Sohu’s latest Form 8-K filing with SEC showed the portal site will buy back 24 million Series A preferred share of its wholly-owned subsidiary Sogou from Alibaba. The deal approximately equals to 10.88% of the outstanding share capital of Sogou at a purchase price of $ 25.8M.

A quick review from the beginning: In August, 2010, Sohu announced to spin off its search subsidiary Sogou as an independent operation, CTO Wang Xiaochuan took office. Two months later, Alibaba Investment Limited invested $ 15 million in exchange for 10% of Sogou’s shares.

Sohu’s earning reports of Q1, 2012 showed that Sogou pulled in $ 23 million in revenue, which increased by 184% year over year.

Currently, the search engine company has more than 1300 staff.

 

Here is an internal mail from the CEO, Wang Xiaochuan.

Dear Sogou fellows, 

Sougou started operating as an independent company since October 2010, when we received investment from Alibaba and Yufeng Fund. In the following 20 months, with the help and efforts of every Sogouer, we have together achieved some exciting results: 

Firstly, We have increased our search market share by over twice, replacing Google as the second biggest Chinese search engine in October 2011.

The revenue rose by 8 times, and we started to profit in Q3 and Q4 of 2011. Meanwhile, our team is also growing, the staff number has risen by 3 times and surpassed 1000 in Q1 last year, which ensures a greater strategy forehead.

In the second half of the year, we will upgrade the Sogou Pinyin Input Method, Sogou Browser, and the search engine and soon will launch some new PC and wireless products.

Considering our constant upgrading strategy, we are not so sure if Alibaba could keep on supporting us strongly on strategic level. With negotiation, we decided that Sohu would purchase back shares of Sogou while continue the cooperation with Yunfeng fund to further our development. 

On behalf of the Sogou team, I would love to express our gratitude to the help Alibaba group has been giving us all along. I am also looking forward to Sogou’s future growth and breakthroughs in this inspiring Chinese Internet industry.

 Wang Xiaochuan

CEO of Sogou

July 2nd  2012