Yahoo 2000 Annual Report Download - page 4

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While the Internet was validated as a medium in 2000,the
industry surrounding it changed. As with all previous high-
growth industries, a very normal phase of consolidation
began occurring as certain financial models were proven or
disproved. In addition, the financial markets pulled back
substantially in 2000, making capital almost impossible to
obtain for early stage companies that had not already
achieved scale. For many companies, this pull back was
quicker and deeper than expected.
We believe this consolidation will separate the strong from
the weak and, ultimately, reward companies like Yahoo! that
have strong core assets, a healthy leadership position and
financial strength. While we will manage responsibly
through the current transition period, we have great confi-
dence in our plans and prospects for long-term growth.
Year 2000 highlights
Yahoo!’s performance and strong core assets mean it is
among the best-positioned companies to emerge from the
current market environment with greater leadership. Addition-
ally, the strength of our balance sheet and our conservative
fiscal discipline provide us with the ability to invest in our glob-
al platform and deliver long-term value for our shareholders,
consumers, business partners and employees. During 2000,
we continued to meet or exceed our stated goals across all
key metrics. Among the year’s highlights:
Yahoo! delivered record revenues of more than $1.1 billion,
reflecting growth of nearly 90 percent year over year.
Non-U.S. operations represented 15 percent of total con-
solidated revenues during the full year, excluding Yahoo!’s
34 percent interest in Yahoo! Japan. Business services
accounted for 10 percent of consolidated revenue.
Pro forma operating cash flow, or EBITDA (earnings before
interest, taxes, depreciation and amortization), increased
to $411 million, up 117 percent from 1999. This demon-
strates Yahoo!’s strong business model, giving the
company financial and operating flexibility few companies
can match.
With almost $1.7 billion in cash and marketable debt
securities, and zero debt, Yahoo! ended the year in its
strongest financial position ever. Looking forward, our
strong balance sheet is an important asset and a key
resource as we execute on our goal to increase our
market position during the current industry transition.
Yahoo! continues to be the No. 1-ranked network world-
wide (Nielsen//Netratings, November 2000), with the
highest reach globally. We finished the year with 24 World
properties in 12 languages.
Yahoo! established itself as one of the top 40 most valu-
able brands in the world and the most valuable Internet
brand. According to Interbrand (June 2000), Yahoo!’s
brand is valued at $6.3 billion.
Yahoo! has become an increasingly essential service in
the lives of our consumers. By year-end 2000, our world-
wide consumer base grew to more than 180 million
people, and our average daily page views climbed to 900
million, nearly double our total at year-end 1999.
Key to this growth has been our ability to continuously
expand our offerings, attract new members and drive
increased usage. During 2000, this included the introduc-
tion of new business and enterprise services and premium
services, generating new streams of revenue for the
company. You’ll find an expanded discussion of many
of these services, and the contribution they are making to
our business, beginning on page 28 of this report.
Our plan for 2 001
While the current economic conditions facing all businesses
are challenging, the good news is that Yahoo! possesses a
set of strong core assets and stronger financial position.
That means the company has the freedom to take the
proactive operational and competitive steps necessary to
drive long-term growth and stockholder value.
Managing our business through this transition period will
require strength, focus and financial discipline. We will bal-
ance Yahoo!’s objective to come out of 2001 as a leader in
our key initiatives with the need to adjust our near-term
business plan to reflect the cyclical economic and capital
market slowdown that we are currently experiencing. We
are confident that we can achieve this goal, while we also
continue investing in key strategic growth areas to capture
the significant long-term opportunities that lie before us.
Our first priority: strengthening our core marketing services
business. Perhaps the most important change Yahoo! will
experience is the ongoing transition in our client base
toward companies in more traditional lines of business.
While this change contributes to making Yahoo! a stronger
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company and gives it the chance to prove the value of its
network to the world’s largest businesses, we are experi-
encing this transition at the same time that economic
conditions are worsening. We plan to responsibly manage
through this period by maintaining a focus on the longer-
term horizon, which we continue to believe affords great
opportunities for growth.
Our second area of major strategic importance is business
and enterprise services. Currently, our two major services
are Corporate Yahoo! and Yahoo! Broadcast Services.
Yahoo! will continue to align with enterprise channel
and service partners, and we have established a dedi-
cated team to focus on our corporate and enterprise
sales efforts.
Our third investment area focuses on serving the growing
demand from our members to provide premium services.
In 2000 we successfully laid the groundwork by rolling out
a number of premium — or “for pay” — services. In 2001
we plan to add additional premium services in the areas
of personal finance and investing, communications,
commerce and digital entertainment.
To help us meet these objectives, we have focused our
entire organization on the following priorities:
Turning visitors into me mbe rs, by deepening our relation-
ships with our consumers to a level that results in
members committing to our essential services;
Evolving our ge ne ral conte nt and We b applications into
true consume r se rvice s, by constantly increasing the
value of our personalized offerings, resulting in Yahoo!
becoming more essential and relevant to our members
daily lives;
Transitioning our custome rs into partne rs, by becoming
more essential to our business partners, and by
addressing their needs through integrated marketing
and business solutions;
Transforming manage rs into le ade rs, and adding bench
strength at senior levels to continue building a sustain-
able organization that is poised to capture the massive
opportunity in front of us; and,
Evolving our corporate culture , by continuing to adapt to
the changing business conditions and environment.
Next step in our evolution
2000 was a significant year for both Yahoo! and the Internet.
Our company adapted and excelled through the challenges
and changes that occurred — especially during the second
half of the year — and demonstrated that we are building a
powerful franchise that is becoming increasingly essential
to businesses and consumers.
To maintain that momentum and expand our management
expertise, we announced in March 2001 that we have
initiated a search for a new CEO to join our team. I will
remain as chairman and CEO until the search is completed,
and then I will continue as an active and dedicated chairman.
This initiative is an extension of our drive to add great
senior-level talent to our company, thus increasing our
bench strength and positioning us for the next phase
of growth.
We have built a solid foundation and have seen tremendous
growth over the last six years. As we enter our seventh year,
we will stay as focused and determined as ever to capture
the opportunity in front of us. My sincerest thanks go out to
our clients, consumers, content and service partners,
employees and stockholders. The success of our business
to date would not have been possible without you, and we
value your continued support.
The Internet opportunity is only just beginning and we know
we have lots of work to do in the years to come. As a result,
we are consciously building and investing in key initiatives
to pursue our goal to make Yahoo! the Internet’s leading
global consumer and business services company.
Sincerely,
Timothy Koogle
Chairman and CEO
March 30, 2001
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