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COMPANY OVERVIEW
Yahoo! is the premier digital media company. Founded in 1994 by Stanford PhD candidates David Filo and Jerry Yang. Yahoo! received funding from Sequoia Capital, a Silicon Valley venture capital firm thats legendary for investing in technology successes. Yahoo! is headquartered in Sunnyvale, Calif., and has more than 13,000 employees in 25 countries, provinces, and territories. Business focus is on creating a content, communications, and community platform that delivers rich consumer experiences and advertising solutions across all digital screens. Attract more than half a billion consumers every month in more than 30 languages. Yahoo! reaches more than half a billion people worldwide thats 1out of every 2 Internet users
Revenue model
About 88% of total revenues for the fiscal year 2010 came from marketing services.The largest segment of it comes from search advertising, where advertisers bid for search terms to display their ads on the search results, on average Yahoo makes 2.5 cents to 3 cents from each search. Other forms of advertising which bring in revenue for Yahoo! include display and contextual advertising.
Yahoo! operates the web portal which provides content including the latest news, entertainment, and sports information. The portal also gives users access to other Yahoo! services like Yahoo! Mail, Yahoo! Maps, Yahoo! Finance, Yahoo! Groups and Messenger.
Yahoo! Mobile offers services for email, instant messaging and mobile blogging, information services, search and alerts entertainment, ring tones, and Yahoo! Photos for camera phones. Yahoo! offers commerce services such as Yahoo! Shopping, Yahoo! Autos, Yahoo! Real Estateand Yahoo! Travel, which enables users to gather relevant information and make commercial transactions and purchases online
Yahoo! provides services such as Yahoo! Domains, Yahoo! Web Hosting, Yahoo! Merchant Solutions, Yahoo! Business Email and Yahoo! Store to small business owners and professionals allowing them to build their own online stores using Yahoo!'s tool
Yahoo! Search Marketing provides services such as Sponsored Search, Local Advertising, and Product/Travel/Directory Submit that let different businesses advertise their products and services on the Yahoo! network. Yahoo! Next is an incubation ground for future Yahoo! technologies currently in their beta testing phase. Yahoo! Search BOSS is a service that allows developers to build search applications based on Yahoo!'s search technology.
Yahoo! Meme is a beta social service, similar to the popular social networking sites Twitter and Jaiku. Y!Connect is a feature that enables individuals to leave comments in online publication
Less focus on search and more on ads In 1999 , Search formed 6% of the traffic, and the company was growing at 10% a month. The big money then was in banner ads. Advertisers were willing to pay ridiculous amounts for banner ads. Yahoo's sales force exploited this source of revenue. Both the Internet startups and the Procter & Gambles were doing brand advertising..So traffic became the thing to get at Yahoo. Lack of hacker-centric cultures Any company that needs to have good software should be hacker centric. Microsoft (back in the day), Google, and Facebook have all had hacker-centric cultures. The consequence of trying to be a media company was that they didn't take programming seriously enough. Microsoft (back in the day), Google, and Facebook have all been obsessed with hiring the best programmers. There are very few instances where a company has sunk into technical mediocrity and recovered.
Botched outsourcing Take, for example, the shutting of Geocities, which (according to the infographic below) eliminated $3.6 billion from Yahoo!'s bottom line. Most recently, Yahoo! outsourced its shopping content to PriceGrabber, its personals to Match.com, and its real estate to Zillow. While this likely gave Yahoo! a new source of ad revenue, you have to wonder: at what cost was this new revenue obtained? If, for example, the contribution margin was greater with Yahoo! Personals than with the ad dollars acquired from Match.com, then Yahoo! is worse off than before. Lack of innovation Yahoo is not able to keep up with the pace of innovation in online media. Yahoo appears to be at a virtual standstill with new product and service introductions when the competition is comprised of Google, Apple, Facebook.
Attempt by Microsoft
OPERATIONAL EFFICIENCIES
Transaction Summary
OFFER $44.6 Billion $31 per share $31 cash, or 0.9509 of Microsoft share Targeted to close in 2nd half of CY08 62% premium to Yahoo! Closing Price on 1/31/08