Excellence

We are committed to winning with integrity. We knowleadership is hard won and should never be taken forgranted. We aspire to flawless execution and don’t takeshortcuts on quality. We seek the best talent andpromote its development. We are flexible and learnfrom our mistakes.

Innovation

We thrive on creativity and ingenuity. We seek theinnovations and ideas that can change the world. Weanticipate market trends and move quickly to embracethem. We are not afraid to take informed, responsiblerisk.

Customer Fixation

We respect our customers above all else and neverforget that they come to us by choice. We share apersonal responsibility to maintain our customers

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loyaltyand trust. We listen and respond to our customers andseek to exceed their expectations.

Teamwork

We treat one another with respect and communicateopenly. We foster collaboration while maintainingindividual accountability. We encourage the best ideas tosurface from anywhere within the organization. Weappreciate the value of multiple perspectives and diverseexpertise.

Community

We share an infectious sense of mission to make animpact on society and empower consumers in waysnever before possible. We are committed to serving boththe Internet community and our own communities.

Fun

We believe humor is essential to success. We applaudirreverence and don

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t take ourselves too seriously. Wecelebrate achievement. We yodel.

We Value...

To Yahoo!

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s Shareholders,Users, Partners, Customersand Employees:

When reviewing Yahoo!’s progressover the past three years since Ijoined, it’s clear that 2001 was ourtransition year, 2002 the year inwhich we started to plant the seedsfor growth, and 2003 the yearin which we began to reap theinitial results of our efforts, whilecontinuing to reinvest in the future.I am very proud of the hard work,dedication, and accomplishmentsthat Yahoo! employees throughoutthe world have delivered.While we made tremendous progressin many financial metrics that areextremely gratifying, what excites memost about this past year is ourdeepening relationships with ourusers. Our No. 1 priority is toprovide the best experience on theInternet. As the quality of ourproducts and services continues toimprove, the more relevant Yahoo!becomes to our hundreds of millions of users, who in turn arespending more time on our networkand using a greater variety of services. This accomplishmentsupports my belief that greatproducts equal great business.Our Company provides acomprehensive marketing solutionsplatform for advertisers as well aspremium products and services forusers and businesses. Within thatframework, Yahoo! has evolved froman organization that relied on asingle revenue source dominatedby dot com advertisers, to anorganization with more diverse andsustainable sources of revenue.Through our premium services, wehave established direct payingrelationships with millions of users.By establishing the world’s largestengaged online audience andproviding a full range of services alongthe online marketing continuum,Yahoo! is supported by hundreds of blue chip traditional advertisers andthousands of small- and medium-sizedbusinesses who want to reach ourglobal audience. This well distributedfoundation helped contribute to make2003 Yahoo!’s greatest revenueproducing year in its history.Full year 2003 revenue was $1.6billion, a 71 percent increase over2002. We delivered record revenuefrom one quarter to the nextthroughout the year, reflecting thegrowing diversity of our business andthe contributions from these newer,more sustainable revenue sources.Yahoo!’s balance sheet also grewthroughout the year to almost$2.6 billion in cash and marketablesecurities, after including the$733 million raised through ourconvertible debt offering, and despitecash expenditures used for theacquisitions of Inktomi Corporation(“Inktomi”) and Overture Services,Inc. (“Overture”). I encourage you toread more about our financial resultsin the materials which accompany,and are a part of, this letter.

Great Products EqualGreat Business

Let’s spend some more time on thatone simple philosophy that hasalways guided my approach: themore we invest in what our userswant, the more they will invest in us.In 2003, we spent the majority of ourinvestment dollars improving the