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Yahoo! Inc. - Company Profile
(408)
349-3300
701
First Avenue
Sunnyvale, CA 94089
www.yahoo.com
Sales
$1.6
billion
Business Description
Yahoo! Inc., together with its consolidated subsidiaries, ("Yahoo!", "Our"
or "We") is a leading provider of comprehensive Internet products and
services to consumers and businesses through our worldwide network of online
properties (the "Yahoo! network"). Yahoo! was developed and first made
available in 1994 by our founders, David Filo and Jerry Yang, while they
were graduate students at Stanford University. Yahoo! was incorporated in
1995 and is a Delaware corporation.
Headquartered in Sunnyvale, California, we have offices in North America,
Europe, Asia, Latin America and Australia. We manage our business
geographically; our principal areas of measurement and decision-making are
the United States and International. Our properties and services for
consumers and businesses currently reside in four areas: Search and
Marketplace; Information and Content; Communications and Consumer Services;
and Affiliate Services. Our basic products and service offerings are
available without charge to our users. We also offer a variety of fee-based
premium services that provide our users access to value-added content or
services. In addition, we sell marketing and advertising services to
businesses across the majority of our properties and services.
During 2003, we completed the acquisitions of Inktomi Corporation ("Inktomi")
and Overture Services, Inc. ("Overture") in March and October, respectively.
Inktomi is a provider of Web search and paid inclusion services on the
Internet. Overture is a provider of commercial search services on the
Internet, including pay-for-performance search services. Since inception, we
have acquired several other companies including those that provided
databases, software, technologies, content, and/or tools to develop and
expand upon our network of properties and services.
PROPERTIES AND SERVICES
Our properties and service offerings are generally available without charge
to our users. We generate revenues from marketing and listing services, and
also offer fee-based premium services that provide our users access to
additional content or services.
Search and Marketplace
Our Search and Marketplace properties focus on being the starting point for
consumers and businesses looking for information and looking to purchase
products and services. The properties include the following:
Search Yahoo! Search;
Local including Yahoo! Yellow Pages, Yahoo! Maps, Yahoo! City Guides and
Yahoo! Real Estate;
Autos Yahoo! Autos;
Shopping/Auctions including Yahoo! Shopping and Yahoo! Auctions;
Travel Yahoo! Travel;
Careers Yahoo! HotJobs; and
Small Business including Yahoo! Merchant Solutions, Yahoo! Web Hosting,
Yahoo! Business Mail and Yahoo! Domains.
Search
Yahoo! Search offers users a highly relevant, comprehensive, fast and
easy-to-use search experience on the Internet. Our search properties are a
gateway to the properties and services within the Yahoo! network. Using
complex search engine algorithms, Yahoo! Search provides users with free
Web-wide search results prioritized based on relevance. Our Yahoo! Search
also offers a hierarchical, subject-based directory of Websites. Users can
access directory listings by browsing through subject matter or using the
keyword search function.
We generate revenue primarily by providing enhanced placement of our
customers' Websites in our search results. Additionally, we generate revenue
through our paid inclusion service, which guarantees that our customers'
Websites are included in the Web search index, and through fees generated
from customers who use our Web search services and incorporate the search
results we provide into their online offerings to end users. See "Affiliate
Services" below for further explanation.
Local
Yahoo! Local is comprised of four comprehensive offerings of local
information, available free to users Yahoo! Yellow Pages, Yahoo! Maps,
Yahoo! City Guides, and Yahoo! Real Estate. Yahoo! Yellow Pages enables
users to connect to local and national merchants in the United States.
Yahoo! Yellow Page business listings can be displayed by proximity to the
user's location. Businesses can pay to have their listings placed in the
Sponsored Business section above regular non-paid listings. Yahoo! Maps
provides interactive maps with zooming and other capabilities and integrated
driving directions. Yahoo! City Guides offers information on local arts and
entertainment news and events. Yahoo! Real Estate offers free services to
our users including: information for prospective home buyers and sellers;
the ability to search for listed properties based on geography, price and
features; moving-related content and services; information about finding a
real estate agent, researching neighborhoods, financing and insurance, and
home improvement ideas; and assistance in locating rentals and roommates.
Users can also pay to list a property.
Autos
Yahoo! Autos offers information about buying, selling, leasing and owning
automobiles. Services available free to our users include new and used car
searches; pricing, specification, insurance, general financing, and other
research information; and new car quote referral services provided through
third parties.
Shopping/Auctions
The Yahoo! Shopping platform provides, free of charge to users, search
functionality and comparison-shopping tools making it easy for consumers to
find, research, compare and conveniently buy almost anything online
including consumer electronics, apparel, books and flowers. Yahoo! Shopping
combines comprehensive product search functionality with a full suite of
comparison shopping, merchant rating and product review tools. Yahoo!
Shopping connects buyers and sellers, and is a starting point for online
commerce.
Yahoo! Auctions creates a marketplace for buyers and both individual and
corporate sellers who wish to purchase or sell goods in an auction-style
setting. Yahoo! Auctions connects buyers and sellers, generating revenue
through listing fees and revenue share of the final selling value from
sellers, and is available free of charge to buyers.
Travel
Yahoo! Travel provides research and booking functionality for consumers to
find, compare and conveniently buy leisure travel products such as flights,
hotel rooms, vacation packages and cruises. Yahoo! Travel generates revenue
through transactions fees and advertising from travel suppliers and
advertisers.
Careers
Our Yahoo! HotJobs ("HotJobs") property is a leader in the online recruiting
industry, providing comprehensive solutions for employers, staffing firms
and job seekers. HotJobs' tools and advice put job seekers in control of
their career search and make it easier and more cost-effective for
recruiters and employers to find qualified candidates compared to offline
alternatives. We provide services for job seekers, which include the ability
to create a resume and to search and apply for jobs, as well as access to
newsletters, online forums and salary research, free of charge. We generate
revenues from employers and staffing firms that access our database of job
seekers and use our tools to post, track and manage job openings. In
addition to our popular consumer job board, HotJobs provides employers and
staffing agencies with a variety of recruiting solutions, including hiring
management software.
Small Business
Yahoo! Small Business provides a comprehensive suite of fee-based services
that enable a company to develop an online presence (through Yahoo! Domains,
Yahoo! Business Mail and Yahoo! Web Hosting), sell their products online
(through Yahoo! Merchant Solutions) and market online by integrating
offerings such as Yahoo! Shopping, pay-for-performance search and Yahoo!
Yellow Pages.
Information and Content
Our Information and Content properties deliver information and entertainment
to consumers. We offer basic content that is available without charge to our
users, and also provide some of our content on a fee or subscription basis.
Our properties provide information and content including the following:
Media including Yahoo! Sports, LAUNCH, Music on Yahoo! and Yahoo! Games;
Finance Yahoo! Finance;
Entertainment including Yahoo! Movies and Yahoo! TV;
Information including Yahoo! News, Yahooligans!, Yahoo! Health; and
Network Services including Yahoo! Front Page, My Yahoo!, and Yahoo!
Companion.
Media
Yahoo! Sports provides up-to-the-minute news, real-time statistics and
scoring, broadcast programming, localized and global coverage, integrated
shopping and auctions opportunities, and an on-line sports community. Yahoo!
Sports has content or marketing relationships with professional sports
organizations including the National Basketball Association and the Major
League Baseball Players Association, among others, as well as sports media
outlets such as Sports Illustrated Interactive. Yahoo! Sports also offers
fee-based fantasy games' sports statistic trackers and leagues and audio
feeds.
LAUNCH, Music on Yahoo! is a comprehensive online music destination. LAUNCH
provides music fans with access to a wide selection of streaming audio,
music videos, artist interviews, music news, album reviews and artist
biographies. In 2003, LAUNCH introduced a variety of fee-based music
services such as concert ticket offerings and premium radio.
Yahoo! Games offers free, Java-based classic board, card and word games
along with downloadable games, game strategy guides, shopping guides, gaming
news and reviews on computer and console videogames. Yahoo! Games also
offers a variety of fee-based premium downloads and subscriptions.
Finance
Yahoo! Finance provides a comprehensive set of financial resources from
investment and company information to personalized financial management
tools. Yahoo! Finance offers Money Manager, a free set of financial tools
that provides an integrated view of an individual's financial life. In
addition, Yahoo! Finance offers fee-based products, including a real-time
stock quotes package, research reports and services to allow users to pay
their bills online.
Entertainment
Yahoo! Movies offers a daily mix of exclusive movie-related content, movie
news and special features, including box office results, trailers, and photo
galleries, as well as links to the movie-related content across the Yahoo!
network. Yahoo! Movies features paid-for film promotions for major movie
studios, including Disney, Sony, Warner Bros., Universal and Fox. Yahoo! TV
connects users to personalized television listings and other
television-related content.
Information
Yahoo! News aggregates news stories from news providers, bringing together
content from media companies such as Associated Press, Reuters, AFP, The
Washington Post, USA Today, Tribune Interactive, National Public Radio, US
News & World Report, and more. Through Yahoo! News, users receive
up-to-the-minute news coverage with text, photos, audio and video, from
multiple sources and points of view.
Yahooligans! is an entertaining and educational Web guide targeted for
children ages seven to twelve. Yahooligans! provides games, instant
messaging, reference materials and movie information, among others.
Yahoo! Health is a comprehensive starting point for users to find healthcare
information. Yahoo! Health provides information and links to sites on
diseases, conditions and medications, as well as listings for various health
information centers, clinical trial information and online community tools.
Network Services
The Yahoo! Front Page (www.yahoo.com) serves as a free navigation hub and
entry point into the Yahoo! network. Among many available features on the
page are the ability to perform a Web search, read the latest news, link to
Yahoo! sites, and view promotions from Yahoo!'s key advertising partners.
My Yahoo! is our free, personalized Web information service that allows
registered members to create a personal profile which organizes and delivers
information of personal interest to the user via a user-customized
interface. The My Yahoo! platform allows us to deliver targeted product,
advertising and transaction-based services on behalf of our advertisers and
partners.
Yahoo! Companion is a free browser add-on that enables users to conveniently
access our properties and services from anywhere on the Web.
Communications and Consumer Services
Our Communications and Consumer Services group provides a wide range of
communication and content services to consumers and small businesses. The
offerings are distributed both on the Yahoo! network and through our access
alliances, including those with SBC Communications Inc. ("SBC") and British
Telecommunications plc. ("BT"). These offerings incorporate a suite of
integrated Yahoo! tools and services including safety and security features,
communications tools, compelling content, and a customized Internet browser
all in an individualized environment.
Premium Internet Packages including SBC Yahoo! DSL, BT Yahoo! Broadband
and Yahoo! Plus;
Communications including Yahoo! Mail, Yahoo! Messenger, Yahoo! Photos,
and Communities;
Personals Yahoo! Personals; and
Mobile Yahoo! Mobile.
Premium Internet Packages
During 2002, we launched a strategic alliance with SBC to offer a co-branded
Internet service to DSL (broadband) customers in SBC's 13-state region and
to dial-up subscribers nationwide. The services offer consumers integrated
access and premium services on a subscription basis, and include a suite of
Yahoo! and SBC customized products and services. During 2003, we launched a
similar alliance with BT offering co-branded DSL, dial, and email services
in the United Kingdom. In December of 2003, Yahoo! also introduced Yahoo!
Plus, a comprehensive premium Internet package for users with broadband
Internet access. In early 2004, Yahoo! announced an alliance with Rogers
Cable Inc., which will provide broadband Internet access bundled with Yahoo!
products and services in Canada.
Communications
Yahoo! Mail is a free service that provides users with a full-featured email
experience including industry-leading Spam control, robust address book
functionality and integration with Yahoo! Calendar. In addition to our basic
email service, we offer premium Mail products that include extra email
storage, mail forwarding and the ability to use Yahoo! Mail with other
client applications. Yahoo! Mail Plus, a premium mail product, offers a
combination of these features plus enhanced junk mail control, increased
virus protection and personalized stationery.
Yahoo! Messenger provides a platform for instantaneous communications for
personal and business users. Users can interact with friends and family on a
real-time basis while customizing the experience via features such as
IMVironments which allows users to change the messaging window
background, animated emoticons, video Web cams and integrated mobile
messaging. For a fee, Yahoo!'s Enterprise Edition Messenger extends the
benefits of this instant communication to the workplace by adding an
enhanced level of security and centralized administrative control. This
service was formerly part of our Enterprise Solutions business along with
Yahoo! Portal Solutions and Broadcast Solutions, which provided
communications solutions to help businesses more easily aggregate and
distribute business critical information and interact with their target
audience. During 2003 we reduced our Yahoo! Portal Solutions and Broadcast
Solutions efforts and reorganized Enterprise Edition Messenger into the
Communications and Consumer Services group.
Yahoo! Photos makes it easy for a user to upload and store pictures, as well
as share them with friends and family for free. For example, Yahoo! users
can now view their pictures with a friend instantly using a specially
designed Yahoo! Photos IMVironment. Users can also order prints with the
click of a mouse as a premium service.
Our online Communities help users build and manage relationships and
includes properties such as Yahoo! Groups, Chat, Member Directory, and
Message Boards. Yahoo! Groups gives users a convenient way to connect with
others who share the same interests and ideas through a Website and email
group.
Personals
Yahoo! Personals allows users to post a profile and search for others with
whom to communicate for free. Users can also send short one-time messages to
others in the community to communicate their interest without charge. With a
subscription, Yahoo! Personals' users can email and use Yahoo! Messenger to
communicate with others in the community. Our Personals service includes
online dating industry-leading features such as voice and video clips, and a
special recommendations engine called "Likely Likables," which uses advanced
search technology to bring similar people together in the community.
Mobile
Through paid arrangements with leading wireless carriers around the world,
Yahoo! Mobile makes a range of Yahoo! products and services available
through wireless phones and PDA's. Customers can access a variety of Yahoo!
services for free, including email, instant messaging, and a wide range of
information offerings on their mobile phones via wireless-specific browsers.
Yahoo! also allows consumers to receive mobile alerts on a wide variety of
interests from sports scores to breaking news to weather. In 2003, Yahoo!
launched a number of innovative mobile features including PC-to-SMS (Short
Message Service) messaging and Yahoo! Mobile Photos.
Affiliate Services
We offer pay-for-performance advertising, paid inclusion and algorithmic
search services. These services connect advertisers and potential buyers
through our network and our affiliates' Websites, networks of Web properties
that have integrated Overture's search service into their Web pages. These
services include:
Pay-For-Performance including Precision Match and Content Match;
Paid Inclusion and;
Algorithmic Search.
Pay-For-Performance
Precision Match or keyword search prioritizes search results by the amount
the advertiser has bid for placement. Advertisers are listed in the search
results on our network and also on our affiliates' networks in descending
order of their bid, with the highest bidder appearing as the first search
listing in the search results. Bids may be expressed either as the amount
the advertiser pays each time there is a click on the advertiser's search
listing or as the maximum amount the advertiser is willing to pay for a
click on the advertiser's search listing. Advertisers pay only when a
click-through occurs on the advertiser's search listing. Advertisers may see
the bids of other advertisers on their keywords, enabling the advertiser to
determine his or her own bid necessary to achieve a desired ranking, which
instills competition among advertisers and promotes greater relevance for
consumers. Most advertisers utilize self-service tools to open and manage
accounts online including tracking, bid management and measurement features.
Content Match allows businesses to place listings on more locations on the
Web and drive more traffic to their sites. Content Match displays listings
when Internet users are viewing related content on the Yahoo! network or our
affiliates' pages. For example, if the user is reading an article about
interest rates, he or she could find links on the side of the page for
mortgage-related advertisers. Similarly, users who are researching vacation
plans may see listings for hotels and rental car agencies.
Paid Inclusion
Paid Inclusion guarantees that our customers' Websites are included and
frequently updated in the index that is crawled by the search engine.
Customers may pay fees based on sales leads or click-throughs powered by our
search services. Customers may also pay a fixed fee that provides inclusion
in the Web search index and an automatic 48-hour refresh of the submitted
content. Through our paid inclusion programs, customers submit information
often not normally available by traditional Web crawling techniques and this
information is included in our Web search index.
Algorithmic Search
Our Algorithmic Search services provide search results to some of our
affiliates, who in turn incorporate these results into their online
offerings to end users. Our search engine uses proprietary technology to
crawl the Web, index and serve Web results on text-based queries. Customers
pay per-query search fees based on query volume.
GEOGRAPHIC PROPERTIES
We seek to build upon our global user base by developing Internet properties
and services focused on geographic regions, which include foreign countries
as well as domestic metropolitan areas. We have launched numerous
geographically targeted Web properties and search services. Additional
information required by this item is incorporated herein by reference to
Note 12 "Segments" of the Notes to the Consolidated Financial Statements,
which appears in Item 8 of this Annual Report on Form 10-K.
Yahoo! Inc. and its subsidiaries provide products and services in 13
languages in over 20 countries, including localized versions of Yahoo! in
Argentina, Australia & New Zealand, Brazil, Canada, China, France, Germany,
Hong Kong, India, Italy, Japan, Korea, Mexico, Singapore, Spain, Taiwan and
the United Kingdom & Ireland. We also provide services through Yahoo! Asia
(our portal to southeast Asia), Yahoo! Chinese (U.S. Chinese language site),
Yahoo! en Espaρol (U.S. Hispanic site), Yahoo! Canada en Franηais (French
Canadian) and Yahoo! en Catalΰ (part of Yahoo! Spain's Catalan language
offerings). Outside the English-speaking markets, we have built independent
directories of local language Websites and other content, developed by
native speakers of each language. We own a majority or 100 percent of these
non-U.S. operations (except in Japan), and have established offices
internationally to facilitate the local development of these businesses. We
have pursued a consistent strategy of content aggregation with leading third
parties and currently plan to continue to rollout certain selected services
for our international markets.
Our joint ventures with SOFTBANK and its affiliates, a holder of
approximately four percent of our common stock as of December 31, 2003,
include Yahoo! Germany, Yahoo! United Kingdom, Yahoo! France (collectively
"Yahoo! Europe"), Yahoo! Japan and Yahoo! Korea. These joint ventures were
formed to establish and manage local versions of our properties in the
respective countries. With the exception of Yahoo! Japan, these joint
ventures are operated and managed by us as a part of our global network.
Yahoo! Japan is a publicly traded company in Japan that is majority owned by
SOFTBANK. As of December 31, 2003, we owned approximately 70 percent of
Yahoo! Europe, 34 percent of Yahoo! Japan and 67 percent of Yahoo! Korea.
Yahoo! Europe and Yahoo! Korea are consolidated subsidiaries of Yahoo! Inc.
The Company has no funding commitment to Yahoo! Japan. As of December 31,
2003, SOFTBANK and its affiliates owned the remaining interests in Yahoo!
Europe and Yahoo! Korea not owned by Yahoo! and its affiliates.
REVENUE CLASSIFICATIONS
Marketing services revenue is primarily generated from the sale of rich
media advertisements (banner and other media advertisements), sponsorship
and text-link advertisements, (including pay-for-performance search
advertisements), paid inclusion, algorithmic searches and transactions
revenue. Banner and other media agreements typically consist of targeted and
non-targeted advertising that appears on or around pages within the Yahoo!
network. Sponsorship agreements take many forms including: high profile
promotions that are typically focused on a particular event, such as a
sweepstakes; third party branded content integration into our properties
allowing marketers to provide information about their products to consumers;
and merchant sponsorship opportunities on targeted Yahoo! properties
encouraging users to purchase the goods and services of our advertisers.
Text-links and hypertext links are links that are embedded in certain words,
advertisements, sponsorships or directed emails, which provide the user with
instant access to the advertiser's Website, to obtain additional information
or to purchase products and services. Additionally, we offer online research
and data services, enabling marketers to better understand their customers
profiles and behaviors. Transactions revenue includes service fees for
facilitating transactions through the Yahoo! network.
Although a significant amount of advertising purchases on our properties are
for general rotation on pages within the Yahoo! network, we also offer
highly-targeted marketing opportunities that are designed to deliver greater
value to advertisers through more focused audiences. By developing an
extended family of Yahoo!-branded properties, we seek to offer advertisers a
wide range of placement options and promotional opportunities. For example,
through our pay-for-performance search advertisements, advertisers can bid
for priority placement in search results. We also offer an integrated set of
sales and marketing tools built on the Yahoo! network and delivered in an
integrated manner to our global audience. They consist of innovative,
interactive marketing programs designed to provide one-stop shopping for
companies seeking to secure a measurable Internet presence.
We maintain three primary channels for selling our marketing services:
online, telephone and direct. Our Sponsored Matches service, which provides
enhanced visibility for Websites within Yahoo!'s search results, is
primarily sold through our online and direct channels. Under this program,
search results pages feature up to the top six pay-for-performance search
listings sold to advertisers. Our telemarketing channel focuses on sales of
online marketing services to small and medium-size businesses. Our direct
advertising sales team focuses on selling our marketing services and
solutions to leading agencies and marketers in the United States. As of
December 31, 2003, we employed advertising sales professionals in 10
locations across the U.S., including: Atlanta, Boston, Chicago, Dallas,
Detroit, the Los Angeles Area, Miami, New York, the San Francisco Bay Area
and Washington D.C. Our advertising sales organization consults regularly
with agencies and advertisers on design and placement of Web-based
advertising, and provides clients with measurements and analyses of
advertising effectiveness. In addition to our geographic sales structure, we
have advertising sales teams for automotive, consumer packaged goods,
entertainment, finance, retail, pharmaceuticals, sports, technology,
telecommunications, travel and advertising agencies. In international
markets, our own internal sales representatives handle our advertising
sales. In some countries, where we have not established full operational
capacity, we have established sales agency relationships.
Fees revenue consists of revenues generated from a variety of consumer and
business fee-based services, including SBC Yahoo! DSL and SBC Yahoo! Dial,
Yahoo! Personals, Small Business Services, Yahoo! Mail and Yahoo! Enterprise
Solutions.
Listings revenue consists of revenues generated from a variety of consumer
and business listings-based services, including access to the HotJobs
database and classifieds, such as Yahoo! Autos, Yahoo! Real Estate and other
search services. HotJobs career offerings are handled by a designated sales
team.
COMPETITION
We operate in the market for Internet products and services, which is a
highly competitive market characterized by rapid change, converging
technologies, and increased competition from companies offering
communication, information and entertainment integrated into other products
and media properties.
Globally, our most significant competition is from Time Warner and Microsoft
("Microsoft" or "MSN"). Time Warner is an integrated media and
communications company engaged in online services, cable, filmed
entertainment, television network, music and publishing. Time Warner has
access to a large potential customer base through its America Online
("AOL"), cable and publishing business units. Microsoft is the largest
software company in the world and through its MSN network provides numerous
Internet products and services and has alliances with companies involved
with broadband access and various forms of digital interactivity.
Microsoft's presence on computer desktops through packaged software products
and their strategy to sell software through online subscriptions provides
them a competitive advantage over us in providing software and services to
online users. Both AOL and MSN have a direct billing relationship with a
greater number of their users through access and other services than we have
with our users through certain of our premium services. This gives them a
potential advantage over us in targeting the sale of enhanced services to
their user base.
As a result of our recent acquisitions of Inktomi and Overture, we compete
directly with other providers of Web search and related search services,
including, among others, Ask Jeeves, Inc., Google Inc. and Looksmart, Ltd.
We also face competition from companies focused on markets where expertise
in a particular segment of the market may provide them a competitive
advantage over us. Two of these competitors, Amazon.com, Inc. and eBay Inc.,
are expanding their positions as e-commerce merchants to leverage advantages
from the scale of their commerce platforms to offer informational and
community features that are competitive with the services we provide.
Internationally, we compete with local portals that are predominantly
supported by the local telecommunication providers, which gives them a
potential competitive advantage over us because they typically already have
a direct billing relationship with their users.
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