YAHOO INC
10-Q, 1998-07-17
COMPUTER INTEGRATED SYSTEMS DESIGN
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<PAGE>

                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
                                          
                                     FORM 10-Q


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                    For the quarterly period ended June 30, 1998
                                          
                                         OR
                                          
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                   For the transition period from _____ to _____
                                          
                           Commission File Number 0-28018
                                          
                                    YAHOO! INC.
               (Exact name of registrant as specified in its charter)
                                          
                California                           77-0398689     
      -------------------------------    ------------------------------------
      (State or other jurisdiction of    (I.R.S. Employer Identification No.)
      incorporation or organization)

                              3420 Central Expressway
                            Santa Clara, California 95051
                      ----------------------------------------
                      (Address of principal executive offices)

        Registrant's telephone number, including area code:  (408) 731-3300
                                                             --------------

Indicate by check mark whether the Registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days: Yes [X]  No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date; does not give effect to the
two-for-one stock split approved by the Company's Board of Directors on July 7,
1998.

                  Class                  Outstanding at June 30, 1998
     --------------------------------    ----------------------------
     Common Stock, $0.00067 par value             46,841,560

                                       
<PAGE>

                                    YAHOO! INC.
                                                        
                                 TABLE OF CONTENTS
                                          
                                          
PART I.   FINANCIAL INFORMATION                                       PAGE NO.

Item 1.   Unaudited Condensed Consolidated Financial Statements:

          Condensed Consolidated Balance Sheets
               at June 30, 1998 and December 31, 1997                      3

          Condensed Consolidated Statements of Operations
               for the three and six months ended June 30, 1998 and 1997   4

          Condensed Consolidated Statements of Cash Flows
               for the six months ended June 30, 1998 and 1997             5

          Notes to Condensed Consolidated Financial Statements             6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                             10

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                               37

Item 2.   Changes in Securities                                           37

Item 3.   Defaults Upon Senior Securities                                 38

Item 4.   Submission of Matters to a Vote of Security Holders             38

Item 5.   Other Information                                               38

Item 6.   Exhibits and Reports on Form 8-K                                38

Signatures                                                                39

                                       2
<PAGE>

PART I -      FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS


                                    YAHOO! INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                           June 30,      December 31,
                                                            1998            1997
                                                        -------------   -------------
                                                         (unaudited)      (audited)
<S>                                                     <C>             <C>
ASSETS
Current assets:
     Cash and cash equivalents                          $  89,278,000   $  62,538,000
     Short-term investments in marketable securities       53,852,000      27,772,000
     Accounts receivable, net                              16,795,000      10,986,000
     Prepaid expenses                                       4,211,000       5,893,000
                                                        -------------   -------------
          Total current assets                            164,136,000     107,189,000

Long-term investments in marketable securities              4,106,000      16,702,000
Property and equipment, net                                 8,987,000       7,035,000
Investment in Yahoo! Japan                                  2,864,000       2,828,000
Other assets                                               11,525,000       8,130,000
                                                        -------------   -------------
                                                        $ 191,618,000   $ 141,884,000
                                                        -------------   -------------
                                                        -------------   -------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                   $   4,483,000   $   4,711,000
     Accrued expenses and other current liabilities        19,490,000      12,481,000
     Deferred revenue                                      18,533,000       4,852,000
     Due to related parties                                 1,517,000       1,412,000
                                                        -------------   -------------
          Total current liabilities                        44,023,000      23,456,000
                                                        -------------   -------------

Minority interests in consolidated subsidiaries               961,000         716,000

Shareholders' equity:
     Common Stock                                              21,000          20,000
     Additional paid-in capital                           206,636,000     146,106,000
     Accumulated deficit                                  (59,677,000)    (27,971,000)
     Cumulative translation adjustment                       (346,000)       (443,000)
                                                        -------------   -------------
          Total shareholders' equity                      146,634,000     117,712,000
                                                        -------------   -------------
                                                       $  191,618,000  $  141,884,000
                                                        -------------   -------------
                                                        -------------   -------------
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
                           financial statements.

                                       3
<PAGE>

                                    YAHOO! INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (UNAUDITED)

<TABLE>
<CAPTION>
                                                              Three Months Ended             Six Months Ended
                                                          ---------------------------   ---------------------------
                                                            June 30,       June 30,       June 30,       June 30,
                                                              1998           1997           1998           1997
                                                          ------------   ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>            <C>
Net revenues                                              $ 41,210,000   $ 14,107,000   $ 71,416,000   $ 24,172,000
Cost of revenues                                             4,720,000      2,318,000      8,637,000      3,755,000
                                                          ------------   ------------   ------------   ------------
     Gross profit                                           36,490,000     11,789,000     62,779,000     20,417,000
                                                          ------------   ------------   ------------   ------------
Operating expenses:
     Sales and marketing                                    20,044,000      9,448,000     36,140,000     16,863,000
     Product development                                     5,010,000      2,444,000      9,544,000      4,693,000
     General and administrative                              2,227,000      1,613,000      4,219,000      2,910,000
     Other - nonrecurring costs                             44,100,000     21,245,000     44,100,000     21,245,000
                                                          ------------   ------------   ------------   ------------
       Total operating expenses                             71,381,000     34,750,000     94,003,000     45,711,000
                                                          ------------   ------------   ------------   ------------
Loss from operations                                       (34,891,000)   (22,961,000)   (31,224,000)   (25,294,000)
Investment income, net                                       1,848,000      1,227,000      3,294,000      2,618,000
Minority interests in operations
     of consolidated subsidiaries                              112,000        182,000        355,000        384,000
                                                          ------------   ------------   ------------   ------------
Loss before income taxes                                   (32,931,000)   (21,552,000)   (27,575,000)   (22,292,000)

Provision for income taxes                                   3,060,000              -      4,131,000              -
                                                          ------------   ------------   ------------   ------------
Net loss                                                  $(35,991,000)  $(21,552,000)  $(31,706,000)  $(22,292,000)
                                                          ------------   ------------   ------------   ------------
                                                          ------------   ------------   ------------   ------------
Net loss per share - basic and diluted                    $      (0.81)  $      (0.50)  $      (0.72)  $      (0.52)
                                                          ------------   ------------   ------------   ------------
                                                          ------------   ------------   ------------   ------------

Weighted average common shares and equivalents
     used in per share calculation - basic and diluted      44,504,000     43,146,000     43,778,000     42,689,000
                                                          ------------   ------------   ------------   ------------
                                                          ------------   ------------   ------------   ------------

Pro forma net loss per share - basic and diluted
     reflecting 2-for-1 stock split (Note 7)              $      (0.40)  $      (0.25)  $      (0.36)  $      (0.26)
                                                          ------------   ------------   ------------   ------------
                                                          ------------   ------------   ------------   ------------

Pro forma weighted average common shares - basic
     and diluted reflecting 2-for-1 stock split (Note 7)    89,008,000     86,292,000     87,556,000     85,378,000
                                                          ------------   ------------   ------------   ------------
                                                          ------------   ------------   ------------   ------------
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
                           financial statements.

                                       4
<PAGE>

                                    YAHOO! INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                        Six Months Ended
                                                                                  ---------------------------
                                                                                     June 30,       June 30,
                                                                                       1998           1997
                                                                                  ------------  -------------
<S>                                                                               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                     $(31,706,000)  $(22,292,000)
     Adjustments to reconcile net loss to net cash provided by 
        (used in) operating activities:

           Depreciation and amortization                                             2,240,000        862,000
           Compensation expense on stock option grants                                 314,000        173,000
           Minority interests in operations of consolidated subsidiaries              (355,000)      (384,000)
           Nonrecurring costs                                                       44,100,000     21,245,000
           Changes in assets and liabilities, net of effects of acquisition:
              Accounts receivable, net                                              (5,757,000)    (2,140,000)
              Prepaid expenses and other assets                                      2,340,000     (5,826,000)
              Accounts payable                                                        (440,000)      (140,000)
              Accrued expenses and other current liabilities                         5,133,000      2,109,000
              Deferred revenue                                                      13,675,000        519,000
              Due to related parties                                                   105,000        (33,000)
                                                                                  ------------  -------------
Net cash provided by (used in) operating activities                                 29,649,000     (5,907,000)
                                                                                  ------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES:

     Acquisition of property and equipment                                          (3,556,000)    (2,289,000)
     Cash acquired in acquisition of Viaweb Inc. (Note 4)                               26,000              -
     Purchases of investments in marketable securities                             (60,726,000)   (17,425,000)
     Sales and maturities of investments in marketable securities                   47,242,000     50,594,000
                                                                                  ------------  -------------
Net cash provided by (used in) investing activities                                (17,014,000)    30,880,000
                                                                                  ------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:

     Proceeds from issuance of Common Stock, net                                    13,408,000      2,113,000
     Proceeds from minority investors                                                  600,000        600,000
     Proceeds from lease obligations                                                         -      1,151,000
                                                                                  ------------  -------------
Net cash provided by financing activities                                           14,008,000      3,864,000
                                                                                  ------------  -------------
Effect of exchange rate changes on cash and cash equivalents                            97,000        (24,000)
                                                                                  ------------  -------------
Net change in cash and cash equivalents                                             26,740,000     28,813,000
Cash and cash equivalents at beginning of period                                    62,538,000     33,547,000
                                                                                  ------------  -------------
Cash and cash equivalents at end of period                                        $ 89,278,000   $ 62,360,000
                                                                                  ------------  -------------
                                                                                  ------------  -------------
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
                           financial statements.

                                       5
<PAGE>

                                    YAHOO! INC.
                                          
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    (UNAUDITED)


NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION

     Yahoo! Inc., including its subsidiaries ("Yahoo!" or the "Company"), is a
global Internet media company that offers a network of branded World Wide Web
(the "Web") programming serving millions of users daily.  The Company was
incorporated in California on March 5, 1995 and commenced operations on that
date.  The Company conducts its business within one industry segment.

     The accompanying unaudited condensed consolidated financial statements
reflect all adjustments that, in the opinion of management, are necessary for a
fair presentation of the results for the periods shown.  The results of
operations for such periods are not necessarily indicative of the results
expected for a full year or for any future period.
     
     These financial statements should be read in conjunction with the
consolidated financial statements and related notes incorporated by reference in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997. 
Certain prior period balances have been reclassified to conform to current
period presentation.  The condensed consolidated financial statements for the
periods ended June 30, 1997 have been restated to reflect the October 1997
acquisition of Four11 Corporation which was accounted for as a pooling of
interests.  Unless otherwise indicated, all share numbers in this Report do not
reflect the two-for-one stock split to be effected on August 3, 1998.
     

NOTE 2 - COMMITMENTS

     During March 1997, the Company entered into the Co-Marketing and Trademark
License agreements with Netscape Communications Corporation ("Netscape") under
which the Company co-developed and operated an Internet information navigation
service called "Netscape Guide by Yahoo!" (the "Guide").  The Co-Marketing
agreement provided that revenue from advertising on the Guide, which was managed
by the Company, was 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 was
being amortized over the initial two-year term.  On May 21, 1998, the Company
and Netscape terminated these agreements effective July 1, 1998.  Pursuant to
the termination of these agreements, Netscape agreed to forego revenue sharing
on the Guide for the three months prior to the termination date.  The Company
entered into a new agreement with Netscape to include the Yahoo! brand in the
Netscape Distinguished Provider Program (a promotional program on the Netscape
website), which began on June 1, 1998, for which the Company was provided a
$1,584,000 credit as part of the termination agreement.  Unamortized 

                                       6
<PAGE>

trademark license costs in excess of the advertising credit were charged to 
operations in the quarter ended June 30, 1998.

     
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income."  SFAS 130 establishes standards for reporting comprehensive income and
its components in a financial statement.  Comprehensive income as defined
includes all changes in equity (net assets) during a period from non-owner
sources.  Examples of items to be included in comprehensive income, which are
excluded from net income, include foreign currency translation adjustment and
unrealized gain/loss on available for sale securities.  For the three and six
month periods ended June 30, 1998 and 1997, the difference between net loss, as
reported, and comprehensive income relates solely to the change in the
cumulative translation adjustment for the respective periods which was not
material to these financial statements.
     
     
NOTE 4 - ACQUISITION OF VIAWEB INC.

     On June 10, 1998, the Company completed the acquisition of all outstanding
shares of Viaweb Inc. ("Viaweb"), a provider of software and services for
hosting online stores, through the issuance of 393,591 pre-split shares of
Yahoo! Common Stock.  All outstanding options to purchase Viaweb common stock
were converted into options to purchase 61,126 pre-split shares of Yahoo! Common
Stock.  The acquisition was accounted for as a purchase in accordance with APB
Opinion No. 16.  Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on their
estimated fair values at the date of the acquisition.  Results of operations for
Viaweb have been included with those of the Company for periods subsequent to
the date of acquisition.  Pro forma net revenues, net loss, and net loss per
share for the three and six months ended June 30, 1998 and 1997, giving effect
to Viaweb's historical results of operations, were not materially different from
the Company's results, as reported.
     
     The total purchase price of the acquisition was $48,559,000 including
acquisition expenses of $1,750,000.  The purchase price was allocated to the
assets acquired and liabilities assumed based on their estimated fair values as
follows:

<TABLE>
<CAPTION>
<S>                                                        <C>
          In-process research and development              $44,100,000
          Technology and other intangible assets             4,232,000
          Tangible assets acquired                             571,000
          Liabilities assumed                                 (344,000)
                                                           -----------
                                                           $48,559,000
                                                           -----------
                                                           -----------
</TABLE>

     Based on a third-party appraisal, management determined that $44,100,000 of
the purchase price represented acquired in-process research and development that
had not yet 

                                       7
<PAGE>

reached technological feasibility and had no alternative future use.  This 
amount was expensed during the quarter ended June 30, 1998 as a nonrecurring 
charge upon consummation of the acquisition.  Beginning in June 1998, the 
Company is amortizing the purchased technology and other intangible assets 
over an estimated useful life of three years.  Amortization expense of 
purchased technology and other intangible assets was $117,000 during the 
quarter ended June 30, 1998.
     
     
NOTE 5 - YAHOO! MARKETPLACE

     On August 26, 1996, the Company entered into agreements with Visa
International Service Association ("VISA") and another party (together, the
"Visa Group") to establish a limited liability company, Yahoo! Marketplace
L.L.C., to develop and operate a navigational service focused on information and
resources for the purchase of consumer products and services over the Internet. 
During July 1997, prior to the completion of significant business activities and
public launch of the property, the Company and VISA entered into an agreement
under which the Visa Group released the Company from certain obligations and
claims.  In connection with this agreement, the Company issued 699,481 shares of
Yahoo! Common Stock to the Visa Group, for which the Company recorded a one-
time, non-cash, pre-tax charge of $21,245,000 in the second quarter ended June
30, 1997.


NOTE 6 - LEGAL PROCEEDINGS

     As previously reported, in July and October 1997, GTE New Media Services
Incorporated ("GTE New Media") filed lawsuits in state court in Dallas, Texas
and in federal court in the District of Columbia, against Netscape and the
Company, which lawsuits relate to certain Yellow Pages services offered in the
Netscape Guide By Yahoo!.  In June 1998, the Company entered into agreements
with GTE New Media that provide for the dismissal of, and mutual release with
respect to, both lawsuits without any payment or consideration by the Company,
and, with respect to the Texas case, subject only to certain conditions that the
Company anticipates will be fulfilled by October 1998.  Satisfaction of these 
conditions is not expected to have a material effect on the Company's 
financial position or results of operations.


NOTE 7 - SUBSEQUENT EVENTS

STOCK SPLIT

     During July 1998, the Company's Board of Directors approved a two-for-one
Common Stock split.  Shareholders of record on July 17, 1998 (the record date)
will be entitled to one additional share for every share held on that date.  The
Company has presented pro forma earnings per share and pro forma weighted
average shares in the statement of operations for all periods presented
reflecting the effect of the stock split.

                                       8
<PAGE>

PRIVATE PLACEMENT

     During July 1998, the Company entered into an agreement for a private 
placement of Common Stock to SOFTBANK Holdings, Inc., a 29% shareholder of 
the Company at June 30, 1998.  On July 14, 1998, the Company received 
proceeds of $250,000,000 in exchange for 1,363,440 newly issued, pre-split 
shares of Yahoo! Common Stock, bringing SOFTBANK's total ownership to 
approximately 31%.  In connection with the transaction, the Company also 
agreed to provide registration rights comparable to the registration rights 
provided on the shares acquired by SOFTBANK prior to the Company's April 1996 
initial public offering. The shares purchased by SOFTBANK are subject to a 
pre-existing agreement, entered into in 1996, that prohibits SOFTBANK from 
purchasing additional shares of the Company's capital stock if such purchase 
would result in SOFTBANK owning more than 35% of the Company's capital stock 
(assuming the exercise of all outstanding options and warrants to purchase 
capital stock).  These restrictions terminate on the earlier of March 12, 
2001, or in the event that the Company's founders, David Filo and Jerry Yang, 
own beneficially less than 3,750,000 shares of the Company's Common Stock, in 
the aggregate (prior to giving effect to the two-for-one stock split approved 
by the Company's Board of Directors on July 7, 1998).  Also, SOFTBANK's 
maximum permitted percentage ownership increases to 49.5% of the Company's 
capital stock (excluding options and warrants to purchase capital stock) in 
the event that Messrs. Filo and Yang beneficially own in the aggregate less 
than 6,000,000 shares of Common Stock (prior to giving effect to the 
two-for-one stock split approved by the Company's Board of Directors on July 
7, 1998).  The agreements also prohibit SOFTBANK from disposing of shares 
representing more than 5% of the Company's capital stock without approval of 
the Company's Board of Directors (other than in public market sales under 
Rule 144 or pursuant to a registration statement filed by the Company).

                                       9
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     THIS REPORT 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 THAT ARE
SIGNIFIED BY THE WORDS "EXPECTS", "ANTICIPATES", "INTENDS", "BELIEVES", OR
SIMILAR LANGUAGE.  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.  IN EVALUATING THE COMPANY'S BUSINESS, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH BELOW UNDER THE
CAPTION "RISK FACTORS" IN ADDITION TO THE OTHER INFORMATION SET FORTH HEREIN. 
THE COMPANY CAUTIONS INVESTORS THAT ITS BUSINESS AND FINANCIAL PERFORMANCE ARE
SUBJECT TO SUBSTANTIAL RISKS AND UNCERTAINTIES.

OVERVIEW

     Yahoo! Inc. is a global Internet media company that offers a network of
branded World Wide Web programming that serves millions of users daily.  As the
first online navigational guide to the Web, www.yahoo.com is the single largest
guide in terms of traffic, advertising, household and business user reach, and
is one of the most recognized brands associated with the Internet.  Yahoo! Inc.
provides targeted Internet resources and communications services for a broad
range of audiences, based on demographic, key-subject and geographic interests. 
The Company was incorporated in California on March 5, 1995 and commenced
operations on that date.  In August 1995, the Company commenced selling
advertisements on its Web pages and recognized its initial revenues.  In April
1996, the Company completed its initial public offering.  In October 1997, the
Company acquired Four11 Corporation, a privately-held online communications and
Internet directory company.  The acquisition was accounted for as a pooling of
interests.  The condensed consolidated financial statements for the period ended
June 30, 1997 have been restated to reflect the acquisition.  In June 1998, the
Company acquired Viaweb Inc., a provider of software and services for hosting
online stores.  The acquisition was accounted for as a purchase.

     The Company's revenues are derived principally from the sale of banner
advertisements on short-term contracts.  The Company's standard rates for
advertising currently range from approximately $6.00 per thousand impressions
for run of network to approximately $90.00 per thousand impressions for highly
targeted audiences and properties.  To date, the duration of the Company's
advertising commitments has ranged from one week to two years.  During 1997, the
Company also began selling a combination of sponsorship and banner advertising
contracts.  In general, these sponsorship advertising contracts have longer
terms (ranging from three months to two years) than standard banner advertising
contracts and also involve more integration with Yahoo! services, such as the
placement of buttons that provide users with direct links to the advertiser's
Web site.  Advertising revenues on both banner and sponsorship contracts are
recognized ratably over the period in which the advertisement is displayed,
provided that no significant 

                                       10
<PAGE>

Company obligations remain at the end of a period and collection of the 
resulting receivable is probable.  Company obligations typically include 
guarantees of minimum number of "impressions," or times that an advertisement 
appears in pages viewed by users of the Company's online properties.  To the 
extent minimum guaranteed impressions are not met, the Company defers 
recognition of the corresponding revenues until the remaining guaranteed 
impression levels are achieved.  The Company also earns additional revenue on 
sponsorship contracts for fees relating to the design, coordination, and 
integration of the customer's content and links into Yahoo! online media 
properties.  These development fees are recognized as revenue once the 
related activities have been performed and the customer's web links are 
available on Yahoo! online media properties.  A number of the Company's 
agreements provide that Yahoo! receive revenues from electronic commerce 
transactions.  Currently, these revenues are recognized by the Company upon 
notification from the advertiser of revenues earned by Yahoo! and, to date, 
have not been significant.

RESULTS OF OPERATIONS

   NET REVENUES
  
     Net revenues were $41,210,000 and $71,416,000 for the second quarter and
first half of 1998, respectively, which represent increases of 192% and 195%
when compared with the corresponding periods in 1997.  The increases are due
primarily to the increasing number of advertisers purchasing space on Yahoo!
online media properties and the trend towards larger purchases and for a longer
duration.  Approximately 1,800 customers advertised on Yahoo! online media
properties during the quarter ended June 30, 1998 as compared to approximately
900 during the second quarter of 1997.  No one customer accounted for 10% or
more of revenues during the three or six month periods ended June 30, 1998 and
1997.  International revenues have accounted for less than 10% of net revenues
during the three and six month periods ended June 30, 1998 and 1997.  Barter
revenues also represented less than 10% of net revenues during those periods. 
Advertising purchases by SOFTBANK, a 29% shareholder of the Company at June 30,
1998, and its related companies accounted for approximately 1% of net revenues
in the second quarter and first half of fiscal 1998 as compared to 5% and 7% in
the corresponding periods in fiscal 1997.  Contracted prices on these orders are
comparable to those given to other major customers of the Company.  There can be
no assurance that customers will continue to purchase advertising on the
Company's Web pages or that market prices for Web-based advertising will not
decrease due to competitive or other factors.  Additionally, while the Company
has experienced strong revenue growth during the first half of 1998, management
does not believe that this level of revenue growth will be sustained in future
periods.

   COST OF REVENUES
  
     Cost of revenues consist of the expenses associated with the production and
usage of Yahoo! online media properties.  These costs primarily consist of fees
paid to third parties for content included on the Company's online media
properties, Internet connection charges, equipment depreciation, and
compensation.  Cost of revenues were 

                                       11
<PAGE>

$4,720,000 and $8,637,000 for the second quarter and first half of 1998, 
respectively, or 11% and 12% of net revenues, as compared to $2,318,000 and 
$3,755,000, or 16% of net revenues, in the corresponding periods in fiscal 
1997.  The absolute dollar increase in cost of revenues is primarily 
attributable to an increase in the quantity of content available on Yahoo! 
online media properties, and the increased usage of these properties.  The 
Company anticipates that its content and Internet connection expenses will 
increase with the quantity and quality of content available on Yahoo! online 
media properties, and increased usage of these properties.  As measured in 
page views (defined as electronic page displays), the Company delivered an 
average of 115 million page views per day in June 1998 compared with an 
average of over 38 million page views per day in June 1997.  Yahoo! Japan, an 
unconsolidated joint venture of the Company which began operations in April 
1996, is included in these page views figures and accounted for an average of 
approximately 8 million page views per day in June 1998 and an average of 
over 3 million page views per day in June 1997.  The Company anticipates that 
its content and Internet connection expenses will continue to increase in 
absolute dollars for the foreseeable future.  The Company currently 
anticipates cost of revenues will be in the range of 10% to 13% of net 
revenues for the remainder of 1998.

   SALES AND MARKETING
  
     Sales and marketing expenses were $20,044,000 for the quarter ended June
30, 1998, or 49% of net revenues as compared to $9,448,000, or 67% of net
revenues for the quarter ended June 30, 1997.  For the six months ended June 30,
1998, sales and marketing expenses were $36,140,000, or 51% of net revenues as
compared to $16,863,000, or 70% of net revenues for the six months ended June
30, 1997.  Sales and marketing expenses consist primarily of advertising and
other marketing related expenses (which include Netscape Premier
Provider/Distinguished Provider and Netscape Guide amortization costs),
compensation and employee-related expenses, and sales commissions.  The increase
in absolute dollars from the year ago periods is primarily attributable to an
increase in advertising and distribution costs associated with the Company's
aggressive brand-building strategy, increases in compensation expense associated
with growth in sales and marketing personnel, and expansion in the international
subsidiaries with the addition of subsidiaries subsequent to June 30, 1997 in
Australia, Denmark, Italy, Korea, Norway, Singapore, and Sweden.  The Company
also added Yahoo! guides in Spanish and Mandarin Chinese languages during the
quarter ended June 30, 1998.  The Company anticipates that sales and marketing
expenses in absolute dollars will increase in future periods as it continues to
pursue an aggressive brand building strategy and continues to build its direct
sales organization.  As a percentage of net revenues, the Company currently
anticipates that sales and marketing expenses may trend somewhat lower over the
remainder of 1998.

   PRODUCT DEVELOPMENT
  
     Product development expenses were $5,010,000 for the quarter ended June 30,
1998, or 12% of net revenues as compared to $2,444,000, or 17% of net revenues
for the quarter ended June 30, 1997.  For the six months ended June 30, 1998,
product development expenses were $9,544,000, or 13% of net revenues as compared
to 

                                       12
<PAGE>

$4,693,000, or 19% of net revenues for the six months ended June 30, 1997. 
Product development expenses consist primarily of employee compensation 
relating to developing and enhancing the features and functionality of Yahoo! 
online media properties.  The increase in absolute dollars is primarily 
attributable to increases in the number of engineers that develop and enhance 
Yahoo! online media properties.  To date, all internal product development 
costs have been expensed as incurred.  The Company believes that significant 
investments in product development are required to remain competitive.  
Consequently, the Company expects to incur increased product development 
expenditures in absolute dollars in future periods.  As a percentage of net 
revenues, the Company currently anticipates that product development expenses 
will approximate current levels during the remainder of 1998.

   GENERAL AND ADMINISTRATIVE
  
     General and administrative expenses were $2,227,000 for the quarter ended
June 30, 1998, or 5% of net revenues as compared to $1,613,000, or 11% of net
revenues for the quarter ended June 30, 1997.  For the six months ended June 30,
1998, general and administrative expenses were $4,219,000, or 6% of net revenues
as compared to $2,910,000, or 12% of net revenues for the six months ended June
30, 1997.  General and administrative expenses consist primarily of fees for
professional services and compensation.  The increase in absolute dollars is
primarily attributable to increases in personnel and usage of professional
services.  The Company believes that the absolute dollar level of general and
administrative expenses will increase in future periods, as a result of
increased fees for professional services and an increase in personnel.  As a
percentage of net revenues, the Company currently anticipates that general and
administrative expenses will approximate current levels during the remainder of
1998.
     
   OTHER - NONRECURRING COSTS
  
     On June 10, 1998, the Company completed the acquisition of all outstanding
shares of Viaweb through the issuance of 393,591 pre-split shares of Yahoo!
Common Stock.  All outstanding options to purchase Viaweb common stock were
converted into options to purchase 61,126 pre-split shares of Yahoo! Common
Stock.  During the quarter ended June 30, 1998, the Company recorded a
nonrecurring charge of $44,100,000 for in-process research and development that
had not yet reached technological feasibility and had no alternative future use.
     
     During July 1997, prior to the completion of significant business
activities and public launch of the Yahoo! Marketplace, the Company and VISA
entered into an agreement under which the Visa Group released the Company from
certain obligations and claims.  In connection with this agreement, the Company
issued 699,481 shares of Yahoo! Common Stock to the Visa Group, for which the
Company recorded a one-time, non-cash, pre-tax charge of $21,245,000 in the
second quarter ended June 30, 1997.

                                       13
<PAGE>

   INVESTMENT INCOME, NET
  
     Investment income, net of investment expense, was $1,848,000 for the
quarter ended June 30, 1998.  For the quarter ended June 30, 1997, investment
income was $1,227,000.  Investment income for the six months ended June 30, 1998
was $3,294,000 as compared to $2,618,000 for the six months ended June 30, 1997.
The increase in investment income from the year ago periods was primarily
attributable to a higher average investment balance.  Investment income for the
remainder of 1998 is expected to increase significantly due to proceeds from a
private placement of $250,000,000 received by the Company on July 14, 1998.
     
   MINORITY INTERESTS IN OPERATIONS OF CONSOLIDATED SUBSIDIARIES

     Minority interests in losses from operations of consolidated subsidiaries
were $112,000 for the quarter ended June 30, 1998 as compared to $182,000 for
the same period in 1997.  Minority interests for the six months ended June 30,
1998 were $355,000 as compared to $384,000 for the six months ended June 30,
1997.  The 1998 minority interest is attributable to operations in the European
and Korean joint ventures.  Minority interest from the year ago periods is
attributable to losses in the European and other joint ventures.  The Company
expects that minority interests in operations of consolidated subsidiaries in
the aggregate will continue to fluctuate in future periods as a function of the
results from consolidated subsidiaries.  When, and if, the consolidated
subsidiaries become profitable, the minority interests elimination on the
statement of operations will reduce the Company's net income by the minority
partner's share of the subsidiaries' net income.
     
   INCOME TAXES
  
     Based on the current estimate of operating results and certain other 
factors, the Company expects its effective tax rate, before the effect of the 
non-deductible charge of $44,100,000 for acquired in-process research and 
development, will approximate 25% for fiscal year 1998.  Before the effect of 
this charge, the tax rate was approximately 27% for the quarter ended June 30,
1998 and 25% for the six months ended June 30, 1998. These rates are lower 
than the statutory U.S. federal rate due primarily to the utilization of net 
operating loss carryforwards, the utilization of research and development 
credits, and the change in the valuation allowance on temporary differences.  
The Company believes sufficient uncertainty exists regarding the 
realizability of its remaining deferred tax assets such that a full valuation 
allowance continues to be required.  The portion of the deferred tax assets 
attributable to the exercise of employee stock options is reflected in the 
U.S. net operating loss carryforward, the tax benefit of which, when 
recognized, will be accounted for as a credit to additional paid-in capital 
rather than a reduction of the income tax provision.  Deferred tax assets 
related to employee stock option exercises are currently expected to increase 
through fiscal year 1998.

   NET LOSS
  
     The Company recorded a net loss of $35,991,000 or $0.81 per share for the
quarter ended June 30, 1998.  Excluding the effect of the nonrecurring charge of

                                       14
<PAGE>

$44,100,000 incurred in connection with the acquisition of Viaweb, the Company
earned $8,109,000 or $0.15 per share diluted.  The Company recorded a net loss
of $21,552,000 or $0.50 per share for the quarter ended June 30, 1997. 
Excluding the effect of the nonrecurring charge of $21,245,000 incurred in
connection with the Visa agreement, the Company recorded a net loss of $307,000
or $0.01 per share. 

     For the six month period ended June 30, 1998, the Company recorded a net
loss of $31,706,000 or $0.72 per share.  Excluding the effect of the
nonrecurring charge of $44,100,000, the Company earned $12,394,000 or $0.23 per
share diluted.  For the six month period ended June 30, 1997, the Company
recorded a net loss of $22,292,000 or $0.52 per share.  Excluding the effect of
the nonrecurring charge of $21,245,000, the Company recorded a net loss of
$1,047,000 or $0.02 per share.

LIQUIDITY AND CAPITAL RESOURCES

     Yahoo! invests predominantly in instruments that are highly liquid, of
high-quality investment grade, and predominantly have maturities of less than
one year with the intent to make such funds readily available for operating
purposes.  At June 30, 1998, the Company had cash and cash equivalents and
investments in marketable securities totaling $147,236,000 compared to
$107,012,000 at December 31, 1997.
     
     For the six months ended June 30, 1998, cash provided by operating
activities of $29,649,000 was primarily due to earnings, before the nonrecurring
charge of $44,100,000, and increases in deferred revenue (due to invoicing and
cash receipts in excess of revenue) and accrued liabilities.  For the six months
ended June 30, 1997, cash used in operating activities of $5,907,000 was
primarily due to increases in prepaid expenses and other assets, which resulted
primarily from a $5,000,000 one-time non-refundable license payment to Netscape
under the Netscape Guide by Yahoo! agreement and a $1,000,000 payment to
Netscape under the Premier Provider agreement.
     
     Cash used in investing activities was $17,014,000 for the six months June
30, 1998.  Purchases (net of sales and maturities) of investments in marketable
securities during the period were $13,484,000 and capital expenditures totaled
$3,556,000.  Capital expenditures have generally been comprised of purchases of
computer hardware and software as well as leasehold improvements related to
leased facilities, and are expected to increase in future periods.  Cash
provided by investing activities was $30,880,000 for the six months ended June
30, 1997.  Sales and maturities (net of purchases) of investments in marketable
securities during the period were $33,169,000 and capital expenditures totaled
$2,289,000.
     
     For the six months ended June 30, 1998, cash provided by financing
activities of $14,008,000 was due primarily to the issuance of Common Stock
pursuant to the exercise of stock options. For the six months ended June 30,
1997, cash provided by financing activities of $3,864,000 was due primarily to
the issuance of Common Stock pursuant to the exercise of stock options and
proceeds received under lease obligations.

                                       15
<PAGE>
          
     The Company currently has no material commitments other than those under
operating lease agreements.  The Co-Marketing agreement with Netscape was
terminated in May 1998 and the Premier Provider agreements have expired.  The
Company has experienced a substantial increase in its capital expenditures and
operating lease arrangements since its inception, which is consistent with
increased staffing, and anticipates that this will continue in the future. 
Additionally, the Company will continue to evaluate possible acquisitions of, or
investments in businesses, products, and technologies that are complementary to
those of the Company, which may require the use of cash.  Management believes
existing cash and investments will be sufficient to meet the Company's operating
requirements for at least the next twelve months; however, the Company may sell
additional equity or debt securities or obtain credit facilities.  The sale of
additional securities could result in additional dilution to the Company's
shareholders.  During July 1998, the Company entered into an agreement for a
private placement of Common Stock to SOFTBANK Holdings, Inc.  On July 14, 1998,
the Company received proceeds of $250,000,000 in exchange for 1,363,440 newly
issued, pre-split shares of Yahoo! Common Stock.
     
RISK FACTORS

   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 or acquisition 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 of any other acquired businesses or technologies with its
operations, such as the recent acquisition of Viaweb Inc., the failure of the
Company to successfully develop and 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 June 30, 1998, the Company had an accumulated deficit of $59,677,000.
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. The Company believes that period-to-period
comparisons of its operating results are not 

                                       16
<PAGE>

meaningful and that the results for any period should not be relied upon as 
an indication of future performance. In particular, although the Company has 
experienced strong revenue growth during the first half of 1998, management 
does not believe that this level of revenue growth will be sustained in 
future periods. In addition, the Company currently expects 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, to develop and commercialize 
additional media properties, and to acquire complementary businesses and 
technologies. 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.

     On June 10, 1998, the Company completed the acquisition of Viaweb Inc., a
provider of software and services for hosting online stores, in exchange for
393,591 pre-split shares of the Company's Common Stock and assumption of options
to purchase an aggregate of 61,126 pre-split shares of the Company's Common
Stock.  The Company incurred a one-time charge of $44,100,000 in the quarter
ended June 30, 1998 for acquired in-process technology and expenses associated
with the transaction.  The remaining purchase price of approximately $4,232,000
has been allocated to acquired technology and other intangible assets and is
being amortized over an estimated useful life of three years. As a result of the
expense incurred in the quarter ended June 30, 1998, the Company reported a net
loss for such quarter and may report a net loss for the year ending December 31,
1998.

   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 large extent, are fixed.
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 or sponsorship 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. As a result of these factors, there can be no assurance that
the Company will not incur significant losses in the future.

                                       17
<PAGE>

     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! online media properties, the advertising budgeting cycles of
individual advertisers, the mix of types of advertising sold by the Company
(such as the amount of targeted advertising, which generally has higher rates),
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 future
acquisitions, negative general economic conditions (which may be expected to
adversely affect media spending), 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.

     Seasonality may 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. This seasonality may adversely
affect the Company's operating results for the quarter ending September 30,
1998.  The Company also expects to experience seasonality in the level of use of
its online properties, with user traffic on Yahoo! 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 to date have experienced slower growth or
decline.

     A key element of the Company's strategy is to generate advertising revenues
through sponsored services and placements by third parties in the Company's
online media 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 or "click throughs" (in which case, these agreements typically
provide for adjustments to the fees payable thereunder or "make good" periods),
that third-party sponsors do not renew the agreements at the end of their term
or that sponsors renew at lower rates, that the arrangements do not generate
anticipated levels of shared transaction revenue, or that sponsors default in
the payment commitments in such agreements, which could result in the Company
failing to achieve anticipated revenue from the sponsorship arrangements. 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 

                                       18
<PAGE>

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 an event, the trading price of the Company's Common Stock
would likely be materially and adversely affected.

   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. Negative competitive developments could
have a material adverse effect on the Company's business and on the trading
price of the Company's Common Stock.

     MULTIPLE PROVIDERS OF COMPETITIVE SERVICES.  The Company competes with many
other providers of online navigation, information and community services. As the
Company expands the scope of its Internet services, it will compete directly
with a greater number of Internet sites and other media companies across a wide
range of different online services, including in vertical markets where
competitors may have advantages in expertise, brand recognition and other
factors. Many companies offer competitive products or services addressing Web
navigation services, including, among others, America Online Inc. (NetFind),
C/NET, Inc. (Snap! Online), Digital Equipment Corporation (AltaVista), Excite,
Inc. (including WebCrawler), Infoseek Corporation, Inktomi, Lycos, Inc.
(including Tripod), Microsoft Corporation (Internet Start), Netscape
Communications Corporation (Netcenter), and Wired Ventures, Inc. (hotbot). In
addition, the Company competes with metasearch services and software
applications, such as C/NET's search.com 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. In addition, many
large media companies have announced that they are contemplating Internet
navigation services and are attempting to become "gateway" sites for Web users.
For example, both Time-Warner Inc. and CBS have announced initiatives to develop
Web services in order to have their Web sites become the starting point for
users navigating the Web and C/NET recently announced that NBC has purchased an
equity interest in C/NET's Snap! Online navigational service, and that C/NET and
NBC will operate the service as a joint venture. In June 1998 Infoseek and the
Walt Disney Company ("Disney") entered into agreements providing that Disney
will purchase 43% of Infoseek's capital stock and warrants to purchase
sufficient shares to control Infoseek. The parties also announced that they will
be launching a new portal service that combines content for both companies. The
Company also anticipates that Disney will provide significant promotional
support to these online properties, including through Disney's substantial media
resources, which include the ABC television network. These and other competitors
have and are expected to continue to make substantial marketing expenditures to
promote their online properties. To the extent the Company is required to
increase its sales and marketing expenditures in response these efforts, the
Company's operating results could be materially and adversely affected.

                                       19
<PAGE>

     A large number of Web sites and online services (including, among others,
the Microsoft Network, AOL, Netscape (Netcenter), and other Web navigation
companies such as Excite, Lycos, and Infoseek) also offer informational and
community features, such as news, stock quotes, sports coverage, Yellow
Pages and email listings, weather news, chat services, bulletin board listings
and online store hosting services that are competitive with the services offered
by the Company. For example, Netscape, which experiences high levels of traffic
on its Web sites by virtue of default settings and buttons on its popular Web
browser products, recently significantly enhanced its Netcenter service as a
"gateway" Web site, through commercial relationships between Netscape and
certain of the Company's competitors. A number of companies, including Hotmail
(which was recently acquired by Microsoft) and WhoWhere? Inc., offer Web-based
email 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. AOL recently acquired Mirabilis, a
provider of "ICQ" instant Internet messaging software and services that compete
with the Company's Yahoo! Pager offering, and the ICQ user base will provide AOL
with an additional platform for distribution of AOL's other navigation,
information and communications services that compete with those of the Company.
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. As a result of the Company's recent acquisition of Viaweb Inc., the
Company also expects to face competition in the market for hosting online
merchant stores. The Company also faces intense competition in international
markets, including competition from several U.S.-based competitors as well as
media and online companies and Internet service providers that are already well
established in those foreign markets.

     CONSOLIDATION OF PRODUCTS OFFERED BY WEB BROWSERS AND OTHER INTERNET POINTS
OF ENTRY.  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, increasingly 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, that could make it more
difficult for Internet viewers to find and use the Company's products and
services. Netscape recently announced an agreement with Excite under which
Excite will be the most prominent navigational service within the Netcenter
Website. In the future, Netscape and Microsoft and other browser suppliers may
also more tightly integrate products and services similar to the Company's into
their browsers or their browsers' pre-set home pages. 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, long-
distance providers, cable 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 feature and promote Internet search engine services provided by Inktomi
in the Microsoft Network and other Microsoft online 

                                       20
<PAGE>

properties, and offers personalized Web services through its Internet Start 
service. The Company expects that such search services may be tightly 
integrated into future versions of the Microsoft operating system, the 
Internet Explorer browser and other software applications, and that Microsoft 
will promote such services within the Microsoft Network or through other 
Microsoft affiliated end-user services such as MSNBC or WebTV Networks, Inc. 
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.

     COMPETITION FOR ADVERTISING EXPENDITURES.  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. In
addition, the Company's sales may be adversely affected to the extent that the
Company's competitors offer superior advertising services that better target
users or provide better reporting of advertising results.

     PRINCIPAL COMPETITIVE FACTORS.  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 high-quality, 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.
Additionally, the Company has faced and expects to continue to face competition
with respect to the acquisition of strategic businesses and technologies. 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.

     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. 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 AOL. 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. In addition, well-established traditional media companies may
acquire, invest or otherwise establish commercial relationships with the
Company's competitors, such as NBC's recent investment in C/NET's Snap! Online
service or Disney's investment in Infoseek, and may use their substantial media
resources to promote and enhance such competitor's services. 

                                       21
<PAGE>

Greater competition resulting from such relationships could 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. Web-based advertising is
relatively new, and predicting the extent of further growth, if any, in Web
advertising expenditures is difficult. There can be no assurance that
communication or commerce over the Internet will increase 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. For example, to the extent that higher bandwidth Internet access
becomes more widely available through cable modems or other technologies, the
Company may be required to make significant changes to the design and content of
its online properties in order to compete effectively. Failure of the Company to
effectively adapt to these or any other 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 continue to develop or that demand for the Company's products or media
properties will be sustainable. If the market develops more slowly than expected
or becomes saturated with competitors, or if the Company's products and media
properties do not sustain market acceptance, the 

                                       22
<PAGE>

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 user and advertiser
base and that the importance of brand recognition will increase due to the
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 success
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 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 the majority 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! 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 

                                       23
<PAGE>

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.

     TECHNOLOGY AND INFRASTRUCTURE.  In May 1998, the Company and Inktomi
entered into an agreement under which Inktomi will provide text-based Web search
results to complement the Company's directory and navigational guide. The
Inktomi service was integrated on July 1, 1998.  The Company will depend
substantially upon ongoing maintenance and technical support from Inktomi to
ensure accurate and rapid presentation of such search results to the Company's
customers. Any termination of the agreement with Inktomi or Inktomi'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 principally on a private third-party provider, Frontier
GlobalCenter, Inc. ("GlobalCenter"), for the Company's principal Internet
connections. Additionally, email and other service Internet connections are
provided by GTE. Any disruption in the Internet access provided by these
third-party providers or any failure of these third-party providers 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
the delivery of 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, and Rogers Communications ("Rogers") in Canada, 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 

                                       24
<PAGE>

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. Certain of these arrangements 
also require the Company to integrate third parties' content with the 
Company's services, which can require the dedication of resources and 
significant programming and design efforts to accomplish. In addition, the 
Company has granted exclusivity provisions to certain third parties, and may 
in the future grant additional exclusivity provisions. Such exclusivity 
provisions may have the effect of preventing the Company, for the duration of 
such exclusivity arrangements, from accepting advertising or sponsorship 
arrangements within a particular subject matter with respect to portions of 
the Company's network of media properties, which could have an adverse effect 
on the Company.

     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 terminated 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.
Any such event could have a material adverse effect on the Company's business,
results of operations, and financial condition.

     The Company recently announced a co-branding and distribution arrangement
with MCI under which the Company will provide a Web-based online service in
conjunction with dial-up Internet access provided by MCI. In this arrangement,
the Company will depend substantially upon MCI for, among other things,
effective marketing and promotion efforts and the provision of competitive
Internet access service to customers. Any failure by MCI in these respects could
materially impair the benefits received by the Company from this arrangement,
and could negatively affect the Yahoo! brand.

   VOLATILITY OF STOCK PRICE

     The trading price of the Company's Common Stock has been and may continue
to be subject to wide fluctuations.  During the six months ended June 30, 1998,
the highest and lowest reported closing sale prices of the Company's Common
Stock on the NASDAQ Stock Market were $157.50 and $58.06, respectively. Trading
prices of the Common Stock may fluctuate 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 

                                       25
<PAGE>

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.

   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. 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, simplified searching from the Web browser,
real-time chat and Internet paging, 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 email
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!-branded 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 

                                       26
<PAGE>

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 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, such as the December 1997 investments in GeoCities and
broadcast.com (formerly AudioNet). 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. Any such investment losses could have a material adverse
effect on the Company's operating results.

   MANAGEMENT OF POTENTIAL GROWTH AND INTEGRATION OF ACQUISITIONS

     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 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 scale to higher levels of use or to effectively track and provide
accurate and timely reports on advertising results also could negatively affect
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.

     As part of its business strategy, the Company has completed and expects to
enter into additional business combinations and acquisitions, such as the
October 1997 

                                       27
<PAGE>

acquisition of Four11 and the June 1998 acquisition of Viaweb. 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, 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 addressing these risks or any other problems encountered in 
connection with such acquisitions.

   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 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 an 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. Additionally, Internet connections for the Company's
Web-based email services are provided by GTE. Any disruption in the Internet
access provided by these third-party providers or any failure of these
third-party providers 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 

                                       28
<PAGE>

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 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 Company does not carry sufficient business
interruption insurance to compensate the Company for losses that may occur as a
result of any of these events. Such events could have a material adverse effect
on the Company's business, operating results, and financial condition.

   TRADEMARKS AND PROPRIETARY RIGHTS

     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 internationally, and has
applied for and obtained the registration for 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 

                                       29
<PAGE>

technologies are likely to arise in the future. For example, the Company is 
aware that a number of patents have been issued in the areas of electronic 
commerce and Web-based information indexing and retrieval (including patents 
recently issued to one of the Company's direct competitors), and the Company 
anticipates that additional third-party patents will be issued in the future. 
There can be no assurance that the technology recently acquired through the 
Viaweb acquisition, or any other technology relating to the Company's 
business that has been or may be developed by the Company or licensed from 
third parties, will not be determined to infringe one or more third-party 
patents. In the event of such infringement, there can be no assurance that 
the Company will be able to license such patents on reasonable terms, if any, 
or that such infringement will not result in substantial monetary liability 
to the Company, including substantial expenses that may be incurred in 
defending against third-party patent claims regardless of the merit of such 
claims.

   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 user privacy, defamation,
pricing, taxation, content regulation, quality of products and services, and
intellectual property ownership and infringement. 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, decrease the acceptance of the Web as a communications and commercial
medium and require the Company to incur expense in complying with any new
regulations, 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 

                                       30
<PAGE>

material deemed to be objectionable on the Web, and the European Union has 
recently adopted privacy and copyright directives that may impose additional 
burdens and costs on the Company's international operations. 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. 
A number of proposals have been made at the federal, state and local level 
that would impose additional taxes on the sale of goods and services through 
the Internet. Such proposals, if adopted, could substantially impair the 
growth of electronic commerce, and could adversely affect the Company's 
opportunity to derive financial benefit from such activities. Also, 
legislation is pending in Congress that would impose liability on online 
service providers such as the Company for listing or linking to third-party 
Web sites or hosting third-party Web sites that include materials that 
infringe copyrights or other rights of others. In addition, a number of other 
countries have announced or are considering additional regulation in many of 
the foregoing areas. Such laws and regulations if enacted in the United 
States or abroad could fundamentally impair the Company's ability to provide 
Internet navigation services, or substantially increase the cost of doing so, 
which would have a material 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 in the United States or 
abroad 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.

                                       31
<PAGE>

   LIABILITY FOR INFORMATION SERVICES

     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, message 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, or that the Company is
responsible for legal injury caused by statements made for or actions taken by
participants in the Company's message board services. 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. The Company offers Web-based email services, which expose the
Company to potential risks, such as liabilities or claims resulting from
unsolicited email (spamming), lost or misdirected messages, illegal or
fraudulent use of email or interruptions or delays in email service. Even to the
extent such claims do not result in liability to the Company, the Company
expects to incur significant costs in investigating and defending such claims.

     The Company also from time to time enters into arrangements to offer
third-party products and services under the Yahoo! brand or via distribution on
Yahoo! properties. For example, the Company recently announced an agreement with
GeoCities under which GeoCities will offer free home page services and certain
related products to Yahoo! users. The Company also recently announced an
arrangement with broadcast.com, an Internet-based broadcast network, whereby
links to broadcast.com's site and content will be distributed via Yahoo!
properties. These business arrangements involve additional legal risks, such as
potential liabilities for content posted by free home page users or made
available by other third-party providers. The Company may be subject to claims
concerning such services or content by virtue of the Company's involvement in
marketing, branding or providing access to such services, even if the Company
does not itself host, operate, or provide such services. While the Company's
agreements with these parties often provide that the Company will be indemnified
against such liabilities, there can be no assurance that such indemnification,
if available, will be adequate.

   POTENTIAL COMMERCE-RELATED LIABILITIES AND EXPENSES

     As part of its business, 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 

                                       32
<PAGE>

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.

     The Company recently began offering a Yahoo!-branded VISA credit card,
which includes a "rewards" program entitling card users to receive points that
may be redeemed for merchandise, such as books or music. This arrangement
exposes the Company to certain additional risks and expenses, including, without
limitation, those relating to compliance with consumer protection laws, loss of
customer data, disputes over redemption procedures and rules, products
liability, sales taxation and liabilities associated with any failure in
performance by participating merchants.

     In June 1998, the Company completed the acquisition of Viaweb, a provider
of software and reporting tools for the operation of online commerce Web sites.
The Company intends to use the Viaweb technology to host and promote online
stores on behalf of third-party merchants, the operation and maintenance of
which will be largely under the independent control of such merchants. These
activities expose the Company to a number of additional risks and uncertainties,
including (without limitation) potential liabilities for illegal activities that
may be conducted by participating merchants; products liability or other tort
claims relating to goods or services sold through hosted commerce sites;
consumer fraud and false or deceptive advertising or sales practices; breach of
contract claims relating to merchant transactions; claims that materials
included in merchant sites or sold by merchants through these sites infringe
third-party patents, copyrights, trademarks or other intellectual property
rights, or are libelous, defamatory or in breach of third-party confidentiality
or privacy rights; claims relating to any failure of merchants to appropriately
collect and remit sales or other taxes arising from e-commerce transactions; and
claims that may be brought by merchants as a result of their exclusion from the
Company's commerce services or losses resulting from any downtime or other
performance failures in the Company's hosting services. Although the Company
maintains liability insurance, there can be no assurance that insurance will
cover these claims or that such coverage, if available, will be adequate. Even
to the extent such claims do not result in material liability to the Company,
the Company expects to incur significant costs in investigating and defending
such claims.

   YEAR 2000 IMPLICATIONS

     Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field and cannot distinguish
21st century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such "Year 2000" requirements. Although the Company
believes that its systems are Year 2000 compliant in all material respects,
there can be no assurances that the Company's current systems and products do
not contain undetected errors or defects with Year 2000 date functions that may
result in material costs to the Company. Although the Company is not aware of
any material operational issues or costs associated with preparing its internal
systems for the Year 2000, there can be no assurances that the Company will not
experience serious 

                                       33
<PAGE>

unanticipated negative consequences (such as significant downtime for one or 
more Yahoo! media properties) and/or material costs caused by undetected 
errors or defects in the technology used in its internal systems. In 
addition, the Company utilizes third-party equipment, software and content 
that may not be Year 2000 compliant. Failure of such third-party equipment, 
software or content to operate properly with regard to the year 2000 and 
thereafter could require the Company to incur unanticipated expenses to 
remedy any problems, which could have a material adverse effect on the 
Company's business, results of operations and financial condition. 
Furthermore, the purchasing patterns of advertisers may be affected by Year 
2000 issues as companies expend significant resources to correct their 
current systems for Year 2000 compliance. These expenditures may result in 
reduced funds available for Web advertising or sponsorship of Web services, 
which could have a material adverse effect on the Company's business, results 
of operations and financial condition.

   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 Yahoo!
localized for Japan, Germany, France, the United Kingdom, 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, Denmark, Italy, Norway, Sweden,
and Singapore. The Company also offers Yahoo! guides in Spanish and Mandarin
Chinese languages.

     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 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. 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. There can be no assurance that the
international markets addressed by the Company will develop at a rate that
supports the Company's level of investment.  If revenues from these markets 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. In
addition, in a number of international markets the Company faces substantial
competition from ISPs, some of which have a dominant market share in their
territories, that offer or may offer their own navigational service.

     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 

                                       34
<PAGE>

regulatory requirements, trade barriers, difficulties in staffing and 
managing foreign operations, longer payment cycles, problems in collecting 
accounts receivable, political instability, export restrictions, export 
controls relating to encryption technology, 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 July 15, 1998, the present directors, executive officers, and their
respective affiliates beneficially owned approximately 59% of the outstanding
Common Stock of the Company. As of July 15, 1998, SOFTBANK owned approximately
31% of the outstanding Common Stock.  As a result of their ownership, the
directors, executive officers, greater than 5% shareholders and their respective
affiliates (including SOFTBANK) 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.

   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 the Company, which could have an
adverse effect on the market price of the Company's Common Stock. In addition,
the Company's charter documents do not permit 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.

                                       35

<PAGE>

     SHARES ELIGIBLE FOR FUTURE SALE

     As of June 30, 1998, the Company had outstanding 46,841,560 pre-split
shares of Common Stock, and options to purchase a total of 11,570,692 pre-split
shares of the Company's Common Stock under the Company's stock option plans,
including shares issued and options assumed in the recent acquisition of Viaweb.
Of these shares, an estimated number of 3,186,132 pre-split shares recently
issued in connection with acquisitions and investments have been or will be
available for resale pursuant to registration statements filed by the Company
with the SEC.  Sales of substantial amounts of such shares in the public market
or the prospect of such sales could adversely affect the market price of the
Company's Common Stock. 

                                        36
<PAGE>

PART II - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

     As previously reported, in July and October 1997, GTE New Media Services
Incorporated ("GTE New Media") filed lawsuits in state court in Dallas, Texas
and in federal court in the District of Columbia, against Netscape and the
Company, which lawsuits relate to certain Yellow Pages services offered in the
Netscape Guide By Yahoo!.  In June 1998, the Company entered into agreements
with GTE New Media that provide for the dismissal of, and mutual release with
respect to, both lawsuits without any payment or consideration by the Company,
and, with respect to the Texas case, subject only to certain conditions that the
Company anticipates will be fulfilled by October 1998.

     From time to time the Company is subject to other legal proceedings and
claims in the ordinary course of business, including claims of alleged
infringement of trademarks, copyrights and other intellectual property rights,
and a variety of claims arising in connection with the Company's email, message
boards, and other communications and community features, such as claims alleging
defamation and invasion of privacy.  The Company is not currently aware of any
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.


ITEM 2.   CHANGES IN SECURITIES

     Yahoo! Inc. made the following unregistered sales of the Company's Common
Stock in the quarter ended June 30, 1998:
<TABLE>
<CAPTION>

                                                                    PERSONS OR CLASS
                                     NAME OF                          OF PERSONS TO       EXEMPTION
                                  UNDERWRITER OR                        WHOM THE            FROM
TRANSACTION        AMOUNT OF        PLACEMENT       CONSIDERATION    SECURITIES WERE     REGISTRATION
   DATE         SECURITIES SOLD       AGENT           RECEIVED            SOLD             CLAIMED
- -----------   ------------------- --------------    -------------   ----------------    ---------------
<S>           <C>                 <C>               <C>             <C>                 <C>
6/10/98        393,591 Shares (1)     None              (1)         Stockholders of     Section 4(2) of
                                                                      Viaweb Inc.       the Securities 
                                                                                        Act of 1933, as 
                                                                                        amended
</TABLE>

(1)  Pursuant to an Agreement and Plan of Merger dated June 4, 1998, by and
     among Yahoo!, XY Acquisition Corporation, a wholly-owned subsidiary of
     Yahoo!, and Viaweb Inc. ("Viaweb"), on June 10, 1998 (the effective date of
     the acquisition), all outstanding shares of Viaweb capital stock were
     converted into 393,591 pre-split shares of Yahoo! Common Stock.  The resale
     of these shares has been registered on a Registration Statement on Form S-3
     filed with the Securities and Exchange Commission on June 12, 1998.

                                         37
<PAGE>

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     None.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


ITEM 5.   OTHER INFORMATION

     None.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K   

       a. The exhibits listed in the accompanying Index to Exhibits are filed as
          part of this Report on Form 10-Q.
     
       b. Reports on Form 8-K:

          1) On June 8, 1998, the Company filed a report on Form 8-K, pursuant 
             to Item 5 of such Form, announcing that it had entered into an 
             Agreement and Plan of Merger to acquire Viaweb Inc.

          2) On June 12, 1998, the Company filed a report on Form 8-K (as 
             amended by Form 8-K/A filed on June 18, 1998), pursuant to Items 2
             and 7 of such Form, regarding its acquisition of Viaweb Inc.

                                         38
<PAGE>

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                   YAHOO! INC.



Dated: July 17, 1998               By: /s/  Gary Valenzuela     
                                       -------------------------
                                        Gary Valenzuela
                                        Senior Vice President, Finance
                                        and Administration, and Chief
                                        Financial Officer
                                        (Principal Financial Officer)


Dated: July 17, 1998               By:  /s/  James J. Nelson     
                                       -------------------------
                                         James J. Nelson
                                         Vice President, Finance
                                         (Principal Accounting Officer)

                                         39
<PAGE>


                                    YAHOO! INC.
                                          
                                 INDEX TO EXHIBITS
                                          
                                          
<TABLE>
<CAPTION>
                                                                      Exhibit
Title                                                                   No.
- -----                                                                 -------
<S>                                                                   <C>
Stock Purchase Agreement dated as of July 7, 1998, between Yahoo!
and SOFTBANK Holdings Inc. . . . . . . . . . . . . . . . . . . . . . . 10.1

Amendment to Second Amended and Restated Investor Rights Agreement
dated July 7, 1998 among Yahoo!, SOFTBANK Holdings Inc., Sequoia 
Capital VI and Sequioia Technology Partners VI . . . . . . . . . . . . 10.2

Content License Agreement dated January 8, 1998 between Yahoo! and
ZDNet  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3

Financial Data Schedule  . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>

<PAGE>

- ------------------------------------------------------------------------------


                           STOCK PURCHASE AGREEMENT
                                       
                                       
- ------------------------------------------------------------------------------
                                       
                                       
                                by and between
                                       
                                       
                                       
                                  YAHOO! INC.
                                (the "COMPANY")
                                       
                                       
                                      and
                                       
                                       
                                       
                            SOFTBANK HOLDINGS INC.
                               (the "PURCHASER")
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                           Dated as of July 7, 1998

<PAGE>

                                  YAHOO! INC.
                           STOCK PURCHASE AGREEMENT
                                       
     THIS STOCK PURCHASE AGREEMENT is made and entered into as of July 7, 1998,
by and among YAHOO! INC., a California corporation (the "COMPANY"), and
SOFTBANK Holdings Inc., a Delaware corporation (the "PURCHASER").

     THE PARTIES AGREE AS FOLLOWS:

                                   ARTICLE I
                        AUTHORIZATION AND SALE OF STOCK
                        -------------------------------
                                       
     Section 1.1    AUTHORIZATION OF THE SHARES.  On or before the Closing Date
(as defined in Section 2.1 below), the Company will have authorized the
issuance and sale of 1,363,440 shares of Common Stock of the Company, par value
$0.00067 per share (the "SHARES"), pursuant to this Agreement.

     Section 1.2    SALE OF THE SHARES.  Subject to the terms and conditions
hereof, on the Closing Date the Company will issue and sell to the Purchaser,
and the Purchaser will purchase from the Company, the Shares at a purchase
price of $183.36 per share for a total purchase price of $250,000,358.40.

                                  ARTICLE II
                            CLOSING DATE; DELIVERY
                            ----------------------

     Section 2.1    CLOSING DATE.  The consummation of the purchase and sale of
the Shares hereunder (the "CLOSING") shall be held at the offices of Venture
Law Group, A Professional Corporation, 2800 Sand Hill Road, Menlo Park,
California 94025 at 10:00 a.m., on July 14, 1998 or at such other time and
place as the Company and the Purchaser mutually agree upon in writing
(the "CLOSING DATE").

     Section 2.2    DELIVERY.  At the Closing, the Purchaser shall deliver
payment of the purchase price for the Shares by check or by wire transfer.
Within three (3) days after the Closing Date, the Company shall deliver to the
Purchaser certificate(s) representing the Shares.

     Section 2.3    CONSUMMATION OF CLOSING.  All acts, deliveries and
confirmations comprising the Closing regardless of chronological sequence shall
be deemed to occur contemporaneously and simultaneously upon the occurrence of
the last act, delivery or confirmation of the Closing and none of such acts,
deliveries or confirmations shall be effective unless and until the last of
same shall have occurred.

                                  ARTICLE III
                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
                 ---------------------------------------------

     The Company hereby represents and warrants to the Purchaser, at and as of
the date of this Agreement and at and as of the Closing Date, as follows:

<PAGE>

     Section 3.1    ORGANIZATION  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite corporate power to own, lease and operate its property
and to carry on its business as now being conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the failure to be so qualified or licensed would have a material adverse effect
on the business, assets (including intangible assets), liabilities, condition
(financial or otherwise), prospects, property or results or operations (a
"MATERIAL ADVERSE EFFECT") of the Company.

     Section 3.2    VALID ISSUANCE OF COMMON STOCK. The Shares, when issued and
paid for in accordance with this Agreement will be duly authorized, validly
issued, fully paid, and non-assessable and issued in compliance with all
applicable federal or state securities laws.

     Section 3.3    AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

          (a)  The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement.  The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company.  This
Agreement has been duly executed and delivered by the Company, and constitutes
the valid and binding obligation of the Company, enforceable in accordance with
its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.

          (b)  The execution and delivery by the Company of this Agreement does
not, and consummation of the transactions contemplated by this Agreement will
not, (i) conflict with, or result in any violation or breach of any provision
of the Articles of Incorporation or Bylaws of the Company, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which the
Company is a party or by which any of its properties or assets may be bound, or
(iii) conflict or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its properties or assets, except in the case of (ii) and
(iii) for any such conflicts, violations, defaults, terminations, cancellations
or accelerations which would not have a Material Adverse Effect on the Company
and its subsidiaries, taken as a whole.

          (c)  No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("GOVERNMENTAL
ENTITY") is required by or with respect to the Company in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state 

                                      -2-
<PAGE>

securities laws and the laws of any foreign country, and (iii) such other 
consents, authorizations, filings, approvals and registrations which, if not 
obtained or made, could be expected to have a Material Adverse Effect on the 
Company and its subsidiaries, taken as a whole.

     Section 3.4    COMMISSION FILINGS; FINANCIAL STATEMENTS.

          (a)  The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") and made available to the Purchaser or its
representatives all forms, reports and documents required to be filed by the
Company with the Commission since December 31, 1997 (collectively, the "COMPANY
COMMISSION REPORTS").  The Company Commission Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended, (the "SECURITIES ACT"), and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

          (b)  Each of the financial statements (including, in each case, any
related notes) contained in the Company Commission Reports, including any such
Report filed after the date of this Agreement until the Closing, complied as to
form in all material respects with the applicable published rules and
regulations of the Commission with respect thereto, was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, as permitted
by Form 10-Q of the Commission) and fairly presented the consolidated financial
position of the Company and its subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount.

     Section 3.5    COMPLIANCE WITH LAWS.  The Company has complied with, is
not in violation of, and has not received any notices of violation with respect
to, any federal, state or local statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business,
including but not limited to statutes, laws or regulations relating to the
protection of the environment or concerning the handling, storage, disposal or
discharge of toxic materials (collectively, "ENVIRONMENTAL LAWS"), except for
failures to comply or violations which would not have a Material Adverse Effect
on the Company and its subsidiaries, taken as a whole.

     Section 3.6    SHAREHOLDERS CONSENT.  No consent or approval of the
shareholders of the Company is required or necessary for the Company to enter
into this Agreement or to consummate the transactions contemplated hereby and
thereby.

     Section 3.7    LITIGATION.  Except as otherwise disclosed in the Company
Commission Reports, (i) there is no private or governmental action, suit,
proceeding, claim, arbitration or 

                                      -3-
<PAGE>

investigation pending before any agency, court or tribunal, foreign or 
domestic, or, to the knowledge of the Company or any of its subsidiaries, 
threatened against the Company or any of its properties or any of its 
officers or directors (in their capacities as such), which, if determined 
adversely to the Company, would have a Material Adverse Effect on the Company 
and its subsidiaries, taken as a whole, and (ii) there is no judgment, decree 
or order against the Company, or, to the knowledge of the Company, any of its 
respective directors or officers (in their capacities as such) relating to 
the business of the Company, the presence of which would have Material 
Adverse Effect with respect the Company and its subsidiaries, taken as a 
whole.

     Section 3.8    INTELLECTUAL PROPERTY.  Except as disclosed in the Company
Commission Reports, the Company owns or possesses, or can acquire on
commercially reasonable terms, adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights, technology,
software, know-how and trade secrets necessary to conduct the business now or
proposed to be conducted by the Company, and the Company has not received any
notice of infringement of or conflict with (and knows of no such infringement
of or conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights, technology, know-how or
trade secrets that would result in a Material Adverse Effect; and, to the
Company's knowledge, the discoveries, inventions, products, services or
processes used in the Company's business do not, infringe or conflict with any
right or patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third party,
which infringement or conflict would result in a Material Adverse Effect.

                                       
                                  ARTICLE IV
                REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
                -----------------------------------------------

     The Purchaser hereby represents and warrants to the Company, at and as of
the date of this Agreement and at and as of the Closing, as follows:

     Section 4.1    AUTHORITY.  The Purchaser is a corporation and is duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  The Purchaser has now, and will have at the Closing Date, all
requisite legal and corporate power to enter into this Agreement, to purchase
the Shares hereunder, and to perform its obligations under the terms of this
Agreement.

     Section 4.2    AUTHORIZATION.  All corporate action on the part of the
Purchaser necessary for the purchase of the Shares and the performance of the
Purchaser's obligations hereunder has been taken or will be taken prior to the
Closing Date.  This Agreement when executed and delivered by the Purchaser will
constitute a valid and legally binding obligation of the Purchaser, enforceable
in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy laws or other similar laws affecting creditors' rights
generally, and except insofar as the availability of equitable remedies may be
limited.

     Section 4.3    PURCHASE ENTIRELY FOR OWN ACCOUNT.  This Agreement is made
with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the 

                                      -4-
<PAGE>

Purchaser's execution of this Agreement, the Purchaser hereby confirms, that 
the Shares to be acquired by the Purchaser will be acquired for investment 
for the Purchaser's own account, not as a nominee or agent, and not with a 
view to the resale or distribution of any part thereof, and that the 
Purchaser has no present intention of selling, granting any participation in, 
or otherwise distributing the same.  By executing this Agreement, the 
Purchaser further represents that the Purchaser does not presently have any 
contract, undertaking, agreement or arrangement with any person to sell, 
transfer or grant participation to such person or to any third person, with 
respect to any of the Shares.  The Purchaser has not been formed for the 
specific purpose of acquiring the Shares.

     Section 4.4    INVESTMENT EXPERIENCE.  Purchaser is an "accredited
investor" as defined in Rule 501(a) under the Securities Act.  Purchaser is
aware of the Company's business affairs and financial condition and has had
access to and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares.  Purchaser has such
business and financial experience as is required to give it the capacity to
protect its own interests in connection with the purchase of the Shares.
Purchaser is not a "broker" or a "dealer" as defined in the Exchange Act.

     Section 4.5    RESTRICTED SECURITIES. The Purchaser understands that the
Shares are characterized as "restricted securities" under applicable U.S.
federal and state securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that, pursuant to
these laws and applicable regulations, the Purchaser must hold the Shares
indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Shares, and
on requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.  In this connection, Purchaser represents that it is familiar with SEC
Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.

     Section 4.6    LEGENDS.  The Purchaser understands that the Shares, and
any securities issued in respect thereof or exchange therefor, may bear one or
all of the following legends:

               (a)  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF.  NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933."

                                      -5-
<PAGE>

               (b)  Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the
certificate so legended.

                                   ARTICLE V
                             CONDITIONS TO CLOSING
                             ---------------------

     Section 5.1    CONDITIONS TO THE PURCHASER'S OBLIGATIONS.  The obligation
of the Purchaser to purchase the Shares at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions:

          (a)  REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS.  The representations and warranties made by the Company in Article
III hereof shall be true and correct when made, and shall be true and correct
on the Closing Date with the same force and effect as if they had been made on
and as of such date, subject to changes contemplated by this Agreement; and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing Date.

          (b)  COMPLIANCE CERTIFICATE.  The President of the Company shall
deliver to the Purchaser at the Closing a certificate certifying that the
conditions specified in Section 5.1(a) have been fulfilled and stating that
there shall have been no material adverse change in the business, operations,
properties, assets or financial condition of the Company since the date of this
Agreement.

          (c)  OPINION OF COMPANY'S COUNSEL.  The Purchaser shall have received
from Venture Law Group, A Professional Corporation, counsel to the Company, an
opinion addressed to the Purchaser, dated the Closing Date, substantially in
the form of EXHIBIT A attached hereto.

          (d)  QUALIFICATIONS.  The offer and sale of the Shares to the
Purchaser pursuant to this Agreement shall be exempt from qualification under
the California Corporate Securities Law of 1968, as amended.  All other
authorizations, approvals or permits of any other governmental authority that
are required in connection with the lawful issuance and sale of the Shares
shall have been duly obtained and shall be effective on and as of the Closing
Date.

          (e)  REGISTRATION RIGHTS.  The Second Amended and Restated Investor
Rights Agreement dated March 12, 1996 shall have been amended to include the
Shares as Registrable Securities (as defined therein).

     Section 5.2    CONDITIONS TO OBLIGATIONS OF THE COMPANY.  The Company's
obligation to issue and sell the Shares at the Closing is subject to the
fulfillment on or prior to the Closing Date of each of the following
conditions:

          (a)  REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS.  The representations and warranties of the Purchaser in Article IV
hereof shall be true and correct when made, and shall be true and correct on
the Closing Date with the same force and effect as if they had been made on and
as of such date; and the Purchaser shall have performed all obligations and
conditions herein required to be performed by it on or prior to the Closing
Date.

                                      -6-
<PAGE>

          (b)  QUALIFICATIONS.  The offer and sale of the Shares to the
Purchaser pursuant to this Agreement shall be exempt from qualification under
the California Corporate Securities Law of 1968, as amended.  All other
authorizations, approvals or permits of any other governmental authority that
are required in connection with the lawful issuance and sale of the Shares
shall have been duly obtained and shall be effective on and as of the Closing
Date.

                                  ARTICLE VI
                                 MISCELLANEOUS
                                 -------------

     Section 6.1    GOVERNING LAW.  This Agreement shall be governed in all
respects by the laws of the State of California.

     Section 6.2    SURVIVAL.  The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.

     Section 6.3    SUCCESSORS AND ASSIGNS.  Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.

     Section 6.4    ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects
hereof and thereof.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser.

     Section 6.5    NOTICES AND OTHER COMMUNICATIONS.  Every notice or other
communication required or contemplated by this Agreement by either party shall
be delivered either by (i) personal delivery, (ii) postage prepaid return
receipt requested registered or certified mail or the equivalent of registered
or certified mail under the laws of the country where mailed, (iii) nationally
recognized overnight courier, such as Federal Express or UPS, or (iv) facsimile
with a confirmation copy sent simultaneously by postage prepaid, return receipt
requested, registered or certified mail, in each case addressed to the Company
or the Purchaser as the case may be at the following address:

     To the Company:     Yahoo! Inc.
                         3420 Central Expressway
                         Santa Clara, CA 95051
                         Attn:  Timothy Koogle
                         Facsimile:  (408) 731-3301

                                      -7-
<PAGE>
     
     With a copy at the same address to the attention of the General Counsel
     and Secretary, and a copy to:
     
                         Venture Law Group
                         A Professional Corporation
                         2800 Sand Hill Road
                         Menlo Park, California  94025
                         Attn.:  James L. Brock
                         Facsimile:  (415) 233-8386

     To the Purchaser:   SOFTBANK Holdings Inc.
                         10 Langley Road, Suite 403
                         Newton Center, MA  02159
                         Attn: Ronald D. Fisher
                         Facsimile: (617) 928-9301
     
     
     With a copy to:     Sullivan & Cromwell
                         125 Broad Street
                         New York, NY  10004
                         Attn: Stephen A. Grant
                         Facsimile: (212) 558-3588

or at such other address as the intended recipient previously shall have
designated by written notice to the other party (with copies to counsel as may
be indicated on the signature page).  Notice by registered or certified mail
shall be effective on the date it is officially recorded as delivered to the
intended recipient by return receipt or equivalent, and in the absence of such
record of delivery, the effective date shall be presumed to have been the fifth
(5th) business day after it was deposited in the mail.  All notices delivered
in person or sent by courier shall be deemed to have been delivered to and
received by the addressee and shall be effective on the date of personal
delivery; notices delivered by facsimile with simultaneous confirmation copy by
registered or certified mail shall be deemed delivered to and received by the
addressee and effective on the date sent.  Notice not given in writing shall be
effective only if acknowledged in writing by a duly authorized representative
of the party to whom it was given.

     Section 6.6    DELAYS OR OMISSIONS.  No delay or omission to exercise any
right, power or remedy accruing to any holder of any Shares, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.  Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent 

                                      -8-
<PAGE>

specifically set forth in such writing.  All remedies either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.

     Section 6.7    SEPARABILITY OF AGREEMENTS; SEVERABILITY OF THIS AGREEMENT.
In case any provision of this Agreement shall be invalid, illegal or 
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

     Section 6.8    FINDER'S FEES.

          (a)  The Company (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Purchaser
harmless of and from any liability for commission or compensation in the nature
of a finder's fee to any broker or other person or firm (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company, or any of its employees or representatives, is responsible.

          (b)  The Purchaser (i) represents and warrants that it has retained
no finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Company harmless
of and from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which the
Purchaser, or any of its employees or representatives, is responsible.

     Section 6.9    CALIFORNIA CORPORATE SECURITIES LAW.  THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE
OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE
IS SO EXEMPT.

     Section 6.10   COUNTERPARTS.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.  Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement
by such party.  Such facsimile copies shall constitute enforceable original
documents.

     Section 6.11   ATTORNEYS' FEES.  If any action or proceeding shall be
commenced to enforce this Agreement or any right arising in connection with
this Agreement, the prevailing party in such action or proceeding shall be
entitled to recover from the other party, the reasonable attorneys' fees, costs
and expenses incurred by such prevailing party in connection with such action
or proceeding or negotiation to avoid such action or proceeding.

                                      -9-
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year set forth in the heading hereof.

                                   YAHOO! INC.
                                   
                                   
                                   By:  /s/ TIMOTHY KOOGLE
                                        -------------------------------
                                        Timothy Koogle, President & CEO



                                   SOFTBANK HOLDINGS INC.
                                   
                                   
                                   By:  /s/  RONALD D. FISHER
                                        -------------------------------
                                        Ronald D. Fisher, Vice Chairman


                                      -10-

<PAGE>
                                  YAHOO! INC.
                                       
                   AMENDMENT TO SECOND AMENDED AND RESTATED
                           INVESTOR RIGHTS AGREEMENT
                                       

     THIS AMENDMENT TO SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
(the "AMENDMENT") is made and entered into as of July 7, 1998, by and among
Yahoo! Inc., a California corporation (the "COMPANY"), and the undersigned
holders (the "HOLDERS") of the outstanding Registrable Securities (as defined
in the Rights Agreement) listed on EXHIBIT A hereto to amend the Second Amended
and Restated Investor Rights Agreement dated March 12, 1996 ("RIGHTS
AGREEMENT") by and among the Company and certain persons and entities listed on
SCHEDULE A, SCHEDULE B and SCHEDULE C thereto.  Capitalized terms not defined
herein shall have the meaning assigned in the Rights Agreement.

                                   RECITALS
                                       
     A.   Pursuant to the terms of the Rights Agreement, any provision of the
Rights Agreement may be amended, waived, discharged or terminated upon the
written consent of the Company and the holders of a majority of the outstanding
Registrable Securities.

     B.   Concurrent with the execution of this Amendment, the SOFTBANK
Holdings, Inc., a Holder, is purchasing from the Company shares of the
Company's Common Stock pursuant to a Stock Purchase Agreement of even date
herewith (the "STOCK PURCHASE AGREEMENT").

     C.   In connection with such investment, the undersigned Holders
constituting the holders of a majority of the outstanding Registrable
Securities desire to amend and restate certain provisions of the Rights
Agreement as set forth herein.

     THE PARTIES HEREBY AGREE AS FOLLOWS:

     1.   Section 2.1 (b) of the Rights Agreement is hereby amended and
restated in its entirety as follows:

               "(b) The term "REGISTRABLE SECURITIES" means:

                   (i)   The shares of Common Stock issuable or issued upon
conversion of the Series A Shares, Series B Shares and Series C Shares (the
Series A Shares, the Series B Shares, the Series C Shares and the SOFTBANK
Shares are sometimes collectively referred to as the "STOCK"); and

                  (ii)   1,363,440 shares of Common Stock (the "SOFTBANK
SHARES") issued to SOFTBANK Holdings, Inc. ("SOFTBANK"), pursuant to the Stock
Purchase Agreement dated July 7, 1998 by and between the Company and SOFTBANK.

<PAGE>

                 (iii)   Any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, the Stock, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
his or her rights under this Agreement are not assigned;

PROVIDED, HOWEVER, that Common Stock or other securities shall only be treated
as Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale."

     2.   Section 2.1 is amended by the addition of the following subsection at
the end of Section 2.1:

               "(i) The term "Initial Public Offering" means the initial
offering to the public of securities of the Company."

     3.   Section 2.2(a) of the Rights Agreement is hereby amended and restated
in its entirety as follows:

          "2.2 REQUESTED REGISTRATION.

               (a)  If the Company shall receive at any time a written request
from the Holders of Registrable Securities having market value (based on the
average closing price of the Common Stock on the principal trading exchange or
system for the ten (10) trading days preceding the date of the request)
exceeding three hundred million dollars ($300,000,000) that the Company file a
registration statement under the Securities Act for the sale of Registrable
Securities for an aggregate public offering price of at least ten million
dollars ($10,000,000), the Company shall notify within ten (10) days of receipt
thereof, in writing, all Holders of Registrable Securities of such request, and
shall use its best efforts to effect as soon as practicable the registration
under the Act of all Registrable Securities which the Holders request to be
registered within twenty (20) days of the mailing of such notice by the Company
in accordance with Section 5.5."

     4.   Except as provided herein, the Rights Agreement shall remain in full
force and effect.  If one or more provisions of this Amendment are held to be
unenforceable under applicable law, such provision shall be excluded from this
Amendment and the balance of this Amendment shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

     5.   Nothing in this Amendment, express or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Amendment, except as expressly provided herein.

                                      -2-
<PAGE>

     6.   This Amendment shall be governed by and construed under the laws of
the State of California in the United States of America as applied to
agreements among California residents entered into and to be performed entirely
within California.

     7.   This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

                           [SIGNATURE PAGE FOLLOWS]

                                      -3-
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Amendment.

COMPANY:

YAHOO! INC.

By:   /s/ TIMOTHY KOOGLE
      -------------------------------
      Timothy Koogle, President & CEO


HOLDERS:

SOFTBANK HOLDINGS INC.


By:   /s/ RONALD D. FISHER
      -------------------------------
      Ronald D. Fisher, Vice Chairman


SEQUOIA CAPITAL VI


By:   /s/ MICHAEL MORITZ
      -------------------------------
Name:     Michael Moritz
      -------------------------------
Title:    General Partner
      -------------------------------

SEQUOIA TECHNOLOGY PARTNERS VI


By:   /s/ MICHAEL MORITZ
      -------------------------------
Name:     Michael Moritz
      -------------------------------
Title:    General Partner
      -------------------------------

                                      -4-
<PAGE>
                                       
                                   EXHIBIT A
                                   ---------
                                LIST OF HOLDERS
                                ---------------

SOFTBANK Holdings Inc.
846 University Avenue
Norwood, MA  02062-2666

cc:  Stephen A. Grant, Esq.
     Sullivan & Cromwell
     125 Broad Street
     New York, NY  10004

Sequoia Capital VI
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California  94025

cc:  Bradford F. Shafer, Esq.
     Brobeck, Phleger & Harrison,
     One Market, Spear Street Tower
     San Francisco, CA  94105

Sequoia Technology Partners VI
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, California  94025


<PAGE>
                                  YAHOO! INC.
                                       
                           CONTENT LICENSE AGREEMENT

     THIS CONTENT LICENSE AGREEMENT (the "AGREEMENT") is made as of this 8th
day of January, 1998  between YAHOO! INC., a California corporation, with
offices at 3400 Central Expressway, Suite 201, Santa Clara, CA 95051, ("YAHOO")
and ZDNET, with offices at One Athenaeum Street, Cambridge, MA 02142
("LICENSOR").

     In consideration of the mutual promises contained herein, the parties
agree as follows:

SECTION 1: DEFINITIONS

     Unless otherwise specified, capitalized terms used in this Agreement shall
have the meanings attributed to them in EXHIBIT A hereto.

SECTION 2: GRANT OF LICENSES

2.1  LICENSOR GRANT OF LICENSES.  Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Yahoo, under Licensor's applicable
Intellectual Property Rights:

     (a)  A non-exclusive, worldwide license to use, modify, reproduce,
          distribute, display and transmit the Licensor Content in electronic
          form as part of the Yahoo Properties via the Internet, and to permit
          users of the Yahoo Properties to download and print the Licensor
          Content for personal use. Yahoo's license to modify the Licensor
          content shall be limited to modifying the Licensor Content to fit the
          format and look and feel of the Yahoo Property; Yahoo shall not alter
          the substantive meaning of the Licensor Content in any way.

     (b)  A non-exclusive, worldwide, fully paid license to use, reproduce and
          display the Licensor's Brand Features: (i) in connection with the
          presentation of the Licensor Content on the Yahoo Cobranded Pages in
          the Yahoo Properties; and (ii) in connection with the marketing and
          promotion of the Yahoo Properties.  All use by Yahoo of Licensor's
          Brand Features shall comply with Licensor's trademark usage
          guidelines as have been delivered to Yahoo from time to time.

     (c)  Yahoo shall be entitled to sublicense the rights set forth in this
          Section 2.1(1) to its Affiliates only for inclusion in Yahoo
          Properties, and (2) as necessary for  any mirror site of or
          distribution arrangement for a Yahoo Property.  Any sublicense shall
          obligate the sublicensee to comply with the terms and conditions of
          this Agreement, however, Yahoo shall remain liable for any breach by
          such sublicensee.

2.2  QUALITY STANDARDS.  Each of Yahoo and Licensee shall at all times conduct
all aspects of its business which relate to the Yahoo Properties and the
Licensor Site in a professional manner that

<PAGE>

will reflect favorably upon the other party so as to preserve and enhance the 
goodwill associated with the Brand Features of the other party. Yahoo shall 
not modify the Licensor Content except as may be necessary to conform to the 
look and feel of the Yahoo Properties; provided that such modifications shall 
not alter the substantive meaning of any Licensor Content in any way.

SECTION 3: DELIVERY OF LICENSOR CONTENT; ADVERTISING REVENUE

3.1  YAHOO'S RESPONSIBILITIES.  In addition to any responsibilities that may be
set forth in EXHIBIT C, Yahoo will be responsible for implementing the agreed
upon design and layout and for posting,  maintenance and operation of the Yahoo
Cobranded Pages.

3.2  LICENSOR ASSISTANCE.  In addition to any responsibilities that may be set
forth in EXHIBIT C, Licensor will provide on-going assistance to Yahoo with
regard to technical, administrative and service-oriented issues relating to the
utilization, transmission and maintenance of the Licensor Content, as Yahoo may
reasonably request. Licensor will use its reasonable best efforts to ensure
that the Licensor Content is accurate, comprehensive and updated regularly in
accordance with the Delivery Specifications as set forth in EXHIBIT C.

3.3  ADVERTISING RIGHTS.  Yahoo shall have the sole right to sell and retain
all Advertising Rights with respect to Yahoo Cobranded  Pages.  All advertising
inventory generated via pageviews to Yahoo's servers, including the Yahoo
Cobranded Pages, will be the property of Yahoo and Yahoo will keep 100% of the
revenue.  Licensor shall have the sole right to sell and retain all Advertising
Rights on the Licensor Site, including on any page within the Licensor Site
which is linked to from the Yahoo Properties.   All advertising inventory
generated via pageviews to the Licensor Site, will be the property of Licensor
and Licensor will keep 100% of the revenue, even if traffic originated from a
Yahoo Cobranded Page.

3.4  NOTICES.  Yahoo will not alter or impair any acknowledgment of copyright
or other Intellectual Property Rights of Licensor that may appear in the
Licensor Content and the Licensor Brand Features, including all copyright,
trademark and similar notices that Licensor may reasonably request on each
Yahoo Cobranded Page.

3.5  LINKS.  During the Term (as defined in Section 7), the parties will
maintain the hypertext links specified in EXHIBIT B.

SECTION 4: LICENSOR CONTENT

4.1  SELECTION OF LICENSOR CONTENT.  Licensor Content will be placed on the
Yahoo Properties as described in EXHIBIT B. Licensor will provide Licensor
Content in a volume appropriate in light of the number and placement of
Pointers placed by Yahoo on the Yahoo Properties.  The goal of the parties is
to generate a relatively equal amount of page views on the Yahoo Cobranded
Pages, on the one hand, and the pages on the Licensor Site which are visited by
users through the links on the Yahoo Cobranded Pages, on the other hand.
Licensor and Yahoo will compare traffic levels for the applicable pages of the
Licensor Site and the Yahoo Cobranded Pages monthly during the first three
months of the Term and thereafter on a quarterly basis and

<PAGE>

the parties will take steps to balance the page views.  Yahoo shall use good 
faith reasonable best efforts to balance such page views from the Yahoo 
Properties to the Licensor Site in any way it deems reasonably appropriate, 
in consultation with Licensor, including from areas of the Yahoo Properties 
other than the Yahoo Cobranded Pages.  In the event Yahoo is not successful, 
after using  good faith, reasonable best efforts, in balancing such page 
views, Licensor's sole remedy shall be to terminate this Agreement upon at 
least thirty (30) days written notice to Yahoo, provided such page views have 
not been balanced by the end of such thirty (30) days. Licensor's remedy 
shall not be limited however, if Licensor fails to use its good faith 
reasonable best efforts to balance the page views.

4.2  CORRECTIONS.  If Licensor requests that any portion of the Licensed
Content on a Yahoo Cobranded Page be deleted, corrected or made inaccessible
because such Licensed Content contains material errors, or is, or could be
subject to a claim that it is defamatory, obscene, invades the right of
privacy, or infringes any right of any person or entity, Yahoo shall delete or
correct the affected Licensor Content within 72 hours after receipt of
Licensor's request. If Licensor requests that any portion of the Licensed
Content on a Yahoo Cobranded Page be deleted, updated, replaced or made
inaccessible for any other reason, Yahoo shall use commercially reasonable
efforts to honor this request as soon as possible but no later than five (5)
days from the date of Licensor's request.

SECTION 5: INDEMNIFICATION

5.1  LICENSOR INDEMNITY.  Licensor, at its own expense, will indemnify, defend
and hold harmless Yahoo, its Affiliates and their employees, representatives,
agents, from and against any judgment, loss, damage, liability, cost or expense
(including reasonable attorneys' fees) arising from any third party claim,
brought against Yahoo or its  Affiliates  alleging that (1) the Licensor
Content as delivered to Yahoo, (2) any material contained on the Yahoo
Cobranded Pages (other than the Yahoo Brand Features), (3) any Licensor Brand
Feature licensed to Yahoo hereunder or (4) or any material, including, without
limitation, software, included on or downloadable from Licensor Site that is
full text of articles excerpted or headlined on the Yahoo Cobranded Pages or is
specifically referenced on the Yahoo Cobranded Pages (including those shareware
files or other software available for download either via a download button on
the Yahoo Cobranded Pages or which are specifically referred to on the Yahoo
Cobranded Pages), infringes in any manner any Intellectual Property Right of
any third party or contains any material or information that is obscene,
defamatory, libelous, slanderous, that violates any person's right of
publicity, privacy or contains any virus; PROVIDED, HOWEVER, that Licensor
shall have no obligation to indemnify under this section unless: (x) Yahoo
provides Licensor with prompt written notice of any such claim; (y)Yahoo
permits Licensor to assume and control the defense of such action, with counsel
chosen by Licensor (who shall be reasonably acceptable to Yahoo); and (z)
Licensor does not enter into any settlement or compromise of any such claim
without Yahoo's prior written consent, which consent shall not be unreasonably
withheld. Licensor will pay any and all costs, damages, and expenses,
including, but not limited to, reasonable attorneys' fees and costs awarded
against or otherwise incurred by Yahoo or an Affiliate in connection with or
arising from any such claim, suit, action or proceeding. It is understood and
agreed that Yahoo does not intend and will not be required to edit or review
for accuracy or appropriateness any

<PAGE>

Licensor Content.

5.2  YAHOO INDEMNITY.  Yahoo, at its own expense, will indemnify, defend and
hold harmless Licensor, its Affiliates, and their respective employees,
representatives, officers, directors, and agents (collectively, the "Licensor
Parties") from and against any judgment, loss, damages, liability, cost or
expense (including reasonable attorneys' fees) arising from any third party
claim brought against any Licensor Party to the extent such claim alleges that
any modification made by Yahoo to any Licensor Content or any Licensor Brand
Feature or any use of the Licensor Content or Licensor Brand Feature by Yahoo
in a manner not permitted by this Agreement infringes in any manner any
Intellectual Property Right of any third party or contains any material or
information that is obscene, defamatory, libelous, slanderous, that violates
any person's right of publicity, privacy; PROVIDED, HOWEVER, that Yahoo shall
have no obligation to indemnify any Licensor Party under this section unless:
(x) Licensor provides Yahoo with prompt written notice of any such claim; (y)
Licensor permits Yahoo to assume and control the defense to such action, with
counsel chosen by Yahoo (who shall be reasonably acceptable to Licensor); and
(z) Yahoo does not enter into any settlement or compromise of such claim
without Licensor's prior written consent, which consent shall not be
unreasonably withheld.

SECTION 6: LIMITATION OF LIABILITY AND WARRANTY

6.1. LIMITATION OF LIABILITY.  EXCEPT AS PROVIDED IN SECTION 5, UNDER NO
CIRCUMSTANCES SHALL LICENSOR, YAHOO, OR ANY AFFILIATE BE LIABLE TO ANOTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
ARISING FROM THIS AGREEMENT, EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR
ANTICIPATED PROFITS OR LOST BUSINESS.

6.2  LIMITATION OF WARRANTY.  THE LICENSOR CONTENT AND THE LICENSOR BRAND
FEATURES ARE PROVIDED HEREUNDER BY LICENSOR ON AN "AS IS" BASIS WITHOUT
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE.

SECTION 7: TERM AND TERMINATION

7.1  INITIAL TERM AND RENEWALS.  This Agreement will become effective as of the
Effective Date and shall, unless sooner terminated as provided below or as
otherwise agreed, remain effective for an initial term of twenty-four (24)
months following the Launch Date (the "INITIAL TERM"). Yahoo shall notify
Licensor of such first date of public availability.  After the Initial Term,
this Agreement will be automatically renewed for successive additional one year
periods ("EXTENSION TERMS"), unless otherwise terminated by either party by
giving notice to the other party not less than sixty (60) days prior to the end
of a Term. As used herein, the "Term" means the Initial Term and any Extension
Term(s).

<PAGE>

7.2  EARLY TERMINATION.  Notwithstanding the foregoing, this Agreement may be
terminated by either party immediately upon notice if the other party: (a)
becomes insolvent; (b) files a petition in bankruptcy; (c) makes an assignment
for the benefit of its creditors; or (d) breaches any of its obligations under
this Agreement in any material respect, which breach is not remedied within
fifteen  (15) days following written notice to such party or (e) for any reason
or for no reason sixty (60) days after notice to the other party. In addition,
Licensor may terminate this Agreement prior to the end of the term pursuant to
Section 4.1.

7.3  YAHOO EARLY TERMINATION.  Yahoo may terminate this Agreement prior to the
end of the term effective on any of the following dates in the circumstances
described below: twelve (12) months, fifteen (15) months, eighteen (18) months,
or twenty-one (21 months after the Launch Date (each, an "Offer Matching
Date"). In the event that Yahoo receives a bona fide third party offer to
provide any segment of Computing Content of the type listed in Section 3 of
Exhibit B, on an exclusive basis for the Yahoo Properties (i.e., Yahoo may
license Computing Content only from such third party), then at least sixty (60)
days prior to the applicable Offer Matching Date,  Yahoo shall give Licensor
written notice (the "Offer Notice") of the material terms of such third party
offer. Licensor shall have ten (10) business days from its receipt of the Offer
Notice to either accept the Offer Notice and provide such Computing Content on
the terms specified therein or decline the Offer Notice in which event this
Agreement shall terminate as of such Offer Matching Date and Yahoo shall be
free to license such content from a third party on terms no less favorable to
Yahoo than those offered to Licensor in the Offer Notice.  Notwithstanding the
foregoing, this Section 7.3 shall not apply to any Premier Merchant Program of
Yahoo.  A  "Premier Merchant Program" is defined as an arrangement between
Yahoo and a third party in which links to the third party's Web site are placed
in relevant areas of the Yahoo Properties for the primary purpose of generating
sales of the third party's goods and services and where the third party
provides content directly related to such good and services as an ancillary
feature of such arrangement.

7.4  EFFECT OF TERMINATION.  Except as expressly set forth in Section 4.1, a
party's right to terminate pursuant to this Section 7 shall be in addition to
any other right or remedy available to such party whether pursuant to this
Agreement, in law or at equity. Upon termination of this agreement for any
reason, Yahoo shall immediately (i) remove all Licensor Content and Licensor
Brand Features from its server(s) and from the Yahoo Properties and shall
promptly delete the Licensor Content and Licensor Brand Features from its
computer systems.  The provisions of Sections 5, 6, 7, 8, 9, 10, and this
Section 7.4 shall survive any termination or expiration of this Agreement.

SECTION 8: OWNERSHIP

8.1  BY LICENSOR.  Yahoo acknowledges and agrees that: (i) as between Licensor
and its Affiliates on the one hand, and Yahoo and its Affiliates on the other,
Licensor and its Affiliates own all right, title and interest in the Licensor
Content, the Licensor Site and the Licensor Brand Features; (ii) nothing in
this Agreement shall confer in Yahoo or any Yahoo Affiliate any right of
ownership in the Licensor Content, the Licensor Site or the Licensor Brand
Features; and (iii) neither Yahoo or its Affiliates shall now or in the future
contest the validity of the Licensor

<PAGE>

Brand Features.

8.2  NO OTHER LICENSES.  No licenses are granted by either party except for
those expressly set forth in this Agreement.

SECTION 9: PUBLIC ANNOUNCEMENTS

     The parties will cooperate to create any and all appropriate public
announcements relating to the relationship set forth in this Agreement. Neither
party shall make any public announcement regarding the existence or content of
this Agreement without the other party's prior written approval and consent,
which consent shall not be unreasonably withheld.

SECTION 10: NOTICES; MISCELLANEOUS PROVISIONS

10.1 NOTICES.  All notices, requests and other communications called for by
this agreement shall be deemed to have been given immediately if made by
telecopy or electronic mail (confirmed by concurrent written notice sent first
class U.S. mail, postage prepaid), if to Yahoo at 3400 Central Expressway,
Suite 201, Santa Clara, CA 95051, Fax; (408) 731-3301 Attention: Vice President
(e-mail: [email protected]), with a copy to its General Counsel (e-mail:
[email protected]), and if to Licensor at the physical and electronic mail
addresses set forth on the signature page of this Agreement to the attention of
President, or to such other addresses as either party shall specify to the
other. A copy of any notice to Licensor regarding breach, interpretation or
termination of this Agreement shall be sent to Licensor's Legal Department at
Ziff-Davis Inc., One Park Avenue, NY, NY 10016, Attn:! Legal Department.
Notice by any other means shall be deemed made when actually received by the
party to which notice is provided.

10.2 MISCELLANEOUS PROVISIONS.  This Agreement will bind and inure to the
benefit of each party's permitted successors and assigns. Neither party may
assign this Agreement, in whole or in part, without the other party's written
consent; PROVIDED, HOWEVER, that: (i) either party may assign this Agreement
without such consent in connection with any merger, consolidation, any sale of
all or substantially all of such party's assets or any other transaction in
which more than fifty percent (50%) of such party's voting securities are
transferred. Any attempt to assign this Agreement other than in accordance with
this provision shall be null and void. This Agreement will be governed by and
construed in accordance with the laws of the State of California, without
reference to conflicts of laws rules, and without regard to its location of
execution or performance. If any provision of this Agreement is found invalid
or unenforceable, that provision will be enforced to the maximum extent
permissible, and the other provisions of this Agreement will remain in force.
Neither this Agreement, nor any terms and conditions contained herein may be
construed as creating or constituting a partnership, joint venture or agency
relationship between the parties. No failure of either party to exercise or
enforce any of its rights under this Agreement will act as a waiver of such
rights. This Agreement and its exhibits are the complete and exclusive
agreement between the parties with respect to the subject matter hereof,
superseding and replacing any and all prior agreements, communications, and
understandings,

<PAGE>

both written and oral, regarding such subject matter. This Agreement may only 
be modified, or any rights under it waived, by a written document executed by 
both parties. This Agreement may be executed in any number of counterparts, 
all of which taken together shall constitute a single instrument. Execution 
and delivery of this Agreement may be evidenced by facsimile transmission.

10.3 FORCE MAJEURE.  Neither party shall be responsible for any failure or
delay in performance of its obligations under this Agreement because of
circumstances beyond its reasonable control, including, without limitation,
acts of God, network failures or telecommunications failures.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.

YAHOO! INC.                        ZDNET
                                   
By:  /s/ JEFFREY A. MALLETT        By:  /s/ DANIEL ROSENSWEIG
     -----------------------       --------------------------
     Name:  Jeffrey A. Mallett     Name:  Daniel Rosensweig
     Title:  C.O.O.                Title:  President

Address:  3420 Central Expressway  Address:  One Athenaeum Street
          Santa Clara, CA  95051             Cambridge, MA  02142
Telecopy: 408-731-3510             Telecopy:  617-225-3600
E-mail: [email protected]

j:\lbb\yahoolnk.doc

<PAGE>


                                   EXHIBIT A

                                       
                                  DEFINITIONS
                                       
     
     "ADVERTISING RIGHTS" shall mean the advertising and promotional rights
sold or licensed with respect to Content Pages.

     "AFFILIATES" of any party shall mean any entity that controls, is
controlled by or is under common control with such party. For purposes of this
definition, "control" shall mean the possession, directly or indirectly, of a
majority of the voting power of such entity (whether though ownership of
securities, partnership or other ownership interests, by contract or
otherwise).

     "COMPUTING CONTENT" shall mean news stories, product reviews, features and
rankings, buying guides, technical tips, and other content relating to the
subject of what are commonly perceived as computer and computer related
products, including, without limitation, hardware, software, computer
peripherals, or similar computer related equipment or software.  In no event
shall Computer Content include reviews or other content relating to (1) books
on the subject of computing, (2) computer games or gaming, or (3) so called
"Enhanced" music compact disks.

     "LAUNCH DATE" shall mean February 15, 1998.

     "INTELLECTUAL PROPERTY RIGHTS" shall mean trade secrets, patents,
copyrights, trademarks, service marks, know-how,  moral rights and similar
rights of any type under the laws of any governmental authority, domestic or
foreign, including all applications and registrations relating to any of the
foregoing.

     "INTERNET" shall mean the collection of computer networks commonly known
as the Internet, and shall include, without limitation, the World Wide Web.

     "LICENSOR BRAND FEATURES" shall mean all trademarks, service marks, logos
and other distinctive brand features of Licensor that are used in the Licensor
Content which are protected under U.S. copyright law or as to which Licensor
has established trademarks or trade dress rights, including, without
limitation, the trademarks, service marks and logos described in EXHIBIT B
hereto.

     "LICENSOR CONTENT" shall mean, collectively, all materials, data, and
similar information from the Licensor Site selected by Licensor for inclusion
on Yahoo Cobranded Pages, of the categories listed  in EXHIBIT B attached
hereto.
     

     "LICENSOR SITE" shall mean the world wide web site entitled ZDNet and
any successor thereto.

<PAGE>

     "POINTERS" shall mean headlines of Licensor articles from the Licensor
Content selected by Licensor with teaser copy from each such article.
     
     "YAHOO BRAND FEATURES" shall mean all trademarks, service marks, logos and
other distinctive brand features of Yahoo that are used in or relate to a Yahoo
Property, which are protected under U.S. copyright law or as to which Yahoo has
established trademark or trade dress rights, including, without limitation, the
trademarks, service marks and logos described in EXHIBIT B.

     "YAHOO COBRANDED  PAGES" shall mean those pages in the Yahoo Property that
reside on Yahoo server(s) that contain any Licensor Content and which shall
each be co-branded with both Licensor Brand Features and Yahoo Brand Features.

     "YAHOO PROPERTIES" shall mean any U.S. Yahoo branded or co-branded online
web site, including, without limitation, Internet guides, developed by Yahoo or
its Affiliates and distributed or made available by Yahoo or its Affiliates
over the Internet.

<PAGE>

                                   EXHIBIT B
                                       
                               LICENSOR CONTENT

1.   Yahoo will include prominent Pointers throughout the Yahoo Properties in 
relevant areas, at the sole discretion of Yahoo; provided that in any area of 
the Yahoo Properties where Yahoo determines it is appropriate to include 
headlines of or links to Computing Content, Yahoo will make reasonably 
commercial efforts to include a Pointer (collectively, the "Covered Areas"). 
The Pointers will be placed more prominently in each of the Covered Areas 
than those pointing to similar content from any other third party content 
provider of Computing Content.  The Pointers will link (either textually or 
graphically, as Yahoo may determine at its sole discretion) to the Licensor 
Content from each such area. The Yahoo Cobranded Pages, accessed by clicking 
on the Pointers, will be co-branded with the Licensor Brand Features and the 
Yahoo Brand Features. Each party's Branded Features will be prominently 
positioned near the top of each Yahoo Cobranded Page as determined by Yahoo 
at its sole discretion, and will include prominent links to the Licensor 
Site, such links to be placed as determined by the parties.

     During the term of this Agreement, Yahoo shall not license for use on 
the Yahoo Property any Computing Content (including Pointers) of a nature 
different from that described in Section 3 of this Exhibit B (the "Additional 
Content") unless such opportunity is first discussed with Licensor. In the 
event that Yahoo receives a bona fide third party offer to provide Additional 
Content for the Yahoo Properties, or Yahoo desires to solicit interest from 
third parties in providing Additional Content, Yahoo shall deliver to 
Licensor a written notice (the "Discussion Notice") describing the material 
terms of such third party offer or of Yahoo's intended offer to third 
parties.  At Licensor's discretion, the parties will engage in good faith 
discussions concerning such opportunity.  If Licensor declines to commence 
discussions concerning such opportunity, or if after ten (10) days from the 
date of the Discussion Notice the parties have not after good faith 
negotiations reached agreement concerning the licensing of such Additional 
Content, Yahoo may license such Additional Content from a third party.  The 
foregoing shall not apply to any content which is to be an ancillary feature 
of a Premier Merchant Program of the type described in Section 7.3.

     During the term of this Agreement, Licensor shall not license for use on 
the Licensor Site any content organized into a browsable hierarchy from any 
major Internet search site ("Search Content") unless such opportunity is 
first discussed with Yahoo. In the event that Licensor receives a bona fide 
third party offer to provide Search Content for the Licensor Site or Licensor 
desires to solicit interest from third parties in providing Search Content, 
Licensor shall deliver to Yahoo a written notice (the "Search Notice") 
describing  the material terms of such third party offer or of Licensor's 
intended offer to third parties. At Yahoo's discretion, the parties will 
engage in good faith discussions concerning such opportunity, or if after ten 
(10) days from the date of the Search Notice the parties have not, after good 
faith negotiations, reached agreement concerning the licensing of Search 
Content, Licensor may license Search Content from a third party.

<PAGE>

2.   Each Yahoo Cobranded Page will include prominent links to relevant areas 
of the Licensor Site. For example, a Pointer within the Software category of 
the Yahoo Property will link to a Yahoo Cobranded Page highlighting software, 
shareware and utilities that is downloadable from the Licensor Site.

3.   The parties have agreed on the following elements of content as the 
Licensor Content that will be delivered to Yahoo for incorporation into the 
Yahoo Cobranded Pages.  These feeds will be established as soon as is 
practical.

*0   ZDNet News stories
*1   Shareware features and rankings
*2   Anchordesk and Rumors and Comment stories
*3   Buying guide summaries (multi-product comparisons)
*4   Tech tips
*5   Featured hardware/software product of the week
*6   "First Look" segments from PC Magazine
*7   Single product reviews

Other elements may be added in the future as both parties agree to add them.

<PAGE>

                            LICENSOR BRAND FEATURES
                                       
                                     ZDNET
                                  ZDNET Logo
                                       
                                       
                                       
                             YAHOO BRAND FEATURES
                                       
                                    Yahoo!
                              Yahoo related logos

<PAGE>

                                  EXHIBIT C

                     DELIVERY AND TECHNICAL SPECIFICATIONS

CONTENT
  
1.   All Yahoo Cobranded Pages will reflect the general look and feel of the
     Yahoo Property on which such Cobranded Page resides or is linked from.
     The general look and feel (including layout and design) of the Yahoo
     Cobranded Pages and any Cobranded Pages will be mutually agreed to by the
     parties.

2.   Licensor will deliver the Licensed Content to Yahoo on a regular basis via
     e-mail or such other form as the parties may agree to from time to time.




<TABLE> <S> <C>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE YAHOO!
INC. FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-START>                             JAN-01-1998
<PERIOD-END>                               JUN-30-1998
<CASH>                                      89,278,000
<SECURITIES>                                53,852,000
<RECEIVABLES>                               20,443,000
<ALLOWANCES>                                 3,648,000
<INVENTORY>                                          0
<CURRENT-ASSETS>                           164,136,000
<PP&E>                                      13,854,000
<DEPRECIATION>                               4,867,000
<TOTAL-ASSETS>                             191,618,000
<CURRENT-LIABILITIES>                       44,023,000
<BONDS>                                              0
                                0
                                          0
<COMMON>                                        21,000
<OTHER-SE>                                 146,613,000
<TOTAL-LIABILITY-AND-EQUITY>               191,618,000
<SALES>                                              0
<TOTAL-REVENUES>                            71,416,000
<CGS>                                                0
<TOTAL-COSTS>                                8,637,000
<OTHER-EXPENSES>                            94,003,000
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                           (27,575,000)
<INCOME-TAX>                                 4,131,000
<INCOME-CONTINUING>                       (31,706,000)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                              (31,706,000)
<EPS-PRIMARY>                                   (0.72)
<EPS-DILUTED>                                   (0.72)
        

</TABLE>


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