Yahoo! CEO: Usage Up “Dramatically”

In a presentation marked by the liberal use of the words “rapid” and
“growth,” Yahoo! CEO Terry Semel told investors that
users and usage of the portal’s services had grown “dramatically” over the
past year, and the company in December reached its goal of attracting 2
million paid subscribers by year’s end.

Speaking at the Morgan Stanley Software, Services, Internet, and Networking
Conference in Scottsdale, Ariz., Semel said usage of Yahoo! had grown 15
percent over the past six months, with the company having attracted 200
million unique users. It also counts nearly 100 million registered active
users — people registered with the portal that use at least five different
Yahoo! services. The ranks of those folks, Semel said, had grown “very
dramatically.”

Much of that growth, according to Semel, comes at the expense of online
competitors and traditional media. While some of this can be attributed to the growth in usage of the Internet as a whole, it’s also likely due to the much-publicized troubles of competitor, AOL . That means the growth rates may be difficult to maintain if the ISP is successful in its turnaround effort. Semel, not surprisingly, is optimistic, predicting that Yahoo!’s market share will continue to increase.

“We’re very excited about that increase,” he said, “because the more time
they spend with us the more opportunities we have to talk to them — both
Yahoo! opportunities in products and services, as well as those of our
advertisers.”

The remarks presage Yahoo!’s reporting of fourth quarter results next week.
Back when it released 3Q results, Yahoo! execs predicted it would bring in
between $930 and $955 million for the full year 2002, with EBIDTA coming in
at between $190 and $200 million. Semel said he expected 22 percent overall
revenue growth in 2002, and 20 percent growth, or more, in 2003.

Semel declined to go into detail about the company’s most dramatic move in
recent weeks, the acquisition of search player Inktomi for $235 million.
Semel did say, somewhat cryptically, that owning the algorithmic search technology would
allow Yahoo! to be more innovative and creative about the search-related
services it will provide.

“We can create things that work for the size and the scale of what we are,”
he said. “And some of our inventions, and some of our innovations, will take
advantage of what Yahoo! is, and be scaled specifically for our size and our
scale.”

Semel also reiterated the company’s commitment to paid search, including
paid inclusion listings, and noted that the Inktomi acquisition also brought
Yahoo! a sales force accustomed to making paid search sales. Those
salespeople, Semel said, would be focused on attracting small- and
medium-sized businesses, and their sales pitches would be enhanced by the
fact that Yahoo! generates better-than-average click-throughs in the paid
search arena.

Bigger brand advertisers, however, are still very much a part of the Yahoo!
strategy, and Semel stressed the company’s commitment to working with
advertising agencies — an area in which the company was once very weak, but
in which it has made great strides.

“We only had one kind of relationship with advertising agencies — it was
called nonexistent,” he said, adding that the company has since made an
effort to hire executives who have experience working with agencies.

Yahoo!’s newest line of business, fees and listings, also drew praise from
Semel, as he patted the company on the back for having started from scratch
and grown the business to serve 2 million paying subscribers in 2002. Semel
has high hopes for the area, too, saying he expects to grow that number to
10 million in the next few years.

Yahoo! is set to unveil its results next week after Wednesday’s market
close.