GROUP 4
GROUP MEMBERS
Ralph Matthew A. Ong
Ha Phuoc Vu
Tran Khai Khuong
Melva Hermayanty Saragih
Pham Dinh Chien
M997Z245
M997Z244
M997Z212
M997Z227
M997Z201
INTRODUCTION
• Founded in 1994 by Stanford PhD candidates David
Filo and Jerry Yang;
• helps people uncover the best of the Web, more easily
discover what they are looking for, and perhaps find
something they didn’t expect;
• The name, YAHOO
• Yet
• Another
• Hierarchical
• Officious
• Oracle
•
located at Sunnyvale, Calif., and has more than 13,000
employees.
YAHOO’S BUSINESS
• creating a content, communications, and community platform that
delivers rich consumer experiences and advertising solutions across
all digital screens.
• attract more than half a billion consumers every month in more
than 30 languages — making Yahoo! one of the most visited and
most trusted Internet destinations.
More than doing business ….
• empower people through corporate social responsibility programs,
products, and services to make a positive impact on their
communities;
• connect our advertisers to a global online community so they can
change the world together.
Questions 1
• What makes Yahoo! an attractive opportunity
(and not just a good idea?)
In 2005, it was easy for Yahoo! to find some capital from
outside because of its attractive opportunity as a business.
There were several uniqueness of Yahoo! among Internet
search providers:
• “The Yahoo! hierarchy is a handcrafted tool in that all of
its…categories were designated by people, not computers.
The sites that they link to are likewise deliberately
chosen, not assigned by software algorithms.
• In this, Yahoo! is a very labor intensive product.
But it is
also a guide with human discretion and judgment built into
it - and this can at times make it almost uncannily
effective….
• In addition, Yahoo! offered a central place where people could
go to just to see what was out there. This made it easy for
people with little previous exposure to the Web to start
searching through Yahoo!’s lists of links, often just to see if they
could find something of interest.
• This is the essence of Yahoo!’s uniqueness and (let’s say it)
genius. It isn’t especially interesting to point to information that
many people are known to find interesting. TV Guide does this.
So do phone books, and countless Web sites that cater to
well-defined interest groups….
But Yahoo! is able to build
intuitive paths that might be singularly, or even temporarily
important to the people seeking it.
And it does this in a
way that no other service has truly replicated.
Question 2
How will Yahoo! Make money?
Business model
How will Yahoo! Make money?
• Through targeted advertising based on
enormous following
• New premium service
• Explore broad-band service (from 2004)
Sell advertising
• Yahoo! sells advertising (This is not the
auctioned search advertising that Google has
become known for, although Yahoo! also does
this).
• This advertising is the banner ads that you see
when you use all their compelling services.
(chatting, email…).
• The ads can be very specifically targeted such
as a movie ad that is shown for a few hours on
a Thursday and Friday afternoon to a specific
demographic.
Business model- Yahoo! created
enormous following
• Generate following through its strong brand and
momentum created
• The interest-area based structure of Yahoo! made it an
easier and more enjoyable way for users to find
relevant information, generate following
• Through its editorial efforts, it provided a combination
of comprehensiveness and high quality.
Identify the major risks in each of these
categories: Technology, market, team and
financial. Rank order them
• Technology risks:
– Any failure to scale and adapt existing technology architecture to
manage expansion and respond to rapid technological change could
adversely affect business.
– The technology architectures and platforms utilized for the services are
highly complex and may not provide satisfactory support in the future.
– New technologies could block display advertisements or search
marketing listings.
– Changes in regulations or user concerns regarding privacy and
protection of user data, or any failure to comply with such laws.
• Market risks:
– Yahoo! face significant competition for users, advertisers, publishers
and distributors, principally from Google, Microsoft, and AOL.
– In markets, Yahoo! compete with local Internet service providers that
may have competitive advantages.
• Especially those in Asia, Europe, and Latin America, Yahoo! face
substantial competition from local Internet service providers and other
portals that offer search, communications, and other commercial services.
– International operations are subject to increased risks which could
harm Yahoo’s business, operating results, and financial condition.
• Team risks:
– Employees of the company responsible for making the business model
work.
– Weak management team impact on instant credibility to outside
investors.
– A strong management team may not be able to salvage a weak
business model, but should be able to change the model and redefine
the business as it becomes necessary.
– Changes in Yahoo’s management or leadership, competitors’ hiring
practices, and the effectiveness of compensation programs.
• Financial risks:
– Fluctuations in foreign currency exchange rates affect to operating
results in U.S. dollar terms.
– Yahoo! may be required to record a significant charge to earnings if
our goodwill, amortizable intangible assets, or investments in equity
interests become impaired.
– Yahoo’s stock price has been volatile historically and may continue to
be volatile regardless of operating performance.
– Yahoo! may have exposure to additional tax liabilities which could
negatively impact to income tax provision, net income, and cash flow.
– Adverse general economic conditions have caused and could cause
decreases or delays in marketing services spending by the advertisers
and could harm to ability to generate marketing services revenues.
– Yahoo! rely on the value of our brands, and a failure to maintain or
enhance the Yahoo! brands in a cost-effective manner.
QUESTION 4
What are the advantages and disadvantages
of each of the funding options that Yahoo!
Could pursue?
Which one do you recommend?
FUNDING OPTIONS
[1] Accept Sequoia’s offer and launch Yahoo! As their own
company.
[2] Accept corporate sponsorship.
[3] Merge with an existing corporation.
[4] Postpone their decision.
[5] Selling their company.
Option 1: Accept Sequoia’s offer and launch
Yahoo! As their own company
ADVANTAGES
DISADVANTAGES
[1] More capital/money.
[1] Yang & Filo loses 25% share.
[2] Can manage business better.
[2] Possibility of disagreement.
[3] Strong brand.
[3] Betrayal of a partner.
[4] Invaluable resourses.
Option 2: Accept corporate sponsorship
DISADVANTAGES
ADVANTAGES
[1] Receive funds.
[1] Company may be sold out.
[2] Development of their site.
[2] May destroy the company’s
image.
Thank you!