Management Project/Paper Final
A History and Management Analysis
Yahoo! was started in a Stanford University campus trailer. It was founded in January 1994 by Jerry Yang and David Filo, who were Electrical Engineering graduate students when they created a website named "Jerry and David's Guide to the World Wide Web". The Guide was a directory of other websites, organized in a hierarchy, as opposed to a searchable index of pages. In April 1994, Jerry and David's Guide to the World Wide Web was renamed "Yahoo!". The yahoo.com domain was created on January 18, 1995.
On March 8, 1997, Yahoo! acquired online communications company Four11. Four11's webmail service, Rocketmail, became Yahoo! Mail. Yahoo! also acquired ClassicGames.com and turned it into Yahoo! Games. Yahoo! then acquired direct marketing company Yoyodyne Entertainment, Inc. on October 12, 1998. In January 1999, Yahoo! acquired web hosting provider GeoCities. Another company Yahoo! took over was eGroups, which became Yahoo! Groups in June 2000. On March 8, 1998, Yahoo! launched Yahoo! Pager, an instant messaging service that was renamed Yahoo! Messenger a year later.
When acquiring companies, Yahoo! often changed the relevant terms of service. For example, they claimed intellectual property rights for content on their servers, unlike the previous policies of the companies they acquired. As a result, many of the acquisitions were controversial and unpopular with users of the existing services.
Yahoo! grew rapidly throughout the 1990s. Like many search engines and web directories, Yahoo! diversified into a web portal. It also made many high-profile acquisitions. Its stock price skyrocketed during the dot-com bubble; Yahoo! stock closed at an all-time high of $118.75 a share on January 3, 2000.
While the yahoo.com domain was created in January 1995, and by the end of 1994 Yahoo! had already received one million hits. Yang and Filo realized their website had massive business potential, and on March 2, 1995, Yahoo! was incorporated. On April 5, 1995, Michael Moritz of Sequoia Capital provided Yahoo! with two rounds of venture capital, raising approximately $3 million. On April 12, 1996, Yahoo! had its initial public offering, raising $33.8 million dollars by selling 2.6 million shares at the opening bid of $13 each.
Yahoo! stock doubled in price in the last month of 1999. On January 3, 2000, at the height of the dot-com boom, Yahoo! stock closed at an all-time high of $118.75 a share. Sixteen days later, shares in Yahoo! Japan became the first stock in Japanese history to trade at over ¥100,000,000, reaching a price of 101.4 million yen ($962,140 at that time).
On February 7, 2000, yahoo.com was brought to a halt for a few hours, as the victim of a distributed denial of service attack (DDoS) On the next day, its shares rose about $16, or 4.5 percent as the failure was blamed on hackers rather than on an internal glitch, unlike a fault with eBay earlier that year.
During the dot-com boom, the cable news network CNBC reported that Yahoo! and eBay were discussing a 50/50 merger] Although the merger never materialized, the two companies decided to form a marketing/advertising alliance six years later in 2006.[
On June 26, 2000, Yahoo! and Google signed an agreement which would tapped the Google engine for power searches made on yahoo.com.
However, after the dot-com bubble burst, it reached an all-time low of $8.11. In 2000, Yahoo! began using Google for search results. Over the next four years, it developed its own search technologies, which it started using in 2004. Yahoo! also revamped its mail service to compete with Google's Gmail in 2007. In February 2008, Microsoft Corporation made an unsolicited bid to acquire Yahoo! for $44.6 billion. Yahoo! subsequently formally rejected the bid, claiming that it "substantially undervalues" Yahoo! and was not in the interest of its shareholders.