Yahoo! Inc - Adds Services And Becomes A Portal, 1997-1998

ADDS SERVICES AND BECOMES A PORTAL (1997-1998)

Yahoo!'s branding efforts resulted in 39 percent of the general public knowing the Yahoo! name, according to a Yankelovich study. To build its brand recognition Yahoo! was the first Internet-only company to advertise on television. New services launched in 1997 included Yahoo! Finance, which included investment research, market summaries, and financial news as well as links to stock quotes, company profiles, and similar information.

By 1997 Yahoo! was posting profitable quarterly financial results, including $210,000 in the first quarter and $610,000 in the second quarter. Revenue in the second quarter more than quadrupled to $13.5 million from $3.3 million a year ago. First-quarter advertising sales were $9.5 million, compared to $1.7 million in the first quarter of 1996. Third quarter revenue reached $17.3 million, with an operating profit of $222,000 and net income of $1.6 million. Traffic reached an average of 50 million page views per day in September. Wall Street took note and toward the end of 1997 analysts were recommending Yahoo! as being financially sound and likely to benefit from increased Internet spending by advertisers and retailers.

During 1998 Yahoo! developed plans for becoming a portal and developing additional revenue streams from commerce and other sources. In mid-1998 the company acquired Viaweb Inc., an Internet commerce software vendor, for $49 million in stock. The acquisition gave Yahoo! the ability to design, build, promote, and host online storefronts and give merchants tracking and reporting tools. The Viaweb Store was subsequently relaunched as Yahoo! Store. Later in the year Yahoo! acquired Yoyodyne for about $30 million in stock. Yoyodyne specialized in target marketing, and Yahoo! would use its resources to develop ongoing promotional programs for its advertisers.

Yahoo! continued to operate at a profit in 1998. For the first quarter it had revenue of $30.2 million and a net profit of $4.3 million. About 22 percent of its revenue came from commerce and sponsorships. Strong traffic helped Yahoo! report financial results ahead of analysts' expectations for the rest of the year. In May Yahoo! led all Internet sites with 30.6 million unique visitors, followed by America Online with 22.8 million and Netscape with 18.9 million. For September average page views reached 144 million, with the number of registered users increasing by 7 million to more than 25 million. PC Magazine named Yahoo! the best Web search engine of 1997, citing its news-searching capabilities and extensively cross-referenced directory. It also praised the company's microsites, including Yahoo! Finance, regional guides, Yahooligans! For Kids, and Beatrice's Web Guide, a partnership with Women's Wire. Yahoo! also featured chat rooms and a free e-mail service. For fiscal 1998 the company's revenue reached $203.3 million, up from $70.5 million in fiscal 1997.

Yahoo! extended its brand in many ways. Globally it operated sites in 11 countries overseas, including a newly launched Chinese-language Web site based in Hong Kong. Like other search engines, Yahoo! offered extra services such as news, yellow and white pages, free e-mail, chat, and instant messaging. The Yahoo! name was also found on its own magazine, Yahoo! Internet Life, and a co-branded Visa credit card. New services launched in 1998 included Yahoo! Small Business and Yahoo! Clubs.