GROUP 4

GROUP MEMBERS

Ralph Matthew A. Ong M997Z245Ha Phuoc Vu M997Z244Tran Khai Khuong M997Z212Melva Hermayanty Saragih M997Z227Pham Dinh Chien M997Z201

INTRODUCTION

• Founded in 1994 by Stanford PhD candidates David

Filo and Jerry Yang;

• helps people uncover the best of the Web, more

easily discover what they are looking for, and perhaps

find something they didn’t expect;

• The name, YAHOO

• Yet

• Another

• Hierarchical

• Officious

• Oracle

• located at Sunnyvale, Calif., and has more than

13,000 employees.

YAHOO’S BUSINESS

• 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 — making Yahoo! one of the most visited and

most trusted Internet destinations.

More than doing business ….

• empower people through corporate social responsibility programs,

products, and services to make a positive impact on their

communities;

• connect our advertisers to a global online community so they can

change the world together.

Questions 1

• What makes Yahoo! an attractive opportunity (and not just a good idea?)

In 2005, it was easy for Yahoo! to find some capital from

outside because of its attractive opportunity as a business.

There were several uniqueness of Yahoo! among Internet

search providers:

• “The Yahoo! hierarchy is a handcrafted tool in that all of its…

categories were designated by people, not computers.

The sites that they link to are likewise deliberately

chosen, not assigned by software algorithms.

• In this, Yahoo! is a very labor intensive product. But it is

also a guide with human discretion and judgment built into

it - and this can at times make it almost uncannily

effective….

• In addition, Yahoo! offered a central place where people could

go to just to see what was out there. This made it easy for

people with little previous exposure to the Web to start

searching through Yahoo!’s lists of links, often just to see if they

could find something of interest.

• This is the essence of Yahoo!’s uniqueness and (let’s say it)

genius. It isn’t especially interesting to point to information that

many people are known to find interesting. TV Guide does this.

So do phone books, and countless Web sites that cater to

well-defined interest groups…. But Yahoo! is able to build

intuitive paths that might be singularly, or even temporarily

important to the people seeking it. And it does this in a

way that no other service has truly replicated.

Question 2

How will Yahoo! Make money?Business model

How will Yahoo! Make money?

• Through targeted advertising based on enormous following

• New premium service• Explore broad-band service (from 2004)

Sell advertising

• Yahoo! sells advertising (This is not the auctioned search advertising that Google has become known for, although Yahoo! also does this).

• This advertising is the banner ads that you see when you use all their compelling services. (chatting, email…).

• The ads can be very specifically targeted such

as a movie ad that is shown for a few hours on

a Thursday and Friday afternoon to a specific

demographic.

Business model- Yahoo! created enormous following

• Generate following through its strong brand and

momentum created

• The interest-area based structure of Yahoo! made it an

easier and more enjoyable way for users to find

relevant information, generate following

• Through its editorial efforts, it provided a combination

of comprehensiveness and high quality.

Identify the major risks in each of these categories: Technology, market, team and

financial. Rank order them

• Technology risks:

– Any failure to scale and adapt existing technology architecture to manage expansion and respond to rapid technological change could adversely affect business.

– The technology architectures and platforms utilized for the services are highly complex and may not provide satisfactory support in the future.

– New technologies could block display advertisements or search marketing listings.

– Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws.

• Market risks:

– Yahoo! face significant competition for users, advertisers, publishers and distributors, principally from Google, Microsoft, and AOL.

– In markets, Yahoo! compete with local Internet service providers that may have competitive advantages.• Especially those in Asia, Europe, and Latin America, Yahoo! face

substantial competition from local Internet service providers and other portals that offer search, communications, and other commercial services.

– International operations are subject to increased risks which could

harm Yahoo’s business, operating results, and financial condition.

• Team risks:

– Employees of the company responsible for making the business model work.

– Weak management team impact on instant credibility to outside investors.

– A strong management team may not be able to salvage a weak business model, but should be able to change the model and redefine the business as it becomes necessary.

– Changes in Yahoo’s management or leadership, competitors’ hiring practices, and the effectiveness of compensation programs.

• Financial risks:– Fluctuations in foreign currency exchange rates affect to operating

results in U.S. dollar terms.

– Yahoo! may be required to record a significant charge to earnings if our goodwill, amortizable intangible assets, or investments in equity interests become impaired.

– Yahoo’s stock price has been volatile historically and may continue to be volatile regardless of operating performance.

– Yahoo! may have exposure to additional tax liabilities which could

negatively impact to income tax provision, net income, and cash flow.

– Adverse general economic conditions have caused and could cause decreases or delays in marketing services spending by the advertisers and could harm to ability to generate marketing services revenues.

– Yahoo! rely on the value of our brands, and a failure to maintain or enhance the Yahoo! brands in a cost-effective manner.

QUESTION 4

What are the advantages and disadvantages of each of the funding options that Yahoo! Could pursue? Which one do you recommend?

FUNDING OPTIONS[1] Accept Sequoia’s offer and launch Yahoo! As their own company.[2] Accept corporate sponsorship.[3] Merge with an existing corporation.[4] Postpone their decision.[5] Selling their company.

Option 1: Accept Sequoia’s offer and launch Yahoo! As their own company

ADVANTAGES

[1] More capital/money.

[2] Can manage business better.

[3] Strong brand.

DISADVANTAGES

[1] Yang & Filo loses 25% share.

[2] Possibility of disagreement.

[3] Betrayal of a partner.

[4] Invaluable resourses.

Option 2: Accept corporate sponsorship

ADVANTAGES

[1] Receive funds.

[2] Development of their site.

DISADVANTAGES

[1] Company may be sold out.

[2] May destroy the company’s

image.

Thank you!