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					Yahoo Refi Analysis
Evaluation of 4Q:07 Debt Refinancing Analysis, A Year Later


11/10/2008
www.COLDFINANCE.com
Neil_McCluskey@yahoo.com
www.COLDFINANCE.com                                                               posted November-10-2008


Yahoo Refi Analysis Revisited - Introduction

As a follow-up to the Yahoo re-financing analysis, posted October 15, 2007, this analysis estimates
Yahoo’s financial status today, as if the transaction had been executed. In the original transaction, the
analysis assumed total debt issued of $2.5 billion, at the beginning of 4Q:07 with a five year term and
retired on a straight-line basis, paid annually at the end of 4Q.

Re-financing Model

The updated re-financing (or refi) model includes updated actual reported quarters 4Q:07 through
3Q:08 and updated consensus outlook thereafter.

The updated refi model incorporates the original transaction assumptions, including $2.5B debt sold at
par with an 8% interest rate and issuance fees of 1%. The rate is based on BBB-rated yields as of the
date of issuance. Re-purchase of shares was assumed to occur evenly over 4Q:07 and 1Q:08 at the then
market price of $28.

Discussion of Financial Impact

Over the five-year life of the loan (2008-12), the impact of debt on Yahoo’s updated financial results
remains modest. Relative to the unlevered model, levered aggregate real revenue (five years 2008-12,
discounted at tax-adjusted borrowing rate) of $28B and aggregate real operating income of $4B remain
unchanged. After leverage, aggregate real EPS falls a modest 5%, from $2.89 per share unlevered to
$2.75 levered, while aggregate real PF EPS falls from $2.81 to $2.67. Essentially, the transaction leads to
diminished net earnings early in the loan life, partially offset by higher earnings in late loan life years and
subsequent periods thereafter.

Since the original analysis in October 2007, the consensus financial outlook for Yahoo has declined
leading to lower operating income to sustain debt financing. More specifically, over the 2008-12 loan
period, aggregate real revenue consensus outlook has declined by 18%, falling from $35B to $28B,
operating income declined by 51%, falling from $9B to $4B, EPS declined by 33%, falling from $4.30 to
$2.89 and PF EPS declined by 50%, falling from $5.66 to $2.81.

With the lowered consensus financial outlook, debt ratios (if the refi transaction had been executed in
4Q:07) become somewhat challenging for Yahoo, in the early years of the loan. In 2008 and 2009,
periods where ratios are most critical, coverage ratios are particularly affected. More specifically, if the
loan had been taken as of 4Q:07, and in light of the lowered consensus earnings outlook, Yahoo
coverage ratios would have declined by ~40% from 8.4x to 4.9x in 2008 and 13.1x to 7.8x in 2009.
Meanwhile, fixed charge coverage ratios would have fallen by over 60% from 2.3x to 0.8x in 2008 and
2.7x to 0.9x in 2009. That said, Yahoo is still projected to produce $500M in excess cash, after debt
service and even after allowing for $300M in discretionary investing activity, so the risk of default,
despite the deterioration in credit ratios, is still very low.




Neil_McCluskey@yahoo.com                          Page | 1                        posted November-10-2008
www.COLDFINANCE.com                                                           posted November-10-2008


Meanwhile, the change in leverage ratios for Yahoo is less impactful. For example CY08 Debt / Equity
decreases from 0.3x to 0.2x - neither is very significant. Debt / EBITDA does increase from 0.8x under the
original leverage model to 1.2x updated, but again, both are conservative. By 2009, the updated model
still implies 0.7x Debt / EBITDA, up marginally from 0.5x in the original model, but again, neither is
excessive.

As under the original refi transaction, even with the updated consensus outlook, the two key sources of
transaction benefit for Yahoo are improved ROE and (EPS-inflating) share count reduction at the end of
the transaction period. More specifically, in 2012 and 2013, adding leverage boosts Yahoo’s ROE from
~7% to an average of ~8%. The impact on per share earnings is a 1%-2% improvement in CY12 and CY13
EPS. More specifically, unlevered 2013 consensus GAAP EPS of $0.92 and PF EPS of $0.96 improve, with
leverage, to $0.94 and $0.98 respectively.

Evaluation of the 4Q:07 Refi Strategy

In summary, by introducing some leverage into Yahoo’s capital structure in 4Q:07, Yahoo could have
improved its out-year 2013+ share value by 1% to 2%. That said, this improvement is, arguably, too
modest to justify borrowing the $2.5B. In short, the benefits of the refi would have been largely erased
by the size of the downward consensus earnings revisions. While there is some shareholder value
improvement from the refi, it is probably too small to justify the transaction.




Neil_McCluskey@yahoo.com                        Page | 2                      posted November-10-2008
                                                                              Yahoo, Inc. (YHOO)
Last Reported Quarter:      09/30/08                                     Income Statement (w/ 4Q:07 Refi)                                          Neil_McCluskey@yahoo.com
Last Update:                10/27/08
                                              2007A                                                  2008E                                                2009E
FY end: Dec                  MAR        JUN           SEP      DEC         FY       MAR        JUN       SEP         DEC        FY       MAR        JUN           SEP      DEC        FY
(in $M, except EPS)           1Q         2Q           3Q        4Q        2007A      1Q         2Q       3QA         4QE       2008E      1Q         2Q           3Q        4Q       2009E
Gross revenue                $1,672    $1,698         $1,768   $1,832      $6,969   $1,818    $1,798     $1,786      $1,878    $7,280    $1,824    $1,831     $1,838       $2,014    $7,507
 TAC                            489       454            485      429       1,857      466       452        461         488     1,867       474       476        478          524     1,952
Net Revenue                  $1,183    $1,244         $1,283   $1,403      $5,113   $1,352    $1,346     $1,325      $1,390    $5,413    $1,350    $1,355     $1,360       $1,490    $5,555
 Cost of sales                  223       227            253      269         971      286       310        307         327     1,230       297       298        299          328     1,222
 R&D                            191       217            223      235         866      258       268        268         265     1,059       260       260        260          265     1,045
 S&M                            317       338            341      368       1,364      359       349        346         355     1,409       350       350        350          360     1,410
 G&A                            116       123            140      157         536      151       172        178         150       650       145       145        155          160       605
 SBC                            140       129            146      158         572      125       123        133         100       481       100       100        100          100       400
 Non-recurring charges            0         0              0        0           0       29         0          0           0        29         0         0          0            0         0
 Amortization                    27        25             30       25         107       24        23         24          25        96        25        25         25           25       100
Operating income               $169      $185           $150     $191        $695     $121      $101        $70        $168      $460      $173      $177       $171         $252      $773
  Interest and other, net       35         31            44       (31)        79       (26)      (25)         (41)      (25)     (118)      (20)      (19)          (18)       (7)      (64)
Pretax income                 $204       $216          $194      $160       $774       $94       $75          $29      $143      $342      $153      $158          $152      $245      $708
 Taxes                         (92)       (88)          (79)      (64)      (322)      (47)      (38)         (41)      (57)     (183)      (61)      (63)          (61)      (98)     (283)
 Equity income                  29         32            37        53        151       455        55           28        50       587        32        32            32        32       128
 Minority interests              1          1            (1)       (4)        (3)        0        (1)          (2)        1        (2)       (1)       (1)           (1)       (1)       (4)
Net income                    $142       $161          $151      $146       $600      $502       $91          $14      $137      $745      $123      $126          $122      $178      $549
O/S (fully diluted)           1,418      1,404      1,395        1,345      1,392     1,295     1,299      1,298       1,296     1,297     1,295     1,295      1,294        1,293     1,294
EPS (reported)                $0.10      $0.11      $0.11        $0.11      $0.43     $0.37     $0.07      $0.01       $0.11     $0.57     $0.09     $0.10      $0.09        $0.14     $0.42
EPS (w/o extra items)         $0.11      $0.12      $0.11        $0.09      $0.43     $0.08     $0.08      $0.06       $0.11     $0.33     $0.11     $0.11      $0.11        $0.15     $0.47
TAC                          29.2%      26.7%      27.4%        23.4%      26.6%     25.6%     25.1%      25.8%       26.0%     25.6%     26.0%     26.0%      26.0%        26.0%     26.0%
Net Revenue                 100.0%     100.0%     100.0%       100.0%     100.0%    100.0%    100.0%     100.0%      100.0%    100.0%    100.0%    100.0%     100.0%       100.0%    100.0%
 Gross Margin                81.2%      81.8%      80.3%        80.8%      81.0%     78.8%     76.9%      76.8%       76.5%     77.3%     78.0%     78.0%      78.0%        78.0%     78.0%
 R&D                         16.2%      17.4%      17.4%        16.8%      16.9%     19.0%     19.9%      20.2%       19.1%     19.6%     19.3%     19.2%      19.1%        17.8%     18.8%
 S&M                         26.8%      27.2%      26.6%        26.2%      26.7%     26.6%     25.9%      26.1%       25.5%     26.0%     25.9%     25.8%      25.7%        24.2%     25.4%
 G&A                          9.8%       9.9%      11.0%        11.2%      10.5%     11.1%     12.8%      13.4%       10.8%     12.0%     10.7%     10.7%      11.4%        10.7%     10.9%
Operating Margin             14.3%      14.9%         11.7%     13.6%      13.6%      8.9%      7.5%       5.3%       12.1%      8.5%     12.8%     13.1%         12.6%     16.9%     13.9%
  Interest and other, net     3.0%       2.5%          3.4%     -2.2%       1.5%     -1.9%     -1.9%      -3.1%       -1.8%     -2.2%     -1.5%     -1.4%         -1.3%     -0.5%     -1.2%
Pretax Margin                17.3%      17.3%         15.1%     11.4%      15.1%      7.0%      5.6%       2.2%       10.3%      6.3%     11.4%     11.6%         11.2%     16.5%     12.8%
 Tax Rate                    45.2%      40.7%         40.6%     39.6%      41.6%     49.8%     50.1%     139.7%       40.0%     53.4%     40.0%     40.0%         40.0%     40.0%     40.0%
Net Margin                   12.0%      12.9%         11.8%     10.4%      11.7%     37.1%      6.8%       1.1%        9.9%     13.8%      9.1%      9.3%          9.0%     12.0%      9.9%
Incremental GM                118%       94%            32%      73%                 133%      494%           84%      63%                  26%      78%        78%          78%
Incremental Oper Inc.         309%       26%           -90%      26%                 138%      330%          147%     223%                 -12%      78%      -122%          60%
Y/Y Growth
 Revenue                        9%       11%            14%       14%        12%      14%         8%           3%       -1%       6%         0%       1%            3%        7%         3%
 Net Income                   -11%       -2%            -5%      -46%       -20%     253%       -43%         -91%       -6%      24%       -76%      38%            NM       30%       -26%
 EPS                           -6%        3%            -1%      -43%       -16%     271%       -39%         -90%       -2%      33%       -74%      38%            NM       30%       -26%
Q/Q Growth
 Revenue                       -4%        5%             3%        9%                 -4%         0%          -2%       5%                  -3%       0%            0%       10%
 Net Income                   -47%       13%            -6%       -4%                245%       -82%         -84%     855%                 -10%       2%           -2%       45%
 EPS                          -47%       14%            -5%        0%                243%       -81%         -84%     856%                 -10%       2%           -2%       46%
                                                                              Yahoo, Inc. (YHOO)
Last Reported Quarter:      09/30/08                                     Coverage Ratios (w/ 4Q:07 Refi)                                   Neil_McCluskey@yahoo.com
Last Update:                10/27/08
                                             2007A                                               2008E                                         2009E
FY end: Dec                 MAR        JUN        SEP         DEC          FY       MAR      JUN       SEP     DEC       FY       MAR      JUN       SEP      DEC       FY
(in $M, except EPS)          1Q         2Q         3Q          4Q         2007A      1Q       2Q      3QA      4QE      2008E      1Q       2Q       3Q        4Q      2009E

Net Cash & Mkt Securities    $2,378    $2,402     $2,013      ($1,246)              ($335)    $579     $619    $702                $759     $887     $1,058   $1,276

EBIT / Interest                  n/a       n/a          n/a      4.7x       16.9x     4.9x     4.5x     4.1x     6.7x      4.9x     6.8x      6.9x     6.8x    11.7x      7.8x
EBITDA / Interest                n/a       n/a          n/a      7.0x       75.0x     8.7x     8.5x     8.2x    11.7x      9.2x    11.8x     12.1x    12.2x    19.1x     13.5x
Fixed Charge Ratio               n/a       n/a          n/a      0.3x        0.6x     0.4x     0.4x     0.4x     0.4x      0.8x     0.4x      0.4x     0.4x     0.5x      0.9x

Debt / EBITDA                    n/a       n/a          n/a      1.5x        1.7x     1.8x     1.5x     1.5x     1.1x      1.2x     1.1x      1.0x     1.0x     0.7x      0.7x
Debt / Assets                    n/a       n/a          n/a      0.3x        0.3x     0.2x     0.2x     0.2x     0.1x      0.1x     0.1x      0.1x     0.1x     0.1x      0.1x
Debt / Equity                    n/a       n/a          n/a      0.5x        0.5x     0.4x     0.3x     0.3x     0.2x      0.2x     0.2x      0.2x     0.2x     0.1x      0.1x

DFL                              n/a       n/a          n/a     1.27x       1.06x    1.26x    1.29x    1.33x    1.18x     1.25x    1.17x     1.17x    1.17x    1.09x     1.15x
                                                                         Yahoo, Inc. (YHOO)
Last Reported Quarter:      09/30/08                                 Balance Sheet (w/ 4Q:07 Refi)                                     Neil_McCluskey@yahoo.com
Last Update:                10/27/08
                                            2007A                                           2008E                                           2009E
FY end: Dec                  MAR        JUN      SEP        DEC       FY      MAR       JUN       SEP       DEC       FY      MAR       JUN       SEP       DEC       FY
(in $M, except EPS)           1Q         2Q       3Q         4Q      2007A     1Q        2Q      3QA        4QE      2008E     1Q        2Q       3Q         4Q      2009E
Cash & equiv                 $1,309     $1,526    $1,528    $1,154            $2,241    $1,911    $1,964    $1,547            $1,553    $1,581    $1,652    $1,270
Marketable securities         1,037        865       684       488               267     1,020     1,070     1,070             1,108     1,183     1,258     1,333
A/R, net                        893        892       950     1,056             1,040     1,042       993     1,044             1,014     1,017     1,021     1,119
Prepaids and other              336        362       322       181               191       191       190       194               197       201       205       210
  Total C/A                  $3,575     $3,645    $3,484    $2,878            $3,739    $4,164    $4,217    $3,854            $3,872    $3,983    $4,137    $3,931
Mktable securities            $782       $760      $551      $362              $239      $148        $85       $85               $98     $123      $148      $173
PPE                           1,128      1,176     1,240     1,332             1,363     1,416     1,491     1,580             1,669     1,751     1,825     1,893
Goodwill                      2,976      3,004     3,532     4,002             4,157     4,151     4,038     4,038             4,043     4,048     4,053     4,058
Intangible assets               413        393       517       611               652       616       556       492               469       445       421       397
Inv in equity interests       1,928      1,963     1,989     2,181             2,954     3,139     3,115     3,165             3,207     3,249     3,291     3,333
Other                           512        550       529       504               222       216       226       231               241       236       241       246
 Total assets               $11,313    $11,491   $11,843   $11,870           $13,326   $13,850   $13,728   $13,446           $13,599   $13,834   $14,116   $14,032

Accounts payable              $141       $143      $132      $176              $134      $137      $151      $214              $139      $131      $147      $214
Accrued liabilities             929        923       966     1,006             1,053     1,063     1,077     1,088             1,099     1,110     1,121     1,132
Deferred revenue                331        342       337       368               496       478       447       382               371       372       374       409
Short-term debt                   0        750       750     1,250               500       500       500       500               500       500       500       500
 Total C/L                   $1,401     $2,157    $2,184    $2,800            $2,183    $2,178    $2,175    $2,183            $2,109    $2,113    $2,142    $2,256
Long-term debt                $750          $0        $0    $2,000            $2,583    $2,000    $2,000    $1,500            $1,500    $1,500    $1,500    $1,000
Other liabilities               255        298       309       289               340       355       371       378               386       393       401       409
Deferred revenue                 63         61        59        95               307       276       246       251               256       261       267       272
 Total liabilities           $2,469     $2,516    $2,552    $5,185            $5,414    $4,810    $4,791    $4,312            $4,250    $4,268    $4,309    $3,937
Minority interests               $8        $8        $8       $12               $12       $13       $15       $10                $9        $9       $10       $10
Equity                       $8,836     $8,968    $9,283    $6,673            $8,000    $9,027    $8,922    $9,124            $9,339    $9,557    $9,797   $10,085
  Total liab & equity       $11,313    $11,491   $11,843   $11,870           $13,326   $13,850   $13,728   $13,446           $13,599   $13,834   $14,116   $14,032

Current Ratio                   2.6        1.7       1.6       1.0               1.7       1.9       1.9       1.8               1.8       1.9       1.9       1.7
Quick Ratio                     0.0        1.1       0.0       0.0               0.0       1.4       0.0       1.2               1.2       1.2       1.2       1.1
Days A/R                         49         48        49        52                52        53        51        50                50        50        50        50
Tangible Book Value/Share     $5.59      $5.77     $5.59     $5.40             $6.58     $6.99     $7.04     $6.88             $7.02     $7.22     $7.45     $7.41
Cash/Share                    $0.92      $1.09     $1.10     $0.86             $1.73     $1.47     $1.51     $1.19             $1.20     $1.22     $1.28     $0.98
Cash+mkt securities/Share     $2.21      $2.24     $1.98     $1.49             $2.12     $2.37     $2.40     $2.09             $2.13     $2.23     $2.36     $2.15
Debt/Share                    $0.53      $0.53     $0.54     $2.42             $2.38     $1.92     $1.93     $1.54             $1.54     $1.54     $1.55     $1.16
Debt/Capital                   10%         3%        3%       20%               23%       18%       18%       14%               14%       14%       13%       10%
ROE (annualized)              6.3%       7.2%      6.6%      7.3%     7.6%    27.4%      4.3%      0.6%      6.1%     9.4%     5.3%      5.3%      5.1%      7.2%     5.7%
ROA (annualized)              5.0%       5.6%      5.2%      4.9%     5.1%    15.9%      2.7%      0.4%      4.0%     5.9%     3.6%      3.7%      3.5%      5.1%     4.0%
                                                                       Yahoo, Inc. (YHOO)
Last Reported Quarter:         09/30/08                        Statement of Cashflows (w/ 4Q:07 Refi)                                           Neil_McCluskey@yahoo.com
Last Update:                   10/27/08
                                              2007A                                              2008E                                                2009E
FY end: Dec                     MAR       JUN       SEP      DEC         FY       MAR      JUN       SEP          DEC       FY        MAR       JUN           SEP      DEC       FY
(in $M, except EPS)              1Q        2Q       3Q        4Q       2007A       1Q       2Q       3QA          4QE      2008E       1Q        2Q           3Q        4Q      2009E
Net income                       $142      $161     $151      $146       $600      $502      $91          $14      $137      $745      $123      $126         $122      $178      $549
 Deprecication                     95       103      102       109        409       118      126          129       136       508       136       143          150       157       587
 Amortization                      56        57       68        68        250        70       77           79        64       290        65        65           65        65       260
 Tax benefits from SBC             61        97       13       (95)        76         0       31           21        45        97        45        45           45        45       180
 Excess tax bene's from SBC       (46)      (82)       (7)      99        (35)        0        0          (35)      (40)      (75)      (30)      (35)         (35)      (35)     (135)
 Deferred taxes                   (42)      (49)     (44)      (78)      (213)       30        8            5         5        47         5         5            5         5        20
 Equity earnings                  (29)      (32)     (37)      (53)      (151)     (455)     (55)         (28)      (50)     (587)      (32)      (32)         (32)      (32)     (128)
 Dividends received                 0         0       15         0         15         0       19            0         0        19         0         0            0         0         0
 Minority interests                (1)       (1)      0.5        4          3        (0)       1            2        (5)       (2)       (1)        0            1         1         0
 SBC                              140       129      146       158        572       125      123          133       100       481       100       100          100       100       400
 Other                             (3)       20      (29)      (15)       (28)       (3)      (1)           6        (5)       (3)      (10)        5           (5)       (5)      (15)
 Changes in working cap
   A/R                             40         3      (50)      (82)       (89)       27       (4)          23       (51)       (4)       30        (4)          (4)      (98)      (75)
   Prepaids                        13       (26)      74        72        133        (4)       3          (36)       (4)      (41)       (4)       (4)          (4)       (4)      (16)
   A/P                             31         0      (19)       33         45       (44)       5            4        63        27       (74)       (8)          16        67         1
   Accrued expenses               (28)       19       60       134        185        46        8           47        11       112        11        11           11        11        44
   Deferred revs                   11         7        6        61         86       336      (48)         (56)      (60)      172        (6)        6            7        41        48
 Net cash from ops               $441      $406     $450      $562     $1,859      $746     $386         $307      $346    $1,785      $357      $424         $442      $496    $1,720
Capex                            ($118)   ($145)   ($147)    ($192)      ($602)   ($140)   ($176)        ($167)   ($225)     ($708)   ($200)    ($200)        ($200)   ($200)     ($800)
Purchase of securities            (570)    (423)    (112)        0      (1,105)     (33)    (857)         (392)    (550)    (1,832)    (600)     (650)         (650)    (650)    (2,550)
Sale/maturity of securities        728      617      511       388       2,244      377      194           406      550      1,526      550       550           550      550      2,200
Acquisitions, net of cash          (12)     (24)    (320)     (618)       (974)    (166)     (14)          (29)       0       (209)     (50)      (50)          (50)     (50)      (200)
Purchases of intangibles             0        0      (75)      (35)       (110)      (9)     (42)          (16)       0        (67)     (31)      (31)          (31)     (31)      (125)
Other inv. activities               (7)     (13)     (10)        5         (25)     (10)       3            (0)       7         (0)       8         8             8        8         31
 Net cash from investment          $22      $12    ($154)    ($452)      ($573)     $18    ($892)        ($199)   ($218)   ($1,290)   ($324)    ($374)        ($373)   ($373)   ($1,444)
Proceeds from common stock         $72     $132      $40       $131      $375      $127     $191          $14       $20      $351        $8        $8           $8       $15       $38
Excess tax benefits from sbc        46       82        7        (99)        35        0        0           35        40        75        30        35           35        35       135
Long-term debt                       0        0        0      2,500      2,500        0        0            0      (500)     (500)        0         0            0      (500)     (500)
Stock repo                        (845)    (418)    (352)    (3,021)    (4,336)     (79)       0            0       (30)     (109)      (15)      (15)         (15)      (30)      (75)
Other                                0       (4)     (10)        (3)       (17)     (52)      (4)          (8)        0       (65)        0         0            0         0         0
  Net cash from financing        ($728)   ($208)   ($316)     ($491)   ($1,442)     ($5)    $187          $41     ($470)    ($247)      $23       $28          $28     ($480)    ($403)
FX                                   4        7       21         7         40        28      (10)         (97)      (75)     (154)       (50)     (50)         (25)      (25)     (150)
 Total cash in (out)             ($261)    $217       $2     ($374)     ($116)     $787    ($330)         $52     ($417)      $93         $6      $28          $71     ($382)    ($277)
Opening cash                    $1,570    $1,309   $1,526    $1,528    $1,570     $1,454   $2,241    $1,911       $1,964   $1,454     $1,547    $1,553    $1,581       $1,652   $1,547
Closing cash                    $1,309    $1,526   $1,528    $1,154    $1,454     $2,241   $1,911    $1,964       $1,547   $1,547     $1,553    $1,581    $1,652       $1,270   $1,270

EBIT                             $309      $314     $296      $349     $1,268      $246     $224         $203      $268      $940      $273      $277         $271      $352    $1,173
EBITDA                           $460      $474     $466      $527     $1,927      $433     $427         $410      $468    $1,739      $474      $485         $486      $574    $2,020
FCF                              $369      $328     $310      $270     $1,277      $607     $192         $175      $161    $1,135      $187      $241         $277      $331    $1,037
EBIT / share                     $0.22     $0.22    $0.21     $0.26     $0.91      $0.19    $0.17        $0.16     $0.21    $0.73      $0.21     $0.21        $0.21     $0.27    $0.91
EBITDA / share                   $0.32     $0.34    $0.33     $0.39     $1.38      $0.33    $0.33        $0.32     $0.36    $1.34      $0.37     $0.37        $0.38     $0.44    $1.56
FCF / share                      $0.26     $0.23    $0.22     $0.20     $0.92      $0.47    $0.15        $0.14     $0.12    $0.87      $0.14     $0.19        $0.21     $0.26    $0.80
                                         Yahoo, Inc. (YHOO)
Neil_McCluskey@yahoo.com            Income Statement (w/ 4Q:07 Refi)
Long-term Outlook

FY end: Dec                  FY        FY        FY        FY        FY        FY         FY
(in $M, except EPS)         2007A     2008E     2009E     2010E     2011E     2012E      2013E
Gross revenue               $6,969    $7,280    $7,507    $8,277    $9,459    $10,340    $11,088
 TAC                         1,857     1,867     1,952     2,152     2,459      2,740      2,938
Net Revenue                 $5,113    $5,413    $5,555    $6,125    $7,000     $7,600     $8,150
 Cost of sales                 971     1,230     1,222     1,348     1,575      1,748      1,915
 R&D                           866     1,059     1,045     1,125     1,155      1,220      1,225
 S&M                         1,364     1,409     1,410     1,580     1,820      2,000      2,120
 G&A                           536       650       605       630       660        695        710
 SBC                           572       481       400       400       420        430        440
 Non-recurring charges
 Amortization                  107        96       100       120       120        140        140
Operating income              $695      $460      $773      $923    $1,250     $1,367     $1,600
  Interest and other, net       79      (118)      (64)        4        66        122        167
Pretax income                 $774      $342      $708      $927    $1,316     $1,489     $1,767
 Taxes                        (322)     (183)     (283)     (371)     (526)      (596)      (724)
 Equity income                 151       587       128       144       148        152        156
 Minority interests             (3)       (2)       (4)       (4)       (4)        (4)        (4)
Net income                    $600      $745      $549      $696      $934     $1,042     $1,194
O/S (fully diluted)           1,392     1,297     1,294     1,291     1,287     1,280      1,272
EPS (reported)                $0.43     $0.57     $0.42     $0.54     $0.73     $0.81      $0.94
EPS (w/o extra items)         $0.43     $0.33     $0.47     $0.58     $0.77     $0.86      $0.98
TAC                          26.6%     25.6%     26.0%     26.0%     26.0%     26.5%      26.5%
Net Revenue                 100.0%    100.0%    100.0%    100.0%    100.0%    100.0%     100.0%
 Gross Margin                81.0%     77.3%     78.0%     78.0%     77.5%     77.0%      76.5%
 R&D                         16.9%     19.6%     18.8%     18.4%     16.5%     16.1%      15.0%
 S&M                         26.7%     26.0%     25.4%     25.8%     26.0%     26.3%      26.0%
 G&A                         10.5%     12.0%     10.9%     10.3%      9.4%      9.1%       8.7%
Operating Margin             13.6%      8.5%     13.9%     15.1%     17.9%     18.0%      19.6%
  Interest and other, net     1.5%     -2.2%     -1.2%      0.1%      0.9%      1.6%       2.1%
Pretax Margin                15.1%      6.3%     12.8%     15.1%     18.8%     19.6%      21.7%
 Tax Rate                    41.6%     53.4%     40.0%     40.0%     40.0%     40.0%      41.0%
Net Margin                   11.7%     13.8%      9.9%     11.4%     13.3%     13.7%      14.7%
Incremental GM
Incremental Oper Inc.
Y/Y Growth
 Revenue                       12%       6%         3%      10%       14%         9%         7%
 Net Income                   -20%      24%       -26%      27%       34%        12%        15%
 EPS                          -16%      33%       -26%      27%       35%        12%        15%
Q/Q Growth
 Revenue
 Net Income
 EPS
                                            Yahoo, Inc. (YHOO)
Neil_McCluskey@yahoo.com               Coverage Ratios (w/ 4Q:07 Refi)
Long-term Outlook

FY end: Dec                  FY          FY        FY        FY        FY        FY        FY
(in $M, except EPS)         2007A       2008E     2009E     2010E     2011E     2012E     2013E

Net Cash & Mkt Securities   ($1,246)     $702     $1,276    $2,071    $3,061    $3,888    $4,812

EBIT / Interest               16.9x        4.9x      7.8x     12.0x     23.9x     59.9x       NA
EBITDA / Interest             75.0x        9.2x     13.5x     20.5x     38.5x     97.6x       NA
Fixed Charge Ratio             0.6x        0.8x      0.9x      0.9x      0.9x      1.0x      1.0x

Debt / EBITDA                  1.7x        1.2x      0.7x      0.4x      0.2x      0.0x      0.0x
Debt / Assets                  0.3x        0.1x      0.1x      0.1x      0.0x      0.0x      0.0x
Debt / Equity                  0.5x        0.2x      0.1x      0.1x      0.0x      0.0x      0.0x

DFL                           1.06x       1.25x     1.15x     1.09x     1.04x     1.02x     1.00x
                                          Yahoo, Inc. (YHOO)
Neil_McCluskey@yahoo.com              Balance Sheet (w/ 4Q:07 Refi)
Long-term Outlook

FY end: Dec                  FY        FY        FY        FY        FY        FY        FY
(in $M, except EPS)         2007A     2008E     2009E     2010E     2011E     2012E     2013E
Cash & equiv                 $1,154    $1,547    $1,270    $1,066     $956      $583      $766
Marketable securities           488     1,070     1,333     1,708     2,158     2,683     3,238
A/R, net                      1,056     1,044     1,119     1,233     1,410     1,541     1,652
Prepaids and other              181       194       210       227       246       266       288
  Total C/A                  $2,878    $3,854    $3,931    $4,234    $4,769    $5,072    $5,944
Mktable securities            $362        $85     $173      $298      $448      $623      $808
PPE                           1,332     1,580     1,893     2,244     2,626     3,081     3,573
Goodwill                      4,002     4,038     4,058     4,083     4,113     4,148     4,188
Intangible assets               611       492       397       337       312       322       367
Inv in equity interests       2,181     3,165     3,333     3,527     3,735     3,957     4,193
Other                           504       231       246       261       276       291       306
 Total assets               $11,870   $13,446   $14,032   $14,984   $16,280   $17,495   $19,380

Accounts payable              $176      $214      $214      $236      $276      $307      $336
Accrued liabilities           1,006     1,088     1,132     1,178     1,226     1,275     1,327
Deferred revenue                368       382       409       451       516       560       601
Short-term debt               1,250       500       500       500       500         0         0
 Total C/L                   $2,800    $2,183    $2,256    $2,366    $2,518    $2,142    $2,264
Long-term debt               $2,000    $1,500    $1,000     $500         $0        $0        $0
Other liabilities               289       378       409       443       479       519       562
Deferred revenue                 95       251       272       294       319       345       373
 Total liabilities           $5,185    $4,312    $3,937    $3,603    $3,316    $3,006    $3,199
Minority interests             $12       $10       $10       $10       $10       $10       $10
  Equity                     $6,673    $9,124   $10,085   $11,371   $12,954   $14,479   $16,171
  Total liab & equity       $11,870   $13,446   $14,032   $14,984   $16,280   $17,495   $19,380

Current Ratio                   1.0       1.8       1.7       1.8       1.9       2.4       2.6
Quick Ratio                     0.0       1.2       1.1       1.0       0.9       1.0       1.1
Days A/R                         52        50        50        50        50        50        50
Tangible Book Value/Share     $5.40     $6.88     $7.41     $8.19     $9.22    $10.20    $11.68
Cash/Share                    $0.86     $1.19     $0.98     $0.83     $0.74     $0.46     $0.60
Cash+mkt securities/Share     $1.49     $2.09     $2.15     $2.38     $2.77     $3.04     $3.79
Debt/Share                    $2.42     $1.54     $1.16     $0.78     $0.39     $0.00     $0.00
Debt/Capital                   20%       14%       10%        6%        3%        3%        3%
ROE (annualized)              7.3%      6.1%      7.2%      7.3%      8.3%      7.9%      8.0%
ROA (annualized)              4.9%      4.0%      5.1%      5.5%      6.5%      6.5%      6.7%
                                          Yahoo, Inc. (YHOO)
Neil_McCluskey@yahoo.com          Statement of Cashflows (w/ 4Q:07 Refi)
Long-term Outlook

FY end: Dec                      FY        FY         FY         FY         FY         FY         FY
(in $M, except EPS)            2007A      2008E      2009E      2010E      2011E      2012E      2013E
Net income                       $600       $745       $549       $696       $934     $1,042     $1,194
 Deprecication                    409        508        587        674        768        870        983
 Amortization                     250        290        260        260        260        260        260
 Tax benefits from SBC             76         97        180        180        189        194        198
 Excess tax bene's from SBC       (35)       (75)      (135)      (145)      (155)      (165)      (175)
 Deferred taxes                  (213)        47         20         20         20         20         20
 Equity earnings                 (151)      (587)      (128)      (144)      (148)      (152)      (156)
 Dividends received                15         19          0          0          0          0          0
 Minority interests                 3         (2)         0          0          0          0          0
 SBC                              572        481        400        400        420        430        440
 Other                            (28)        (3)       (15)       (15)       (15)       (15)       (15)
 Changes in working cap             0          0          0          0          0          0          0
   A/R                            (89)        (4)       (75)      (115)      (176)      (131)      (112)
   Prepaids                       133        (41)       (16)       (17)       (19)       (20)       (22)
   A/P                             45         27          1         22         40         30         29
   Accrued expenses               185        112         44         46         48         50         52
   Deferred revs                   86        172         48         64         89         70         69
 Net cash from ops             $1,859     $1,785     $1,720     $1,927     $2,254     $2,483     $2,766
Capex                            ($602)     ($708)     ($800)     ($900)   ($1,000)   ($1,150)   ($1,275)
Purchase of securities          (1,105)    (1,832)    (2,550)    (2,700)    (2,800)    (2,900)    (2,940)
Sale/maturity of securities      2,244      1,526      2,200      2,200      2,200      2,200      2,200
Acquisitions, net of cash         (974)      (209)      (200)      (250)      (300)      (350)      (400)
Purchases of intangibles          (110)       (67)      (125)      (150)      (175)      (200)      (225)
Other inv. activities              (25)        (0)        31         34         37         40         43
 Net cash from investment        ($573)   ($1,290)   ($1,444)   ($1,766)   ($2,038)   ($2,360)   ($2,597)
Proceeds from common stock       $375       $351        $38        $60        $80       $160       $160
Excess tax benefits from sbc       35         75        135        145        155        165        175

Stock repo                      (4,336)     (109)       (75)      (120)      (160)      (320)      (320)
Other                              (17)      (65)         0          0          0          0          0
  Net cash from financing      ($1,442)    ($247)     ($403)     ($415)     ($425)     ($495)       $15
FX                                 40       (154)      (150)        50        100          0          0
 Total cash in (out)            ($116)       $93      ($277)     ($205)     ($110)     ($373)      $184
Opening cash                   $1,570     $1,454     $1,547     $1,270     $1,066       $956       $583
Closing cash                   $1,454     $1,547     $1,270     $1,066       $956       $583       $766

EBIT                           $1,268       $940     $1,173     $1,323     $1,670     $1,797     $2,040
EBITDA                         $1,927     $1,739     $2,020     $2,257     $2,698     $2,927     $3,283
FCF                            $1,277     $1,135     $1,037     $1,154     $1,391     $1,480     $1,648
EBIT / share                    $0.91      $0.73      $0.91      $1.02      $1.30      $1.40      $1.60
EBITDA / share                  $1.38      $1.34      $1.56      $1.75      $2.10      $2.29      $2.58
FCF / share                     $0.92      $0.87      $0.80      $0.89      $1.08      $1.16      $1.30

				
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