Subject: our board’s decision
as you’ll see from the news release we issued today, our board of
directors has reviewed microsoft’s unsolicited proposal with yahoo!’s
management, financial and legal advisors. after a careful evaluation,
the board has unanimously concluded that the proposal is not in the
best interests of yahoo! and our stockholders. of course, the board of
directors is continuously evaluating all of its strategic options in
the context of the rapidly evolving industry environment and we remain
committed to pursuing initiatives that maximize value for stockholders.
we believe microsoft’s proposal substantially undervalues
yahoo!-including our highly recognizable global brand, large worldwide
audience, significant recent investments in advertising platforms,
future growth prospects, our ability to generate free cash flow and our
earnings potential as well as substantial unconsolidated investments
(like alibaba and yahoo! japan).
you deserve the credit for the tremendously valuable business we
have built. all of us in management, as well as the members of the
board, deeply appreciate and respect what you have done and continue to
do in order to maintain and enhance yahoo!’s leadership position in the
online world.
we have been very deliberate about the steps we are taking to
position yahoo!. we are putting in place the pieces we need to
accelerate growth by becoming a leading starting point for users and
the must buy for advertisers. the global online advertising market is
projected to grow from $45 billion in 2007 to $75 billion in 2010, and
our more focused strategies position us to capture an even larger share
of this market. we are moving to take advantage of this unique window
of time in the growth of the online advertising market to build market
share and to create value for stockholders.
several key assets form a solid foundation as we execute this
strategy. first, our global brand is a tremendous base from which to
build leadership as the starting point for internet use: yahoo! is one
of the most recognizable and admired brands in the world. we have some
500 million users (1 out of every 2 internet users worldwide). in the
u.s., we are #1 in personalized home pages, mail, music, news, sports,
shopping and travel. yahoo! also is #1 in time spent on our sites, an
increasingly important metric for marketers.
second, our substantial operating cash flow, which we expect to grow
in the double digits in 2009, gives us the financial flexibility to
execute our plans.
third, we have made important investments in our core computing
infrastructure that provides us greater scalability and increases the
rate of iteration on core technologies like algorithmic search as much
as tenfold. and of course, you’re familiar with our investments in
enhanced search technology through panama. these assets-the brand, the
audience, the financial strength, and the technology-position us to
capitalize on this pivotal moment for yahoo!
and the online marketplace. of course, our most important resource is
you: the thousands of creative, passionate and committed yahoos who are
executing our strategies to deliver value for users, advertisers,
publishers-and stockholders.
as you know, we have taken significant steps to refocus our business
on our starting point-must buy strategies. and we’re making headway.
starting points: our goal is to grow visits to key yahoo! starting
points and properties, by approximately 15% per year over the next
several years. and we’re on the move: we are the most visited site in
the u.s., and the number of u.s. users grew strongly in the
double-digits in 2007 on our yahoo.com home page alone. as our open
platform takes shape it will significantly accelerate that growth.
mobile, as an area of focus, is the biggest emerging starting point
in the world. with twice as many mobile users as personal computer
users and projections for substantial advertising growth in mobile, we
have an important competitive edge as the number one mobile destination
in the u.s. and we are building a superior mobile experience for yahoo!
users to further capitalize on this opportunity.
must buy: at the same time, we will increasingly make online
advertising easier and more effective for marketers, opening up new
ways for them to address consumers. our right media exchange, acquired
last year, is more open and easy to use, simplifying transactions for
buyers and sellers of online ad inventory. another 2007 acquisition,
blue lithium, brings us best in class performance marketing. while
we’ve historically tracked the success of our ad business by focusing
on metrics related to our owned and operated sites, our goal is to
increase the percentage of the total online advertising demand we
touch-to 20% of our addressable market over the next several years,
from an estimated 15% in 2007.
our newspaper consortium, is a great example. it has grown to more
than 600 newspapers, up from just 264 just seven months ago. combined
with ebay, comcast, at&t and others, we are creating a valuable,
unique network of premium sites to serve our advertisers.
our key strategies will be enhanced by our adoption of platforms
that welcome third party developers and encourage new applications that
will enrich the user experience.
finally, beyond our core strategies, there’s the added benefit of
our substantial, unconsolidated investments in china and japan: we have
major positions in yahoo! japan, the leader in its market and alibaba,
which is strongly positioned in china, a market with enormous growth
potential.
we have accomplished a great deal in a very short time. yahoo! is a
faster-moving, better organized, more nimble company well on its way to
transforming the experiences of its users, advertisers, publishers and
developers.
i hope you are as proud as i am of the yahoo! we have built and we continue to build. thanks for your hard work.
jerry