Yahoo! today filed an investor presentation that details the Company’s three-year financial plan and strategic initiatives which are expected to roughly double operating cash flow over the next three years from $1.9 billion to $3.7 billion and generate $8.8 billion in revenue excluding traffic acquisition costs (revenue ex-TAC) in 2010.
The financial plan was first presented to Yahoo!’s board of directors in December 2007, before the Company received the unsolicited acquisition proposal by Microsoft Corporation.
The presentation supports the unanimous determination by the Company’s board of directors that Microsoft’s January 31, 2008 unsolicited acquisition proposal substantially undervalues Yahoo!. The board cited Yahoo!’s global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as its substantial unconsolidated investments, as factors in its decision. Yahoo!’s board of directors is continuing to evaluate all of its strategic alternatives to maximize value for Yahoo! stockholders.
Yahoo!’s management today also reaffirmed its outlook for the first quarter 2008 and full year 2008, as previously provided on January 29, 2008.
Key sources of projected growth in revenue and operating cash flow cited in the presentation include $1.9 billion in added revenue ex-TAC over the next three years from display/video advertising, as Yahoo! expects its growth to outpace the currently anticipated market rate of growth in online display/video advertising. The Company also expects $1.4 billion in added search revenue, implying growth essentially in line with the anticipated market rate of growth in search advertising.
“Yahoo! is positioned for accelerated financial growth – we have a powerful consumer brand, a huge global audience and a highly profitable operating model,” said Jerry Yang, the Company’s co-founder and chief executive officer. “With industry-leading tools, technology, people and platforms, Yahoo! is poised to capture growth in display advertising where we believe growth will be greatest. Combined with our recent progress in search monetization, Yahoo! is well positioned to provide the broadest range of products to our advertisers while delivering the most compelling experiences to users.”
“This is a scale business and our scale is a tremendous strategic asset,” said Roy Bostock, Chairman of the board. “We are pleased to share with the market more details about our business and our expectations for Yahoo!’s financial performance, which provided context for our board’s unanimous rejection of Microsoft’s unsolicited proposal. Yahoo! represents a truly unique strategic platform within our industry. The board of directors and management will continue to work closely together to ensure that any strategic path we pursue capitalizes on that uniqueness and value in a way that maximizes the benefit to our stockholders.”
Yahoo!’s investor presentation also reiterates its principal strategies, which are to enhance an already strong position as a leading starting point for users of the Internet and to be a “must buy” proposition for the most online advertisers.
Starting Points: In support of the Starting Points objective, which focuses on properties that users return to many times a day to start their Internet experience, the presentation discusses Yahoo!’s initiatives to make its front pages, Yahoo.com and My Yahoo!, as well as search, mail and mobile more open, social and relevant to users. The presentation highlights Yahoo!’s leading positions in key starting points, including the 305 million unique monthly users of its homepage and the 262 million unique monthly users of Yahoo! mail.(1)
Must Buy: The presentation also highlights the Company’s Must Buy strategic objective, which focuses on making it easier for advertisers, agencies, publishers and ad networks to do business with Yahoo! and with one another. Key initiatives include the development of a new ad platform designed to simplify online advertising buying and selling as well as improvements to the Panama search advertising platform. In addition to its leading position in display advertising distributed on its owned and operated sites, Yahoo! is also the second largest provider of sponsored search advertising online. Yahoo! also operates Right Media, the leading online advertising exchange, and is now ranked among the largest online advertising networks with premium partners including eBay, Comcast, AT&T and many more.
The presentation notes that, in addition to Yahoo!’s strong projected operating results over the next three years, the Company’s strategic assets in Asia, including its stakes in Yahoo! Japan, Alibaba Group and Gmarket, its strong cash position, and its early leadership positions in mobile Internet and emerging markets, combine to create significant equity value.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties concerning Yahoo!’s projected financial performance (including without limitation the statements and information in the quotations from management in this press release), as well as Yahoo!’s strategic and operational plans. Actual results may differ materially from the results projected. The potential risks and uncertainties include, among others, the implementation and results of the Company’s ongoing strategic initiatives; the Company’s ability to compete with new or existing competitors; reduction in spending by, or loss of, marketing services customers; the demand by customers for Yahoo!’s premium services; acceptance by users of new products and services; risks related to joint ventures and the integration of acquisitions; risks related to the Company’s international operations; failure to manage growth and diversification; adverse results in litigation, including intellectual property infringement claims; the Company’s ability to protect its intellectual property and the value of its brands; dependence on senior management and other key personnel; dependence on third parties for technology, services, content and distribution; general economic conditions and changes in economic conditions; and risks and uncertainties arising in connection with Microsoft’s unsolicited proposal to acquire Yahoo!, including the loss of key employees who pursue other employment opportunities due to concerns as to their employment security, increased difficulty for the Company in executing its strategic plan and pursuing other strategic opportunities, and the possibility of significant costs of defense, indemnification and liability resulting from stockholder litigation. More information about potential factors that could affect Yahoo!’s business and financial results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yahoo!’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which is on file with the Securities and Exchange Commission (SEC) and available online at www.sec.gov.
This press release includes projected financial performance information for 2008-2010 from the Company’s three-year financial plan presented to its board of directors in December 2007. These projections are necessarily based upon a variety of estimates and assumptions which, though currently considered reasonable by Yahoo!, may not be realized and are inherently subject, in addition to the specific risks identified above, to business, economic, competitive, industry, regulatory, market and financial uncertainties and contingencies, many of which are beyond Yahoo!’s control. There can be no assurance that the assumptions made in preparing the projected financial performance information will prove accurate. Accordingly, actual results may differ materially from the results projected.
All information in this press release is as of March 18, 2008, unless otherwise noted, and Yahoo! does not intend, and undertakes no duty, to update or otherwise revise the information contained in this press release.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as non-GAAP financial measures by the SEC: revenues excluding traffic acquisition costs or TAC (revenues ex-TAC) and operating income before depreciation, amortization, and stock-based compensation expense (OCF).These measures may be different from non-GAAP measures used by other companies. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (GAAP). Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are included in the Appendix to the Yahoo! Investor Presentation furnished as Exhibit 99.2 to the Company’s Current Report on Form 8-K dated March 18, 2008 and can be accessed through Yahoo!’s Investor Relations website at www.yahoo.com.
March 23rd, 2008
Yahoo! today announced that it has launched a new research lab in Haifa, Israel — its first in the region. The Yahoo! Research Israel Lab will be led by Dr. Ronny Lempel, a renowned information organization and retrieval expert who will report directly to Dr. Ricardo Baeza-Yates, vice president of Yahoo! Research.
The Yahoo! Research Israel Lab, which opens today, will focus on boiling down complex technology problems into simple solutions to change the game in Web search. As a demonstration of its commitment to next-generation search, Yahoo! recently opened Yahoo! Labs – Bangalore and appointed eminent scientist Dr. Rajeev Rastogi to head the new India lab. Yahoo!’s arrival in Israel furthers the company’s commitment to discovering new technologies that deliver compelling experiences on the Web.
“Search is still in its infancy,” said Prabhakar Raghavan, head of Yahoo! Research. “At Yahoo!, we are working on the hard core science that can lead to search experiences that are significantly beyond the current art.” He continues to say, “Ronny Lempel is a great addition to the world-class team that we have assembled to develop a new approach to Web search. His expertise in search technologies and ties to local academia will help us draw on the best talent and knowledge from across the region and strengthen our worldwide R&D efforts.”
Lempel previously worked at the Information Retrieval Group at IBM’s Haifa Research Lab, focusing on research and development for enterprise search systems. Prior to joining IBM, he received his BSc., MSc. and Ph.D. in Computer Science at Technion-Israel Institute of Technology. He has authored numerous papers and received several awards for his work on search engine technology, and has twice won the Best Presentation Award at the International World Wide Web Conference.
“Israel is fertile ground for incredibly talented technologists, researchers and engineers, and the Yahoo! Research Israel Lab provides the best opportunity to create the technologies that will underpin the next generation of search on the Internet,” Lempel said. “I look forward to building the Haifa team with the best talent this region has to offer.”
March 17th, 2008
Google announced today that it has completed its acquisition of DoubleClick, a company that offers online ad serving and management technology to advertisers, web publishers and ad agencies.
Eric Schmidt, Google’s Chairman and Chief Executive Officer, said, “We are thrilled that our acquisition of DoubleClick has closed. With DoubleClick, Google now has the leading display ad platform, which will enable us to rapidly bring to market advances in technology and infrastructure that will dramatically improve the effectiveness, measurability and performance of digital media for publishers, advertisers and agencies, while improving the relevance of advertising for users.”
March 12th, 2008
Yahoo! today announced that it has amended the Company’s bylaws to extend the deadline for nominating directors to Yahoo!’s board from March 14th to 10 days following the public announcement of the date for Yahoo!’s 2008 annual meeting of stockholders. As the Company has not yet announced the date of this year’s annual meeting, the amendment will give stockholders who want to nominate one or more directors, including Microsoft Corporation, more time to do so. The amendment does not preclude any party from nominating one or more directors at any time prior to the new deadline.
Yahoo!’s board of directors remains committed to pursuing initiatives that maximize value for Yahoo!’s stockholders. To the extent that the extension of the nomination deadline has the effect of postponing the nomination of one or more directors by any party, it will allow Yahoo!’s board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest.
March 10th, 2008
Yahoo! continues to enable the global mobile ecosystem with the unveiling of Yahoo! onePlace™ – a revolutionary mobile content management solution. Following the company’s achievements in reinventing mobile search and mobile communications, Yahoo! onePlace is designed to be an essential tool to enable consumers to better manage the wide selection of content available across the Internet.
“Over the last three years, we have aggressively executed on our mobile strategy to deliver innovative and indispensable services to consumers globally and become the starting point for the most users. With the introduction of Yahoo! onePlace, we are announcing the next essential component to our mobile product line up,” said Marco Boerries, executive vice president, Connected Life, Yahoo!. “Yahoo! onePlace is where users will be able to find what matters to them the most, no matter where their interests, passions and information come from. Yahoo! onePlace will provide mobile users with a rich and dynamic content experience.”
Yahoo! onePlace™ will bring together a consumers’ interests, passions and important information into a single location – creating a rich and highly personalized experience. Everything is instantly organized, dynamically kept current, and served to them the way they want. So now, the content they consume and the way they consume it will be hyper-customized to their specific preferences and tastes.
Yahoo! onePlace will be simple-to-use because it will be based on a familiar process of using bookmarks to instantly link to practically any piece of content (news feeds, web sites, videos, images, emails, search queries, etc.) from anywhere across the Internet. Once in Yahoo! onePlace, everything will be kept automatically updated (with the latest game score, stock price, etc) as well as assigned categories and tags – or placed into customized “collections” that consumers create – making it extremely intuitive for consumers to find and combine their content in the ways most useful to them.
Yahoo! onePlace will allow consumers to stay better informed on the topics they care about, with less work – for their daily interests (e.g., favorite sports teams or stocks), as well as those they only care about on a selective basis. For example, if a user is planning a holiday to Paris in June, he could create a “Paris” collection, and begin linking it to any information he thinks will be useful to him on his trip: weather conditions, city guides, restaurant reviews, hotel reservations, walking maps, songs of Edith Piaf, English-French dictionaries, winery recommendations, etc. Yahoo! onePlace will give consumers a single location to consume all of their information contextually, keeping it updated (so they know, for example, if their flight times have changed) and instantly accessible whenever and however they want it. The product will be configured to allow consumers to do the same for literally hundreds of different topics.
Yahoo! onePlace is designed to include the following features, which will allow consumers to:
- Centralized and open content management – Centralize and manage all the content they care about, from anywhere on the Internet, accessible from a single location and arranged to best meet their preferences. The product is also designed to allow consumers to link to any favorite content they’ve already personalized on the Yahoo! network (e.g., MyYahoo!®, flickr™, del.icio.us®), or at other popular websites (e.g., Digg®, Last.FM®, reddit™, Yelp®).
- Personalized views – Enjoy their content based on their specific needs:
- Collections – Group content in a way that makes sense. For example, create a collection related to an upcoming trip, or of favorite 80’s bands.
- Categories – Organize content according to commonly-used subjects (e.g., celebrities, local businesses, sports), making it easy to access and retrieve.
- Pulse – Stream updates relevant to users’ content, such as flight status changes, new songs by a favorite music artist, or a restaurant review.
- Favorites – Surface the content a consumer uses most frequently.
- Dynamic updates – See previews for selected sources that are kept fresh throughout the day – giving users a single location for a view of what’s going on across their world.
- Mobile RSS reader – Use a mobile RSS reader integrated into Yahoo! onePlace – providing a simple way to read and subscribe to their favorite feeds.
- Smart organization – Create a rich experience around a specific topic by grouping whatever content they find most useful.
Yahoo! onePlace is expected to launch, along with Yahoo! oneConnect™, in Q2 2008, joining Yahoo!’s award-winning mobile product portfolio, which includes Yahoo! Go 3.0, Yahoo!’s new mobile homepage and Yahoo! oneSearch™. After its release, Yahoo! onePlace is expected to become available across hundreds of devices and mobile browsers around the world.
March 6th, 2008
Google today introduced Google Sites™, an application that makes creating a team web site as easy as editing a document. With Google Sites, people can quickly gather a variety of information in one place – including videos, calendars, presentations, attachments, and text – and easily share it for viewing or editing with a small group, their entire organization, or the world.
“Creating a team web site has always been too complicated, requiring dedicated hardware and software as well as programming skills,” said Dave Girouard, vice president and general manager of enterprise, Google. “Now with Google Sites, anyone can create an entirely customized site in minutes and invite others to contribute. We are literally adding an edit button to the web.”Creating and editing a set of pages in a Google Site requires no knowledge of HTML or web design skills. People can start a new page with one click. Adding content is as easy as clicking the edit button. Sharing is as simple as sending an invitation. All content is instantly searchable, and Google Sites is accessible through any web browser.
Anyone inside an organization can begin using Google Sites by signing up for Google Apps™ communication and collaboration services through Team Edition — without having to burden IT for support. After verifying their business or school email address, people can instantly invite others to join, or easily identify people within their organization already using Google Apps.
With Google Sites, people can create a wide variety of sites, such as:
- an intranet to centralize company information;
- a team site to manage a project;
- a profile site including an individual’s resume, areas of expertise, and goals for the quarter; and
- a virtual classroom to post homework assignments, class notes and other resources.
Google Sites is secure and scalable. Users have full control over who can own, collaborate and view pages, and view version history for each site. Google Sites is built to scale to any sized organization — from a five person start-up to a 50,000 person enterprise or university — and requires no hardware or software to buy, install, or maintain.
Additional features include the ability to:
- Embed content from other Google products, including YouTube™, Google Docs™, Google Calendar™, and Picasa™
- Upload files of any type
- Customize a site’s look and feel
Google Sites is based on JotSpot™ technology and available in the Team, Standard, Premier, and Education Editions of Google Apps. If your business or school doesn’t use Google Apps, please visit http://sites.google.com and sign up for Team Edition with your work or school email address. Existing Google Apps administrators can enable Google Sites immediately from the Google Apps control panel.
February 29th, 2008
Yahoo! today introduced Yahoo! Buzz, an extension to Yahoo.com that opens up the Internet’s leading starting point by uncovering the most interesting and relevant content from websites across the Internet and bringing more buzz-worthy stories to the homepage of Yahoo!. Currently in beta, Yahoo! Buzz measures consumer votes and search patterns to identify interesting and timely stories and videos from large news sources as well as niche blogs around the Web. Top stories are then given primary editorial consideration for feature placement on Yahoo.com.
Yahoo! Buzz can highlight anything – a major news event, an intriguing video or image, or an interesting blog post – and instead of editors, real people vote and search for their favorite stories to determine the top rated content from across the Web. Yahoo! Buzz ranks the most popular content of the moment using a unique approach that combines consumer votes with search popularity to give a story a Buzz Score. This new initiative creates a lens on what people are most interested in to enhance relevance on the popular Yahoo.com, and help publishers deliver their best content to Yahoo!’s broad and diverse audience of more than 500 million users.
“Yahoo Buzz is a good example of how we are continuing to innovate and open up our key starting points to third party publishers, making Yahoo! more social and personally relevant for our half a billion consumers,” said Jeff Weiner, executive vice president, Yahoo! Network Division. “In addition, we recently announced that we will be opening up our user interface for Yahoo! Search, as well as creating a smarter inbox by opening up Yahoo! Mail, two other key ways that consumers start with Yahoo!.”
“With Yahoo! Buzz, we are building on the recent success of the homepage of Yahoo! and improving consumers’ favorite online starting point, by combining popular stories with the wisdom of real people to determine what is most engaging and relevant,” said Tapan Bhat, vice president, Front Doors and Network Services, Yahoo!. “Consumer engagement with the Yahoo! homepage has increased nearly 20 percent year-over-year, evidence that continuing to open up and provide consumers with direct links out to third party publishers keeps people coming back to Yahoo! again and again.”
Yahoo! Buzz Brings Publishers’ Content to Internet’s Largest Audience
Yahoo! Buzz builds on an openness initiative Yahoo! launched last year in which editors began highlighting third-party content from across the Web in the “Featured Today” module on Yahoo.com. This effort has already provided tremendous value for consumers and publishers, representing a first step in the creation of a more open system for Web content. “When Yahoo! linked to People.com’s Sexiest Man Alive coverage, referrals from Yahoo! increased by over 11 times versus the average day,” said Fran Hauser, President, People Digital.
“Getting a link on Yahoo!’s Front Page is like connecting to a fire hose,” said Evan Hansen, editor-in-chief, Wired.com. “Thanks to this program, we got more than 2 million page views in less than two hours from a single headline, helping to drive a 1400 percent increase in Yahoo! referral traffic versus the previous month and enabling us to reach a vast audience that may not otherwise see the stories we publish on Wired.com.”
In its beta phase, Yahoo! Buzz includes content from nearly 100 publishers, ranging from large online publishing brands to small, influential blogs, and will grow from there to open up to all publishers interested in having their content included in Yahoo! Buzz. Participating publishers are given an online ‘badge’ enabling their readers to vote and submit stories to Buzz in real-time. Stories with the highest Buzz Scores will be highlighted via direct links to the publishers’ sites from http://buzz.yahoo.com and submitted to Yahoo.com’s editors for possible coverage on the Yahoo! homepage. Additionally, Yahoo! allows users to submit Buzz stories to social news sites including delicious, Digg, Facebook, Propeller, Reddit and Stumbleupon.
New Tools for Publishers and Advertisers
As Yahoo! Buzz evolves, it will form the basis for an open ecosystem of publishers, advertisers and consumers. Yahoo! will develop this ecosystem by building out new syndication and monetization tools that enable publishers to share relevant content, connect to more advertisers and reach a broader audience. For example, a Yahoo! Buzz API will enable publishers to add customized Yahoo! Buzz modules or shortcuts to their sites to showcase their own most buzzed items or other popular stories on relevant topics. Over time, we expect this to extend into a powerful content exchange that connects owners of content with distributors of traffic.
February 26th, 2008
A consortium of six international companies announced they have executed agreements to build a high–bandwidth subsea fiber optic cable linking the United States and Japan. The construction of the new Trans–Pacific infrastructure will cost an estimated US$300 million.
The new cable system — named Unity — will address broadband demand by providing much needed capacity to sustain the unprecedented growth in data and Internet traffic between Asia and the United States. Unity is expected to initially increase Trans–Pacific lit cable capacity by about 20 percent, with the potential to add up to 7.68 Terabits per second (Tbps) of bandwidth across the Pacific.
According to the TeleGeography Global Bandwidth Report, 2007, Trans–Pacific bandwidth demand has grown at a compounded annual growth rate (CAGR) of 63.7 percent between 2002 and 2007. It is expected to continue to grow strongly from 2008 to 2013, with total demand for capacity doubling roughly every two years.
“The Unity cable system allows the members of the consortium to provide the increased capacity needed as more applications and services migrate online, giving users faster and more reliable connectivity,” said Unity spokesperson Jayne Stowell.
The Unity consortium is a joint effort by Bharti Airtel, Global Transit, Google, KDDI Corporation, Pacnet and SingTel. The name Unity was chosen to signify a new type of consortium, born out of potentially competing systems, to emerge as a system within a system, offering ownership and management of individual fiber pairs.
This new 10,000 kilometer (km) Trans–Pacific cable will provide connectivity between Chikura, located off the coast near Tokyo, to Los Angeles and other West Coast network points of presence. At Chikura, Unity will be seamlessly connected to other cable systems, further enhancing connectivity into Asia.
The Unity consortium selected NEC Corporation and Tyco Telecommunications to construct and install the system during a signing ceremony held in Tokyo on February 23, 2008. Construction will begin immediately, with initial capacity targeted to be available in the first quarter of 2010.
The new five fiber pair cable system can be expanded up to eight fiber pairs, with each fiber pair capable of carrying up to 960 Gigabits per second (Gbps). By having a high fiber count, Unity is able to offer more capacity at lower unit costs.
February 26th, 2008
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