Perry Wu's article dated Aug 1, 2005 had some very malicious inaccuracies and a full retraction is warranted.

Mr Wu suggests that SOHU is playing accounting games. But anyone with a basic understanding of accounting principals can see that he is mistaken. Mr Wu insinuates that SOHU is cooking the books. His explanation of why SOHU shareholder equity only increased $1 million while profits were around $12 million was the following. "Sohu has never paid a dividend so the non-increase in shareholders' equity must come from another place. It probably means that Sohu is playing accounting games, using its shareholders' equity accounts to run through expenses that should be run through its profit and loss accounts"

Anyone however doing a few minutes of research will understand however that SOHU repurchased $12 million worth of stock which is the real reason for the change in shareholder equity.

Did Mr. Wu even contact the company before writing this slam article that was completely inaccurate? Perhaps before you let Mr. Wu do another slam piece on a publicly traded company you should require him to take 1 or 2 accounting classes.

To allow Mr. WU to insinuate fraud at a publicly traded company such as SOHU without more due dilligence is irresponsible. I took 2 account classes in college and quickly saw through his errors in mere minutes. Did he not check with anyone??

In fairness, I would encourage you to write a positive article on SOHU. Perhaps you could write an article on the growth of its Sogou search engine which continues to gain users and ranks 60% in market share among new internet users.

Thank you,

Evan Pelham

Carlin Financial