Yahoo! Inc.

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Yahoo! Inc. is a global Internet communications, commerce, and media company that offers a comprehensive branded network of services to more than 120 million users each month worldwide. As the first online navigational guide to the World Wide Web, www.yahoo.com is the leading guide in terms of traffic, advertising, household, and business user reach, and is one of the most recognized brands associated with the Internet. The company also provides online business services designed to enhance Yahoo!'s clients' Web services, including audio and video streaming, store hosting and management, and Web site tools and services. The company's global Web network includes 21 World properties. Yahoo! has offices in Europe, the Asia Pacific, Latin America, Canada and the United States, and is headquartered in Santa Clara, California.
Yahoo! was developed and first made available in 1994 by the Company's founders, David Filo and Jerry Yang, while they were graduate students at Stanford University. The Company was incorporated in California on March 5, 1995, and commenced operations on that date. On May 18, 1999 the Company reincorporated in Delaware. In August 1995, the company commenced selling advertisements on its Web pages and recognized its initial revenues. The company experienced dramatic growth providing broadcast media, communications, and commerce services. Yahoo! completed several major acquisitions including GeoCities, an Internet company specializing in publishing tools and online communities, and Broadcast.com inc., an Internet company specializing in audio and video broadcasts over the Web. These acquisitions as well as many other ones have helped Yahoo! diversify the properties and services it offers to its clients, helping to establish it as a one-of-a-kind, all encompassing web portal.
Yahoo! is the number-one destination of users of the Internet the world over. With over 110 million unique users and 485 million average daily page views during December 1999, Yahoo! has clearly proven its ability to attract Web users like moths to light. With Yahoo!'s customizable services available in the U.S. and in 21 countries in 12 languages, Yahoo! users worldwide can pay their bills, track their stock portfolios, purchase virtually any product imaginable, and find a host of other services including email and chat rooms, all within the virtual borders of the prime ...

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... for the short-term it still faces possible downside. As good as Yahoo!’s prospects are for the future, with all of its new sources of revenue as well as with the new pay services it is implementing, Yahoo! still faces near term uncertainty for shareholders. With all of the market turmoil over the possibility of recession and economic downturn, Yahoo!’s current instability leaves it with room for a greater decrease in share price. I do however believe that over the long term Yahoo! has a strong outlook and will perform well for its shareholders. Although compelling at these levels, I would not buy shares in Yahoo! for the short term, as in the next 6 months I don’t see any improvement in Yahoo!’s finances. I would therefore buy a July-01 Put on Yahoo (Symbol: YHQSF), with the exercise price of $30, based on Friday February 23rd’s closing price of $25.43. This Put is $4.57 “in the money” and its last trade went through at 9 and 7/8. This is less than the value computed by Black-Scholes of 11 and 1/64. I believe that over the next few months, Yahoo!’s shares will be trading below the current market price of $25.43, therefore making the Put a profitable investment with minimal risk.

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