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Yahoo Inc Case Study

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Essay title: Yahoo Inc Case Study

February 25, 2001

Yahoo! Inc. is a global Internet communications, commerce, and media company that offers a comprehensive branded network of services to more than 120 million users each month worldwide. As the first online navigational guide to the World Wide Web, www.yahoo.com is the leading guide in terms of traffic, advertising, household, and business user reach, and is one of the most recognized brands associated with the Internet. The company also provides online business services designed to enhance Yahoo!'s clients' Web services, including audio and video streaming, store hosting and management, and Web site tools and services. The company's global Web network includes 21 World properties. Yahoo! has offices in Europe, the Asia Pacific, Latin America, Canada and the United States, and is headquartered in Santa Clara, California.

Yahoo! was developed and first made available in 1994 by the Company's founders, David Filo and Jerry Yang, while they were graduate students at Stanford University. The Company was incorporated in California on March 5, 1995, and commenced operations on that date. On May 18, 1999 the Company reincorporated in Delaware. In August 1995, the company commenced selling advertisements on its Web pages and recognized its initial revenues. The company experienced dramatic growth providing broadcast media, communications, and commerce services. Yahoo! completed several major acquisitions including GeoCities, an Internet company specializing in publishing tools and online communities, and Broadcast.com inc., an Internet company specializing in audio and video broadcasts over the Web. These acquisitions as well as many other ones have helped Yahoo! diversify the properties and services it offers to its clients, helping to establish it as a one-of-a-kind, all encompassing web portal.

Yahoo! is the number-one destination of users of the Internet the world over. With over 110 million unique users and 485 million average daily page views during December 1999, Yahoo! has clearly proven its ability to attract Web users like moths to light. With Yahoo!'s customizable services available in the U.S. and in 21 countries in 12 languages, Yahoo! users worldwide can pay their bills, track their stock portfolios, purchase virtually any product imaginable, and find a host of other services including email and chat rooms, all within the virtual borders of the prime Internet real estate that is Yahoo.com, which can rightfully lay claim to the top spot among Internet portals. Yahoo! continues to add services and features, all of which should result in keeping those users coming back for repeat visits and extending the time they spend online in Yahoo! Web properties. Yahoo!'s acquisition of GeoCities extended its reach into personal Web pages, and its purchase of broadcast.com ushered it into Web-based audio and video. Yahoo! has also entered the free ISP arena by participating in Kmart's BlueLight.com. By entering into so many different online arenas, Yahoo! has insured itself of being a serious competitor to the many other internet companies today, effectively rolling all of these other services into one large company.

The company makes its properties available without charge to users, and generates revenue primarily through the sale of advertisements, promotions, sponsorships, merchandising and direct marketing. During 1999, approximately 5,200 customers advertised on Yahoo! properties. Internet users view an average of approximately 465 million web pages per day on Yahoo!-branded online properties. The question is - can Yahoo! convert this amazing web traffic into revenues? As Tim Koogle, CEO of Yahoo! succinctly puts it: "Dollars always follow eyeballs!" This, however, is up for debate, as many people doubt Yahoo!'s ability to capitalize on its dominance over the internet portal marketplace and turn its brand name recognition into dollars.

12 month chart for YAHOO and the Nasdaq Composite Index

During the last 12 months, the stock market has seen a huge downfall in the share prices of almost every computer and internet related company, as investors have begun to realize that sky-high valuations were not justified by the companies' prospects. This has forced many previously high flying companies down to the ground, if not under. As the "dot-com shakeout" has taken place, Yahoo! has found that its advertising business has come under fire, as many companies are not spending nearly as much on advertising and are beginning to focus on corporate earnings. (Currently, advertising accounts for 90 percent of the portal's income.) In turn, Yahoo!'s

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