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As filed with the Securities and Exchange Commission on November 5, 1997
Registration No. 333- -
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
YAHOO! INC.
(Exact Name of Registrant as specified in its charter)
CALIFORNIA 77-0398689
(State of incorporation) (I.R.S. Employer Identification No.)
3400 CENTRAL EXPRESSWAY, SUITE 201
SANTA CLARA, CALIFORNIA 95051
(408) 731-3300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
TIMOTHY KOOGLE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
3400 CENTRAL EXPRESSWAY, SUITE 201
SANTA CLARA, CALIFORNIA 95051
(408) 731-3300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
JAMES L. BROCK
JOHN H. SELLERS
KARL SUN
VENTURE LAW GROUP
A PROFESSIONAL CORPORATION
2800 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
(415) 854-4488
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
UNTIL OCTOBER 20, 1998 OR UNTIL SUCH EARLIER TIME THAT ALL OF THE SHARES
REGISTERED HEREUNDER HAVE BEEN SOLD.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each class of Amount Proposed maximum Proposed maximum
securities to be to be offering price aggregate Amount of
registered registered per share(1) offering price(1) registration fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$0.00067 per share...... 1,521,834 shares $41.25 $62,775,653 $19,023
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee, based on the average of the high and low prices for the
Company's Common Stock as reported on the Nasdaq National Market on October 30,
1997 in accordance with Rule 457 under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
<PAGE>
NOTE: INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 5, 1997
1,521,834 SHARES
YAHOO! INC.
COMMON STOCK, $0.00067 PAR VALUE
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 5 OF THIS PROSPECTUS FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------
All references herein to "Yahoo!" or the "Company" mean Yahoo! Inc., a
California corporation, unless otherwise indicated by the context.
The 1,521,834 shares of Yahoo! Inc. Common Stock, $0.00067 par value,
covered by this Prospectus (the "Shares") are offered for the account of
certain shareholders and warrantholders of the Company (the "Selling
Shareholders"). The Shares were issued or reserved for issuance to the
Selling Shareholders in connection with the acquisition by the Company of
Four11 Corporation on October 20, 1997 (the "Acquisition"). For additional
information regarding the Acquisition, see "Issuance of Common Stock to
Selling Shareholders." The Shares may be offered by the Selling Shareholders
from time to time in one or more transactions in the over-the-counter market
at prices prevailing therein, in negotiated transactions at such prices as
may be agreed upon, or in a combination of such methods of sale. See "Plan of
Distribution." The price at which any of the Shares may be sold, and the
commissions, if any, paid in connection with any such sale, are unknown and
may vary from transaction to transaction. Each Selling Shareholder has
advised the Company that no sale or distribution other than as disclosed
herein will be effected until after this Prospectus shall have been
appropriately amended or supplemented, if required, to set forth the terms
thereof. The Company will not receive any proceeds from the sale of the
Shares by the Selling Shareholders.
The Securities and Exchange Commission (the "Commission") may take the
view that, under certain circumstances, the Selling Shareholders and any
broker-dealers or agents that participate with the Selling Shareholders in
the distribution of the Shares may be deemed to be "underwriters" within the
meaning of the Securities Act. Commissions, discounts or concessions received
by any such broker-dealer or agent may be deemed to be underwriting
commissions under the Securities Act. The Company and the Selling
Shareholders have agreed to certain indemnification arrangements. See "Plan
of Distribution."
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "YHOO." On November 4, 1997, the last sale price of the Company's
Common Stock on the Nasdaq National Market was $51 per share.
-------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------
<TABLE>
<CAPTION>
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UNDERWRITING PROCEEDS TO
Price to Public DISCOUNTS AND COMMISSION SELLING SHAREHOLDERS
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<S> <C> <C> <C>
Per Share................
Total.................... See Text Above See Text Above See Text Above
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</TABLE>
THE DATE OF THIS PROSPECTUS IS OCTOBER -, 1997
<PAGE>
No person is authorized in connection with any offering made hereby to give
any information or to make any representation not contained in this Prospectus,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or the Selling Shareholders. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the shares of Common Stock offered hereby, nor does
it constitute an offer to sell or a solicitation of an offer to buy any of the
shares offered hereby to any person in any jurisdiction in which it is unlawful
to make such an offer or solicitation. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances create any implication
that the information contained herein is correct as of any time subsequent to
the date hereof.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and the
shares of Common Stock offered hereby, reference is hereby made to the
Registration Statement. Statements contained herein concerning the provisions
of any document are not necessarily complete, and each such statement is
qualified in its entirety by reference to the copy of such document filed with
the Commission.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, NW, Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, Seven World Trade Center, New York, New York 10048, and Chicago Regional
Office, Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, NW, Washington, D.C. 20549 upon
payment of the prescribed fees. The Company is also required to file electronic
versions of these documents with the Commission through the Commission's
Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). The Common
Stock of the Company is quoted on The Nasdaq National Market. Reports, proxy
and information statements and other information concerning the Company may be
inspected at The Nasdaq Stock Market at 1735 K Street, NW, Washington, D.C.
20006. In addition, the Commission maintains a World Wide Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
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INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 0-26822).
2. The Company's definitive Proxy Statement dated March 25, 1997, filed
in connection with the Company's April 30, 1997 Annual Meeting of Shareholders.
3. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997 (File No. 0-26822).
4. The Company's Current Reports on Form 8-K, filed with the Commission
on August 4, 1997, October 14, 1997 (as amended October 30, 1997) (File No.
0-26822).
5. The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form 8-A, filed with the Commission on March
12, 1996 (File No. 0-026822).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference in this Prospectus. Any statement contained in
a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any other subsequently filed document which also is incorporated by
reference herein) modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part hereof, except
as so modified or superseded.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference, other than exhibits to such documents. Requests should be directed
to Andrea Klipfel, Investor Relations, 3400 Central Expressway, Suite 201, Santa
Clara, California 95051, telephone: (408) 731-3300.
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THE COMPANY
Yahoo! is an Internet media company that offers a network of
globally-branded properties, specialty programming, and aggregated content
distributed primarily on the World Wide Web (the "Web") serving business
professionals and consumers, and is among the most widely used
guides for information and discovery on the Web.
Under the "Yahoo!" brand, the Company provides intuitive, context-based
guides to online content, Web search capabilities, aggregated third-party
content and community and personalization features. In September 1997, Internet
users viewed an average of 50 million Web pages per day in "Yahoo!" branded
properties.
The Company makes its properties available without charge to users and
generates revenue primarily through the sale of banner advertising. Advertising
on Yahoo! properties is sold through the Company's internal advertising sales
force and third party agents. During the third quarter of 1997, more than 1200
advertisers purchased advertising on Yahoo! properties.
Yahoo! was incorporated on March 5, 1995 under the laws of California. The
Company's principal executive offices are located at 3400 Central Expressway,
Suite 201, Santa Clara, California 95051 and its telephone number is (408)
731-3300. As used in this prospectus, the "Company" and "Yahoo!" refer to
Yahoo! Inc., a California corporation, and its wholly owned subsidiaries.
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RISK FACTORS
THIS PROSPECTUS (INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN)
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS,
BELIEFS, INTENTIONS OR FUTURE STRATEGIES. ALL FORWARD LOOKING STATEMENTS
INCLUDED IN THIS DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY ON
THE DATE HEREOF, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH
FORWARD LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET
FORTH BELOW AND IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. IN EVALUATING
THE COMPANY'S BUSINESS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER INFORMATION SET FORTH HEREIN OR
INCORPORATED HEREIN BY REFERENCE.
LIMITED OPERATING HISTORY; ANTICIPATED LOSSES
The Company was incorporated in March 1995 and did not commence
generating advertising revenues until August 1995. Accordingly, the Company
has a limited operating history upon which an evaluation of the Company can
be based, and its prospects are subject to the risks, expenses and
uncertainties frequently encountered by companies in the new and rapidly
evolving markets for Internet products and services, including the Web-based
advertising market. Specifically, such risks include, without limitation, the
failure to continue to develop and extend the "Yahoo!" brand, the failure to
develop new media properties, the inability of the Company to maintain and
increase the levels of traffic on Yahoo! properties, the development of equal
or superior services or products by competitors, the failure of the market to
adopt the Web as an advertising medium, the failure to successfully sell
Web-based advertising through the Company's recently developed internal sales
force, potential reductions in market prices for Web-based advertising as a
result of competition or other factors, the failure of the Company to
effectively generate commerce-related revenues through sponsored services and
placements in Yahoo! properties, the inability of the Company to effectively
integrate the technology and operations or any other acquired businesses or
technologies with its operations such as the recent acquisition of Four11,
the failure of the Company to successfully offer personalized Web-based
services, such as e-mail services, to consumers without errors or
interruptions in service, and the inability to continue to identify, attract,
retain and motivate qualified personnel. There can be no assurance that the
Company will be successful in addressing such risks. As of September 30,
1997, the Company had an accumulated deficit of $26,695,000. The limited
operating history of the Company and the uncertain nature of the markets
addressed by the Company make the prediction of future results of operations
difficult or impossible and, therefore, the recent revenue growth experienced
by the Company should not be taken as indicative of the rate of revenue
growth, if any, that can be expected in the future. The Company believes that
period to period comparisons of its operating results are not meaningful and
that the results for any period should not be relied upon as an indication of
future performance. The Company currently expects to significantly increase
its operating expenses to expand its sales and marketing operations, to fund
greater levels of product development and to develop and commercialize
additional media properties. As a result of these factors, there can be no
assurance that the Company will not incur significant losses on a quarterly
and annual basis.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
As a result of the Company's limited operating history, the Company does
not have historical financial data for a significant number of periods on which
to base planned operating expenses. The Company derives the majority of its
revenues from the sale of advertisements under short-term contracts, which are
difficult to forecast accurately. The Company's expense levels are based in
part on its expectations concerning future revenue and to a
5
<PAGE>
large extent are fixed. The Company also has fixed expenses in the form of
advertising revenue guarantees of up to $18.5 million over the next 18 months
relating to the NETSCAPE GUIDE BY YAHOO!, which subject the Company to
additional risk in the event that revenues from this property are not
sufficient to offset guaranteed payments and related operating expenses.
Quarterly revenues and operating results depend substantially upon the
advertising revenues received within the quarter, which are difficult to
forecast accurately. Accordingly, the cancellation or deferral of a small
number of advertising contracts could have a material adverse effect on the
Company's business, results of operations and financial condition. The
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall, and any significant shortfall in revenue in
relation to the Company's expectations would have an immediate adverse effect
on the Company's business, operating results and financial condition. In
addition, the Company plans to continue to significantly increase its
operating expenses to expand its sales and marketing operations, to continue
to develop and extend the "Yahoo!" brand, to fund greater levels of product
development and to develop and commercialize additional media properties. To
the extent that such expenses precede or are not subsequently followed by
increased revenues, the Company's business, operating results and financial
condition will be materially and adversely affected.
The Company's operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside the Company's
control. These factors include the level of usage of the Internet, demand for
Internet advertising, the addition or loss of advertisers, the level of user
traffic on YAHOO! and the Company's other online media properties, the
advertising budgeting cycles of individual advertisers, the amount and timing
of capital expenditures and other costs relating to the expansion of the
Company's operations, the introduction of new products or services by the
Company or its competitors, pricing changes for Web-based advertising, the
timing of initial set-up, engineering or development fees that may be paid in
connection with larger advertising and distribution arrangements, technical
difficulties with respect to the use of YAHOO! or other media properties
developed by the Company, incurrence of costs relating to acquisitions such
as the recent acquisition of Four11 Corporation, general economic conditions
and economic conditions specific to the Internet and online media. As a
strategic response to changes in the competitive environment, the Company may
from time to time make certain pricing, service or marketing decisions or
business combinations that could have a material adverse effect on the
Company's business, results of operations and financial condition. The
Company also has experienced, and expects to continue to experience,
seasonality in its business, with user traffic on YAHOO! and the Company's
other online media properties being lower during the summer and year-end
vacation and holiday periods, when usage of the Web and the Company's
services typically experience slower growth or decline. Additionally,
seasonality may also affect the amount of customer advertising dollars placed
with the Company in the first and third calendar quarters as advertisers
historically spend less during these quarters.
A key element of the Company's strategy is to generate additional
advertising revenues through sponsored services and placements by third
parties in Yahoo! online properties in addition to banner advertising. In
connection with these arrangements, the Company may receive sponsorship fees
as well as a portion of transaction revenues received by the third party
sponsor from users originated through the Yahoo! placement, in return for
minimum levels of user impressions to be provided by the Company. To the
extent implemented, these arrangements expose the Company to potentially
significant financial risks, including the risk that the Company fails to
deliver required minimum levels of user impressions and that third party
sponsors do not renew the agreements at the end of their term. In addition,
because the Company has limited experience with these arrangements, the
Company is unable to determine what effect such arrangements will have on
gross margins and results of operations. Although transaction-based fees
have not to date represented a material portion of the Company's net
revenues, if and to the extent such revenues become significant, the
foregoing factors could result in greater variations in the Company's
quarterly operating results and could have a material adverse effect on the
Company's business, results of operations and financial condition.
Due to all of the foregoing factors, in some future quarter the Company's
operating results may fall below the expectations of securities analysts and
investors. In such event, the trading price of the Company's Common Stock would
likely be materially and adversely affected.
6
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RISKS ASSOCIATED WITH NETSCAPE GUIDE BY YAHOO!
During March 1997, the Company entered into certain agreements with
Netscape Communications Corporation ("Netscape") under which the Company has
developed and operates an Internet information navigation service called
"NETSCAPE GUIDE BY YAHOO!" (the "GUIDE"). The Co-Marketing agreement provides
that revenue from advertising on the GUIDE, which is managed by the Company,
is to be shared between the Company and Netscape. Under the terms of the
Trademark License agreement, the Company made a one-time non-refundable
trademark license fee payment of $5,000,000 in March 1997 which is being
amortized over the initial two-year term, which commenced in May 1997. Under
the terms of the Co-Marketing agreement as amended in June 1997, the Company
also provided Netscape with a minimum of $4,660,000 in guarantees against
shared advertising revenues in the first year of the agreement and up to
$15,000,000 in the second year of the agreement, subject in the second year
to certain minimum levels of advertising impressions being reached on the
GUIDE. Actual payments may be higher and will relate directly to the overall
revenue recognized from the GUIDE.
The Netscape Guide agreement exposes the Company to a number of
significant risks and uncertainties, including, without limitation: the risk
that the Company will fail to generate sufficient advertising revenue to
offset the initial and future guaranteed payments to Netscape, including any
failure that results from negative trends in the Web-based advertising
business (such as price erosion) or the inability of the Company to rapidly
expand their advertising sales and management efforts to match the additional
inventory currently anticipated from the Guide; the risk that projected user
traffic levels for the Guide will not be achieved, which may be affected by
several factors, such as declines or slower growth in the number of users of
Netscape's browser product, particularly as a result of continued increases
in the market share of other browser products, such as Microsoft
Corporation's ("Microsoft") Internet Explorer browser product; the effect of
competitive personalized information services from other parties; and the
risk that Netscape does not elect to renew the agreement at the end of the
two year term, after which the agreement permits Netscape to use certain
elements of the user interface developed by the Company without payment of
any consideration to the Company. As a result of the foregoing factors, there
can be no assurance that the Guide activities will not have a material
adverse effect on the Company's business, operating results or financial
condition.
COMPETITION
The market for Internet products and services is highly competitive and
competition is expected to continue to increase significantly. There are no
substantial barriers to entry in these markets, and the Company expects that
competition will continue to intensify. Although the Company currently
believes that the diverse segments of the Internet market will provide
opportunities for more than one supplier of products and services similar to
those of the Company, it is possible that a single supplier may dominate one
or more market segments.
The Company competes with many other providers of online navigation,
information and community services. Many companies offer competitive products or
services addressing Web navigation services, including, among others, Digital
Equipment Corporation (AltaVista), Excite, Inc. ("Excite"), including WebCrawler
and NetFind, the version of Excite's service for America Online ("AOL") users,
Infoseek Corporation, Inktomi, Lycos, Inc. (Lycos and A2Z), Open Text
Corporation (Open Text Index), C|NET (Snap! Online) and Wired (hotbot). In
addition, the Company competes with metasearch services and software
applications, such as C|NET's search.com
7
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service, that allow a user to search the databases of several directories and
catalogs simultaneously. The Company also competes indirectly with database
vendors that offer information search and retrieval capabilities with their
core database products. The Company also faces competition from providers of
software and other Internet products and services that incorporate search and
retrieval features into their offerings. For example, Web browsers offered by
Netscape and Microsoft, which are the most widely used browsers, incorporate
prominent search buttons and similar features, such as features based on
"push" technologies, that direct search traffic to competing services,
including those that may be developed or licensed by such parties. In
addition, entities that sponsor or maintain high-traffic Web sites or that
provide an initial point of entry for Internet users, such as the Regional
Bell Operating Companies or Internet Service Providers ("ISPs") such as
Microsoft and AOL, currently offer and could further develop, acquire or
license Internet search and navigation functions that compete with those
offered by the Company and could take actions that make it more difficult for
consumers to find and use Yahoo! services. For example, Microsoft recently
announced that it will offer Internet search engine services provided by
Inktomi in the Microsoft Network and other Microsoft online properties. The
Company expects that such search services may be tightly integrated into the
Microsoft operating system, the Internet Explorer browser and other software
applications, and that Microsoft may promote such services within the
Microsoft Network or through other end-user services such as WebTV. Insofar
as Microsoft's Internet navigational offerings may be more conveniently
accessed by users than those of the Company, this may provide Microsoft with
significant competitive advantages that could have a material adverse effect
on the Company's business. A large number of Web sites and online services
(including, among others, the Microsoft Network, AOL, and other Web
navigation companies such as Excite, Lycos and Infoseek) offer informational
and community features, such as news, stock quotes, sports coverage, Yellow
Pages and e-mail listings, weather news, chat services and bulletin board
listings that are competitive with the services offered by the Company. A
number of companies, including HotMail and WhoWhere?, offer Web-based e-mail
service similar to those offered by the Company, and such companies have and
are expected to continue to provide such services in tandem with larger
navigational sites and online services. Several companies, including large
companies such as Microsoft and AOL and their affiliates, also are developing
or currently offer online information services for local markets, which
compete with the Company's regional Yahoo! online properties. The Company
also faces intense competition in international markets, including
competition from U.S.-based competitors as well as media and online companies
that are already well established in those foreign markets. Many of the
Company's existing competitors, as well as a number of potential new
competitors, have significantly greater financial, technical, marketing and
distribution resources than the Company. In addition, providers of Internet
tools and services may be acquired by, receive investments from or enter into
other commercial relationships with larger, well-established and
well-financed companies, such as Microsoft or Netscape. For example, AOL is a
significant shareholder of Excite, and a version of the Excite service (AOL
NetFind) has been designated as the exclusive Internet search service for use
by AOL's subscribers. Greater competition resulting from such relationships
could have a material adverse effect on the Company's business, operating
results and financial condition.
The Company also competes with online services, other Web site operators
and advertising networks, as well as traditional offline media such as
television, radio and print for a share of advertisers' total advertising
budgets. The Company believes that the number of companies selling Web-based
advertising and the available inventory of advertising space have increased
substantially during recent periods. Accordingly, the Company may face
increased pricing pressure for the sale of advertisements and reductions in
the Company's advertising revenues.
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The Company believes that the principal competitive factors in its
markets are brand recognition, ease of use, comprehensiveness, independence,
quality and responsiveness of search results, the availability of targeted
content and focused value added products and services, quality and brand
appeal, access to end users, and, with respect to advertisers and sponsors,
the number of users, duration and frequency of visits and user demographics.
Competition among current and future suppliers of Internet navigational and
informational services, high-traffic Web sites and ISPs, as well as
competition with other media for advertising placements, could result in
significant price competition and reductions in advertising revenues. There
can be no assurance that the Company will be able to compete successfully or
that the competitive pressures faced by the Company will not have a material
adverse effect on the Company's business, operating results and financial
condition.
DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET; TECHNOLOGICAL CHANGE
The Company's future success is substantially dependent upon continued
growth in the use of the Internet and the Web in order to support the sale of
advertising on the Company's online media properties. There can be no
assurance that communication or commerce over the Internet will become more
widespread or that extensive content will continue to be provided over the
Internet. The Internet may not prove to be a viable commercial marketplace
for a number of reasons, including lack of acceptable security technologies,
potentially inadequate development of the necessary infrastructure, such as a
reliable network backbone, or timely development and commercialization of
performance improvements, including high speed modems. In addition, to the
extent that the Internet continues to experience significant growth in the
number of users and level of use, there can be no assurance that the Internet
infrastructure will continue to be able to support the demands placed upon it
by such potential growth or that the performance or reliability of the Web
will not be adversely affected by this continued growth. If use of the
Internet does not continue to grow, or if the Internet infrastructure does
not effectively support growth that may occur, the Company's business,
operating results and financial condition would be materially and adversely
affected. The market for Internet products and services is characterized by
rapid technological developments, evolving industry standards and customer
demands, and frequent new product introductions and enhancements. These
market characteristics are exacerbated by the emerging nature of this market
and the fact that many companies are expected to introduce new Internet
products and services in the near future. Failure of the Company to
effectively adapt to technological developments could adversely affect the
Company's business, operating results and financial condition.
DEVELOPING MARKET; UNPROVEN ACCEPTANCE OF THE COMPANY'S PRODUCTS AND MEDIA
PROPERTIES
The markets for the Company's products and media properties have only
recently begun to develop, are rapidly evolving and are characterized by an
increasing number of market entrants who have introduced or developed
information navigation products and services for use on the Internet and the
Web. As is typical in the case of a new and rapidly evolving industry, demand
and market acceptance for recently introduced products and services are
subject to a high level of uncertainty and risk. Because the market for the
Company's products and media properties is new and evolving, it is difficult
to predict the future growth rate, if any, and size of this market. There can
be no assurance either that the market for the Company's products and media
properties will develop or that demand for the Company's products or media
properties will emerge or become sustainable. If the market fails to develop,
develops more slowly than expected or becomes saturated with competitors, or
if the Company's products and media properties do not achieve or sustain
market acceptance, the Company's business, operating results and financial
condition will be materially and adversely affected.
RISKS ASSOCIATED WITH BRAND DEVELOPMENT
The Company believes that establishing and maintaining the "Yahoo!" brand
is a critical aspect of its efforts to attract and expand its audience and that
the importance of brand recognition will increase due to the
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growing number of Internet sites and the relatively low barriers to entry.
Promotion and enhancement of the "Yahoo!" brand will depend largely on the
Company's success in providing high quality products and services, which
cannot be assured. In order to attract and retain Internet users and to
promote and maintain the "Yahoo!" brand in response to competitive pressures,
the Company may find it necessary to increase substantially its financial
commitment to creating and maintaining a distinct brand loyalty among
consumers. If the Company is unable to provide high quality products and
services or otherwise fails to promote and maintain its brand, or if the
Company incurs excessive expenses in an attempt to improve its products and
services or promote and maintain its brand, the Company's business, operating
results and financial condition will be materially and adversely affected.
RELIANCE ON ADVERTISING REVENUES AND UNCERTAIN ADOPTION OF THE WEB AS AN
ADVERTISING MEDIUM
The Company derives substantially all of its revenues from the sale of
advertisements on its Web pages under short-term contracts. Most of the
Company's advertising customers have only limited experience with the Web as
an advertising medium, have not devoted a significant portion of their
advertising expenditures to Web-based advertising and may not find such
advertising to be effective for promoting their products and services
relative to traditional print and broadcast media. The Company's ability to
generate significant advertising revenues will depend upon, among other
things, advertisers' acceptance of the Web as an effective and sustainable
advertising medium, the development of a large base of users of the Company's
services possessing demographic characteristics attractive to advertisers,
and the ability of the Company to continue to develop and update effective
advertising delivery and measurement systems. No standards have yet been
widely accepted for the measurement of the effectiveness of Web-based
advertising, and there can be no assurance that such standards will develop
sufficiently to support Web-based advertising as a significant advertising
medium. In addition, there can be no assurance that the advertisers will
determine that banner advertising, which comprises substantially all of the
Company's revenues, is an effective advertising medium, and there can be no
assurance that the Company will effectively transition to any other forms of
Web-based advertising, should they develop. Certain advertising filter
software programs are available that limit or remove advertising from an
Internet user's desktop. Such software, if generally adopted by users, may
have a materially adverse effect upon the viability of advertising on the
Internet. There also can be no assurance that the Company's advertising
customers will accept the internal and third-party measurements of
impressions received by advertisements on Yahoo! and the Company's online
media properties, or that such measurements will not contain errors. The
Company relies primarily on its internal advertising sales force for domestic
advertising sales, which involves additional risks and uncertainties,
including (among others) risks associated with the recruitment, retention,
management, training and motivation of sales personnel. As a result of these
factors, there can be no assurance that the Company will sustain or increase
current advertising sales levels. Failure to do so will have a material
adverse effect on the Company's business, operating results and financial
position.
SUBSTANTIAL DEPENDENCE UPON THIRD PARTIES
The Company depends substantially upon third parties for several critical
elements of its business including, among others, technology and
infrastructure, content development and distribution activities.
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TECHNOLOGY AND INFRASTRUCTURE. The Company supplements its Internet
directory listings with full-text Web search results provided by AltaVista, a
division of Digital Equipment Corporation ("Digital"), under a non-exclusive
agreement. The Company believes that these search results provide a key
competitive element for its Internet navigation services. The Company
therefore depends substantially upon ongoing maintenance and technical
support from Digital to ensure accurate and rapid presentation of such search
results to the Company's customers. In addition, any termination of the
agreement with Digital or Digital's failure to renew such agreement upon
expiration could result in substantial additional costs to the Company in
developing or licensing replacement technology, and could result in a loss of
levels of use of the Company's navigational services. The Company also relies
on a private third party provider, GlobalCenter, Inc. ("GlobalCenter"), for
the Company's Internet connections. Any disruption in the Internet access
provided by GlobalCenter or any failure of GlobalCenter to handle current or
higher volumes of use could have a material adverse effect on the Company's
business, operating results and financial condition. The Company also
licenses technology and related databases from third parties for certain
elements of Yahoo! properties, including, among others, technology underlying
news, stock quotes and current financial information, chat services, street
mapping, telephone listings and similar services. The Company has experienced
and expects to continue to experience interruptions and delays in service and
availability for such elements, such as recent interruptions in the Company's
stock quote services. Any errors, failures or delays experienced in
connection with these third party technologies and information services could
negatively impact the Company's relationship with users and adversely affect
the Company's brand and its business, and could expose the Company to
liabilities to third parties.
CONTENT DEVELOPMENT. A key element of the Company's strategy involves
the implementation of Yahoo!-branded media properties targeted for interest
areas, demographic groups and geographic areas. In these efforts, the Company
has relied and will continue to rely substantially on content development and
localization efforts of third parties. For example, the Company has entered
into an agreement with Ziff-Davis pursuant to which Ziff-Davis publishes an
online publication and a print magazine under the "Yahoo!" brand. The Company
also expects to rely substantially on third party affiliates, including
SOFTBANK in Japan and Korea, Rogers Communications ("Rogers") in Canada, and
Ziff-Davis in certain European countries, to localize, maintain and promote
these services and to sell advertising in local markets. There can be no
assurance that the Company's current or future third-party affiliates will
effectively implement these properties, or that their efforts will result in
significant revenue to the Company. Any failure of these parties to develop
and maintain high-quality and successful media properties also could result
in unfavorable dilution to the "Yahoo!" brand.
DISTRIBUTION RELATIONSHIPS. In order to create traffic for the Company's
online properties and make them more attractive to advertisers and consumers,
the Company has entered into certain distribution agreements and informal
relationships with leading Web browser providers (Microsoft and Netscape),
operators of online networks and leading Web sites, and computer
manufacturers, such as Compaq Computer and Gateway 2000. The Company
believes these arrangements are important to the promotion of the Company's
online media properties particularly among new Web users who may first access
the Web through these browsers, services, Web sites or computers. The
Company's business relationships with these companies consist of arrangements
for the positioning of access to Yahoo! properties on Web browsers and
cooperative marketing programs and licenses to include YAHOO! in online
networks or services offered by these parties, which are intended to increase
the use and visibility of YAHOO!. These distribution arrangements typically
are not exclusive, and may be terminable upon little or no notice. Third
parties that provide distribution channels for the Company may also assess
fees or otherwise impose additional conditions on the listing of YAHOO! or
other online properties of the Company, such as Netscape's requirement of
substantial payments for placement of YAHOO! on the "Net Search" Web page
accessible from a button on the
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Netscape Web browser. In addition, these companies may terminate or reduce
their joint marketing activities with the Company. Any such events could have
a material adverse effect on the Company's business, results of operations
and financial condition.
ENHANCEMENT OF YAHOO! PROPERTIES AND DEVELOPMENT OF NEW PROPERTIES
To remain competitive, the Company must continue to enhance and improve
the functionality, features and content of the YAHOO! main site, as well as
the Company's other branded media properties, such as the NETSCAPE GUIDE BY
YAHOO!. There can be no assurance that the Company will be able to
successfully maintain competitive user response times or implement new
features and functions, such as new search capabilities, greater levels of
user personalization, localized content filter and information delivery
through "push" or other methods, which will involve the development of
increasingly complex technologies. The Company also expects that
personalized information services, such as the Company's recently launched
Web-based e-mail service, will require significantly greater expenses
associated with, among other things, increased server capacity and equipment
and requirements for additional customer support personnel and systems. To
the extent such additional expenses are not offset by additional revenues
from such personalized services, the Company's financial results will be
adversely affected.
The Company's future success also depends in part upon the timely
processing of Web site listings submitted by users and Web content providers,
which have increased substantially in recent periods. The Company has from
time to time experienced significant delays in the processing of submissions,
and further delays could have a material adverse effect on the Company's
goodwill among Web users and content providers, and on the Company's business.
A key element of the Company's business strategy is the development and
introduction of new YAHOO! online properties targeted for specific interest
areas, user groups with particular demographic characteristics and geographic
areas. There can be no assurance that the Company will be successful in
developing, introducing and marketing such products or media properties or
that such products and media properties will achieve market acceptance,
enhance the Company's brand name recognition or increase traffic on Yahoo!'s
online properties. Furthermore, enhancements of or improvements to YAHOO! or
new media properties may contain undetected errors that require significant
design modifications, resulting in a loss of customer confidence and user
support and a decrease in the value of the Company's brand name recognition.
The Company's ability to successfully develop additional targeted media
properties depends substantially on use of YAHOO! to promote such properties.
If use of YAHOO! fails to continue to grow, the Company's ability to
establish other targeted properties would be adversely affected. Any failure
of the Company to effectively develop and introduce these properties, or
failure of such properties to achieve market acceptance, could adversely
affect the Company's business, results of operations and financial condition.
INVESTMENTS IN AFFILIATES
The Company has made equity investments in affiliated companies that are
involved in the commercialization of "Yahoo!" branded online properties, such as
versions of YAHOO! localized for foreign markets. The Company currently intends
to continue to make significant additional investments in such companies
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from time to time in the future, as well as other companies involved in the
development of technologies or services that are complementary or related to
the Company's business. These affiliated companies typically are in an early
stage of development and may be expected to incur substantial losses. As a
result, the Company has recorded and expects to continue to record a share of
the losses in such affiliates attributable to the Company's ownership, which
losses have had and will continue to have an adverse effect on the Company's
results of operations. Furthermore, there can be no assurance that any
investments in such companies will result in any return nor can there be any
assurance as to the timing of any such return, or that the Company will not
lose its entire investment.
MANAGEMENT OF POTENTIAL GROWTH
The Company's recent growth has placed, and is expected to continue to
place, a significant strain on its managerial, operational and financial
resources. To manage its potential growth, the Company must continue to
implement and improve its operational and financial systems and to expand,
train and manage its employee base. The Company also expects that its
operational and management systems will face additional strain as a result of
the Company's recent acquisition of Four11 Corporation. The process of
managing advertising within large, high traffic Web sites such as those in
the YAHOO! network is an increasingly important and complex task. The
Company relies on both internal and licensed third party advertising
inventory management and analysis systems. To the extent that any extended
failure of the Company's advertising management system results in incorrect
advertising insertions, the Company may be exposed to "make good" obligations
with its advertising customers, which, by displacing advertising inventory,
could defer advertising revenues and thereby have a material adverse effect
on the Company's business, operating results and financial condition.
Failure of the Company's advertising management systems to effectively track
and provide accurate and timely reports on advertising results also could
negatively effect the Company's relationships with advertisers and thereby
have an adverse effect on the Company's business. There can be no assurance
that the Company's systems, procedures or controls will be adequate to
support the Company's operations or that Company management will be able to
achieve the rapid execution necessary to fully exploit the Company's market
opportunity. Any inability to effectively manage growth, if any, could have
a material adverse effect on the Company's business, operating results and
financial condition.
RISK OF CAPACITY CONSTRAINTS AND SYSTEMS FAILURES
The Company is dependent on its ability to effectively serve a high volume
of use of its online media properties. Accordingly, the performance of the
Company's online media properties is critical to the Company's
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reputation, its ability to attract advertisers to the Company's Web sites and
to achieve market acceptance of these products and media properties. Any
system failure that causes interruption or an increase in response time of
the Company's products and media properties could result in less traffic to
the Company's Web sites and, if sustained or repeated, could reduce the
attractiveness of the Company's products and media properties to advertisers
and licensees. An increase in the volume of queries conducted through the
Company's products and media properties could strain the capacity of the
software or hardware deployed by the Company, which could lead to slower
response time or system failures, and adversely affect the number of
impressions received by advertisers and thus the Company's advertising
revenues. In addition, as the number of Web pages and users increase, there
can be no assurance that the Company's products and media properties and
infrastructure will be able to scale accordingly. The Company also faces
technical challenges associated with higher levels of personalization and
localization of content delivered to users of its services, which adds strain
to the Company's development and operational resources. For example,
personalized information services, such as Web-based email services, involve
increasingly complex technical and operational challenges, and there can be
no assurance that the Company will successfully implement and scale such
services to the extent required by any growth in the number of users of such
services, or that the failure to do so will not materially and adversely
affect the goodwill of users of these services, or negatively affect the
Company's brand and reputation. The Company is also dependent upon Web
browsers and Internet and online service providers for access to its products
and media properties. In particular, a private third party provider,
GlobalCenter, provides the Company's principal Internet connections. In the
past, users have occasionally experienced difficulties due to system
failures, including failures unrelated to the Company's systems. Any
disruption in the Internet access provided by GlobalCenter or any failure of
GlobalCenter to handle higher volumes of user traffic could have a material
adverse effect on the Company's business, operating results and financial
condition. Furthermore, the Company is dependent on hardware suppliers for
prompt delivery, installation and service of servers and other equipment used
to deliver the Company's products and services.
The Company's operations are susceptible to outages due to fire, floods,
power loss, telecommunications failures, break-ins and similar events. In
addition, substantially all of the Company's network infrastructure is
located in Northern California, an area susceptible to earthquakes, which
also could cause system outages or failures. The Company does not presently
have a disaster recovery plan or redundant, multiple site capacity in the
event of any such occurrence. Despite the implementation of network security
measures by the Company, its servers are vulnerable to computer viruses,
break-ins and similar disruptions from unauthorized tampering with the
Company's computer systems. The occurrence of any of these events could
result in interruptions, delays or cessations in service to Yahoo! users,
which could have a material adverse effect on the Company's business,
operating results and financial condition.
INTEGRATION OF ACQUISITIONS
As part of its business strategy, the Company expects to enter into
business combinations. For example, the Company recently acquired Four11
Corporation, a privately held online communications and directory company.
Acquisition transactions are accompanied by a number of risks, including,
among other things, the difficulty of assimilating the operations and
personnel of the acquired companies, the potential disruption of the
Company's ongoing business, the inability of management to maximize the
financial and strategic position of the Company through the successful
incorporation of acquired technology or content and rights into the Company's
products and media properties, expenses associated with the transactions
(such as expenses of approximately $4 million that the Company expects to be
incurred in the fourth quarter of 1997 in connection with the acquisition of
Four11 Corporation) additional expenses associated with amortization of
acquired intangible assets, the maintenance of uniform standards, controls,
procedures and policies, the impairment of relationships with employees and
customers as a result of any integration of new management personnel, and the
potential unknown liabilities associated with acquired businesses. There can
be no assurance that the Company would be successful in overcoming these
risks or any other problems encountered in connection with such acquisitions.
TRADEMARKS AND PROPRIETARY RIGHTS
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The Company regards its copyrights, trademarks, trade dress, trade
secrets and similar intellectual property as critical to its success, and the
Company relies upon trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with its employees, customers,
partners and others to protect its proprietary rights. The Company pursues
the registration of its trademarks in the United States and (based upon
anticipated use) internationally, and has applied for the registration of
certain of its trademarks, including "Yahoo!" and "Yahooligans!". Effective
trademark, copyright and trade secret protection may not be available in
every country in which the Company's products and media properties are
distributed or made available through the Internet. The Company has licensed
in the past, and it expects that it may license in the future, elements of
its distinctive trademarks, trade dress and similar proprietary rights to
third parties, including in connection with branded mirror sites of YAHOO!,
and other media properties and merchandise that may be controlled
operationally by third parties. While the Company attempts to ensure that the
quality of its brand is maintained by such licensees, no assurances can be
given that such licensees will not take actions that could materially and
adversely affect the value of the Company's proprietary rights or the
reputation of its products and media properties, either of which could have a
material adverse effect on the Company's business. Also, the Company is aware
that third parties have from time to time copied significant portions of
YAHOO! directory listings for use in competitive Internet navigational tools
and services, and there can be no assurance that the distinctive elements of
YAHOO! will be protectible under copyright law. There can be no assurance
that the steps taken by the Company to protect its proprietary rights will be
adequate or that third parties will not infringe or misappropriate the
Company's copyrights, trademarks, trade dress and similar proprietary rights.
In addition, there can be no assurance that other parties will not assert
infringement claims against the Company.
Many parties are actively developing search, indexing and related Web
technologies at the present time. The Company believes that such parties have
taken and will continue to take steps to protect these technologies, including
seeking patent protection. As a result, the Company believes that disputes
regarding the ownership of such technologies are likely to arise in the future.
DEPENDENCE ON KEY PERSONNEL
The Company's performance is substantially dependent on the performance of
its senior management and key technical personnel. In particular, the Company's
success depends substantially on the continued efforts of its senior management
team. The Company does not carry key person life insurance on any of its senior
management personnel. The loss of the services of any of its executive officers
or other key employees could have a material adverse effect on the business,
operating results and financial condition of the Company.
The Company's future success also depends on its continuing ability to
attract and retain highly qualified technical and managerial personnel.
Competition for such personnel is intense and there can be no assurance that the
Company will be able to retain its key managerial and technical employees or
that it will be able to attract and retain additional highly qualified technical
and managerial personnel in the future. The inability to attract and retain the
necessary technical and managerial personnel could have a material and adverse
effect upon the Company's business, operating results and financial condition.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
There are currently few laws or regulations directly applicable to access
to or commerce on the Internet. Due to the increasing popularity and use of
the Internet, it is possible that a number of laws and regulations may be
adopted with respect to the Internet, covering issues such as
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user privacy, pricing and characteristics and quality of products and
services. For example, although the Communications Decency Act was held to be
unconstitutional, there can be no assurance that similar legislation will not
be enacted in the future and it is possible that such legislation could
expose the Company to substantial liability. Such legislation could also
dampen the growth in use of the Web generally and decrease the acceptance of
the Web as a communications and commercial medium, and could, thereby, have a
material adverse effect on the Company's business, results of operations and
financial condition. Other nations, including Germany, have taken actions to
restrict the free flow of material deemed to be objectionable on the Web. In
addition, several telecommunications carriers are seeking to have
telecommunications over the Web regulated by the Federal Communications
Commission (the "FCC") in the same manner as other telecommunications
services. For example, America's Carriers Telecommunications Association
("ACTA") has filed a petition with the FCC for this purpose. In addition,
because the growing popularity and use of the Web has burdened the existing
telecommunications infrastructure and many areas with high Web use have begun
to experience interruptions in phone service, local telephone carriers, such
as Pacific Bell, have petitioned the FCC to regulate ISPs and OSPs in a
manner similar to long distance telephone carriers and to impose access fees
on the ISPs and OSPs. If either of these petitions is granted, or the relief
sought therein is otherwise granted, the costs of communicating on the Web
could increase substantially, potentially slowing the growth in use of the
Web, which could in turn decrease the demand for the Company's products and
media properties. Also it is possible that laws will be adopted or current
laws interpreted in a manner to impose liability on online service providers
such as the Company for listing or linking to third party Web sites that
include materials that infringe copyrights or other rights of others. Such
laws and regulations if enacted could have an adverse effect on the Company's
business, operating results and financial condition. Moreover, the
applicability to the Internet of the existing laws governing issues such as
property ownership, copyright defamation, obscenity and personal privacy is
uncertain, and the Company may be subject to claims that its services violate
such laws. Any such new legislation or regulation or the application of
existing laws and regulations to the Internet could have a material adverse
effect on the Company's business, operating results and financial condition.
Due to the global nature of the Web, it is possible that, although
transmissions by the Company over the Internet originate primarily in the State
of California, the governments of other states and foreign countries might
attempt to regulate the Company's transmissions or prosecute the Company for
violations of their laws. There can be no assurance that violations of local
laws will not be alleged or charged by state or foreign governments, that the
Company might not unintentionally violate such law or that such laws will not be
modified, or new laws enacted, in the future. Any of the foregoing developments
could have a material adverse effect on the Company's business, results of
operations and financial condition.
LIABILITY FOR INFORMATION SERVICES AND COMMERCE-RELATED ACTIVITIES
Because materials may be downloaded by the online or Internet services
operated or facilitated by the Company and may be subsequently distributed to
others, there is a potential that claims will be made against the Company for
defamation, negligence, copyright or trademark infringement, personal injury
or other theories based on the nature and content of such materials. Such
claims have been brought, and sometimes successfully pressed, against online
service providers in the past. In addition, the Company could be exposed to
liability with respect to the selection of listings that may be accessible
through the Company's Yahoo!-branded products and media properties, or
through content and materials that may be posted by users in classifieds,
bulletin board and chat room services offered by the Company. Such claims
might include, among others, that by providing hypertext links to Web sites
operated by third parties, the Company is liable for copyright or trademark
infringement or other wrongful actions by such third parties through such Web
sites. It is also possible that if any information provided through the
Company's services, such as stock quotes, analyst estimates or other trading
information, contains errors, third parties could make claims against the
Company for losses incurred in reliance on such information. In connection
with the acquisition of Four11 Corporation, the Company recently began
offering Web-based email services, which expose the Company
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to potential risks, such as liabilities or claims resulting from unsolicited
email (spamming), lost or misdirected messages, illegal use of e-mail or
interruptions or delays in e-mail service.
From time to time, the Company enters into agreements with sponsors,
content providers, service providers and merchants under which the Company is
entitled to receive a share of revenue from the purchase of goods and
services by users of the Company's online properties. Such arrangements may
expose the Company to additional legal risks and uncertainties, including
(without limitation) potential liabilities to consumers of such products and
services. Although the Company carries general liability insurance, the
Company's insurance may not cover potential claims of this type or may not be
adequate to indemnify the Company for all liability that may be imposed.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND EXPANSION
A key part of the Company's strategy is to develop "Yahoo!" branded
online properties in international markets. The Company has developed and
operates, through joint ventures with SOFTBANK and related entities, versions
of the YAHOO! Internet Guide localized for Japan, Germany, France, the U.K
and Korea. The Company offers a version of YAHOO! localized for Canada under
an agreement with Rogers Communications, and the Company operates localized
or mirror versions of YAHOO! through wholly owned subsidiaries in Australia
and Singapore.
To date, the Company has only limited experience in developing localized
versions of its products and marketing and operating its products and
services internationally, and the Company relies substantially on the efforts
and abilities of its foreign business partners in such activities. The
Company has experienced and expects to continue to experience higher costs as
a percentage of revenues in connection with international online properties
than domestic online properties. If the international revenues are not
adequate to offset investments in such activities, the Company's business,
operating results and financial condition could be materially adversely
affected. The Company may experience difficulty in managing international
operations as a result of distance as well as language and cultural
differences, and there can be no assurance that the Company or its partners
will be able to successfully market and operate its products and services in
foreign markets. The Company also believes that in light of substantial
anticipated competition, it will be necessary to move quickly into
international markets in order to effectively obtain market share, and there
can be no assurance that the Company will be able to do so. In addition to
the uncertainty as to the Company's ability to continue to generate revenues
from its foreign operations and expand its international presence, there are
certain risks inherent in doing business on an international level, such as
unexpected changes in regulatory requirements, trade barriers, difficulties
in staffing and managing foreign operations, longer payment cycles, problems
in collecting accounts receivable, political instability, fluctuations in
currency exchange rates, seasonal reductions in business activity in certain
other parts of the world and potentially adverse tax consequences. There can
be no assurance that one or more of such factors will not have a material
adverse effect on the Company's future international operations and,
consequently, on the Company's business, operating results and financial
condition.
CONCENTRATION OF STOCK OWNERSHIP
As of September 30, 1997, the present directors, executive officers,
greater than 5% shareholders and their respective affiliates beneficially owned
approximately 71% of the outstanding Common Stock of the Company. As of
September 30, 1997, SOFTBANK beneficially owned approximately 33% of the
outstanding Common Stock of the Company. As a result of their ownership, the
directors, executive officers, greater than 5% shareholders (including SOFTBANK)
and their respective affiliates collectively are able to control all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. Such concentration of ownership may also
have the effect of delaying or preventing a change in control of the Company.
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VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Stock has been and may continue
to be subject to wide fluctuations in response to a number of events and
factors, such as quarterly variations in operating results, announcements of
technological innovations or new products and media properties by the Company or
its competitors, changes in financial estimates and recommendations by
securities analysts, the operating and stock price performance of other
companies that investors may deem comparable to the Company, and news reports
relating to trends in the Company's markets. In addition, the stock market in
general, and the market prices for Internet-related companies in particular,
have experienced extreme volatility that often has been unrelated to the
operating performance of such companies. These broad market and industry
fluctuations may adversely affect the trading price of the Company's Common
Stock, regardless of the Company's operating performance.
LEGAL PROCEEDINGS
In July 1997, GTE New Media Services Incorporated ("GTE New Media"), an
affiliate of GTE, filed suit in Dallas, Texas, against Netscape Communications
Corporation ("Netscape") and the Company, in which GTE New Media made a number
of claims relating to the inclusion of certain Yellow Pages hypertext links in
the "Netscape Guide by Yahoo!", an online navigational property operated by the
Company under an agreement with Netscape. In this lawsuit, GTE New Media has
alleged, among other things, that by including links to the Yellow Pages service
operated by several Regional Bell Operating Companies (the "RBOCs") within the
Netscape Guide, the Company has tortiously interfered with an alleged
contractual relationship between GTE New Media and Netscape relating to
placement of links by Netscape for a Yellow Pages service operated by GTE New
Media. GTE New Media seeks injunctive relief as well as actual and punitive
damages. In October 1997, GTE New Media brought suit in the U.S. District Court
for the District of Columbia, against the RBOCs, Netscape and the Company, in
which GTE alleges, among other things, that the alleged exclusion of the GTE New
Media Yellow Pages from the Netscape Guide Yellow Pages service violates federal
antitrust laws, and GTE New Media seeks injunctive relief and damages (trebled
under federal antitrust laws) from such alleged actions. The Company believes
that the claims against the Company in these lawsuits are without merit and
intends to contest them vigorously. Although the Company cannot predict with
certainty the outcome of these lawsuits or the expenses that may be incurred in
defending the lawsuits, the Company does not believe that the result in the
lawsuits will have a material adverse effect on the Company's financial position
or results of operations.
From time to time the Company has been, and expects to continue to be,
subject to other legal proceedings and claims in the ordinary course of its
business, including, among others, contractual disputes with advertisers and
content distribution providers, and claims of alleged infringement of the
trademarks and other intellectual property rights of third parties by the
Company and its licensees. Such claims, even if not meritorious, could result
in the expenditure of significant financial and managerial resources. Although
the Company cannot predict the outcome of any proceeding, the Company is not
currently aware of any such legal proceedings or claims that the Company
believes will have, individually or in the aggregate, a material adverse effect
on the Company's financial position or results of operations.
ANTITAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS
The Board of Directors has the authority to issue up to 10,000,000 shares
of Preferred Stock and to determine the price, rights, preferences, privileges
and restrictions, including voting rights, of those shares without any further
vote or action by the shareholders. The rights of the holders of Common Stock
may be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company without further action by the shareholders and
may adversely affect the voting and other rights of the holders of Common Stock.
The Company has no present plans to issue shares of Preferred Stock. Further,
certain provisions of the Company's charter documents, including provisions
eliminating the ability of shareholders to take action by written consent and
limiting the ability of shareholders to raise matters at a meeting of
shareholders without giving advance notice, may have the effect of delaying or
preventing changes in control or management of
18
<PAGE>
the Company, which could have an adverse effect on the market price of the
Company's Common Stock. In addition, effective upon qualification of the Company
as a "listed corporation," as defined in Section 301.5(d) of the California
Corporations Code, the Company's charter documents eliminated cumulative voting
and provide that, at such time as the Company has at least six directors, the
Company's Board of Directors will be divided into two classes, each of which
serves for a staggered two-year term, which may make it more difficult for a
third party to gain control of the Company's Board of Directors.
19
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of the shares are solely for the account of the
Selling Shareholders. Accordingly, the Company will not receive any proceeds
from the sale of the shares from the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of
October 20, 1997 by each Selling Shareholder. As of November 4, 1997, none
of the Selling Shareholders owned more than one percent of the Company's
outstanding shares. Except as indicated, none of the Selling Shareholders has
held any position or office (other than a non-officer employment
relationship) or had any other material relationship with the Company or any
of its affiliates within the past three years other than as a result of the
ownership of the Company's Common Stock. The Company may amend or supplement
this Prospectus from time to time to update the disclosure set forth herein.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES OFFERED SHARES BENEFICIALLY
OWNED(1) PRIOR BY THIS OWNED(1) AFTER
SELLING SHAREHOLDERS TO THE OFFERING PROSPECTUS THE OFFERING(2)
--------------------------------------- ------------------- -------------- --------------------
<S> <C> <C> <C>
Anderson, Chris........................ 32,558 32,558 0
Campbell, David........................ 1,048 1,048 0
Den Haan, Laura........................ 1,645 23 1,622
Draper Fisher Associates Fund III, LP.. 435,866 435,866 0
Draper Fisher Partners LLC............. 28,326 28,326 0
Drebes, Larry.......................... 289,765 289,765 0
4C Ventures, L.P. ..................... 162,789 162,789 0
GCWF Investment Partners............... 1,953 1,953 0
Graves, William C. .................... 8,152 8,152 0
Innovocam 2............................ 65,115 65,115 0
Kirsch, William........................ 4,118 4,118 0
Kosowsky, Richard...................... 11,926 11,926 0
Labrador Ventures II, LP............... 90,034 90,034 0
Lysander L.L.C. ....................... 13,022 13,022 0
Main, Robert A. ....................... 3,475 724 2,751
McDonald, Lori A. ..................... 2,316 463 1,853
McLaughlin, Glen....................... 6,065 6,065 0
Nakayama, David H. .................... 10,431 1,159 9,272
Nelson, Dru R. ........................ 313 313 0
Ralston, Geoff......................... 70,676 11,180 59,496
Rubino, Vincent C. .................... 4,287 313 3,974
Santullo, Michael...................... 289,765 289,765 0
Tang, Ben.............................. 2,318 2,318 0
Venture Lending, a Division
of Cupertino National
Bank & Trust........................ 4,883 4,883 0
Victorino, Stephen J. ................. 59,498 59,498 0
Woods, Brian R. ....................... 3,243 458 2,785
</TABLE>
- --------------------
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is
not necessarily indicative of beneficial ownership for any other purpose.
Under such rule, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also
any shares which the indivual has the right to acquire within 60 days of
November 5, 1997 through the exercise of any stock option or other right.
Unless otherwise indicated in the footnotes, each person has sole voting
and investment power (or shares such powers with his or her spouse) with
respect to the shares shown as beneficially owned.
(2) Assumes that each Selling Shareholder will sell all of the Shares set
forth above under "Shares Offered By This Prospectus." There can be no
assurance that the Selling Shareholders will sell all or any of the
Shares offered hereunder.
20
<PAGE>
ISSUANCE OF COMMON STOCK TO SELLING SHAREHOLDERS
On October 20, 1997, the Company issued an aggregate of 1,505,720 shares of
Common Stock to the shareholders of Four11 Corporation ("Four11") pursuant to an
Agreement and Plan of Reorganization (the "Merger Agreement") among the Company,
ST Acquisition Corporation, a California corporation and a wholly-owned
subsidiary of the Company (the "Sub"), and Four11. In addition, the Company
assumed warrants to purchase Four11 stock which now represent warrants to
purchase an aggregate of 16,114 shares of the Company's Common Stock. Under the
terms of the Merger Agreement, Sub merged into Four11 and Four11 became a
wholly-owned subsidiary of the Company.
PLAN OF DISTRIBUTION
Shares of Common Stock covered hereby may be offered and sold from time
to time by the Selling Shareholders. The Selling Shareholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Shares may be sold by one or more of the
following means of distribution: (a) a block trade in which the broker-dealer
so engaged will attempt to sell Shares as agent, but may position and resell
a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this Prospectus; (c) an over-the-counter
distribution in accordance with the rules of the Nasdaq National Market; (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (e) in privately negotiated transactions. To the extent
required, this Prospectus may be amended and supplemented from time to time
to describe a specific plan of distribution. In connection with distributions
of the Shares or otherwise, the Selling Shareholders may enter into hedging
transactions with broker-dealers or other financial institutions. In
connection with such transactions, broker-dealers or other financial
institutions may engage in short sales of the Company's Common Stock in the
course of hedging the positions they assume with Selling Shareholders. The
Selling Shareholders may also sell the Company's Common Stock short and
redeliver the shares to close out such short positions. The Selling
Shareholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of Shares offered hereby,
which Shares such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Shareholders may also pledge Shares to a
broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution may effect sales of the pledged
Shares pursuant to this Prospectus (as supplemented or amended to reflect
such transaction). In addition, any Shares that qualify for sale pursuant to
Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus.
In effecting sales, brokers, dealers or agents engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. The
Selling Shareholders and any underwriter, dealer or agent who participate in
the distribution of such shares may be deemed to be "underwriters" under the
Securities Act, and any discount, commission or concession received by such
persons might be deemed to be an underwriting discount or commission under
the Securities Act. The Company has agreed to indemnify the Selling
Shareholders against certain liabilities arising under the Securities Act.
Broker-dealers and agents may receive commissions from the Selling
Shareholders (and, if acting as agent for the purchaser of such shares, from
such purchaser) in amounts to be negotiated prior to the sale. Usual and
customary brokerage fees will be paid by the Selling Shareholders.
Broker-dealers may agree with the Selling Shareholders to sell a specified
number of shares at a stipulated price per share, and, to the extent such a
broker-dealer is unable to do so acting as agent for the Selling
Shareholders, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer commitment to the Selling Shareholders.
Broker-dealers who acquire shares as principal may thereafter resell such
shares from time to time in transactions (which may involve crosses and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) in the over-the-counter
market, in negotiated transactions or by a combination of such methods of
sale or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions computed as described above.
The Company has advised the Selling Shareholders that the anti-manipulation
rules under the Exchange Act may apply to sales of Shares in the market and to
the activities of the Selling Shareholders and their affiliates. The Selling
Shareholders have advised the Company that during such time as the Selling
Shareholders may be engaged in the attempt to sell shares registered hereunder,
they will: (i) not engage in any stabilization activity in connection with any
of the Company's securities; (ii) not bid for or purchase any of the Company's
securities or any rights to acquire the Company's securities, or attempt to
induce any person to purchase any of the Company's securities or rights to
acquire the Company's securities other than as permitted under the Exchange Act;
(iii) not effect any sale or distribution of the Shares until after the
Prospectus shall have been appropriately amended or supplemented, if required,
to set forth the terms thereof; and (iv) effect all sales of Shares in broker's
transactions through broker-dealers acting as agents, in transactions directly
with market makers or in privately negotiated transactions where no broker or
other third party (other than the purchaser) is involved.
The Selling Shareholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal.
21
<PAGE>
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Common Stock may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
The Company has agreed to maintain the effectiveness of this Registration
Statement with respect to the shares of Common Stock offered hereunder by the
Selling Shareholders until the earlier of the sale of such shares or October 20,
1998. No sales may be made pursuant to this Prospectus after such date unless
the Company amends or supplements this Prospectus to indicate that it has agreed
to extend such period of effectiveness. There can be no assurance that the
Selling Shareholders will sell all or any of the shares of Common Stock offered
hereunder.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon by Venture Law Group, A Professional Corporation, Menlo Park, California,
counsel to the Company. As of November 4, 1997, certain attorneys of Venture
Law Group owned in the aggregate 3,187 shares of Common Stock of the Company.
EXPERTS
The consolidated financial statements of Yahoo! Inc. incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 and the supplementary consolidated financial
statements of Yahoo! Inc. and the financial statements of Four11 Corporation,
incorporated in this Prospectus by reference to the Company's Current Report
on Form 8-K/A dated October 14, 1997 (as amended October 30, 1997) have been
so incorporated in reliance on the reports of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accountancy.
22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will bear no expenses in connection with any sale or other
distribution by the Selling Shareholders of the shares being registered other
than the expenses of preparation and distribution of this Registration Statement
and the Prospectus included in this Registration Statement. Such expenses are
set forth in the following table. All of the amounts shown are estimates except
the Securities and Exchange Commission ("SEC") registration fee and the NASD
listing fee.
SEC registration fee $ 19,023
Legal fees and expenses 15,000
Accounting fees and expenses 10,000
NASD listing fee 17,500
Miscellaneous expenses 3,477
----------
Total $ 65,000
----------
----------
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the California Corporations Code allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Securities Act"). Article VII of the
Registrant's Articles of Incorporation and Article VI of the Registrant's Bylaws
provide for indemnification of the Registrant's directors, officers, employees
and other agents to the extent and under the circumstances permitted by the
California Corporations Code. The Registrant has also entered into agreements
with its directors and officers that will require the Registrant, among other
things, to indemnify them against certain liabilities that may arise by reason
of their status or service as directors to the fullest extent not prohibited by
law.
In connection with this offering, the Selling Shareholders have agreed to
indemnify the Registrant, its directors and officers and each such person who
controls the Registrant, against any and all liability arising from inaccurate
information provided to the Registrant by the Selling Shareholders and contained
herein up to a maximum of the proceeds received by the Selling Shareholders from
the sale of their Shares hereunder.
Item 16. EXHIBITS.
EXHIBITS.
2.1 Agreement and Plan of Reorganization dated as of October
7, 1997, by and among Yahoo! Inc., ST Acquisition
Corporation, and Four11 Corporation.(1)
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Price Waterhouse LLP, Independent Accountants
(see page II-4)
23.2 Consent of Price Waterhouse LLP, Independent Accountants
(see page II-5)
23.3 Consent of Venture Law Group, A Professional Corporation
(included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
II-1
<PAGE>
- --------------------
(1) Incorporated by reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K filed with the Commission on October 14, 1997.
Item 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of this offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Yahoo! Inc.
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Clara, State of California, on November 5,
1997.
YAHOO! INC.
By: /s/ TIMOTHY KOOGLE
--------------------
Timothy Koogle
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Timothy Koogle and Gary
Valenzuela, jointly and severally, his or her true and lawful attorneys-in-fact,
each with full power of substitution, for him or her in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact or any
of them, or his or their substitute or substitutes, may lawfully do or cause to
be done or by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ TIMOTHY KOOGLE President, Chief Executive Officer and Director November 5, 1997
------------------
Timothy Koogle (Principal Executive Officer)
/s/ GARY VALENZUELA Senior Vice President, Finance and November 5, 1997
-------------------
Gary Valenzuela Administration, and Chief Financial Officer
(Principal Financial Officer)
/s/ JAMES J. NELSON Vice President, Finance November 5, 1997
-------------------
James J. Nelson (Principal Accounting Officer)
/s/ ERIC HIPPEAU Director November 5, 1997
--------------------
Eric Hippeau
/s/ ARTHUR H. KERN Director November 5, 1997
------------------
Arthur H. Kern
/s/ MICHAEL MORITZ Director November 5, 1997
------------------
Michael Moritz
/s/ JERRY YANG Director November 5, 1997
------------------
Jerry Yang
</TABLE>
II-3
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated January 14, 1997, except as to the pooling of interests with Four11
Corporation which is as of October 20, 1997, which appears as Exhibit 99.1 to
the Current Report on Form 8K/A dated October 14, 1997 (as amended October
30, 1997). We also consent to the incorporation by reference of our report
on the Financial Statement Schedule, which appears on page 26 of Yahoo!
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PRICE WATERHOUSE LLP
San Jose, California
October 30, 1997
II-4
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated October 6, 1997, except as to Note 9, which is as of October 20, 1997,
on the financial statements of Four11 Corporation which appears in Item 7(a)
of the Current Report on Form 8-K/A of Yahoo! Inc. dated October 14, 1997 (as
amended October 30, 1997). We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
San Jose, California
October 30, 1997
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
------------- -------------
2.1 Agreement and Plan of Reorganization dated as of October 7,
1997, by and among Yahoo! Inc., ST Acquisition Corporation,
and Four11 Corporation (1)
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Price Waterhouse LLP, Independent Accountants (see
page II-4)
23.2 Consent of Price Waterhouse LLP, Independent Accountants (see
page II-5)
23.3 Consent of Venture Law Group, a Professional Corporation
(included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
- ---------------
(1) Incorporated by reference to Exhibit 2.1 to the Company's Current Report
on Form 8-K filed with the Commission on October 14, 1997.
<PAGE>
EXHIBIT 5.1
OPINION OF COUNSEL
November 5, 1997
Yahoo! Inc.
3400 Central Expressway, Suite 201
Santa Clara, CA 95051
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about November 5, 1997 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 1,521,834 shares of your
Common Stock (the "Shares"), to be sold by certain shareholders listed in the
Registration Statement (the "Selling Shareholders"). As your legal counsel, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale of the Shares by the
Selling Shareholders in the manner set forth in the Registration Statement in
the section entitled "Plan of Distribution."
It is our opinion that the Shares, when sold by the Selling Shareholders in
the manner referred to in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments to it.
Sincerely,
VENTURE LAW GROUP
A Professional Corporation
/s/ VENTURE LAW GROUP
