Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Sohu’s Third Quarter 2011 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the management’s prepared remarks, there will be a question-and-answer session. Today’s conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today’s conference call, Jenny Wu from Christensen. Please go ahead, madam.

Thank you, operator. Thank you for joining us today to discuss Sohu.com’s third quarter 2011 results. On the call today are Chairman and Chief Executive Officer, Dr. Charles Zhang; Co-President and Chief Operating Officer, Belinda Wang; Co-President and Chief Financial Officer, Carol Yu. Also with us from Changyou, our Chief Executive Officer, Tao Wang; President and Chief Operating Officer, Dewen Chen; and Chief Financial Officer, Alex Ho. As well as CEO of Sogou, Xiaochuan Wang; Vice President of Sohu and CEO of Sohu Video, Ye Deng. Before management begins their prepared remarks, I would like to remind you of the company’s 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. For more information about the potential risks and uncertainties, please refer to the company’s filings with the Securities and Exchange Commission, including its registration statement and most recent annual report on Form 10-K. Now, let me turn the call over to Dr. Charles Zhang, Chairman and CEO. Charles, please proceed.

Thank you. I’m pleased to report strong third quarter results with year-over-year revenue growth of 42% driven by solid performance of our online advertising and online gaming businesses. For online advertising, two of the fastest growing areas Sogou and Sohu Video continued to deliver exciting news. Sogou’s quarterly revenue grew 244% year-over-year, comfortably exceeding our prior guidance. Sohu Video for the first time in September posted number of visitors and total number of video viewed rose to the second place in China according to comp score. For online game, our online gaming subsidiary Changyou once again exceeded its top line and bottom line financial goals while making planned investments in marketing and promotion up to 1 year. Our flagship game, Tian Long Ba Bu or TLBB continued to expand player’s numbers with the release of new expansion pack. Duke of Mountain Deer or DMD appears to hard core game players with these new technologies and advanced cross server game play. Now let me start with some quarterly highlights. Total revenues were US$233 million in the third quarter up 42% a year-over-year and 17% quarter-over-quarter. Gross trend add revenues before tax were $84 million. Net brand advertising revenues were US$77 million, up by 30% year-over-year and 13% quarter-over-quarter, at the high-end of our guidance. Sogou’s revenue were US$18.4 million, exceeding our guidance of US$16 million. This was up 244% year-over-year and 35% quarter-over-quarter. Online games revenues reached US$116 million, up 35% year-over-year and 14% quarter-over-quarter. Non-GAAP diluted EPS were $1.26 compared with $1.16 in the third quarter of 2010, and were also ahead of our expectations. Let me first discuss Sogou business in more detail. During the third quarter, Sogou continued to deliver strong top-line growth driven by continued solid traffic growth and improved monetization. Revenue more than tripled that of…

Thank you, Charles. Third quarter revenue for brand advertising business reached a new high, as we continued benefit from solid demands from the advertisers. Net brand ad revenues for the third quarter were US$77 million, up 30% year-over-year and a gross brand ad revenues before business tax were US$84 million. As Charles mentioned earlier, online video continue to be one of our fastest growing segments is about 110% growth in revenues and nearly 50% increase in the number of advertisers on a year-over-year basis. Looking forward, for the fourth quarter of the 2011 we expect gross brand advertising revenue before business tax to be between US$84 million and US$86 million translating into net brand advertising revenue of between US$77 million and US$79 million, this would represent a year-over-year increase of between 28% and 32%. Now, I will turn the call over to our Co-president and CFO Carol Yu, who will walk you through the quarter’s financials. Carol?

Thank you, Belinda, hello everyone. I will now take you through our financials for the third quarter. One, revenues; total revenues were $233 million, up 42% year-over-year and 17% quarter-over-quarter. This was a new record and came in ahead of our expectations. Total online advertising revenues, which include revenues from brand advertising and Sogou business were $95 million, up 47% year-over-year and 17% quarter-over-quarter. Brand advertising revenues were at the high-end of our expectations at $77 million, up 30% year-over-year and 13% quarter-over-quarter. The increases were mainly due to strong advertising demand from various sectors and increased revenues from across the board which Sohu build a larger sales network in 2011. Sogou revenues were $18.4 million up 224% year-over-year and 35% quarter-over-quarter. The increases were mainly due to increased search traffic and improved monetization. Online game revenues were at US$116 million, up 35% year-over-year and 14% quarter-over-quarter. Wireless revenues were US$14.2 million, a year-over-year increase of 5% and quarter-over-quarter increase of 22%. Now let me provide some more details about our financials. From now on, most of the figures discussed will be non-GAAP. The impact of share-based awards include share-based compensation expense and its related non-cash income tax expense were charged to the quarter’s gross profit, operating profit and income tax expense. For the third quarter the total share-based compensation expense was US$4.4 million. We believe excluding the impact of share-based compensation awards from our non-GAAP financial measures and net income makes a more meaningful comparison of Sohu’s operational results and improve investor’s understandings of our performance. So we will use non-GAAP measures in this discussion to explain margin, cost and expense items. Two, gross margins. Non-GAAP gross margin in the third quarter was 71% compared with 74% in the previous quarter in the same period last year. Brand advertising…

Thank you. (Operator Instructions) Your first question comes from Eddie Leong from Merrill Lynch. Please ask your question. Eddie Leong – Merrill Lynch: Good evening, everyone. I have two questions, the first one is about your Sogou business, could you comment on people’s concerned on the SME segment, especially Peugeot I guess you’re also concerned about whether some of the smaller e-commerce companies our facing some headwinds. And then my second question is on your video business, as you mentioned…

Maybe we would do the questions one by one. So the first your question is how do we see the market’s concern about potential deceleration of businesses form SME, right? Eddie Leong – Merrill Lynch: Yes.

So the fact is that market share profits, so it’s not affecting our search businesses.

We don’t see any slowdown in that respect, we’re still – because of the increasing in our search traffic we’re still seeing a nice growth in terms of both numbers of advertisers as well as the ARPU. Eddie Leong – Merrill Lynch: Understood. And then my second question is on the video – cost you mentioned in the quarter, you guys started to negotiate for 2012 and 2013 video (inaudible) could you like share more color of those on the inflation of our video content? Thanks.

So the price already reached kind of ceiling and level off, so … Eddie Leong – Merrill Lynch: Thank you.

Just becoming more competitive so that we have really quality – entering 2011, the competition because of – getting into this motion picture. So the competition list comes presented and then really now, keep on looking at the quality of the – the key based area, so not all shows can sell that kind of price. Eddie Leong – Merrill Lynch: Got that. Thank you.

Your next question comes from Wallace Cheung from Credit Suisse. Please ask your question. Wallace Cheung – Credit Suisse: Hi, thanks for taking my questions. I think first question is on the quarter basis, as management saying the factors actually have been helping to grow the business where as we’re seeing relatively soft property sales in the physical market side. Has the management have done any kind of like – sort of expansion or self-network or what more creative kind of approach do you – because I do – actually advertising business. As such, you’re growing the business better than the –maybe the strategic division. On the other questions on the online video front, as we’re seeing the content cost is actually has been increasing quite substantially, will management try to produce more internal content, in-house developed content in particular hiring more people to do that help business, especially reduce the content cost going forward? Thank you.

Yeah, regarding your first question, I think as you’ve said the macro – as the economy slowed down, but especially impacted by the related industry regulations and clarity. But I think in terms of the Sogou workers, we’ve been expanding our regional local websites in these two years. We actually, we expanded over 15 local focused across the country. So even if the macro – the actual situation is not so good, we still feel fine with the steady revenue growth on the Sogou focused revenue line.

While the content production side, I think, yes, we do get into in-house for a self-produced content, but in the area of key materials, dramas, we’re selectively working with some outside directors, producers to co-produce some video TV serials like that one of the (Summer Sweetie) is one of the success example of our co-production. For in house developed, fully developed by Sohu, we’re producing some documentaries and talk shows and interviews as leveraging the interviews and these kind of short clips and the news and documentary products. It is cost – cost wide, it’s very good, it’s low cost. But I think, our long clip video still – we needed to still need buy them from by the best content from the market, but by doing some better deals and partners we can effectively manage the cost overall cost. Wallace Cheung – Credit Suisse: Thank you for the chart in the detailed.

(Inaudible) actually, it was very expensive, but by doing some better deals and exchange for some other content actually the cost is significantly brought down. Wallace Cheung – Credit Suisse: Hi. Thank you for a chart comment. And just a quick follow-up on Charles comment is, as we’re seeing like you’ll have more diverse kind of content development acquisitions, but would you also think about the sort of seeking for some content partnership sharing with some other players as you’re seeing some of your industry peers have already formed some joint venture? Thank you.

Yeah, we are – we are yeah – we keep our mind open, and look at those opportunities, but as cut in productions in China is more project based. It depend on some companies that they produce the big show, and then the next show is that – show with the heads and then there is a follow up I mean bad, not so good ones. So, its sometime we bet more on show or each of that production rather than investing in to the company itself, but we definitely keeps our mind open. Wallace Cheung – Credit Suisse: Thank you very much.

Your next question comes from Alicia Yap from Barclays Capital. Please ask your question. Alicia Yap – Barclays Capital: Thank you, good evening everyone. My question is that I was hoping that if you could share reverse what is your view on the overall competitive landscape in the online video space? When do you think that the industry will start to consolidate, and we’ll the beating on the content cost be more rational overtime, if so, when do you expect that to happen?

Alicia maybe I’ll take up those questions. Alicia Yap – Barclays Capital: Okay.

Our view is that we do not think consolidation will happen very quickly, as we see across tinier entrepreneurs they have their own ego. So, it’s very, very difficult, we only see M&A activities as an exception rather than an industry trend. So, we believe that will be the case as well for the video industry. Going to your question as to the content prices as to when we’ll bring back some synergy back into the equation. I believe that will come soon and as Charles and Deng mentioned earlier, we believe that content prices should top out pretty soon. As we – as Charles explained in his script, everybody is getting some share of the exclusive content. We start to see bartering going on between all these industry players. So at the end of the day, if we see a lot of this bartering going on, which we are, there’s not much point in paying sky high prices in order to get all these content in the long-run basis. So we do expect that this extreme cost escalation trend will be dying out soon. Alicia Yap – Barclays Capital: I see. Thank you so much for that. Can I just follow up on your ancillary that…

One follow-up. No problem not an issue. Go ahead. Alicia Yap – Barclays Capital: And so how should we expect the gross margin line for the advertising be trending in the next few quarters?

Overall advertising margin? Alicia Yap – Barclays Capital: Yeah. Because of the amortization accelerator, so how should we expect the gross margin for the advertising line to be trending in the next few quarters?

Again to start with because of the change in our amortization method, we may not be able to ramp up revenue as quick as we changed the accounting method. So we do expect that we will be seeing some margin erosion over the next two, three quarters, but as the new policy come in place and become – and stabilizes, and as content calls becomes more rational. And as we moved into the tail of this cost acceleration trend we will – and as we grow revenue further, I think we will see some bounce back in margins on the longer run basis. Alicia Yap – Barclays Capital: Okay, great. Thank you so much.

Your next question now comes from Zhao Ming from SIJ. Please ask your question. Zhao Ming – SIJ: Thank you. Good evening. Two questions; let me ask first question, Belinda, can you comment on different verticals in the advertising category. I think you just commented on the Real Estate segment, how about categories like Auto, Online Gaming, FMCG and also e-Commerce/Group Buying. That’s my first question.

Okay. I think Lee has said that steady revenue growth for Auto, and Online Gaming in Q2 and Q3, and we’ll still see the trend in Q4. Also at the same time we see the fast growing cultivate by FMCG driving by the online video content and online video influence, also a heavy investment from the e-Commerce company. Zhao Ming – SIJ: Okay. Thanks for that. My second question is about the other revenue on your top-line. I’m understanding that that has a significant portion of the content resale, should we interpret this as a quarter-by-quarter situation not recurring or depending on the efforts in that particular quarter?

If you look at it on for the – for Q3 and Q4, because we’ve licensed out the Qing Princess over these two quarters. So you would see revenue coming in for both of these quarters. So you’re right. These are at least to start it off, it would be more like accidental revenue, while we only have one or two of these premier content for sub-licensing, but as we build up more pipeline over the course of next year, it will become more of a regular revenue. Zhao Ming – SIJ: Okay. If I may, let me quickly ask you what’s your Olympics strategy for next year? Thank you.

This is your third question Ming. Zhao Ming – SIJ: Oh, yeah, sorry. I – happened to ask third question.

Well. We all have good reporting team sending to London to report. We think London Olympics will not big as Asian Olympics. So hope we just wind off (inaudible) report especially from – its micro blog reporting and also video reporting.

Your next question now comes from Jenny Wu of Citigroup. Please ask your question. Jenny Wu – Citigroup: Hi, thank you for taking my question. My first question is, hi, Carol, would you please share us some color about your mobile internet strategy? Thank you.

Mobile Internet?

I think mobile Internet now is actually Internet itself. So it is basically merged to the same Internet platform where you access the Internet through different devices. So, overall products are you know have its launching to develop its mobile application may have made had like in my place, iPhones, mobile phone and all others. I think maybe enabled people to actually to access Internet to generate contents and to take photos and filming videos, anytime, anywhere they want. So we are working our client software to apply to people to pick picture. Recently they actually launched a product that enabled iPhone to take pictures and to upload any kind of our photos. So definitely our platform enabled to push our client software meaning that the news applications of picture taken, or photographing or other twitter software depend on a universal coverage of our fundamental software which we would believe will be our self opinion because if Chinese kind of input, it’s very, very critical to those mobile device application.

Your second question comes from Gillian Chung of Morgan Stanley. Please ask your question. Gillian Chung – Morgan Stanley: Good evening, thank you for taking my question. I wonder if you can provide more color regarding this partnership with MSN, how well the partnership have you grow you video business in terms of traffic and monetization, where Michael’s comment on MSN failure on that video as inventory?

Well I got it. We will work this MSN and have a MSN.tv.sohu.com channel so it was part of our domain names they all traffic were included under Sohu.com and Sohu video, the deal that we have with MSN is that we will also operate the channel whereby we would share some advertising inventory with them. So that will bring that traffic, with these high net income or the high-caliber millions of MSN users across China.

It’s actually a similar, one of our efforts is really to develop a video viewership outside the Sohu video website so there may the broadcasting trend to appear in many platforms, so this is also one of our efforts.

Your next question comes from Catherine Leung of Goldman Sachs. Please announce your questions. Catherine Leung – Goldman Sachs: Hi, I’ve two questions. My first one is regarding your video business, given your video properties are now ranked number two, do you believe that you’re sufficiently monetizing the traffic?

What’s your question again Catherine? Catherine Leung – Goldman Sachs: Well, so basically your video property is being ranked number two, should we think about the scale of your video advertising revenues as approximating what the previous number two player has been generating? In other words are you sufficiently monetizing the traffic that go out?

There are many efforts on that. I think last year we majorly focused on the kind of sponsorship video revenue model. That is when we’ll use basically our MSN and media content, our TV, movie broadcasting channel and the company outlined marketing events with half the prices. And this really helped to increase the ROI from the advertisers investment given the last two years our visitors – number of our unique visitors is not so high. Since this year because of the highly growth, the rapid growth of similar videos UVs and VVs we started to feel CPM model this year. And so we have opened up more CPM inventory for advertisers and I think this will help to increase our future revenue growth of video.

Let me just comment (inaudible) people are concerned about high cost, content cost and of video business, and I think – let me comment that, in the future there will be two trends that enable the supplement to turn profitable. While these is a more targeted advertising, tradition by targeting advertising so that it actually bring the advertiser – to bring the targets, advertising for the users which we know very well. This is one technology platform you can say about so that advertising, the capacity of advertising will be deep. Second trend is really that the subscription, especially for movies and for some of the really high quality content, where – actually highly desired content and also heavy I mean cost per minute of the content are very high. So, that this means or the industry make see a disruption or transactional subscription based model. So, right now the video players are all fighting for the market share for traffic and then one we have the huge traffic and then some of the content turned into subscription and then will I think the improved quickly improve the business model of the various elements in China.

Your next question now comes from Gary Ngan from UBS. Please ask your question. Gary Ngan – UBS: Good evening everyone. Thanks for taking my question. My first question is can you comment a little bit about your unit monetization of Sogou business. So for example like on and per advertiser ARPU basis how do you compare with let’s say Qian Duoduo or on the other hand on a (inaudible) per page, how do you compare with Duoduo. So just want to get a sense of what’s your unit monetization with this to your competition?

(Inaudible).

We’ll ask Erick to give that number.

I think left corner, we see about 35 gross in total revenue for search of Sogou and of that about 18% comes from the increase of the number of advertisers. So the rest of the growth should be coming from the ARPU growth. About 50-50 half coming from the advertiser number growth and half coming from the up growth.

As far as ARPU is concerned, we’re probably trailing around 30% to 40% that of by due. Hello Gary.

We now have your next question from Wendy Huang of RBS. Please ask your question. Wendy Huang – RBS: Hi, thanks for taking my question. I have three questions; first, can you tell us what’s the percentage of your revenue came from the e-commerce including portal as in (inaudible)?

From the portal side, it’s below 10%. For the research side, we do really do this analysis, but I don’t think it’s a very high percentage as well. Wendy Huang – RBS: Okay.

You can simply show up on my top five lists. Wendy Huang – RBS: Sure. Okay, secondly, I noticed that this quarter is actually the first time that the gross margin of this such as reached the level that of brand advertising. So when can we expect the net margin of the such as to reach a similar level as brand advertising as well?

Been a little tricky question. It’s always on a non-GAAP basis, Sohu breakeven this quarter, but we do not expect a – that, we will rush to profitability let’s put it in this way in the next six to 12 months. We’ll continue to invest and continue to grow market share. As far as investment is concerned, it’s mostly on our innovative products R&D and alike.

We now have your next question from Mu Zhi Li from Mizuho. Please ask your question. Mu Zhi Li – Mizuho: Thank you for taking my questions. I would like to ask you about the online videos, you have two video websites the tv.sohu and video.sohu, can you tell me the traffic flow between the two websites, how much percentage that makeup on each? Thank you very much.

Actually as far as – there is a couple of reasons, we have gv.sohu.com and v.o.com our main traffic are and main – our central site is tv.sohu.com, our v.ho.com, it’s more a – Sohu part produced celebrity interviews and some independent content, it’s basically a subsidiary, it’s a sub website. Mu Zhi Li – Mizuho: Thank you. And can you also please explain how come the – from the third-party research like find out the time spent on the Sohu video is smaller, the time spent is shorter than the other peers any reason behind it? Thank you.

(Foreign Language) what is the count score?

Time spent? Mu Zhi Li – Mizuho: Yes. Actually the count score.

Yeah I think we are focusing on – I think the most important two parameters are video views and also the using visitor’s coverage. These are our key parameters combine a little bit of – video sites. We are – our video – I think, so we’re not looking at the ranking of those time stands, but it’s also growing quarter-over-quarter very nicely, especially – with our key drama TV series.

We now have your next question from Dick Wei of JP Morgan. Please ask your question. Dick Wei – JP Morgan: Hi, these are few of my questions. First question is vendor on the video cost front. How much did you spend on the last round of content acquisition over a past couple of months and as so – as what is the budget or what kind of considerations you’re thinking for next year content as well. Thanks.

Dick you are asking about the actual cost or you’re talking about.. what? Dick Wei – JP Morgan: Yeah, I guess for the actual cash outflow, yeah for the last couple of months or for this year as what kind of growth for this year or what is a amount for the share as well?

We already – we are buying over the past few months. We’re already buying content from next year. So, you want to know what’s the cost for next year, it’s probably – well this – our cost is about – at least 15% to 20% cheaper than our competitors. Dick Wei – JP Morgan: All right. Maybe if I can ask about, what is the cash outflow this year, say is it US$15 million and the end of next year…

Can I tell you about the total amount? Dick Wei – JP Morgan: Right, correct.

We’re looking at – to spend between US$50 million to US$80 million in Asia in terms of content acquisition for the pipeline of next year, but some of the cash has already been paid and some are still outstanding and this is the total budget that we’re looking at.

There are no further questions at this time. I’ll now like to hand the conference back to today’s presenters, please continue.

Once again, I would like to thank all of you for joining us on today’s call. If you have any follow-up questions, please do not hesitate to contact us. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all disconnect.