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From:  "Blast Investor" <blast_investor@blastinvest.com> Date:  Mon May 10, 2004  11:09 am Subject:  added SOHU reduced HCA

As planned, I added SOHU at $16 today and reduced HCA at $40. HCA is still very attractive value stock. However, SOHU is even more attractive at similiar PE but much faster growth. My current plan is to gradually add more SOHU as it dropped below $16.

From:  "Blast Investor" <blast_investor@blastinvest.com> Date:  Mon May 10, 2004  1:10 pm Subject:  Buffett Return on equity modeling of SOHU

Buffett Return on equity modeling of SOHU I just did a return on equity modeling on SOHU using Warren Buffett formula: 10 year modeling Assumption: (1) SOHU can maintain current return on equity ratio ( ~ 40%) for next 10 years , (2) All the profit SOHU generated is reinvested into expansion of business generating same degree of return on equity. (3) at end of 10 years, SOHU PE = 10 (pe10+) or book value (book+) as more conservative, PE = 16 as high end of evaluation (PE16+). (4) dividend payout or share buy back = 0%. Current earning per share 0.94. Earning per share at end of 10 years: $21.2 book value at end of 10 years: $72.82 Result of investment return in 10 years: (1) book+: 16.8% per year return (2) PE10+: 34.53% per year return (3) PE16+: 41% per year return 30% to 40% per year for SOHU for next 10 years is most likely result. Compare to YHOO NTES, SINA return on equity modeling: YHOO: lost around -12% to -16% per year for next 10 years. The investment loss is due to YHOO current bubble PE. NTES: gain around 20% to 30% per year for next 10 years due to its high PE. SINA: gain only about 6 to 12% per year for next 10 years due to its low return on equity ratio.