Yahoo Financial Analysis

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Executive Summary

Yahoo! Inc.has placed itself in the top spot among Internet portals, by attracting approximately 232 million visitors each month worldwide. It not only offers a directory and search engine, but also features a collection of communications, commerce, and content services with over 25 international sites in 13 languages.

Yahoo! produces much of its revenue from banner advertising and sponsorship ads, while also obtaining fees through subscription and business services, such as SBC Yahoo! DSL and Dial, Yahoo! Personals, Small Business Services, Yahoo! Mail, and Yahoo! Enterprise Solutions. Customers paying fees rose to 8.4 million, from 4.9 million last year, reflecting growth in these services.

This paper examines the corporation's customers and competitors, the industry it operates in, and industry and environmental trends affecting it. Furthermore, key financial ratios within the firm and its industry, development of growth scenarios, and stock valuation models are discussed. The sensitivity analysis generated will be used to determine Yahoo!'s financial performance. There was no DCF model used in this research since Yahoo! does not pay dividends.

Based on our research of stock price analysis, our recommendation is to BUY. This analysis was formed based on the analysis of the market and the industry that Yahoo! operates in. The financial data that was accumulated for this project is in tune with our recommendation.


Yahoo! is the number one Internet brand globally and reaches the largest audience worldwide. They service more than 232 million people each month worldwide. Yahoo! is a global Internet communications, commerce and Media Company that helps Internet users navigates the World Wide Web. Yahoo! Has the largest global audience. They also have the greatest breadth of wireless products and services of any web provider. Yahoo! offers a broad array of communications, commerce and content services that lead consumers to make them their home on the Internet.

Yahoos! properties and services are in four areas: Search and Marketplace, Information and Content, Communications and Consumer Services and Affiliate Services. In communications they have Mail, Messenger, Calendar, Chat, Greetings, Clubs and Photos. They offer commerce services that include Shopping, Auctions, Finance and Travel. Also they have content and media programming that go toward the interest of individuals Sports, Music, Movies, News, and Games.

Yahoo! is the number one network for corporations. They offer a wide range of services for all businesses and enterprises no matter the size. One service the offer to corporations is Corporate Yahoo!. This service is an information portal that allows companies to communicate and interact directly with their employees, customers and shareholders on a secure and scalable platform. Yahoo! also provides Internet audio and video solutions.


Yahoo! was founded by David Filo and Jerry Yang in 1994. Filo and Yang started their guide to keep a list of their interest on the Internet. As their list grows they would break them into subcategories. This is the basic core concept behind Yahoo!. As word spread about their site more and more people started using their site. In the fall of 1994 the site celebrated its first million hit day.

In March of 1995 Yahoo! was incorporated. In April 1995 they received an investment from Sequoia Capital. Realizing that their company could grow quickly they looked for a management team. Tim Koogle was hired as chief executive officer and Jeffrey Mallett was hired as chief operating officer. In April 1996, Yahoo! launched a highly successful IPO. In May of 1999 Yahoo! was reincorporated.

Yahoo! has acquired my companies in its years of doing business. In 1998 it acquired all outstanding shares of Viaweb, WebCal Corporation, Yoyodyne Entertainment, Inc., and HyperParallel. In 1999 it acquired Log-Me-On.Com LLC, Yahoo! Canada,...
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