increased by $37.2 million to $84.7 million for the year ended December 31, 2008, as compared to
$47.5 million for the year ended December 31, 2007. The increase primarily consisted of a $26.0 million increase in advertising and promotion expenses, which was mainly due to the relevant marketing expenses surrounding the Beijing 2008 Olympic
Games, a $7.7 million increase in personnel expenses resulting from an increase in headcount, salaries and sales commission, a $1.4 million increase in travel and entertainment expenses, a $1.4 million increase in communication expenses, a $1.2
million increase in facilities expenses, a $0.8 million increase in depreciation of servers and computer equipment and a $0.1 million decrease in other expenses, offset by a $1.2 million decrease in bad debt expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $19.0 million to $47.5 million for the year ended December 31, 2007, as compared to $28.5 million for the year ended December 31, 2006. The increase primarily consisted of a $13.7 million increase in advertising and promotion expenses, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category, investment in corporate branding, marketing expenses for Sohu 3.0 and TLBB, a $4.0 million increase in personnel expenses resulting from an increase in headcount, salaries and sales commission, and a $1.3 million increase in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $14.0 million to $27.6 million for the three months ended September 30, 2008, and increased by $34.9 million to $65.2 million for the nine months ended September 30, 2008, as compared with the corresponding three and nine month periods in 2007. The increase for the three months ended September 30, 2008 from the corresponding period in 2007 primarily consists of a $8.9 million increase in advertising and promotion expense, which included the relevant marketing expenses surrounding the Beijing 2008 Olympic Games, a $2.5 million increase in personnel expense resulting from an increase in headcount and salaries (including sale commissions), a $1.5 million increase in depreciation of servers and computer equipment and bandwidth leasing expenses, a $1.0 million increase in facilities expenses, and a $0.1 million increase in other expenses. The increase for the nine months ended September 30, 2008 from the corresponding period in 2007 primarily consists of a $25.7 million increase in advertising and promotion expense, which included the relevant marketing expenses surrounding the Beijing 2008 Olympic Games, a $6.4 million increase in personnel expense resulting from an increase in headcount and salaries (including sale commissions), a $2.0 million increase in depreciation of servers and computer equipment and bandwidth leasing expenses, a $1.1 million increase in facilities expenses, and a $0.2 million increase in other expenses, offset by a $0.5 million decrease in share-based compensation expense under SFAS 123(R).

Sales and Marketing Expenses

Sales and marketing expenses increased by $12.0 million to $21.4 million for the three months ended June 30, 2008, and increased by $20.8 million to $37.5 million for the six months ended June 30, 2008, as compared to the corresponding three and six month periods in 2007. The increase for the three months ended June 30, 2008 from the corresponding period in 2007 primarily consists of a $9.5 million increase in advertising and promotion expense, which included the relevant marketing expenses surrounding the Beijing 2008 Olympic Game, a $2.1 million increase personnel expense resulting from an increase in headcount and salaries (including sale commission), and a $0.4 million increase in other expenses. The increase for the six months ended June 30, 2008 from the corresponding period in 2007 primarily consists of a $16.8 million increase in advertising and promotion expense, which included the relevant marketing expenses surrounding the Beijing 2008 Olympic Game, a $3.9 million increase personnel expense resulting from an increase in headcount and salaries (including sale commission), and a $0.1 million increase in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $8.8 million to $16.1 million for the three months ended March 31, 2008 as compared to $7.3 million for the three months ended March 31, 2007. The increase primarily consists of a $7.3 million increase in advertising and promotion expenses, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category, investment in corporate branding, marketing expenses for TLBB and other products, a $1.8 million increase in personnel expenses resulting from an increase in headcount, salaries and sales commission, which was offset by a $0.3 million decrease in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $8.4 million to $28.5 million for the year ended December 31, 2006, as compared to $20.1 million for the year ended December 31, 2005. The increase primarily consisted of a $3.9 million increase in advertising and promotion expenses, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and marketing activities of the 2006 FIFA World Cup, $1.6 million for share-based compensation expense under SFAS 123(R), a $1.5 million increase in personnel expenses resulting from an increase in headcount and salary increment, a $811,000 increase in traveling and entertainment expenses, and a $589,000 increase in other expenses.

Sales and Marketing Expenses

SIZE="2">Sales and marketing expenses increased by $8.4 million to $28.5 million for the year ended December 31, 2006, as compared to $20.1 million for the year ended December 31, 2005. The increase primarily consisted of a $3.9 million
increase in advertising and promotion expenses, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and marketing activities of the 2006 FIFA World Cup, $1.6 million for
share-based compensation expense under SFAS 123(R), a $1.5 million increase in personnel expenses resulting from an increase in headcount and salary increment, a $811,000 increase in traveling and entertainment expenses, and a $589,000 increase in
other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $6.4 million to $13.6 million for the three months ended September 30, 2007, and increased by $9.7 million to $30.3 million for the nine months ended September 30, 2007, as compared to the corresponding three and nine month periods in 2006. The increase for the three months ended September 30, 2007 from the corresponding period in 2006 primarily consists of a $4.5 million increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category, investment in corporate branding, marketing expenses for Sohu 3.0 and TLBB, a $1.4 million increase in personnel expenses resulting from an increase in headcount, salaries and sales commission, a $419,000 increase in traveling and entertainment expenses, and an $81,000 increase in other expenses. The increase for the nine months ended September 30, 2007 from the corresponding period in 2006 primarily consists of a $6.6 million increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category, investment in corporate branding, marketing expenses for Sohu 3.0 and TLBB, a $2.2 million increase in personnel expenses resulting from an increase in headcount, salaries and sales commission, a $674,000 increase in traveling and entertainment expenses, and a $226,000 increase in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $2.4 million to $9.5 million for the three months ended June 30, 2007, and increased by $3.3 million to $16.7 million for the six months ended June 30, 2007, as compared to the corresponding three and six month periods in 2006. The increase for the three months ended June 30, 2007 from the corresponding period in 2006 primarily consists of a $1.4 million increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and promotion expenses of TLBB, a $777,000 increase in personnel expenses resulting from an increase in headcount and salaries (including commission increase for sales staff), and a $223,000 increase in other expenses. The increase for the six months ended June 30, 2007 from the corresponding period in 2006 primarily consists of a $2.1 million increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and promotion expenses of TLBB, a $823,000 increase in personnel expenses resulting from an increase in headcount and salaries (including commission increase for sales staff), and a $377,000 increase in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $0.9 million to $7.3 million for the three months ended March 31, 2007 as compared to $6.4 million for the three months ended March 31, 2006. The increase primarily consists of a $656,000 increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category, a $198,000 increase in traveling and entertainment expenses, and a $46,000 increase in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $4.6 million to $20.1 million for the year ended December 31, 2005, as compared to $15.5 million for the year ended December 31, 2004. The increase was primarily consists a $2.4 million increase in personnel expenses as a result of increase in headcount and salary increment, a $1.5 million increase in advertising and promotion expenses, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and a $700,000 increase in other expense.

Increase of personnel expenses included the increase of sales commission. Sales commission is paid to our sales teams after the corresponding proceeds of an advertising contract are collected. In view of our implementation of tighter credit controls and increase in the overall credit worthiness of our customers, the historical pattern of amount of commission paid was generally in line with the amount of commission associated with advertising contract concluded. As of December 31, 2005, we determined that sales commissions is earned by employees and recorded as an expense upon recognizing the corresponding advertising revenue, rather than upon actual cash collection of the revenue as in previous periods. As a result, we recorded an accounting adjustment of $700,000 of sales commission relating to revenue recorded but not yet collected.

Sales and Marketing Expenses

Sales and marketing expenses increased by $2.9 million to $7.2 million for the three months ended September 30, 2006, and increased by $7.8 million to $20.6 million for the nine months ended September 30, 2006, as compared to the corresponding three and nine month periods in 2005. The increase for the three months ended September 30, 2006 from the corresponding period in 2005 was primarily due to a $1.3 million increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and our exclusive rights to provide 2006 FIFA World Cup online video content, a $797,000 increase in personnel expenses resulted from an increase in headcount and salary increment, a $445,000 of the required expensing of share-based compensation cost under SFAS 123(R), a $184,000 increase in depreciation and facilities expenses, and a $174,000 increase in other expenses. The increase for the nine months ended September 30, 2006 from corresponding period in 2005 primarily consisted of a $3.4 million increase in advertising and promotion which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and our exclusive portal rights to provide 2006 FIFA World Cup online video content, a $2.0 million increase in personnel expenses resulted from an increase in headcount and salary increment, a $1.2 million of the required expensing of share-based compensation cost under SFAS 123(R), a $638,000 increase in depreciation and facilities expenses, a $369,000 increase in traveling and entertainment expenses, and a $193,000 increase in other expenses.

-27-

Table of Contents

Sales and Marketing Expenses

Sales and marketing expenses increased by $3.0 million to $7.0 million for the three months ended June 30, 2006, and increased by $5.0 million to $13.4 million for the six months ended June 30, 2006, as compared to the corresponding three and six month periods in 2005. The increase for the three months ended June 30, 2006 from the corresponding period in 2005 was primarily due to a $1.2 million increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and our exclusive rights to provide 2006 FIFA World Cup online video content, a $540,000 increase in personnel expenses resulted from increases in headcount and salary increment, a $422,000 increase in bad debt expense, $298,000 of the required expensing of share-based compensation cost under SFAS 123(R), a $241,000 increase in depreciation and facilities expenses, a $151,000 increase in traveling and entertainment expenses, and a $148,000 increase in other expenses. The increase for the six months ended June 30, 2006 from corresponding period in 2005 primarily consisted of a $2.1 million increase in advertising and promotion which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category and our exclusive rights to provide 2006 FIFA World Cup online video content, a $1.2 million increase in personnel expenses resulted from increases in headcount and salary increment, $746,000 of the required expensing of share-based compensation cost under SFAS 123(R), a $455,000 increase in depreciation and facilities expenses, a $271,000 increase in traveling and entertainment expenses and a $228,000 increase in other expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $1.8 million to $6.5 million for the three months ended March 31, 2006 as compared to $4.7 million for the three months ended March 31, 2005. The increase was primarily consists a $617,000 increase in personnel expenses resulted from increases in headcount and salary increment, $448,000 of the required expensing of share-based compensation cost under SFAS 123(R), a $847,000 increase in advertising and promotion expense, which included the relevant expenses associated with our exclusive Olympic sponsorship in the Internet Content Services category, a $120,000 increase in traveling and entertainment expenses, a $199,000 increase in depreciation and facilities expenses, a $39,000 increase in other expenses, and were offset by a $470,000 decrease in bad debt expenses.

Sales and Marketing Expenses

Sales and marketing expenses increased by $5.9 million to $16.5 million for the year ended December 31, 2004, as compared to the year ended December 31, 2003. The increase was primarily due to a $2.8 million increase in advertising and promotion expense, a $1.6 million increase in personnel expenses due to increases in headcounts and increases in bonuses and commissions, a $651,000 increase in traveling and entertainment expenses, a $720,000 increase in bad debt expense, and a $129,000 increase in other items including office and depreciation expense and professional fees.

Sales and Marketing Expenses

Sales and marketing expenses increased by $15,000 to $4.6 million for the three months ended September 30, 2005 and increased by $1.6 million to $13.6 million for the nine months ended September 30, 2005, as compared to the corresponding three and nine month periods in 2004. The increase for the three months ended September 30, 2005 was primarily due to a $166,000 increase in personnel expense, a $48,000 increase in bad debts, offset by a $197,000 decrease in advertising and promotion expense, and a $2,000 decrease in other expense. The increase for the nine months ended September 30, 2005 was primarily due to a $1.2 million increase in personnel expense, a $434,000 increase in bad debt expense, and a $24,000 increase in other expense.

Sales and Marketing Expenses

Sales and marketing expenses increased by $8,000 to $4.3 million for the three months ended June 30, 2005 and increased by $1.6 million to $9.0 million for the six months ended June 30, 2005, as compared to the corresponding three and six month periods in 2004. The increase for the three months ended June 30, 2005 was primarily due to a $402,000 increase in personnel expense due to increase in headcount and increases in bonus and commissions, a $23,000 increase in advertising and promotion expense, offset by a $296,000 decrease in bad debt expense, a $11,000 decrease in traveling and entertainment expenses, and a $110,000 decrease in other items. The increase for the six months ended June 30, 2005 was primarily due to a $1.0 million increase in personnel expense due to increase in headcount and increases in bonuses and commissions, a $386,000 increase in bad debt expense, a $188,000 increase in advertising and promotion expense, and a $35,000 increase in other items.

Sales and Marketing Expenses

Sales and marketing expenses increased by $1.6 million to $4.7 million for the three months ended March 31, 2005 as compared to the three months ended March 31, 2004. The increase was primarily due to a $682,000 increase in bad debt

-17-

Table of Contents

expense, a $610,000 increase in personnel expense due to increase in headcount and increases in bonuses and commissions, a $164,000 increase in advertising and promotion expense, a $114,000 increase in other items including office and depreciation expense and professional fees and a $30,000 increase in traveling and entertainment expenses.

Sales and Marketing Expenses

Sales and marketing expenses were $10.6 million for the year ended December 31, 2003, as compared to $8.0 million for the year ended December 31, 2002. Sales and marketing expenses increased by $2.6 million to $10.6 million for the year ended December 31, 2003, primarily due to increased advertising and promotion expense of $1.7 million to support our marketing strategy, increased personnel expenses of $800,000 due to increases in bonuses and commissions from increased advertising revenues, and traveling, entertainment and office expense of $100,000.