Yahoo 2001 Annual Report Download - page 3

YHOO2
When I joined Yahoo! last May, I realized that we had many significant challenges. Some of these challenges, I
now firmly believe, have been transformed into enormous opportunities. During the past year the Yahoo! team
has developed a clear direction for the Company and demonstrated early momentum on the implementation of
our business plan. We’ve also improved the quality of our revenue by strengthening our client base, built new
revenue streams and enhanced existing ones — all in one of the worst economic environments of the past two
decades. And we did these things on a stage supported by financial discipline.
During my first five months, I spent many hours with our executives immersing myself in the Company’s
remarkable history, examining our core strengths, as well as our competitive challenges. What I discovered
was an extremely intelligent team with the absolute desire to win. I was excited by Yahoo!’s broad scale,
tremendous global reach, the strength of the Yahoo! brand and the recognition it has across all walks of life.
And, thanks to ongoing financial discipline, we had a strong balance sheet with more than $1.5 billion in cash
and marketable securities, and no debt. Overall, there were many great things to work with and a strong foun-
dation from which to build.
But I also saw things that had to change if we were to position Yahoo! for long-term growth. The Company
was heavily dependent on advertising as its primary source of revenue, yet we had limited relationships with
advertising agencies and traditional marketers, as well as a sales team that required more depth. In addition,
with 44 different business areas and sub-areas, the Company itself was difficult to manage. While Yahoo! had
achieved extraordinary success in its first five years by providing the broadest set of Web services possible, it
was apparent to me that we now needed to be more focused. There is also no doubt that at the time I joined,
Yahoo! was feeling the pressure of a decline in the broader economic environment, along with the need to con-
tinue to realign our client base to reduce our dependence on pure play Internet clients.
My first priority was to stabilize the business, while at the same time focusing on the opportunities of
which we could take advantage of in order to build and grow Yahoo!, with the goal of ultimately delivering long-
term shareholder value.
There were three attitudes that I instilled into the Company’s approach: focus, diversification and prof-
itability. Every thought, idea, proposal or plan was scrutinized against these measures, as we rolled up our
sleeves and began to define the Company’s strategy and business priorities. During this period, the manage-
ment team did a great job of balancing the implementation of the hard but necessary measures to ensure
Yahoo! maintained a stable financial position, while working tirelessly to take the operational and competitive
steps needed to drive growth.
The result of this hard work was the development of a new strategy and operating structure that we
believe positions the Company for growth in 2002 and beyond.
To Yahoo!’s shareholders, consumers,
customers, partners and employees:
Terry Semel
Chairman of the Board
and Chief Executive Officer
“There were three attitudes that I instilled into the Company’s approach: focus, diversification and profitability. Every thought, idea,
proposal or plan was scrutinized against these measures, as we rolled up our sleeves and began to define the Company’s strategy
and business priorities.”
Shareholders’ Letter:
A clear and focused game plan.