Cisco Local Director

Metamorphism of Yesterday's Small Software Enterprises Into Today's Dotcom Leaders

Yahoo! Inc. is a global internet communications, commerce and media company. Its principal business activity is to provide broadcast media, communications, business, enterprise and commerce services. Today Yahoo! Inc. is a leading global internet brand and one of the most trafficked Internet destinations worldwide. Yahoo! seeks to provide online products and services essential to users' lives, and offers a full range of tools and marketing solutions for businesses to connect with Internet users around the world. Yahoo! is headquartered in Sunnyvale, California.

The History of Yahoo - How It All Started...

Yahoo! began as a student hobby and evolved into a global brand that has changed the way people communicate with each other, find and access information and purchase things. The two founders of Yahoo!, David Filo and Jerry Yang, Ph.D. candidates in Electrical Engineering at Stanford University developed their Web directory in 1994 in order to keep track of their personal interests on the Internet. Before long they were spending more time on their home-brewed lists of favorite links than on their doctoral dissertations. Eventually, Jerry and David's lists became too long and unwieldy, and they broke them out into categories. When the categories became too full, they developed subcategories ... and the core concept behind Yahoo! was born.

The Web site started out as "Jerry and David's Guide to the World Wide Web" but eventually received a new name with the help of a dictionary. The name Yahoo! is an acronym for "Yet Another Hierarchical Officious Oracle," but Filo and Yang insist they selected the name because they liked the general definition of a yahoo: "rude, unsophisticated, uncouth." Yahoo! itself first resided on Yang's student workstation, "Akebono," while the software was lodged on Filo's computer, "Konishiki" - both named after legendary sumo wrestlers.

The web site gain immense popularity within a shortest span of time. Due to the torrent of traffic and enthusiastic reception Yahoo was receiving; the founders knew they had a potential business on their hands. In March 1995, the pair incorporated the business and met with dozens of Silicon Valley venture capitalists. They eventually came across Sequoia Capital, the well-regarded firm whose most successful investments included Apple Computer, Atari, Oracle and Cisco Systems. They agreed to fund Yahoo in April 1995 with an initial investment of nearly $2 million. Realizing their new company had the potential to grow quickly, Jerry and David began to shop for a management team. They hired Tim Koogle, a veteran of Motorola and an alumnus of the Stanford engineering department, as chief executive officer and Jeffrey Mallett, founder of Novell's WordPerfect consumer division, as chief operating officer. They secured a second round of funding in 1995 from investors Reuters Ltd. and Softbank. Yahoo! launched a highly-successful IPO ($13.00 per share) in April 1996 with a total of 49 employees. Yahoo! is traded on the Nasdaq under the ticker symbol YHOO. Soon, after a month, Yahoo! Inc. and Ziff-Davis International Media formed a new venture, Yahoo! Europe. The company continued to expand, offering Yahoo! Visa cards for customers in 1998, and it finished Internet sites throughout Europe and the world. In June 2000, Yahoo! India was launched. Its global web network now has 24 sites outside the US and it is still growing. In October 2002 Yahoo! Inc even teamed up with AT&T Wireless to provide messaging services from mobile phones as well as from personal computers, and by December it acquired Inktomi Corporation, a web search provider, for a total of US$235 million.

Today, Yahoo! Inc. is a leading global Internet communications, commerce and media company that offers a comprehensive branded network of services to more than 345 million individuals each month worldwide. As the first online navigational guide to the Web, www.yahoo.com is the leading guide in terms of traffic, advertising, household and business user reach. Yahoo! is the No. 1 Internet brand globally and reaches the largest audience worldwide. The company also provides online business and enterprise services designed to enhance the productivity and Web presence of Yahoo!'s clients. The reason behind Yahoo!’s market dominance is because of its power to assimilate and cater to divergent individual, group and corporate interests in a steadfastly impeccable user friendly manner where every bits of micro considerations will be taken care of in synchronization with “big” macro assignments.

SERVICES PROVIDED BY YAHOO! INC.

Yahoo!'s top priority is to provide users with the information they want, when they want it, how they want it and on any device. Starting with its comprehensive, hand-built directory as well as the popular My Yahoo! service, Yahoo! offers a broad and deep array of communications, commerce and content services in over 100 distinct properties that lead consumers to make Yahoo! their home on the Internet and wireless devices and thus the potential users have the power to connect, communicate, create, access and share information online.

Search: Yahoo! has become one of the leading search engines on the Web. Yahoo! Search enables it’s users to find anything and everything they need on the Internet instantaneously through Yahoo! Web Search, as well as vertical search products such as Yahoo! Image, Yahoo! Video, Yahoo! Local, Yahoo! News, and Yahoo! Shopping Search. Yahoo! Search leverages the combination of an advanced set of algorithms to ensure that results are up-to-date, relevant, and comprehensive.

Connecting Life: Recognizing that the Web's future will be fueled by broadband connectivity, Yahoo! has developed successful partnerships with the world's leading broadband providers. Yahoo! provides tightly integrated and co-branded experiences with SBC, Verizon, Bellsouth, Rogers Canada and British Telecom, offering a range of free and premium Yahoo! content and services to subscribers.

Communication: As part of its ongoing commitment to enhance people's ability to connect with anyone around the world, Yahoo! offers communications services that include Yahoo! Mail, Yahoo! Messenger, Yahoo! Calendar, Yahoo! Chat, Yahoo! Greetings, Yahoo! Clubs and Yahoo! Photos and in this way it tries to ensure that it’s users can stay connected with their friends, family, and colleagues any time, from anywhere in the world. As part of it’s communication services, Yahoo! has also become a pioneer of social networking, offering innovative services and user-generated content in products such as My Web, Yahoo! Personals, Yahoo! 360º, Yahoo! Photos, and Flickr, so that users can share the information that's most important to them.

Content: Yahoo! partners with hundreds of premier content providers to bring entertainment and high-quality media content to its users in popular areas of interest through products such as Yahoo! Sports, Yahoo! Finance, Yahoo! Music, Yahoo! Movies, Yahoo! News and Yahoo! Games. Yahoo! also enables it’s users to personalize content through My Yahoo!, which collects users' favorite Yahoo! features, content feeds, and information into a single page.

Mobile: Fitting the lifestyles of the mobile consumer, Yahoo! offers an increasing array of essential, personalized, localized and timely information on wireless devices, including wireless phones, two-way pagers and personal digital assistants. Committed to extending the content and services beyond the desktop, Yahoo! has the largest global mobile audience and the greatest breadth of wireless products and services of any online network or Web content provider. Yahoo! Mobile includes services for on-the-go messaging, such as email, instant messaging, and mob logging; information, such as search and alerts; and fun and games, including ring tones, mobile games, and Yahoo! Photos for camera phones.

Commerce: Yahoo! is also one of the world's largest enablers of consumer transactions on the Web, offering commerce services such as Yahoo! Shopping, Yahoo! Autos, Yahoo! Auctions and Yahoo! Travel, Yahoo! Finance which gives consumers the relevant information they need to make informed purchases online.

As the No. 1 Internet network on corporate desktops, surpassing a 70 percent reach in the U.S. workplace, Yahoo! also offers a range of services for businesses and enterprises of all sizes. Corporate Yahoo! is an information portal solution that enables companies to communicate and interact directly with their employees, customers and shareholders over a secure and scalable platform. Yahoo! Broadcast Services is the leading provider of Internet audio and video streaming solutions for corporate and consumer communications, delivering thousands of live and on-demand, corporate events including: product launches, marketing programs, training/distance learning, keynote addresses, annual shareholder meetings, and quarterly earnings calls.

Small Business: Yahoo! Small Business enables small business owners and professionals to establish and grow a business presence with services such as Yahoo! Domains, Yahoo! Web Hosting, Yahoo! Merchant Solutions, Yahoo! Business Email and Yahoo! Store. Yahoo! also offers HotJobs to help recruiters find the talent they seek.

Advertising: An industry leader in online advertising, Yahoo! provides a comprehensive and effective set of marketing solutions, offering tools for businesses of all sizes. Unique and powerful brand advertising solutions allow clients to build awareness among the world's largest engaged audience. Yahoo! helps marketers create and execute programs that both engage users to interact with their brand as well as provide valuable insights into their customer base. Yahoo!'s data driven services provide unparalleled targeting and measurement capabilities far beyond banners, clicks, and conversions. Yahoo! offers an integrated set of marketing services through Yahoo! Fusion Marketing that unite Yahoo!'s media, e-commerce, direct marketing, broadcast, and communication tools to allow clients to find any audience, connect with anyone, and sell anything. Customized to integrate clients' traditional marketing programs online, Yahoo! Fusion Marketing programs generate greater customer acquisition and retention, extended brand value, and increased sales in today's global marketplace. In addition, Yahoo! Search Marketing helps companies drive traffic to their web sites through services such as Sponsored Search, Local Advertising, and Product/Travel/Directory Submit. For online publishers and portals, Yahoo! can add new revenue sources and enhance user experience through the Yahoo! Publisher Network.

Community services: Yahoo is not only just committed to providing great products and services but it is also committed to empowering its users and employees through programs, products, and services that inspire people to make a positive impact on their communities. The mission of Yahoo! for Good, an unique community relations program, is to connect people with causes through it’s products and services, as well as through partnerships with nonprofits such as Big Brothers Big Sisters, the American Red Cross, and VolunteerMatch. Yahoo! Products for Good includes the My Yahoo! volunteer module, Yahoo! Missing Children Alerts, cause-related Yahoo! Avatars and How to Help links in Yahoo! News stories. Yahoo! also channels the generosity of its employees through the Yahoo! Employee Foundation, a grassroots philanthropic organization that brings together the talents, time, and financial resources of Yahoo! employees. The foundation has given millions of dollars in grants to organizations around the world.

Briefly it can be stated that Yahoo’s products and services fall within four core pillars. These pillars are the foundation for the next generation of the Web, providing the users the power to connect, communicate, and create, gather and share information online.

• Content: Access it, personalize it, and contribute to it.

• Search and Marketplace: Locate and display any and everything.

• Community: Empower users to express and connect, enable people and information to interact.

• Personalization: What, how, when and where users want Yahoo!

Financial Condition And Analysis

Yahoo! Inc generates its income mainly through the sale of advertisements, promotions, sponsorships, merchandising and direct marketing strategies. The acquisition of Kimo.com during 2001 and HotJobs.com in February 2002 made the company even stronger. Revenues generated from advertising accounted for 75% of the 2001 result while revenues from business services accounted for 25%.

According to Disclosure Incorporated, Yahoo! Inc’s current market value is US$10,364,298,000. On studying the income statement and balance sheet of the company from the year of 1998 to 2001 as reported by the Disclosure Incorporated, it can be stated that Yahoo was earning fast and a lot in 1999 and 2000, but was having a bit of trouble in 2001; specifically, its net income in 2000 was more than US$70 million but in 2001 it was plummeting to a deficit income of US$92 million. This is due to the reason of the sharp decline of the sales and income due to the instability of the company resulting from its drastic international expansion within a short period. However, Yahoo! Inc. is still a financially strong company as its growth rate in sales in the five year summary is 70.8%, its most recent P/E ratio is 101.111, and its total assets are US$ 2,379.35 millions, while its total liabilities are US$382.32. Its recent stock price is about $17.54; the 52 week high is $20.54 while the 52 week low is $8.94 (reported by Disclosure Incorporated on 02/11/03). Furthermore, the “Analyst Info” of NASDAQ (accessed on March 10, 2003) recommended to buy the stock rather than to sell it. In conclusion, it might seem that the company’s financial outlook is not stable but hopeful; however, more recent information indicates Yahoo! Inc. is again turned out to be a profitable concern.

CONCLUSION

Being the largest Internet portal in the world, Yahoo! Inc’s greatest strengths are revenue diversification, internet access and other related services. The company’s main opportunities are in its paid listings business, while its weaknesses and threats are international expansion, online advertising, and broadband competition .Major stockholders are Softbank America Inc., 16.2%; David Filo, 7.9%; Jerry Yang, 7.5%; and Capital Research & Management Co., 7.1% .Top competitors include Amazon.com Inc., Convergys Corporation, eBay, Microsoft Corporation and Unisys Corporation. At present the who’s who in the organizational hierarchy of Yahoo! Inc is noted as follows:

• Terry Semel, chairman and CEO, Yahoo!, Inc.

• Roy Bostock, chairman emeritus, BCom3 Group Inc

• Ron Burkle, founder and managing partner, The Yucaipa Companies

• Eric Hippeau, president and executive managing director, SOFTBANK International Ventures

• Vyomesh Joshi, executive vice president, Imaging and Printing Group, HP

• Arthur Kern, founder and chairman, American Media

• Robert Kotick, director, chairman of the board and chief executive officer, Activision, Inc

• Edward Kozel, managing partner, Open Range Ventures

• Gary L. Wilson, chairman, NWA Inc., parent of Northwest Airlines

• Jerry Yang, co-founder and Chief Yahoo, Yahoo!, Inc.

About the Author

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