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92 HAMID KAZEROONY

The Web site started out as “Jerry and David’s Guide to the World Wide Web” but
eventually received a new moniker with the help of a dictionary. The name Yahoo! is an
acronym for “Yet Another Hierarchical Officious Oracle,” but Filo and Yang insist they
selected the name because they liked the general definition of a yahoo: “rude, unsophisti-
cated, uncouth.” Yahoo! itself first resided on Yang’s student workstation, “Akebono,”
while the software was lodged on Filo’s computer, “Konishiki”—both named after
legendary sumo wrestlers.
Yahoo! was incorporated in 1995 in Delaware and launched a highly successful
initial public offering IPO in April 1996 with a total of 49 employees. Its stock rose to the
high of $120 in 2000 but for most of 2009 has been trading under $14.

Yahoo! Segments
Yahoo! offerings include Yahoo! Groups, Yahoo! Answers, and Flickr and are generally
provided to users free of charge. Revenue in Communities’ offerings is primarily gener-
ated through display advertising. Yahoo! search offerings include Yahoo! Search, Yahoo!
Local, Yahoo! Yellow Pages and Yahoo! Maps and are available free to users and are often
the starting point for users navigating the Internet and searching for information. Yahoo!
generates revenues through its Search offerings from search and display advertising.
The Yahoo! Communications segment include Yahoo! Mail, Zimbra Mail, and
Yahoo! Messenger and provides a wide range of communication services to users. Yahoo!
generates display advertising revenues from these offerings.
Yahoo!’s vision and/or mission statement is “Yahoo! powers and delights our
communities of users, advertisers, and publishers—all of us united in creating indispens-
able experiences, and fueled by trust.” Yahoo!’s code of ethics is embedded in its six val-
ues: Excellence, Innovation, Customer Fixation, Teamwork, Community, and Fun.
Yahoo! lost 1 percent in rich media revenue, 1 percent in sponsorship, and 2 percent
in classified ads in 2008 as compared to 2007. Although the revenue from search increased
by 3 percent in 2008 compared to 2007, the increase was due to growth in the entire
Internet business rather than a shift to Yahoo!

External Issues
According to technology research firm IDC, there were 1.1 billion Internet users around
the world and 211 million in the United States as of the end of 2006 (latest data available).
To offer some perspective, the size of the worldwide population of Internet users is compa-
rable to the population of India (estimated at 1.1 billion as of mid-2008, according to the
U.S. Central Intelligence Agency), and the size of the U.S. population of Internet users is
comparable to the population of Brazil (191 million).
Economic growth in the United States and around the world has slowed amid crisis in
the housing and credit markets. The prices of consumables, from fuel to food commodities,
are near all-time highs, yet the values of personal assets, like homes and property, have fallen
dramatically. Add rising unemployment and problematic geopolitics to the mix, and we have
a difficult economic backdrop, to say the least. Although Internet-related businesses have
perhaps held up better than their non digital counterparts, they have still suffered from
macroeconomic malaise. In 2009, a number of Internet content and advertising companies
(including Bankrate Inc., Knot Inc., ValueClick Inc., WebMD Health Corp., and Yahoo! Inc.)
reported disappointing financial results and lowered their forward financial outlooks. Even
Google Inc. expressed economic-related caution in conjunction with its second quarter
results, and Internet media and market research firm comScore Inc. expressed concerns about
deceleration in online spending growth.
Internet advertising revenues in the United States remain strong, topping $23 billion,
according to the 2008 Internet Advertising Revenue Report, released by the Interactive
Advertising Bureau and PricewaterhouseCoopers LLP (PwC). Despite a difficult U.S.
economy, as illustrated in Exhibit 1 to 5, Internet advertising continues to grow, albeit at
a slower pace. This trend confirms marketers’ increased recognition that consumers
spend more and more of their time online.