Yahoo! Acquires Inktomi March 19 th, 2003

Yahoo!

Yahoo  A leading provider of comprehensive online products and services to consumers and business worldwide  No.1 Internet brand globally  No.3 most used search engine  Headquarter: Sunnyvale, California  Global network is available in 13 languages

Leading search sites Site Unique visitors (000) Aver.daily unique Visitors(000) Total usage minutes (000,000) Ave min spent per month MSN Search49,6867, Google Sites41,3288, Yahoo! Search42,5745, AOL Search38,1127,1871,

Yahoo and its search engine  Yahoo is named as an editorially produced directory of websites  But it never owned significant algorithmic back-end search technology of its own  It aggregates services and content to pioneer the concept of a “portal” site  Its search technology is outsourced

Yahoo Search providers AltaVista Inktomi(1998) Google (June 2000) Inktomi (March, 19, 2003)

Yahoo’s strategies on its search business  Improve relevancy and comprehensiveness of search results  Enhance and improve quality of its most- searched terms  Increase marketing resources invested to continue building Yahoo!Search brand  Improve directory matches to offer consumers results within relevant categories

Inktomi

Services  WWW search services  Content networking products  Enterprise search  Paid inclusion services

History  Established in  Contract with Yahoo  In 2000 stock traded at $234  Yahoo switched from Inktomi to Google  Shortly Inktomi was traded at $1.50

Just Before the Merger  Inktomi stock is traded at $1.50  Restructuring efforts  Sale of enterprise search software to Verity  Reduce investments into content networking products group  Focus on the Web search services

Who needs Inktomi? Microsoft – largest portal customer (20.8% of total Web search services revenue) Contract expires in December 2005 AOL – one of the largest portal customers (17.5% of revenues) Ceased its contract with Inktomi in August 2002

Competition  AltaVista  Ask Jeeves  FAST Search and Transfer  Google  Overture  Look-Smart  Northern Light

Financial Performance

Strategic Fit of Yahoo and Inktomi A powerful combination Yahoo!’s global reach and commitment to and Inktomi’s outstanding engineering expertise and leading search technology, providing the best user experience on the Web

Strategic Fit of Yahoo and Inktomi Achieve their mutual goal of making the Inktomi-Yahoo! search offering the standard bearer for searching on the Web

Strategic Fit of Yahoo and Inktomi Create one of the most relevant, comprehensive and highest quality search offerings on the Web for both Yahoo!’s affiliate partners and Yahoo!

Strategic Fit of Yahoo and Inktomi Offer more value to consumers and businesses through programs such as paid inclusion, which provide higher-quality commercial search results

Strategic Fit of Yahoo and Inktomi A way of getting Google off of that page and being able to be more aggressive in trying differentiate and market themselves against Google

Strategic Fit of Yahoo and Inktomi Give Yahoo! an important new tool and revenue source in an increasingly competitive marketplace

Strategic Fit of Yahoo and Inktomi Unprecedented ability to monitor Internet users’ behavior and deluge them with tailor-made advertising based on one's surfing

Potential Risks and Uncertainties  Reaction of customers of Yahoo! and Inktomi to the acquisition  Yahoo!'s ability to successfully integrate Inktomi's operations and employees  Inktomi has never turned a profit  General economic conditions

Potential Risks and Uncertainties  Yahoo’s directory is difficult to scale: hundreds of thousand of people needs to be hired to try and comprehensively categorize the current Internet  Inktomi’s search has traditionally organized pages automatically based on page content and meta information  How do the two systems work together?