<PAGE>
PROSPECTUS
YAHOO! INC.
1,148,313 SHARES OF COMMON STOCK
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" REFERENCED ON PAGE 4 IN DETERMINING
WHETHER TO PURCHASE THE YAHOO! INC. COMMON STOCK.
------------------------
The selling stockholders identified on pages 27-28 of this prospectus are
offering these shares of common stock. For additional information on the methods
of sale, you should refer to the section entitled "Plan of Distribution" on page
25. We will not receive any portion of the proceeds from the sale of these
shares.
Yahoo! Inc.'s common stock is quoted on the Nasdaq National Market under the
symbol "YHOO."
On July 15, 1999, the last sale price of the common stock on the Nasdaq
National Market was $154 7/16 per share.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS PROCEEDS TO SELLING
PRICE TO PUBLIC AND COMMISSION STOCKHOLDERS
<S> <C> <C> <C>
Per Share.................................
Total..................................... See Text Above See Text Above See Text Above
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is July 16, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE COMPANY................................................................................................ 3
RISK FACTORS............................................................................................... 4
USE OF PROCEEDS............................................................................................ 24
ISSUANCE OF COMMON STOCK TO SELLING SHAREHOLDERS........................................................... 24
PLAN OF DISTRIBUTION....................................................................................... 25
SELLING SHAREHOLDERS....................................................................................... 27
LEGAL MATTERS.............................................................................................. 29
EXPERTS.................................................................................................... 29
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 29
</TABLE>
2
<PAGE>
THE COMPANY
Yahoo! Inc. is a global Internet media company that offers a branded network
of comprehensive information, communication and shopping services to millions of
users worldwide. As the first online navigational guide to the Web,
WWW.YAHOO.COM is a leading guide in terms of traffic, advertising, household and
business user reach, and is one of the most recognized brands associated with
the Internet.
We provide broadcast media, personal communications and direct services. In
March 1999, Internet users viewed an average of 278 million Web pages per day in
our properties.
We make our properties available primarily without charge to users, and the
majority of our revenue is generated through the sale of banner and sponsorship
advertising. Advertising on Yahoo! properties is sold through our internal
advertising sales force. During the first quarter of 1999, approximately 2,350
advertisers purchased advertising on our properties.
Yahoo! was incorporated on March 5, 1995 under the laws of California.
Yahoo! was subsequently reincorporated on May 14, 1999 under the laws of
Delaware. Our principal executive offices are located at 3420 Central
Expressway, Santa Clara, California 95051 and our telephone number is (408)
731-3300. As used in this prospectus, the "we," "us," "our" and "Yahoo!" refer
to Yahoo! Inc., a Delaware corporation, and its wholly owned subsidiaries,
including GeoCities. Yahoo! completed its acquisition of GeoCities in May 1999.
3
<PAGE>
RISK FACTORS
RISKS RELATED TO YAHOO!
WE HAVE A LIMITED OPERATING HISTORY AND MAY NOT BE ABLE TO IMPLEMENT OUR GROWTH
STRATEGY.
Yahoo! was incorporated in March 1995 and did not begin generating
advertising revenues until August 1995. Therefore, we have a limited operating
history, and our prospects are subject to the risks, expenses and uncertainties
frequently encountered by young companies that operate exclusively in the new
and rapidly evolving markets for Internet products and services. Successfully
achieving our growth plan depends on, among other things, our ability to:
- continue to develop and extend the Yahoo! brand;
- develop new media properties;
- maintain and increase the levels of traffic on Yahoo! properties;
- develop or acquire competitive services or products;
- effectively generate revenues through sponsored services and placements;
- effectively integrate businesses or technologies;
- successfully develop personalized Web-based services, such as e-mail
services; and
- continue to identify, attract, retain and motivate qualified personnel.
Furthermore, Yahoo!'s growth depends on factors outside of our control,
including:
- adoption by the market of the Web, and more specifically, Yahoo! as an
effective advertising medium; and
- relative price stability for Web-based advertising, despite competition
and other factors that could reduce market prices for advertising.
We may not be successful in implementing our growth plan.
WE ANTICIPATE INCREASED OPERATING EXPENSES AND MAY EXPERIENCE LOSSES.
Because of our limited operating history and the uncertain nature of the
rapidly changing market we serve, the prediction of future results of operations
is difficult or impossible. In addition, period-to-period comparisons of
operating results are not likely to be meaningful. You should not rely on the
results for any period as an indication of future performance. In particular,
although we experienced strong revenue growth during 1998 and the first quarter
of 1999, we do not believe that this level of revenue growth will be sustained
in future periods. We currently expect that our operating expenses will continue
to increase significantly as we expand our sales and marketing operations,
continue to develop and extend the Yahoo! brand, fund greater levels of product
development, develop and commercialize additional media properties, and acquire
complementary businesses and technologies. As a result, we may experience
significant losses on a quarterly and annual basis.
OUR QUARTERLY OPERATING RESULTS WILL FLUCTUATE BECAUSE OF A NUMBER OF FACTORS,
INCLUDING THE RELIANCE ON SHORT-TERM ADVERTISING CONTRACTS.
Our operating results may fluctuate significantly in the future as a result
of a variety of factors, many of which are outside of our control. These factors
include:
- the level of usage of the Internet;
4
<PAGE>
- demand for Internet advertising;
- the addition or loss of advertisers;
- the level of user traffic on Yahoo! online properties;
- the mix of types of advertising we sell (targeted advertising generally
has higher rates);
- the amount and timing of capital expenditures and other costs relating to
the expansion of our operations;
- the introduction of new products or services by us or our competitors;
- pricing changes for Internet-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! online
properties;
- costs incurred with respect to acquisitions; and
- negative general economic conditions and their resulting effects on media
spending.
We may from time to time make certain pricing, service or marketing
decisions that may adversely affect our profitability in a given quarterly or
annual period.
We derive the majority of our revenues from the sale of advertisements under
short-term contracts, which are difficult to forecast accurately. Our expense
levels are based in part on expectations of future revenue and, to a large
extent, are fixed. We may be unable to adjust spending quickly enough to
compensate for any unexpected revenue shortfall. Accordingly, the cancellation
or deferral of advertising or sponsorship contracts could have a material
adverse effect on our financial results. Our operating expenses are likely to
increase significantly over the near term and, to the extent that our expenses
increase but our revenues do not, our business, operating results, and financial
condition may be materially and adversely affected.
Our advertising revenue is also subject to seasonal fluctuations.
Historically, advertisers spend less in the first and third calendar quarters
and user traffic on our online media properties has historically been lower
during the summer and during year-end vacation and holiday periods.
THE RATE STRUCTURE OF SOME OF OUR ADVERTISING CONTRACTS CREATES EXPOSURE TO
POTENTIALLY SIGNIFICANT FINANCIAL RISKS.
A key element of our strategy is to generate advertising revenues through
sponsored services and placements by third parties in our online media
properties in addition to banner advertising. We typically receive sponsorship
fees as well as a portion of transaction revenues received by the sponsor from
users originated through the Yahoo! placement in return for minimum levels of
user impressions to be provided by us. These arrangements expose us to
potentially significant financial risks, including the following:
- if we fail to deliver required minimum levels of user impressions or
"click throughs," our fee may be adjusted downwards;
- the sponsors may not renew the agreements or renew at lower rates; and
- the arrangements may not generate anticipated levels of shared transaction
revenue, or sponsors may default on the payment commitments in such
agreements as has occurred in the past.
As a result of these financial risks, we may not achieve significant revenue
from these sponsorship arrangements. In addition, because of the limited
experience with these arrangements, we are unable to
5
<PAGE>
determine what effect these arrangements will have on gross margins and results
of operations. Transaction-based fees have not to date represented a material
portion of our net revenues. If and to the extent such revenues become a
significant portion of our results, there could be greater variations in our
quarterly operating results.
WE ARE IN A HIGHLY COMPETITIVE INDUSTRY AND SOME OF OUR COMPETITORS MAY BE MORE
SUCCESSFUL IN ATTRACTING AND RETAINING CUSTOMERS.
The market for Internet products and services is highly competitive. There
are no substantial barriers to entry in these markets, and we expect that
competition will continue to intensify. Negative competitive developments could
have a material adverse effect on our business and the trading price of our
stock.
We will compete with many other providers of online navigation, information,
entertainment, business and community services. As we expand the scope of our
Internet offerings, we will compete directly with a greater number of Internet
sites, media companies, and companies providing business services across a wide
range of different online services, including:
- vertical markets where competitors may have advantages in expertise, brand
recognition, and other factors;
- metasearch services and software applications that allow a user to search
the databases of several directories and catalogs simultaneously;
- database vendors that offer information search and retrieval capabilities
with their core database products;
- Web-based email and instant messaging services either on a stand alone
basis or integrated into other products and media properties;
- online merchant hosting services; and
- online broadcasting of business events following consummation of the
proposed broadcast.com merger.
Companies that offer competitive products or services addressing Web
navigation, information and community services include:
- America Online, Inc. (NetFind);
- CNET, Inc. (Snap.com);
- Compaq/Digital Equipment Corporation (AltaVista);
- Excite@home (including WebCrawler);
- Infoseek Corporation (including GO Network);
- Inktomi Corporation;
- Lycos, Inc. (including HotBot and Tripod);
- Microsoft Corporation (msn.com); and
- Netscape Communications Corporation (Netcenter).
A large number of these websites and online services as well as high-traffic
e-commerce merchants such as Amazon.com, Inc. also offer or are expected to
offer informational and community features that may be competitive with the
services that Yahoo! offers. In order to effectively compete, we may
6
<PAGE>
need to expend significant internal engineering resources or acquire other
technologies and companies to provide such capabilities. Any of these efforts
could be dilutive to our stockholders.
MARKET CONSOLIDATION IS CREATING MORE FORMIDABLE COMPETITORS.
In the recent past, there have been a number of significant acquisitions and
strategic plans announced among and between certain of our competitors,
including:
- The Walt Disney Company acquiring a significant interest in Infoseek;
- AOL acquiring Netscape;
- @Home Networks, a provider of high speed internet access serving the cable
television infrastructure and the largest stockholder of which is AT&T,
acquiring Excite;
- NBC announcing that it intends to merge its Internet assets with XOOM.com,
Inc. and Snap.com, a subsidiary of CNET; and
- Compaq taking control of AltaVista through its acquisition of Digital
Equipment Corporation.
The effect of these completed and pending acquisitions and strategic plans
on Yahoo! cannot be predicted with certainty, but all of these competitors are
aligned with companies that are significantly larger or more well established
than Yahoo!. In particular, many of them are television broadcasters having
substantial marketing resources and capabilities to assist our competitors. As a
result, each of them will have access to significantly greater financial,
marketing and, in certain cases, technical resources than Yahoo!.
RECENT ALLIANCES MAY MAKE IT MORE DIFFICULT TO ACCESS YAHOO!'S PRODUCTS AND
MEDIA PROPERTIES.
The recent acquisitions and alliances discussed above will result in greater
competition as more users of the Internet consolidate on fewer services that
incorporate search and retrieval features. In addition, providers of software
and other Internet products and services are incorporating search and retrieval
features into their offerings. For example, Web browsers offered by Netscape and
Microsoft increasingly incorporate prominent search buttons that direct search
traffic to competing services. These features could make it more difficult for
Internet users to find and use our products and services. Netscape has an
agreement with Excite under which Excite is the most prominent navigational
service within the Netcenter website. In the future, Netscape, Microsoft and
other browser suppliers may also more tightly integrate products and services
similar to ours into their browsers or their browsers' pre-set home pages.
Another example is the recently announced arrangement that will result in Compaq
including prominent links to Alta Vista with many of the computers which it
sells. Any of these companies could take actions that would make it more
difficult for consumers to find and use Yahoo! services. Microsoft recently
announced that it will feature and promote Internet search services provided by
Alta Vista and signed a long term partnership with LookSmart to provide
directory services in the Microsoft Network and other Microsoft online
properties. Such search services may be tightly integrated into future versions
of the Microsoft operating system, the Internet Explorer browser, and other
software applications, and Microsoft may promote such services within the
Microsoft Network or through other Microsoft affiliated end-user services such
as MSNBC or WebTV Networks. Each of these situations creates a potential
competitive advantage over ours because their Internet navigational offerings
may be more conveniently accessed by users.
INCREASED COMPETITION MAY EXERT DOWNWARD PRICING PRESSURE ON ADVERTISING
CONTRACTS.
We compete with online services, other website operators and advertising
networks, as well as traditional offline media such as television, radio and
print for a share of advertisers' total advertising budgets. We believe that the
number of companies selling Web-based advertising and the available
7
<PAGE>
inventory of advertising space has recently increased substantially.
Accordingly, we may face increased pricing pressure for the sale of
advertisements, which could reduce our advertising revenues. In addition, our
sales may be adversely affected to the extent that our competitors offer
superior advertising services that better target users or provide better
reporting of advertising results.
WE DEPEND ON CONTINUED GROWTH IN THE USE OF WEB ADVERTISING TO SUPPORT OUR
REVENUE MODEL.
Web-based advertising is relatively new, and it is difficult to predict the
extent of further growth, if any, in Web advertising expenditures. The Internet
may not prove to be a viable commercial marketplace for a number of reasons,
including the lack of acceptable security technologies, potentially inadequate
development of the necessary infrastructure, or the lack of timely development
and commercialization of performance improvements.
THE MARKET FOR OUR PRODUCTS IS NEW, AND THE GROWTH IN MARKET ACCEPTANCE FOR
THESE PRODUCTS IS UNCERTAIN.
The markets for our products and media properties have only recently begun
to develop, are rapidly evolving, and are increasingly competitive. Demand and
market acceptance for recently introduced products and services are subject to a
high level of uncertainty and risk. If the market develops more slowly than
expected or becomes saturated with competitors, or if our products and media
properties do not sustain market acceptance, our business, operating results,
and financial condition will be materially and adversely affected.
THE INTERNET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGES, AND WE MUST ADAPT
QUICKLY TO THESE CHANGES TO COMPETE EFFECTIVELY.
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, we
may be required to make significant changes to the design and content of our
products and media properties. Failure to effectively adapt to these or any
other technological developments could adversely affect our business, operating
results, and financial condition.
WE MUST DEVELOP AND MAINTAIN A "BRAND IDENTITY" FOR OUR PRODUCTS IN ORDER TO
ATTRACT AND EXPAND OUR USER AND ADVERTISER BASE.
We believe that establishing and maintaining the Yahoo! brand is an
important aspect of our efforts to attract and expand our user and advertiser
base. We also believe 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 our
success in providing high-quality products and services. In order to attract and
retain Internet users and to promote and maintain the Yahoo! brand, we may find
it necessary to increase expenditures devoted to creating and maintaining brand
loyalty. In the event of any breach or alleged breach of security or privacy
involving our services, or if any third party undertakes illegal or harmful
actions utilizing our community, communications or commerce services, we could
suffer substantial adverse publicity and impairment of our brand and reputation.
If any of these events occur, our business, operating results, and financial
condition will be materially and adversely affected.
OUR ABILITY TO UTILIZE THE WEB AS AN ADVERTISING MEDIUM DEPENDS ON EFFECTIVELY
REACHING AN AUDIENCE THAT IS ATTRACTIVE TO ADVERTISERS AND CONTINUING TO ENHANCE
DELIVERY AND MEASUREMENT SYSTEMS.
Most of our advertising customers have limited experience with the Web as an
advertising medium. Our ability to generate significant advertising revenues
will depend upon:
- the development of a large base of users of our services possessing
demographic characteristics attractive to advertisers; and
- our ability to continue to develop and update effective advertising
delivery and measurement systems.
8
<PAGE>
No standards have yet been widely accepted for the measurement of the
effectiveness of Web-based advertising. Advertisers may determine that banner
advertising, which comprises the majority of our revenues, is not an effective
advertising medium. We may not be able to effectively transition to any other
forms of Web-based advertising, should such other forms prove more popular.
Certain advertising filter software programs are available that limit or remove
banner advertising from Web pages viewed by an Internet user. Such software, if
generally adopted by users, may have a materially adverse effect upon the
viability of advertising on the Internet. Our advertising customers may not
accept the internal and third-party measurements of impressions received by
advertisements on Yahoo! online media properties and such measurements may
contain errors. We rely primarily on our internal advertising sales force for
domestic advertising sales, which involves additional risks and uncertainties,
including risks associated with the recruitment, retention, management,
training, and motivation of sales personnel. As a result of these factors, we
may not be able to sustain or increase current advertising sales levels. Failure
to do so will have a material adverse effect on our business, operating results,
and financial position.
THE SUCCESSFUL OPERATION OF OUR BUSINESS DEPENDS UPON THE SUPPLY OF CRITICAL
ELEMENTS FROM OTHER COMPANIES.
We will depend substantially upon third parties for several critical
elements of our business including technology and infrastructure, content
development, and distribution activities.
TECHNOLOGY AND INFRASTRUCTURE. Inktomi provides text-based Web search
results to complement our directory and navigational guide. We depend
substantially upon ongoing maintenance and technical support from Inktomi to
ensure accurate and rapid presentation of such search results to customers. If
Inktomi were to prematurely terminate its agreement with us or fail to renew it,
we would have to make substantial expenditures to develop or license replacement
technology. This also could result in lower levels of use of our navigational
services. We rely on a private third-party provider, Frontier GlobalCenter,
Inc., for our principal Internet connections. Email and other service Internet
connections are provided to us 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 our business, operating results, and financial condition. We
license technology and related databases from third parties for certain elements
of our properties, including, among others, technology underlying the delivery
of news, stock quotes and current financial information, chat services, street
mapping and telephone listings, streaming capabilities and similar services. We
have experienced and expect to continue to experience interruptions and delays
in service and availability for such elements, including recent interruptions in
our stock quote services. Furthermore, we are dependent on hardware suppliers
for prompt delivery, installation, and service of servers and other equipment to
deliver our products and services. Any errors, failures, interruptions, or
delays experienced in connection with these third-party technologies and
information services could negatively impact our relationship with users and
adversely affect our brand and our business, and could expose us to liabilities
to third parties.
CONTENT DEVELOPMENT. A key element of our strategy involves the
implementation of Yahoo!-branded media properties targeted for interest areas,
demographic groups, and geographic areas. In these efforts, we rely on content
development and localization efforts of third parties, such as SOFTBANK in Japan
and Korea. We cannot guarantee that our current or future third-party affiliates
will effectively implement these properties, or that their efforts will result
in significant revenue to us. Any failure of these parties to develop and
maintain high-quality and successful media properties also could hurt the Yahoo!
brand. Certain of these arrangements also require us to integrate third parties'
content with our services, which can require significant programming and design
efforts. In addition, we have granted exclusivity provisions to certain third
parties, and may in the future grant additional exclusivity rights. These
exclusive rights may have the effect of preventing us from accepting particular
advertising, sponsorship, or content arrangements during the term of
exclusivity.
9
<PAGE>
DISTRIBUTION RELATIONSHIPS. In order to create traffic for our online
properties and make them more attractive to advertisers and consumers, we have
certain distribution agreements and informal relationships with leading Web
browser providers such as Microsoft and Netscape, operators of online networks
and leading websites, and computer manufacturers, such as Toshiba,
Hewlett-Packard and Gateway. These distribution arrangements typically are not
exclusive, and may be terminated upon little or no notice. In addition, we may
be required to establish relationships with providers of broadband services.
Even if sufficient distribution opportunities are available to us in the U.S. or
abroad, third parties that provide distribution assess fees or otherwise impose
additional conditions on the listing of Yahoo! or our other online properties.
Any failure to cost-effectively obtain distribution could have a material
adverse effect on our business, results of operations, and financial condition.
We recently announced a co-branding and distribution arrangement with AT&T
under which we will provide a Web-based online service in conjunction with
dial-up Internet access provided by AT&T WorldNet Service. The acquisition of
Excite by @Home Networks, whose largest stockholder is AT&T, could adversely
affect our relationship with AT&T.
TO BE SUCCESSFUL IN THE CONTINUALLY EVOLVING MARKET FOR ONLINE SERVICES, WE MUST
CONTINUE TO ENHANCE OUR PROPERTIES AND DEVELOP NEW ONES.
To remain competitive, we must continue to enhance and improve the
functionality, features, and content of the Yahoo! main site, as well as our
other media properties. We may not be able to successfully maintain competitive
user response times or implement new features and functions, which will involve
the development of increasingly complex technologies. Personalized information
services, such as our Web-based email services, message boards, stock portfolios
and Yahoo! Clubs community features, require significantly greater expenses than
our general services. We cannot guarantee that these additional expenses will be
offset by additional revenues from personalized services.
Our future success also depends in part upon the timely processing of
website listings submitted by users and Web content providers, which have
increased substantially in recent periods. We have, from time to time,
experienced significant delays in the processing of submissions. Further delays
could have a material adverse effect on our goodwill among users and Web content
providers, and on our business.
A key element of our 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.
We may not be successful in developing, introducing, and marketing such products
or media properties and such properties may not achieve market acceptance,
enhance our brand name recognition, or increase user traffic. 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 our
brand name. If we fail to effectively develop and introduce new properties, or
those properties fail to achieve market acceptance, our business, results of
operations, and financial condition could be adversely affected.
OUR EQUITY INVESTMENTS IN OTHER COMPANIES MAY NOT YIELD ANY RETURNS.
We have made equity investments in affiliated companies that are involved in
the commercialization of Yahoo!-branded online properties, such as Yahoo! Japan
and Yahoo! Korea. These affiliated companies typically are in an early stage of
development and may be expected to incur substantial losses. Our investments in
such companies may not result in any return. As a result, we have recorded and
expect to continue to record a share of the losses in such affiliates
attributable to our ownership. We have also made equity investments in
non-affiliated companies involved in the development of technologies or services
that are complementary or related to our business. We intend to continue to
10
<PAGE>
make significant additional investments in the future. Losses resulting from
such investments could have a material adverse effect on our operating results.
WE MUST MANAGE OUR RECENT GROWTH AND THE INTEGRATION OF RECENTLY ACQUIRED
COMPANIES SUCCESSFULLY IN ORDER TO ACHIEVE DESIRED RESULTS.
Our recent growth has placed a significant strain on our managerial,
operational, and financial resources. To manage our growth, we must continue to
implement and improve our operational and financial systems and to expand,
train, and manage our employee base. Any inability to manage growth effectively
could have a material adverse effect on our business, operating results, and
financial condition.
The process of managing advertising within large, high traffic websites such
as ours is an increasingly important and complex task. We rely on both internal
and licensed third-party advertising inventory management and analysis systems.
To the extent that any extended failure of our advertising management system
results in incorrect advertising insertions, we may be exposed to "make good"
obligations, which, by displacing advertising inventory, could defer advertising
revenues. Failure of our 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 our relationships
with advertisers.
As part of our business strategy, we have completed several acquisitions and
expect to enter into additional business combinations and acquisitions including
our recent acquisitions of GeoCities, Encompass, Inc. and Online Anywhere, our
proposed acquisition of broadcast.com, and broadcast.com's recent acquisition of
Net Roadshow. Yahoo! expects to enter into additional business combinations and
acquisitions. Acquisition transactions are accompanied by a number of risks,
including:
- the difficulty of assimilating the operations and personnel of the
acquired companies;
- the potential disruption of our ongoing business and distraction of
management;
- the difficulty of incorporating acquired technology or content and rights
into our products and media properties;
- the negative impact on reported earnings if any of these transactions
which are expected to qualify for pooling of interest accounting treatment
for financial reporting purposes fail to so qualify;
- the correct assessment of the relative percentages of in-process research
and development expense which can be immediately written off as compared
to the amount which must be amortized over the appropriate life of the
asset;
- the failure to successfully develop an acquired in-process technology
resulting in the impairment of amounts currently capitalized as intangible
assets;
- unanticipated expenses related to technology integration;
- 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.
We may not be successful in addressing these risks or any other problems
encountered in connection with such acquisitions. See "Risks Related to the
Pending Broadcast.com Merger."
11
<PAGE>
WE WILL CONTINUE TO EXPAND INTO INTERNATIONAL MARKETS IN WHICH WE HAVE LIMITED
EXPERIENCE.
A key part of our strategy is to develop Yahoo!-branded online properties in
international markets. We have developed and operate, through joint ventures
with SOFTBANK and related entities, versions of Yahoo! localized for Japan,
Germany, France, the United Kingdom, and Korea. We also operate localized or
mirror versions of Yahoo! through wholly-owned subsidiaries or branch offices in
Australia and New Zealand, Brazil, Canada, Denmark, Hong Kong, Italy, Norway,
Spain, Sweden, Singapore and Taiwan and offer Yahoo! guides in Spanish and
Mandarin Chinese. We or our partners may not be able to successfully market and
operate our products and services in foreign markets.
To date, we have only limited experience in developing localized versions of
our products and marketing and operating our products and services
internationally. We rely on the efforts and abilities of our foreign business
partners in such activities. We also believe that in light of substantial
anticipated competition, we will need to move quickly into international markets
in order to effectively obtain market share. For example, in a number of
international markets, we face substantial competition from ISPs, some of which
have a dominant market share in their territories, that offer or may offer their
own navigational services. We expect to continue to experience higher costs as a
percentage of revenues in connection with international online properties.
International markets we have selected may not develop at a rate that supports
our level of investment. In particular, international markets may be slower in
adoption of the Internet as an advertising and commerce medium.
In addition to uncertainty about our ability to continue to generate
revenues from our foreign operations and expand our international presence,
there are certain risks inherent in doing business on an international level,
including:
- unexpected changes in regulatory requirements;
- trade barriers;
- difficulties in staffing and managing foreign operations including, as a
result of distance, language and cultural differences;
- longer payment cycles;
- currency exchange rate fluctuations;
- problems in collecting accounts receivable;
- political instability;
- export restrictions;
- seasonal reductions in business activity; and
- potentially adverse tax consequences.
One or more of these factors could have a material adverse effect on our
future international operations and, consequently, on our business, operating
results, and financial condition.
OUR OPERATIONS COULD BE SIGNIFICANTLY HINDERED BY THE OCCURRENCE OF A NATURAL
DISASTER OR OTHER CATASTROPHIC EVENT.
Our operations are susceptible to outages due to fire, floods, power loss,
telecommunications failures, break-ins and similar events. In addition,
substantially all of our network infrastructure is located in Northern
California, an area susceptible to earthquakes. We do not have multiple site
capacity in the event of any such occurrence. Despite our implementation of
network security measures, our servers are vulnerable to computer viruses,
break-ins, and similar disruptions from unauthorized tampering with our computer
systems. We do not carry sufficient business interruption insurance to
12
<PAGE>
compensate us for losses that may occur as a result of any of these events. Such
events could have a material adverse effect on our business, operating results,
and financial condition.
OUR INTELLECTUAL PROPERTY RIGHTS ARE COSTLY AND DIFFICULT TO PROTECT.
We regard our copyrights, trademarks, trade dress, trade secrets, and
similar intellectual property as critical to our success. We rely upon trademark
and copyright law, trade secret protection and confidentiality or license
agreements with our employees, customers, partners and others to protect our
proprietary rights. For example, we have obtained the registration for certain
of our trademarks, including "Yahoo!" and "Yahooligans!". Effective trademark,
copyright, and trade secret protection may not be available in every country in
which our products and media properties are distributed or made available
through the Internet, and while we attempt to ensure that the quality of our
brand is maintained by our licensees, our licensees may take actions that could
materially and adversely affect the value of our proprietary rights or the
reputation of our products and media properties. We are 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.
Protection of the distinctive elements of Yahoo! may not be available under
copyright law. We cannot guarantee that the steps we have taken to protect our
proprietary rights will be adequate.
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH ARE COSTLY
TO DEFEND AND COULD LIMIT OUR ABILITY TO USE CERTAIN TECHNOLOGIES IN THE FUTURE.
Many parties are actively developing search, indexing, e-commerce and other
Web-related technologies. We believe that these parties will continue to take
steps to protect these technologies, including seeking patent protection. As a
result, we believe that disputes regarding the ownership of these technologies
are likely to arise in the future. For example, we are aware that a number of
patents have been issued in the areas of:
- electronic commerce;
- online auctions;
- Web-based information indexing and retrieval, including patents recently
issued to one of our direct competitors;
- online direct marketing;
- fantasy sports;
- common Web graphics formats; and
- mapping technologies.
We anticipate that additional third-party patents will be issued in the
future. From time to time, parties assert patent infringement claims against us
in the form of letters, lawsuits and other forms of communications.
In addition to patent claims, third parties may assert claims against us
alleging infringement of copyrights, trademark rights, trade secret rights or
other proprietary rights or alleging unfair competition. In the event that we
determine that licensing patents or other proprietary rights is appropriate, we
cannot guarantee that we will be able to license such proprietary rights on
reasonable terms or at all. We may incur substantial expenses in defending
against third-party infringement claims regardless of the merit of such claims.
In the event that there is a determination that we have infringed third-party
proprietary rights, we could incur substantial monetary liability and be
prevented from using the rights in the future.
13
<PAGE>
We are aware of lawsuits filed against two of our competitors regarding the
presentment of advertisements in response to search requests on "keywords" that
may be trademarks of third parties. It is not clear what, if any, impact an
adverse ruling in these recently filed lawsuits would have on us. In addition,
lawsuits have been filed against broadcast.com, a company we propose to acquire,
alleging patent infringement relating to broadcast.com's use of streaming media
products.
WE DEPEND ON KEY PERSONNEL WHO MAY NOT CONTINUE TO WORK FOR US.
We are substantially dependent on the continued services of our key
personnel, including our two founders, our chief executive officer, chief
financial officer, chief operating officer, chief technical officer, our vice
presidents in charge of business development, sales and production and our
senior engineers. Each of these individuals has acquired specialized knowledge
and skills with respect to Yahoo! and its operations. As a result, if any of
these individuals were to leave Yahoo!, we could face substantial difficulty in
hiring qualified successors and could experience a loss in productivity while
any such successor obtains the necessary training and experience. We expect that
we will need to hire additional personnel in all areas. The competition for
qualified personnel is intense, particularly in the San Francisco Bay Area,
where our corporate headquarters are located. At times, we have experienced
difficulties in hiring personnel with the right training or experience,
particularly in technical areas. We do not maintain key person life insurance
for any of our personnel. If we do not succeed in attracting new personnel, or
retaining and motivating existing personnel, our business will be adversely
affected.
GEOCITIES WAS RECENTLY ACQUIRED BY YAHOO! AND HAS AN UNPROVEN BUSINESS MODEL
THAT IS HIGHLY DEPENDENT ON THE CONTINUED SUPPORT OF ITS MEMBERS AND
ADVERTISERS.
On May 28, 1999, Yahoo! completed its acquisition of GeoCities, one of the
world's largest Web-based communities. GeoCities' business model, which is a
meaningful part of the combined company's business model, depends upon its
ability to leverage its community platform and to generate multiple revenue
streams. The potential profitability of this business model is unproven, and, to
be successful, we must, among other things, develop and market solutions that
achieve broad market acceptance by our members, Internet advertisers, commerce
vendors and Internet users. GeoCities is substantially dependent upon its
member-generated content, the grass-roots promotional efforts of its members,
the acceptance by its members of advertising and other promotional programs of
third parties and GeoCities and the voluntary involvement of its community
leaders and liaisons to attract Web users to its site and to reduce the demands
on company personnel. This model has existed for only a limited period of time,
and, as a result, is relatively unproven. There can be no assurance that
member-generated content or the promotional efforts of members will continue to
attract users to GeoCities' website or that we will attract advertising revenue
from third parties in sufficient amounts to make the business commercially
viable. There can also be no assurance that GeoCities' community leaders and
liaisons will continue to devote their time voluntarily to improving the
community. If a substantial number of homesteaders become dissatisfied with our
services or our focus on the commercialization of those services, our business,
results of operations and financial condition would be adversely affected.
The GeoCities business model relies on volunteers such as its community
leaders and liaisons to provide assistance to homesteaders and other users of
the GeoCities website. We are aware of a published report that several
volunteers at AOL have asked the U.S. Department of Labor to investigate whether
AOL's use of voluntary labor violates the Federal Fair Labor Standards Act. The
same report states that the Labor Department has not begun an investigation into
the matter, but acknowledges that it has received information from several of
AOL's volunteers. We are also aware of a report that two former AOL volunteers
have filed a class action lawsuit alleging that AOL violated the Fair Labor
Standards Act by not paying its volunteers a minimum wage for work performed by
volunteers. Although we are not aware of any similar requests by any of its or
GeoCities' volunteers, and although neither Yahoo! Nor GeoCities has
14
<PAGE>
been named a defendant in any similar class action lawsuit brought on behalf of
its community members, no assurances can be given that such requests will not be
made in the future. We do not believe that any of its or GeoCities' practices in
connection with the use of volunteers in its business is in violation of any
labor laws; however, to the extent that the Department of Labor makes an adverse
determination in the AOL matter, or to the extent the plaintiffs in the class
action lawsuit prevail, it could materially and adversely affect our business
and financial results.
WE ARE SUBJECT TO U.S. AND FOREIGN GOVERNMENT REGULATION OF THE INTERNET, THE
IMPACT OF WHICH IS DIFFICULT TO PREDICT.
There are currently few laws or regulations directly applicable to the
Internet. The application of existing laws and regulations to Yahoo! relating to
issues such as user privacy, defamation, pricing, advertising, taxation,
gambling, sweepstakes, promotions, content regulation, quality of products and
services, and intellectual property ownership and infringement can be unclear.
In addition, we will also be subject to new laws and regulations directly
applicable to our activities. Any existing or new legislation applicable to us
could expose us to substantial liability, including significant expenses
necessary to comply with such laws and regulations, and dampen the growth in use
of the Web.
Other nations, including Germany, have taken actions to restrict the free
flow of material deemed to be objectionable on the Web. The European Union has
recently adopted privacy and copyright directives that may impose additional
burdens and costs on our international operations. In addition, several
telecommunications carriers, including America's Carriers' Telecommunications
Association, are seeking to have telecommunications over the Web regulated by
the FCC in the same manner as other telecommunications services. Many areas with
high Web use have begun to experience interruptions in phone service, and local
telephone carriers, such as Pacific Bell, have petitioned the FCC to regulate
ISPs and OSPs and to impose access fees. 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. If any such proposals are
adopted, it could substantially impair the growth of the Internet and adversely
affect us.
Several recently passed federal laws could have an impact on our business.
The Digital Millenium Copyright Act is intended to reduce the liability of
online service providers for listing or linking to third-party websites that
include materials that infringe copyrights or other rights of others. The
Children's Online Protection Act and the Children's Online Privacy Protection
Act are intended to restrict the distribution of certain materials deemed
harmful to children and impose additional restrictions on the ability of online
services to collect user information from minors. In addition, the Protection of
Children From Sexual Predators Act of 1998 requires online service providers to
report evidence of violations of federal child pornography laws under certain
circumstances. We are currently reviewing this legislation, and cannot currently
predict the effect, if any, that it will have on our business. Such legislation
may impose significant additional costs on our business or subject us to
additional liabilities.
We post policies concerning the use and disclosure of user data. In
addition, we are required to comply, to a certain extent, with a consent order
issued by the FTC to GeoCities, which imposes certain obligations and
restrictions with respect to information collected from users. Any failure by us
to comply with our posted privacy policies or the consent order could adversely
affect our business, results of operations, and financial condition.
Due to the global nature of the Web, it is possible that the governments of
other states and foreign countries might attempt to regulate its transmissions
or prosecute us for violations of their laws. We might unintentionally violate
such laws. Such laws may be modified, or new laws enacted, in the future. Any
such developments could have a material adverse effect on our business, results
of operations, and financial condition.
15
<PAGE>
WE MAY BE SUBJECT TO LEGAL LIABILITY FOR OUR ONLINE SERVICES.
We host a wide variety of services that enable individuals to exchange
information, generate content, conduct business and engage in various online
activities, including services relating to online auctions and the homesteading
and other services offered by GeoCities. The law relating to the liability of
providers of these online services for activities of their users is currently
unsettled. Claims could be made against us for defamation, negligence, copyright
or trademark infringement, unlawful activity, tort, including personal injury,
fraud, or other theories based on the nature and content of information that we
provide links to or that may be posted online or generated by our users or with
respect to auctioned materials. These types of claims have been brought, and
sometimes successfully pressed, against online service providers in the past. In
addition, we are aware that governmental agencies are currently investigating
the conduct of online auctions.
We also periodically enter into arrangements to offer third-party products,
services, or content under the Yahoo! brand or via distribution on Yahoo!
properties, including stock quotes and trading information. Likewise, GeoCities
and broadcast.com license third-party content for distribution over the
Internet. We may be subject to claims concerning these products, services or
content by virtue of our involvement in marketing, branding, broadcasting or
providing access to them, even if we do not ourself host, operate, provide, or
provide access to these products, services or content. While our agreements with
these parties often provide that we will be indemnified against such
liabilities, such indemnification may not be adequate.
It is also possible that, if any information provided directly by us
contains errors or is otherwise negligently provided to users, third parties
could make claims against us. For example, we offer Web-based email services,
which expose us to potential risks, such as liabilities or claims resulting from
unsolicited email, lost or misdirected messages, illegal or fraudulent use of
email, or interruptions or delays in email service. Investigating and defending
any of these types of claims is expensive, even to the extent that the claims do
not result in liability.
OUR E-COMMERCE ACTIVITIES MAY EXPOSE US TO UNCERTAIN LEGAL RISKS AND POTENTIAL
LIABILITIES.
As part of our business, we enter into agreements with sponsors, content
providers, service providers, and merchants under which we are entitled to
receive a share of revenue from the purchase of goods and services by users of
our online properties. In addition, we provide hosting and other services to
online merchants. These types of arrangements may expose us to additional legal
risks and uncertainties, including potential liabilities relating to the
products and services offered by such third parties.
We 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 us to risks
and expenses 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.
Although we maintain liability insurance, insurance may not cover these
claims or may not be adequate. Even to the extent these types of claims do not
result in material liability, investigating and defending the claims is
expensive.
THE YEAR 2000 PROBLEM COULD CAUSE YAHOO!'S SOFTWARE PRODUCTS AND THOSE OF ITS
SUPPLIERS TO MALFUNCTION, WHICH WOULD PREVENT OR LIMIT ACCESS TO ITS ONLINE
PROPERTIES AND COULD BE COSTLY TO REMEDY.
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot distinguish
twenty-first century dates from twentieth century dates. To function properly,
these date-code fields must distinguish twenty-first century dates
16
<PAGE>
from twentieth 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.
HOW YAHOO! IS AFFECTED. Yahoo! is dependent on the operation of numerous
systems that may be adversely affected by the Year 2000 problem, including:
- Yahoo!'s internal systems; and
- equipment, software and content supplied to Yahoo! by third-party vendors
that may not be Year 2000 compliant, including outside providers of
Web-hosting services on which Yahoo! and broadcast.com are currently
dependent.
In addition, Yahoo!'s future business depends on the successful operation of
the Internet following the commencement of the year 2000. If the Internet is
inaccessible for an appreciable period of time, or if customers and users are
unable to access Yahoo!'s site, Yahoo!'s business and revenues could be
materially adversely affected. Yahoo! is also subject to external forces that
might generally affect industry and commerce, such as telecommunications,
utility or transportation company Year 2000 compliance failures, related service
interruptions and the economic impact that such failures have on Yahoo!
customers and advertisers.
YEAR 2000 COMPLIANCE ASSESSMENT PLANS. Unlike other businesses, Yahoo!
does not have an installed base of legacy systems dating back many years.
Nonetheless, in order to reduce the risks of the Year 2000 compliance problem,
Yahoo! has undertaken a two-phase process of analyzing the impact of the Year
2000 problem. First, Yahoo! has completed an informal assessment of its primary
internal systems and, based on such assessment and our knowledge of the specific
software and systems, Yahoo! currently believes that its systems are Year 2000
compliant in all material respects or can readily be brought into compliance
with the application of corrective software modifications. In many cases, we
expect these modifications to be provided by the vendors of the computer and
software products we have installed. Yahoo! has not incurred material costs to
date in this informal phase of the assessment process, and currently does not
believe that the cost of additional actions will have a material effect on its
results of operations or financial condition.
Second, Yahoo! is in the process of performing a formal assessment of both
its internal systems and the vendor-supplied items and services it employs to
determine how the Year 2000 problem will affect all aspects of Yahoo!'s
operations. Yahoo! expects to complete this second phase of it assessment by
mid-1999. The formal process involves assessment of the following Yahoo!
systems:
- hardware systems, including servers and systems used for date storage;
- software systems, including applications, development tools and
proprietary code;
- infrastructure systems, including routers, hubs and networks;
- facility systems, including general building functions, security, HVAC and
related operations; and
- the systems of our business partners, including content providers and
ISPs.
Yahoo! is conducting its formal assessment of Year 2000 compliance by
gathering information on each aspect of Yahoo!'s systems, reviewing each
component or application for date usage, and examining date representations. As
to Yahoo!'s systems, the preliminary results of this formal assessment are
consistent with the results of Yahoo!'s informal assessment. With respect to
vendor-supplied items and services, Yahoo! is conducting an extensive review of
product compliance information on such items and services available online, in
vendor literature and through trade group information resources, contacting its
vendors for compliance information, and maintaining documentation of assessments
that have been performed by such vendors or outside sources.
17
<PAGE>
Each department of Yahoo! is involved in this formal assessment process.
Once complete, the formal assessment will lead to the creation of a formal
remediation and contingency plan for achieving Year 2000 compliance. Yahoo! does
not anticipate, however, undertaking a formal assessment of the Year 2000
compliance of the Internet or its underlying telecommunications infrastructure,
and will therefore be unable to predict the impact of Year 2000 issues that
might affect the broader Internet business community, including Yahoo!.
RESULTS OF COMPLIANCE EFFORTS TO DATE. Based on the completed informal
assessment and progress on the formal assessment, Yahoo! currently believes that
its internal systems are or can readily be made Year 2000 compliant in all
material respects. However, it is possible that these current internal systems
contain undetected errors or defects with Year 2000 date functions. In addition,
although the combined company does not anticipate problems, vendor-supplied
items and services could contain undetected errors or defects which, if not
corrected, could result in serious unanticipated negative consequences,
including significant downtime for one or more Yahoo! media properties.
COSTS OF YEAR 2000 COMPLIANCE COULD BE SIGNIFICANT. Although Yahoo! is not
aware of any material operational issues or costs associated with preparing its
internal systems for the year 2000, and although Yahoo! has not incurred
material costs to date with respect to the Year 2000 compliance of these
internal systems, the occurrence of any of the following events could materially
and adversely affect Yahoo!'s business, results of operations and financial
condition:
- errors and defects are detected after the formal assessment process is
complete;
- third-party equipment, software or content fails to operate properly with
regard to the Year 2000;
- Web advertisers expend significant resources to correct their current
systems for Year 2000 compliance, resulting in reduced funds available for
Web advertising or sponsorship of Web services; or
- material costs arise in connection with preparing the internal systems of
companies recently acquired by Yahoo! such as GeoCities, Encompass and
Online Anywhere, or the pending acquisition of broadcast.com, for the Year
2000 problem.
RISKS RELATED TO THE PENDING BROADCAST.COM MERGER
EXPECTED BENEFITS OF THE MERGER MAY NOT BE REALIZED.
If we are not able to effectively integrate technology, operations and
personnel from broadcast.com in a timely and efficient manner, then the benefits
of the merger will not be realized. In particular, if the integration is not
successful:
- our operating results may be adversely affected;
- we may lose key personnel; and
- we may not be able to retain the acquired companies' user bases or content
providers.
In addition, whether or not such integration is successful, the attention
and effort devoted to the integration of broadcast.com will significantly divert
management's attention from other important issues, and could result in the
delay of strategic initiatives, the disruption of sales and marketing efforts,
and the loss of customers, vendors, and employees, any of which could have a
material adverse impact on us.
18
<PAGE>
THE MERGER COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS.
If the benefits of the merger does not exceed the costs associated with the
merger, including the dilution to Yahoo! stockholders resulting from the
issuance of shares in connection with the merger, our financial results,
including earnings per share, could be adversely affected. Specifically, we
expect to incur a one-time charge of approximately $22 million related to the
broadcast.com merger during the third quarter of 1999.
THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE AS A RESULT OF THE MERGER.
The market price of our common stock may decline as a result of the merger
with broadcast.com if:
- the integration of Yahoo! with broadcast.com is unsuccessful;
- we do not achieve the perceived benefits of the merger as rapidly or to
the extent anticipated by financial analysts; or
- the effect of the merger on our financial results is not consistent with
the expectations of financial analysts.
FAILURE OF THE MERGER TO QUALIFY AS A POOLING OF INTERESTS WOULD NEGATIVELY
AFFECT OUR FINANCIAL RESULTS.
The failure of the broadcast.com merger to qualify for pooling of interests
accounting treatment for financial reporting purposes for any reason would
materially and adversely affect our reported earnings and, likely, the price of
our common stock.
The availability of pooling of interests accounting treatment for this
merger depends upon circumstances and events occurring after the effective time
of such merger. For example, there must be no significant changes in the
business of the combined company, including significant dispositions of assets,
for a period of two years following the effective time of each such merger.
Further, affiliates of Yahoo! and the acquired company must not sell any shares
of either Yahoo! or the acquired company's capital stock until the day that
Yahoo! publicly announces financial results covering at least 30 days of
combined operations of Yahoo! and broadcast.com after the merger. If the
effective time of the merger occurs prior to September 1, 1999, we expect that
such combined financial results would be published in October 1999. If
affiliates of Yahoo! or the acquired company sell their shares of Yahoo! common
stock prior to that time despite a contractual obligation not to do so, the
merger may not qualify for accounting as a pooling of interests for financial
reporting purposes.
FAILURE TO SUCCESSFULLY COMPLETE THE ACQUISITION OF BROADCAST.COM COULD
ADVERSELY AFFECT OUR STOCK PRICE.
The consummation of the broadcast.com merger is subject to a number of
conditions including approval by the broadcast.com stockholders, respectively.
If we are unable to effectively complete the merger for any reason, our business
and operations could be seriously harmed. In particular, whether or not the
merger is successful over the long term, the acquisition of broadcast.com may:
- significantly divert the attention of management from other important
issues;
- delay strategic initiatives;
- cause the loss of customers or key employees; and
- disrupt sales and marketing efforts.
In addition, our stock price may decline if it does not achieve the
perceived benefits of the merger in a manner consistent with the expectations of
the financial markets.
19
<PAGE>
RISKS RELATED TO BROADCAST.COM'S BUSINESS
Assuming the proposed broadcast.com merger is consummated, broadcast.com
will constitute a meaningful part of Yahoo!'s business and, as a result, we will
become subject to the following additional risks with respect to the
broadcast.com portion of our business.
BROADCAST.COM IS DEPENDENT ON THIRD-PARTY CONTENT PROVIDERS.
Broadcast.com's future success depends upon its ability to aggregate
compelling content and deliver that content on the Web. Broadcast.com typically
does not create content. Rather, it relies on third parties including major
sports organizations, radio and television stations, record labels, cable
networks, businesses, colleges and universities, film producers and
distributors, and other organizations for the compelling and entertaining
content available on the broadcast.com site. Broadcast.com's ability to maintain
and build relationships with third-party content providers will be critical to
the combined company's success and also exposes it to the following risks.
MANY OF BROADCAST.COM'S CONTENT AGREEMENTS EXTEND FOR A PERIOD OF LESS THAN
TWO YEARS AND THERE CAN BE NO GUARANTEE THAT THEY WILL BE RENEWED UPON THEIR
EXPIRATION ON FAVORABLE TERMS OR AT ALL. Broadcast.com's inability to secure
licenses from content providers or performances rights societies or the
termination of a significant number of content provider agreements would
decrease the availability of content and likely result in decreased traffic
on broadcast.com's websites. As a result, broadcast.com would receive
decreased advertising revenue, which would adversely affect its business.
Also, as competition for compelling content increases, broadcast.com's
content providers may increase the prices at which it offers its content to
broadcast.com upon the expiration of these contracts. Either of these events
would negatively affect broadcast.com's business.
THE ROYALTY RATES FOR CERTAIN MUSIC LICENSES HAVE NOT BEEN SET AND MAY BE
SET AT RATES THAT ARE HIGHER THAN ANTICIPATED. In order to have the right to
broadcast music on the Web, broadcast.com is currently required to license
and pay royalties on the copyright in the musical compositions and also to
license and pay royalties on the separate copyright in the actual recordings
of the music to be broadcast. Broadcast.com has license agreements in place
with ASCAP and BMI, the two largest music societies that license the
copyrights to the compositions, to license the musical composition
copyrights on reasonable terms. The Recording Industry Association of
America is representing the five major record labels in inter-industry
negotiations to set the royalties to be paid by Webcasters, like
broadcast.com, for the license to most music recordings. If these
negotiations are not successful, the rates will be determined through
arbitration under the aegis of the Librarian of Congress. The royalty and
other terms for the sound recordings performance license has not been
determined and it is therefore unclear how it will effect broadcast.com's
business. If ASCAP, BMI or the Librarian sets high royalty rates, offers to
renew existing agreements only at higher rates, provides other terms which
make it difficult to operate broadcast.com's current business model or if
broadcast.com is unsuccessful in negotiating licenses with other performance
rights societies or licensing agencies, the combines company's overall
business could be adversely affected.
CONTENT AGREEMENTS ARE OFTEN NOT EXCLUSIVE AND OTHER COMPANIES ARE OFTEN
ABLE TO OFFER SIMILAR CONTENT. In many cases, broadcast.com has not been
able to enter into exclusive licenses to the content it licenses from third
parties for distribution on the Internet. Accordingly, other Webcasters may
often be able to offer similar content. Likewise, most sports and
entertainment content available from broadcast.com is also available on
other media like radio or television. These media are currently, and for the
foreseeable future will be, much more widely adopted for listening or
viewing such content than the Web. To the extent other companies are able to
broadcast content that is similar to or the same as broadcast.com, the
number of users on the broadcast.com website may not grow at all or at a
slower rate than anticipated and therefore broadcast.com will generate less
advertising revenue than expected.
20
<PAGE>
BROADCAST.COM'S BUSINESS IS DEPENDENT ON BUSINESS SERVICES REVENUES.
Broadcast.com expects to derive a substantial amount of its revenues by
providing services to businesses to enable them to broadcast streaming content
over the Internet and corporate intranets. The demand and market acceptance for
these business services solutions is uncertain. Its ability to establish and
maintain a leadership position in Internet and intranet broadcasting for
businesses and in the distribution of other live and on-demand events will
depend on, among other things:
- market acceptance of its current and future business service offerings;
- the reliability of its networks and services; and
- the extent to which end users are able to receive broadcasts at adequate
bit rates to provide for high quality services, none of which can be
assured.
Broadcast.com operates in a market that is at a very early stage of
development, is rapidly evolving and is characterized by an increasing number of
competitors. Today, the most significant of these competitors are companies
offering teleconferencing or videoconferencing services. Broadcast.com also
expects other competitors to become more formidable in the future including
software companies, internet service providers or networking companies. Demand
and market acceptance for recently introduced services by broadcast.com are
subject to a high level of uncertainty and risk. Sales of business services may
require an extended sales effort in certain cases. In addition, potential
customers must accept audio and video broadcast services over the Internet as a
viable alternative to face-to-face meetings, television or audio, audio
teleconferences and video conferencing. Because the market for business services
is new and evolving, it is difficult to predict the size of this market and its
growth rate, if any. In addition, it is uncertain whether businesses and other
organizations will utilize the Internet to any significant degree as a means of
broadcasting business conferences and other events. There can be no assurance
that the market for broadcast.com's business services will continue to develop
or be sustainable. If the market fails to develop, develops more slowly than
expected or becomes more competitive than is currently expected, or if
broadcast.com's sites do not achieve or sustain market acceptance, the portion
of our business related to such activities could be adversely affected.
BROADCAST.COM IS DEPENDENT ON THE DEVELOPMENT, ACCEPTANCE AND AVAILABILITY OF
STREAMING MEDIA TECHNOLOGY.
Broadcast.com relies on the two leading providers of streaming media
products, RealNetworks and Microsoft, to license encoders to it in order to
broadcast its content and to distribute player software in order to create a
broad base of users. There can be no assurance that these providers will
continue to license these products on reasonable terms, or at all, to
broadcast.com. In addition, users are currently able to electronically download
copies of RealNetworks' RealPlayer and Microsoft's Windows Media Player software
free of charge from a wide variety of sources, including broadcast.com. These
providers of streaming media products may begin charging users for copies of
their player software or otherwise change their business model in a manner which
slows the widespread acceptance of these products. In order for broadcast.com to
be successful, there must be a large and growing base of users of these
streaming media products. In addition, competitors of RealNetworks and Microsoft
may introduce and promote products that obtain a substantial share of the market
for streaming media software. In such event, broadcast.com may need to acquire
licenses from such companies, as to which there can be no assurance that they
may be available on reasonable terms or at all. Broadcast.com has limited or no
control over the availability or acceptance of streaming media software, and to
the extent that any of these circumstances occur, broadcast.com's business will
be materially adversely effected.
Broadcast.com also depends on the availability of high quality streaming
media technology to users. Early streaming media technology suffered from poor
audio quality, and video streaming at 28.8 kbps (thousands of bits per second)
currently is of lower quality than television or radio broadcasts. In addition,
congestion over the Internet and packet loss may interrupt audio and video
streams, resulting
21
<PAGE>
in unsatisfying user experiences. In order to receive streamed media adequately,
users generally must have multimedia PCs with certain microprocessor
requirements and at least 28.8 kbps Internet access and streaming media
software. Users typically electronically download such software and install it
on their PCs. Such installation may require technical expertise that some users
do not possess. Furthermore, in order for users to receive streaming media over
corporate intranets, information systems managers may need to reconfigure such
intranets. Because of bandwidth constraints on corporate intranets, some
information systems managers may block reception of streamed media. Widespread
adoption of streaming media technology depends on overcoming these obstacles,
improving audio and video quality and educating customers and users in the use
of streaming media technology. If streaming media technology fails to overcome
these obstacles, broadcast.com's business could be adversely affected.
BROADCAST.COM MAY NOT BE ABLE TO SUCCESSFULLY SCALE ITS OPERATIONS.
Broadcast.com's success depends on its ability to attract large numbers of
additional users and broadcast audio and video programming to a large number of
users simultaneously. In addition, streaming media content requires more
bandwidth than most data transmissions. As a result, to the extent that demand
for broadcast.com's content increases, there will be a need to expand its
infrastructure, including the capacity of its hardware servers and the
sophistication of its software. It may also result in the demand by a greater
number of users to transition to the use of high bandwidth Internet access
devices such as cable modems and xDSL devices. This expansion will be expensive
and complex, and require additional technical expertise. If broadcast.com is
unable to accommodate this growth, it will be adversely affected.
From the commencement of operations, broadcast.com has deployed unicasting
(one user per company originated stream) technology to broadcast audio and video
programming to users over the Internet. Recently, it began to deploy another
broadcast technology, multicasting (multiple users per company originated
stream). Broadcast.com believes that unicasting will continue to be used to
distribute archived and on-demand programming and that multicasting or a similar
broadcasting technology will be used for live and other events where a larger
audience for the content is expected.
To increase its unicast capacity, the successful expansion of its network
infrastructure through the acquisition and deployment of additional network
equipment and bandwidth will be necessary. There can be no assurance that
broadcast.com will be successful in such expansion or that such expansion can be
accomplished at prices that support broadcast.com's business model.
Broadcast.com also must successfully deploy multicasting or a similar
broadcasting technology that can deliver streaming media content to many users
simultaneously through one-to-many Internet connections. Broadcast.com will be
required to test, deploy and successfully scale its multicast network
infrastructure to serve mass audiences. There can be no assurance that it will
be successful in doing so, that multicasting will be able to support a
substantial audience or that an alternative technology will not emerge that
offers superior broadcasting technology as compared to multicasting. In the
event that multicasting technology is not successfully deployed in a timely
manner or such an alternative technology emerges, broadcast.com would likely be
required to expend significant resources to deploy a technology other than
multicasting, which could adversely affect its results of operations. If it
fails to scale its broadcasts to large audiences of simultaneous users, such
failure could adversely affect its business.
INVESTMENT RISKS
OUR STOCK PRICE HAS HISTORICALLY BEEN VOLATILE, WHICH MAY MAKE IT MORE DIFFICULT
FOR YOU TO RESELL SHARES WHEN YOU WANT AT PRICES YOU FIND ATTRACTIVE.
The trading price of our common stock has been and may continue to be
subject to wide fluctuations. During 1998 and the first quarter of 1999, the
closing sale prices of our common stock on the
22
<PAGE>
Nasdaq Stock Market ranged from $14.52 to $219.125. The stock price 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 properties by us or our competitors, changes in financial
estimates and recommendations by securities analysts, the operating and stock
price performance of other companies that investors may deem comparable, and
news reports relating to trends in our 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 price of our stock, regardless of our
operating performance.
MANAGEMENT AND ONE LARGE STOCKHOLDER BENEFICIALLY OWN APPROXIMATELY 48% OF OUR
STOCK; THEIR INTERESTS COULD CONFLICT WITH YOURS; SIGNIFICANT SALES OF STOCK
HELD BY THEM COULD HAVE A NEGATIVE EFFECT ON YAHOO!'S STOCK PRICE.
Yahoo!'s directors and executive officers, and SOFTBANK beneficially own
approximately 48% of our outstanding common stock. As a result of their
ownership, our directors and executive officers and SOFTBANK collectively are
able to control all matters requiring stockholder 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 Yahoo!. In addition, sales of significant amounts of shares
held by Yahoo!'s directors and executive officers and SOFTBANK, or the prospect
of these sales, could adversely affect the market price of Yahoo! Common stock.
ANTI-TAKEOVER PROVISIONS COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO
ACQUIRE US.
Our 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 stockholders. 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 Yahoo! without further action by the stockholders and may adversely
affect the voting and other rights of the holders of common stock. We have no
present plans to issue shares of preferred stock. Further, certain provisions of
our charter documents, including provisions eliminating the ability of
stockholders to take action by written consent and limiting the ability of
stockholders to raise matters at a meeting of stockholders without giving
advance notice, may have the effect of delaying or preventing changes in control
or management of Yahoo!, which could have an adverse effect on the market price
of our stock. In addition, our charter documents do not permit cumulative
voting, which may make it more difficult for a third party to gain control of
the Yahoo! board of directors.
23
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus (the "Shares") are solely for the account of the selling
stockholders. Accordingly, we will not receive any proceeds from the sale of the
Shares from the selling stockholders.
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On May 26, 1999, we issued an aggregate of 695,128 shares of common stock to
the stockholders of Encompass, Inc. pursuant to a merger agreement. Under the
terms of the merger agreement, Encompass became a wholly-owned subsidiary of
Scarlett Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of Yahoo!.
On May 28, 1999, the Company issued an aggregate of 453,185 shares of common
stock to Online Anywhere pursuant to an merger agreement. Under the terms of the
merger agreement, Online Anywhere became a wholly-owned subsidiary of Airborne
Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of
Yahoo!.
24
<PAGE>
PLAN OF DISTRIBUTION
Shares of common stock covered hereby may be offered and sold from time to
time by the selling stockholders. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders may sell the Shares being offered
hereby: (i) on The Nasdaq National Market, or otherwise at prices and at terms
then prevailing or at prices related to the then current market price; or (ii)
in private sales at negotiated prices directly or through a broker or brokers,
who may act as agent or as principal or by a combination of such methods of
sale. The selling stockholders and any underwriter, dealer or agent who
participate in the distribution of such shares may be deemed to be
"underwriters" under the Securities Act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act. We have agreed to indemnify the
selling stockholders against certain liabilities arising under the Securities
Act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholders (and, if acting as agent for the
purchaser of such shares, from such purchaser). Usual and customary brokerage
fees will be paid by the selling stockholders. Broker-dealers may agree with the
selling stockholders to sell a specified number of shares at a stipulated price
per share, and, to the extent such a broker-dealer is unable to do so acting as
agent for the selling stockholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares as principal may thereafter
resell such shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or by a combination of such
methods of sale or otherwise at market prices prevailing at the time of sale or
at negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions computed as described above.
We have advised the selling stockholders that the anti-manipulation rules
under the Exchange Act may apply to sales of Shares in the market and to the
activities of the selling stockholders and their affiliates. The selling
stockholders have advised us that during such time as the selling stockholders
may be engaged in the attempt to sell shares registered hereunder, they will:
- not engage in any stabilization activity in connection with any of our
securities;
- not bid for or purchase any of our securities or any rights to acquire our
securities, or attempt to induce any person to purchase any of our
securities or rights to acquire our securities other than as permitted
under the Exchange Act;
- not effect any sale or distribution of the Shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to set forth the terms thereof; and
- effect all sales of Shares in broker's transactions through broker-dealers
acting as agents, in transactions directly with market makers, or in
privately negotiated transaction where no broker or other third party
(other than the purchaser) is involved.
The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal.
In order to comply with the securities laws of certain states, if
applicable, our common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
common stock may not be sold unless such shares have been registered or
qualified
25
<PAGE>
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
We have agreed to use its best efforts to maintain the effectiveness of this
registration statement with respect to the shares of common stock offered
hereunder by the selling stockholders until the earlier of the sale of such
shares or May 28, 2000. No sales may be made pursuant to this prospectus after
such date unless we amend or supplements this prospectus to indicate that it has
agreed to extend such period of effectiveness. There can be no assurance that
the selling stockholders will sell all or any of the shares of common stock
offered hereunder.
26
<PAGE>
SELLING STOCKHOLDERS
All of the common stock registered for sale pursuant to this prospectus will
be owned immediately after registration by the selling stockholders as the
former stockholders of Encompass and Online Anywhere and all of the shares
offered by the selling stockholders were acquired in connection with the
Encompass and Online Anywhere mergers. Such shares do not exceed one percent
(1%) of our outstanding capitalization as of the date of this prospectus. None
of the selling stockholders has a material relationship with us, except that
certain selling stockholders are or will be non-officer employees of Yahoo!.
The following table sets forth certain information known to us with respect
to beneficial ownership of Yahoo!'s common stock as of May 31, 1999, by each
selling stockholder. The following table assumes that the selling stockholders
sell all of the Shares. Yahoo! is unable to determine the exact number of Shares
that actually will be sold.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED
OWNED
PRIOR TO THE OFFERING SHARES AFTER THE OFFERING
OFFERED BY
------------------------ THIS ----------------------------
SELLING STOCKHOLDERS SHARES PERCENT PROSPECTUS SHARES PERCENT
- --------------------------------------------------------------- --------- ------------- ----------- ------ -------------
<S> <C> <C> <C> <C> <C>
James B. Biddy................................................. 972 * 972 0 *
James H. Bodtke, Jr............................................ 121 * 121 0 *
James Z. Bollas................................................ 20,841 * 20,841 0 *
Nancy J. Burns................................................. 2,605 * 2,605 0 *
Brockton S. Davis.............................................. 258 * 258 0 *
Scott J. Dewald................................................ 2,605 * 2,605 0 *
Maynard Eugene Hill............................................ 911 * 911 0 *
Joe Horowitz................................................... 2,431 * 2,431 0 *
JTB & S Partnership, LLLP...................................... 5,470 * 5,470 0 *
Drew T. Lanham................................................. 20,841 * 20,841 0 *
Jennifer G. LeCoq.............................................. 1,732 * 1,732 0 *
Eugene G. Lewis................................................ 121 * 121 0 *
Steven D. Linowes.............................................. 5,210 * 5,210 0 *
Roger D. Martin................................................ 911 * 911 0 *
Michael K. Moody............................................... 911 * 911 0 *
Deric L. Robinson.............................................. 303 * 303 0 *
Rachel J. Rogers............................................... 3,473 * 3,473 0 *
Edward Seitz................................................... 22,318 * 22,318 0 *
Edward F. Seitz. Trustee of The JCW Trust u/a/d April 6,
1999......................................................... 12,157 * 12,157 0 *
Edward F. Seitz, Trustee of The LEW Trust u/a/d April 6,
1999......................................................... 12,157 * 12,157 0 *
Edward F. Seitz, Trustee of The KJW Trust u/a/d April 6,
1999'........................................................ 12,157 * 12,157 0 *
Thomas C. Shanks............................................... 1,732 * 1,732 0 *
Johnny J. Speaks............................................... 3,473 * 3,473 0 *
The D. & R.G. Vaughan Limited Partnership, LLLP................ 7,294 * 7,294 0 *
Richard Vaughan................................................ 13,547 * 13,547 0 *
John D. Willcutts.............................................. 137,209 * 137,209 0 *
Michael R. Wolford............................................. 20,841 * 20,841 0 *
Keith B. Youngblood............................................ 2,605 * 2,605 0 *
Benchmark Capital Partners, L.P................................ 213,501 * 213,501 0 *
Benchmark Founder's Fund, L.P.................................. 29,653 * 29,653 0 *
TCV II, V.O.F.................................................. 944 * 944 0 *
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED
OWNED
PRIOR TO THE OFFERING SHARES AFTER THE OFFERING
OFFERED BY
------------------------ THIS ----------------------------
SELLING STOCKHOLDERS SHARES PERCENT PROSPECTUS SHARES PERCENT
- --------------------------------------------------------------- --------- ------------- ----------- ------ -------------
<S> <C> <C> <C> <C> <C>
Technology Crossover Ventures II, L.P.......................... 29,079 * 29,079 0 *
TCV II (Q), L.P................................................ 22,356 * 22,356 0 *
TCV II Strategic Partners, L.P................................. 3,967 * 3,967 0 *
Technology Crossover Ventures II, C.V.......................... 4,439 * 4,439 0 *
Benchmark Capital Partners, L.P................................ 26,667 * 26,667 0 *
Benchmark Founder's Fund, L.P.................................. 3,727 * 3,727 0 *
TCV II, V.O.F.................................................. 236 * 236 0 *
Technology Crossover Ventures II, L.P.......................... 7,269 * 7,269 0 *
TCV II, (Q), L.P............................................... 5,589 * 5,589 0 *
TCV II Strategic Partners, L.P................................. 991 * 991 0 *
Technology Crossover Ventures II, C.V.......................... 1,110 * 1,110 0 *
The Interpublic Group of Companies, Inc........................ 30,394 * 30,394 0 *
Motorola, Inc.................................................. 152,551 * 152,551 0 *
Mohan Vishwanath............................................... 82,141 * 82,141 0 *
Anurag Mendhekar............................................... 68,999 * 68,999 0 *
IAI L.L.C...................................................... 52,570 * 52,570 0 *
Dhimant Bhayani................................................ 26,285 * 26,285 0 *
Draper Richards, L.P........................................... 26,285 * 26,285 0 *
Bipin A. Shah.................................................. 22,999 * 22,999 0 *
Sridhar Ranganathan............................................ 17,085 * 17,085 0 *
Anish Dhimant Bhayani.......................................... 2,135 * 2,135 0 *
Sejal Dhimant Bhayani.......................................... 2,135 * 2,135 0 *
</TABLE>
- ------------------------
* represents less than 1%
28
<PAGE>
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Venture Law Group, A Professional Corporation, Menlo Park, California,
counsel to the Company.
EXPERTS
The consolidated financial statements and supplementary consolidated
financial statements of Yahoo! Inc., as of December 31, 1998 and 1997 and for
each of the three years in the period ended December 31, 1998, incorporated in
this prospectus by reference to the Annual Report on Form 10-K of Yahoo! Inc.,
as amended on April 29, 1999, for the year ended December 31, 1998, and the
Current Report on Form 8-K dated June 2, 1999, as amended on June 8, 1999, have
been so incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission. Certain information in the
Registration Statement has been omitted from this prospectus in accordance with
the rules of the SEC. We file the annual, quarterly and special reports, proxy
statements and other information with the SEC. You can inspect and copy the
Registration Statement as well as reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, and at the following
Regional Offices of the SEC: Seven World Trade Center, New York, New York 10048,
and Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
You can obtain copies from the public reference room of the SEC at 450 Fifth
Street, NW, Washington, D.C. 20549 upon payment of certain fees. You can call
the SEC at 1-800-732-0330 for further information about the public reference
room. We are also required to file electronic versions of these documents with
the SEC, which may be accessed through the SEC's World Wide Web site at
http://www.sec.gov. Our common stock is quoted on The Nasdaq National Market.
Reports, proxy and information statements and other information concerning
Yahoo! Inc. may be inspected at The Nasdaq Stock Market at 1735 K Street, NW,
Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" certain of our
publicly-filed documents into this prospectus, which means that information
included in these documents is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, until the selling stockholders have sold all the shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998 (as
amended on April 29, 1999) (File No. 0-28018).
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
(File No. 0-28018).
3. Our Current Reports on Form 8-K, filed with the SEC on January 13, 1999,
January 29, 1999, April 5, 1999 (as amended on April 19, 1999), April 8, 1999
and June 2, 1999 (as amended on June 8, 1999) (File No. 0-28018).
4. The description of our common stock set forth in our Registration
Statement on Form 8-A, filed with the SEC on March 12, 1996.
We will furnish without charge to you, on written or oral request, a copy of
any or all of the documents incorporated by reference, other than exhibits to
such documents. You should direct any requests for documents to Andrea Klipfel,
Investor Relations, 3420 Central Expressway, Santa Clara, California 95051,
telephone: (408) 731-3300.
29
