22 22 YHOO Merger Model Transaction Summary After

Standalone Operating Model - Assumptions - Yahoo! Inc.
Company Name:
Ticker:
Last Historical Year:
Valuation Date:
Transaction Close Date:
Operating Case:
Days in Year:
Unit for Employee Salaries:
Yahoo! Inc.
YHOO
12/31/2007
1/30/2008
6/30/2009
1
1
2
3
Effective Tax Rate:
Blue indicates hard-coded numbers.

Black indicates formulas.
Green indicates links from other worksheets.
Base
Base
Conservative
Management
365
1000000
Lookup Cells for Public Company Comparables:

Company Name
Share Price
Equity Value
Enterprise Value
TTM Revenue
Forward Year 1 Revenue
TTM EBITDA
Forward Year 1 EBITDA
TTM EPS
Forward Year 1 EPS
Forward Year 2 EPS
TTM Revenue Multiple
Forward Year 1 Revenue Multiple
40%
Labels for Comparables:

Trailing Twelve Months
Forward Year 1
Forward Year 2
Forward Year 3
TTM
12/31/2008
12/31/2009
12/31/2010
Lookup Cells for Precedent Transactions:

2
42
59
60
5
72
77
23
73
78
21
75
80
87
92
Acquirer Name
Target Name
Acquisition Date
Offer Price
Equity Value
Enterprise Value
TTM Revenue
TTM EBITDA
TTM Revenue Multiple
TTM EBITDA Multiple
Forward Year 1 EBITDA Multiple
4
2
34
35
54
55
7
16
65
66
73
74
77
78

TTM EBITDA Multiple
TTM P/E Multiple
Forward Year 1 P/E Multiple
Forward Year 2 P/E Multiple
Levered Beta
Debt
Tax Rate
97
88
93
98
90
95
100
61
28
18
Total Net Revenue (Ex-TAC) ($MM) - Yahoo! Inc.
Search Advertising:
Display Advertising:
Affiliate Site Revenue:
Premium Fees:
Other Revenue:
Total Net Revenue (Ex-TAC):
Net Revenue Growth %:
Historical
Projected
FY 2005 FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
$977
$1,181
$1,384
$1,597
$1,815
$2,126
$2,346
$1,730
$2,052
$2,415
$2,791
$3,195
$3,624
$4,071
$728
$625
$656
$683
$703
$724
$746
$798
$881
$934
$981
$1,020
$1,050
$1,071
$326
$374
$412
$449
$485
$519
$550
$3,696
$4,560
$5,113
$5,801
$6,500
$7,217
$8,043
$8,784
N/A
23.4%
12.1%
13.5%
12.1%
11.0%
11.4%
9.2%
Search Advertising - Yahoo! Inc.
Total # Searches - Global (MM):

Search Market Share - Yahoo! Inc.:
Total # Search Queries - Yahoo! Inc. (MM):
Revenue Per Search (RPS) - Yahoo! Inc.:
Total Search Revenue - Yahoo! Inc. ($MM):
Total # Global Searches (MM) - Growth:
Base
Conservative
Management
Selected Global Search Growth:
Yahoo! Inc. - Global Search Market Share:
Base
Conservative
Management
Selected Global Search Market Share:
Yahoo! Inc. - RPS Growth:
Historical
Projected
FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
726,000 813,120 902,563 992,820 1,082,173 1,168,747
12.5%
12.0%
11.5%
11.0%
11.0%
10.5%
90,750
97,574 103,795 109,210 119,039 122,718
$0.013
$0.014
$0.015
$0.017
$0.018
$0.019
$977
$1,181
$1,384
$1,597
$1,815
$2,126
$2,346
12.5%
12.5%
12.5%
12.0%
10.0%
14.0%
12.0%
11.0%
9.0%
13.5%
11.0%
10.0%
8.0%
13.0%
10.0%
9.0%
7.0%
12.5%
9.0%
8.0%
6.0%
12.0%
8.0%
12.5%
12.5%
12.5%
12.0%
11.0%
12.5%
12.0%
11.5%
10.0%
13.0%
11.5%
11.0%
10.0%
13.5%
11.0%
11.0%
9.0%
14.0%
11.0%
10.5%
9.0%
14.0%
10.5%
Base
Base
Base
Conservative
Management
Selected RPS Growth:
10.0%
10.0%
10.0%
Base
9.0%
7.0%
11.0%
9.0%
8.5%
7.0%
11.0%
8.5%
8.0%
6.0%
11.0%
8.0%
7.5%
5.0%
10.5%
7.5%
7.0%
4.0%
10.0%
7.0%
Display Advertising - Yahoo! Inc.
Daily Avg. Pageviews (MM) - Yahoo! Inc.:

Total Pageviews (MM) - Yahoo! Inc.:
Revenue Per Pageview - Yahoo! Inc.:
Total Display Revenue - Yahoo! Inc. ($MM):
Historical
Projected
3,933
4,546
4,955
5,351
5,779
6,184
6,616
1,435,454 1,659,108 1,808,427 1,953,101 2,109,349 2,257,004 2,414,994
$0.0012 $0.0012 $0.0013 $0.0014 $0.0015 $0.0016 $0.0017
$1,730
$2,052
$2,415
$2,791
$3,195
$3,624
$4,071
Pageviews (MM) - Yahoo! Inc. - Growth:

Base
Conservative
Management
Selected Pageviews Growth:
15.0%
15.0%
15.0%
Base
11.0%
11.0%
11.0%
9.0%
8.0%
11.0%
9.0%
8.0%
7.0%
10.0%
8.0%
8.0%
6.0%
10.0%
8.0%
7.0%
5.0%
9.0%
7.0%
7.0%
5.0%
9.0%
7.0%
Yahoo! Inc. - Revenue Per Pageview Growth:

Base
Conservative
Management
Selected Revenue Per Pageview Growth:
10.0%
10.0%
10.0%
Base
7.0%
7.0%
7.0%
8.0%
6.0%
12.0%
8.0%
7.0%
6.0%
11.0%
7.0%
6.0%
5.0%
11.0%
6.0%
6.0%
5.0%
10.0%
6.0%
5.0%
4.0%
10.0%
5.0%
Subscription Fees - Yahoo! Inc.
Total Subscribers (MM):

Fees Per Subscriber:
Fee Revenue ($MM):
Subscribers (MM) - Yahoo! Inc. - Growth:
Base
Historical
Projected
FY 2005 FY 2006 FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
12.60
16.30
19.00
20.14
21.15
21.99
22.65
23.11
$52.67
$48.99
$46.37
$46.37
$46.37
$46.37
$46.37
$46.37
$664
$798
$881
$934
$981
$1,020
$1,050
$1,071
29.4%
16.6%
6.0%
5.0%
4.0%
3.0%
2.0%
Conservative
Management
Selected Subscriber Growth:
29.4%
29.4%
Base
16.6%
16.6%
5.0%
8.0%
6.0%
4.0%
7.0%
5.0%
3.0%
6.0%
4.0%
2.0%
5.0%
3.0%
2.0%
4.0%
2.0%
Yahoo! Inc. - Fees Per Subscriber Growth:

Base
Conservative
Management
Selected Fees Per Subscriber Growth:
(7.0%)
(7.0%)
(7.0%)
Base
(5.3%)
(5.3%)
(5.3%)
0.0%
(2.0%)
2.0%
0.0%
0.0%
(2.0%)
1.0%
0.0%
0.0%
(1.0%)
0.0%
0.0%
0.0%
(1.0%)
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Miscellaneous Revenue - Yahoo! Inc.
Affiliate Site Net Revenue ($MM):

Other Revenue ($MM):
Historical
Projected
$728
$625
$656
$683
$703
$724
$746
$326
$374
$412
$449
$485
$519
$550
Affiliate Site Net Revenue ($MM) - Yahoo! Inc. - Growth:

Base
Conservative
Management
Selected Affiliate Site Net Revenue Growth:
Base
Other Revenue ($MM) - Yahoo! Inc. - Growth:
Base
Conservative
Management
Selected Other Revenue Growth:
Base
5.0%
4.0%
7.0%
5.0%
4.0%
3.0%
7.0%
4.0%
3.0%
2.0%
6.0%
3.0%
3.0%
1.0%
6.0%
3.0%
3.0%
0.0%
5.0%
3.0%
10.0%
8.0%
12.0%
10.0%
9.0%
7.0%
12.0%
9.0%
8.0%
6.0%
11.0%
8.0%
7.0%
5.0%
11.0%
7.0%
6.0%
4.0%
10.0%
6.0%
Cost of Revenue & Operating Expenses ($MM) - Yahoo! Inc.
Cost of Revenue (Ex-TAC):

Product Development:
Sales & Marketing:
General & Administrative:
Total COGS and Operating Expenses:
% Revenue (Ex-TAC):
FY 2005
$534
$570
$1,034
$341
$2,479
67.1%
Historical
Projected
$810
$982
$1,122
$1,284
$1,457
$1,642
$1,814
$833
$1,084
$1,265
$1,443
$1,630
$1,830
$2,013
$1,322
$1,610
$1,785
$2,031
$2,289
$2,564
$2,813
$529
$633
$708
$809
$915
$1,029
$1,133
$3,494
$4,310
$4,880
$5,566
$6,290
$7,065
$7,774
76.6%
84.3%
84.1%
85.6%
87.2%
87.8%
88.5%
Assumptions - Average Total Expenses Per Employee by Division - Yahoo! Inc.

Sales & Marketing:
FY 2005
$215,500
$260,000
$360,000
$150,000
Historical
FY 2006
$265,850
$310,000
$420,000
$210,000
FY 2007
$250,000
$315,000
$428,000
$200,000
FY 2008E
$251,657
$323,942
$418,172
$197,089
FY 2009E
$257,108
$329,656
$424,564
$200,846
Projected
FY 2010E
$262,659
$335,421
$430,963
$204,651
FY 2011E
$265,707
$337,923
$433,118
$206,479
FY 2012E
$268,772
$340,391
$435,186
$208,299
Assumptions - # Employees by Division - Yahoo! Inc.

Sales & Marketing:
Total # Employees:
% Growth:
FY 2005
2,480
2,190
2,872
2,274
9,816
N/A
Historical
Projected
3,046
3,928
4,457
4,994
5,545
6,180
6,749
2,688
3,442
3,905
4,376
4,859
5,415
5,914
3,148
3,763
4,269
4,783
5,311
5,919
6,464
2,518
3,167
3,593
4,027
4,471
4,983
5,441
11,400
14,300
16,225
18,180
20,187
22,497
24,569
16.1%
25.4%
13.5%
12.1%
11.0%
11.4%
9.2%
Cost of Revenue - Employee Expense Breakout - Yahoo! Inc.
Cost of Revenue Employees:

Total Expenses Per Employee:
Historical
Projected
FY 2005
2,480
3,046
3,928
4,457
4,994
5,545
6,180
6,749
$215,500 $265,850 $250,000 $251,657 $257,108 $262,659 $265,707 $268,772
Cost of Revenue SBC ($MM):

Stock-Based Compensation Per Employee:
Expenses to be Allocated:
$0.000
$6.621 $10.628
$0
$2,174
$2,706
$215,500 $263,676 $247,294
Salary % Compensation:
Benefits % Compensation:
Overhead % Compensation:
Bonus % Compensation:
Salary Per Employee:
Benefits Per Employee:
Overhead Per Employee:
Bonus Per Employee:
SBC Per Employee:
Salary Per Employee % Growth:
Benefits % Salary:
Overhead % Salary:
Bonus % Salary:
SBC % Salary:
40.0%
15.0%
30.0%
15.0%
40.0%
15.0%
30.0%
15.0%
$86,200 $105,471
$32,325 $39,551
$64,650 $79,103
$32,325 $39,551
$0
$2,174
N/A
0.375
0.75
0.375
0
$9.082
$2,038
$10.482
$2,099
$11.988
$2,162
$13.627
$2,205
$15.180
$2,249
40.0%
15.0%
30.0%
15.0%
$98,918 $101,885 $104,942 $108,090 $110,252 $112,457
$37,094 $35,660 $36,730 $37,832 $38,588 $39,360
$74,188 $76,414 $77,657 $78,906 $79,381 $79,844
$37,094 $35,660 $35,680 $35,670 $35,281 $34,862
$2,706
$2,038
$2,099
$2,162
$2,205
$2,249
0.223556 -0.06213
0.375
0.375
0.75
0.75
0.375
0.375
0.020609 0.027351
3.0%
35.0%
75.0%
35.0%
2.0%
3.0%
35.0%
74.0%
34.0%
2.0%
3.0%
35.0%
73.0%
33.0%
2.0%
2.0%
35.0%
72.0%
32.0%
2.0%
2.0%
35.0%
71.0%
31.0%
2.0%
Product Development - Employee Expense Breakout - Yahoo! Inc.
Product Development Employees:

Product Development SBC ($MM):
FY 2005
2,190
$260,000
$22.390
$10,221
$249,779
Historical
FY 2006
2,688
$310,000
$144.807
$53,880
$256,120
50.0%
15.0%
25.0%
10.0%
50.0%
15.0%
25.0%
10.0%
Projected
FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
3,442
3,905
4,376
4,859
5,415
5,914
$315,000 $323,942 $329,656 $335,421 $337,923 $340,391
$218.207 $253.017 $286.176 $320.618 $356.868 $389.062
$63,395 $64,788 $65,397 $65,985 $65,902 $65,790
$251,605
50.0%
15.0%
25.0%
10.0%

Bonus Per Employee:
SBC Per Employee:
Benefits % Salary:
Overhead % Salary:
Bonus % Salary:
SBC % Salary:
$124,889 $128,060 $125,803 $129,577 $133,464 $137,468 $140,217 $143,022

$37,467 $38,418 $37,741 $38,873 $38,705 $38,491 $37,859 $37,186
$62,445 $64,030 $62,901 $64,788 $66,732 $68,734 $70,109 $71,511
$24,978 $25,612 $25,161 $25,915 $25,358 $24,744 $23,837 $22,883
$10,221 $53,880 $63,395 $64,788 $65,397 $65,985 $65,902 $65,790
N/A
0.3
0.5
0.2
0.0818442
0.025387 -0.01763
0.3
0.3
0.5
0.5
0.2
0.2
0.420743 0.503924
3.0%
30.0%
50.0%
20.0%
50.0%
3.0%
29.0%
50.0%
19.0%
49.0%
3.0%
28.0%
50.0%
18.0%
48.0%
2.0%
27.0%
50.0%
17.0%
47.0%
2.0%
26.0%
50.0%
16.0%
46.0%
Sales & Marketing - Employee Expense Breakout - Yahoo! Inc.
Sales & Marketing Employees:

Sales & Marketing SBC ($MM):
FY 2005
2,872
$360,000
$8.698
$3,028
$356,972
Historical
FY 2006
3,148
$420,000
$155.084
$49,261
$370,739
40.0%
10.0%
10.0%
40.0%
40.0%
10.0%
10.0%
40.0%
Bonus Per Employee:
SBC Per Employee:
Projected
FY 2007 FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
3,763
4,269
4,783
5,311
5,919
6,464
$428,000 $418,172 $424,564 $430,963 $433,118 $435,186
$246.472 $255.020 $286.970 $319.790 $353.953 $383.617
$65,507 $59,739 $59,993 $60,208 $59,796 $59,344
$362,493
40.0%
10.0%
10.0%
40.0%
$142,789 $148,296 $144,997 $149,347 $153,827 $158,442 $161,611 $164,843

$35,697 $37,074 $36,249 $37,337 $36,919 $36,442 $35,554 $34,617
$35,697 $37,074 $36,249 $37,337 $36,919 $36,442 $35,554 $34,617
$142,789 $148,296 $144,997 $134,412 $136,906 $139,429 $140,602 $141,765
$3,028 $49,261 $65,507 $59,739 $59,993 $60,208 $59,796 $59,344
N/A
0.038569
-0.02224
3.0%
3.0%
3.0%
2.0%
2.0%
Benefits % Salary:
Overhead % Salary:
Bonus % Salary:
SBC % Salary:
0.25
0.25
0.25
0.25
0.25
0.25
1
1
1
0.0212095 0.332178 0.451783
25.0%
25.0%
90.0%
40.0%
24.0%
24.0%
89.0%
39.0%
23.0%
23.0%
88.0%
38.0%
22.0%
22.0%
87.0%
37.0%
21.0%
21.0%
86.0%
36.0%
General & Administrative - Employee Expense Breakout - Yahoo! Inc.
General & Administrative Employees:

General & Administrative SBC ($MM):
FY 2005
2,274
$150,000
$21.383
$9,404
$140,596
Bonus Per Employee:
SBC Per Employee:
Benefits % Salary:
Overhead % Salary:
Bonus % Salary:
SBC % Salary:
Historical
FY 2006 FY 2007 FY 2008E FY 2009E
2,518
3,167
3,593
4,027
$210,000 $200,000 $197,089 $200,846
$118.418 $97.120 $112.815 $127.310
$47,027 $30,665 $31,395 $31,618
$162,973 $169,335
Projected
FY 2010E FY 2011E FY 2012E
4,471
4,983
5,441
$204,651 $206,479 $208,299
$142.295 $157.991 $171.798
$31,826 $31,708 $31,572
40.0%
15.0%
40.0%
5.0%
40.0%
15.0%
40.0%
5.0%
40.0%
15.0%
40.0%
5.0%
$56,238
$21,089
$56,238
$7,030
$9,404
$65,189
$24,446
$65,189
$8,149
$47,027
$67,734
$25,400
$67,734
$8,467
$30,665
$69,766
$24,418
$62,790
$8,721
$31,395
$71,859
$24,432
$63,955
$8,982
$31,618
$74,015
$24,425
$65,133
$9,252
$31,826
$75,495
$24,158
$65,681
$9,437
$31,708
$77,005
$23,872
$66,224
$9,626
$31,572
0.159158 0.039039
0.375
0.375
0.375
1
1
1
0.125
0.125
0.125
0.1672167 0.721392 0.452722
3.0%
35.0%
90.0%
12.5%
45.0%
3.0%
34.0%
89.0%
12.5%
44.0%
3.0%
33.0%
88.0%
12.5%
43.0%
2.0%
32.0%
87.0%
12.5%
42.0%
2.0%
31.0%
86.0%
12.5%
41.0%
N/A
Income Statement ($MM) - Yahoo! Inc.
Historical
FY 2006 FY 2007
Projected
FY 2008E FY 2009E FY 2010E FY 2011E FY 2012E
Revenue (Ex-TAC):
Gross Profit:
Operating Expenses:
Sales & Marketing:
Amortization of Intangibles:
Total Operating Expenses:
$4,560
$810
$3,750
$5,113
$982
$4,131
$5,801
$1,122
$4,679
$6,500
$1,284
$5,216
$7,217
$1,457
$5,761
$8,043
$1,642
$6,401
$8,784
$1,814
$6,970
$833
$1,322
$529
$125
$2,809
$1,084
$1,610
$633
$107
$3,435
$1,265
$1,785
$708
$118
$3,876
$1,443
$2,031
$809
$66
$4,348
$1,630
$2,289
$915
$51
$4,884
$1,830
$2,564
$1,029
$29
$5,451
$2,013
$2,813
$1,133
$16
$5,976
Operating Income:
Interest / Investment Income:
Net Investment Gains / Losses & Other:
Pre-Tax Income:
Income Tax Provision:
Effective Income Tax Rate:
Earnings in Equity Interests:
Minority Interest Earnings:
Net Income (GAAP):
Weighted Avg. Diluted Shares Outstanding:
Diluted EPS (GAAP):
$941
$143
$14
$1,098
($458)
41.7%
$112
($1)
$751
1,458
$0.52
$695
$130
$24
$849
($337)
39.7%
$151
($3)
$660
1,405
$0.47
$803
$87
$0
$890
($356)
40.0%
$151
($3)
$682
1,405
$0.48
$867
$73
$0
$940
($376)
40.0%
$151
($3)
$712
1,405
$0.51
$876
$76
$0
$952
($381)
40.0%
$151
($3)
$719
1,405
$0.51
$950
$84
$0
$1,035
($414)
40.0%
$151
($3)
$769
1,405
$0.55
$994
$98
$0
$1,093
($437)
40.0%
$151
($3)
$803
1,405
$0.57
Pro-Forma Reconciliation:
Stock-Based Compensation:
Pro-Forma Pre-Tax Income:
Effective Tax Rate:
Equity & Minority Interest Earnings:
$238
$425
$1,761
41.7%
$111
$250
$572
$1,672
39.7%
$148
$247
$630
$1,766
40.0%
$148
$139
$711
$1,790
40.0%
$148
$106
$795
$1,853
40.0%
$148
$60
$882
$1,977
40.0%
$148
$34
$960
$2,086
40.0%
$148
Pro-Forma Net Income:

Pro-Forma EPS:
$1,138
$0.78
$1,156
$0.82
$1,208
$0.86
$1,222
$0.87
$1,260
$0.90
$1,334
$0.95
$1,400
$1.00
Depreciation:
Amortization:
EBITDA:
EBIT:
$425
$302
$238
$1,906
$1,366
$572
$409
$250
$1,927
$1,268
$630
$365
$247
$2,045
$1,433
$711
$477
$139
$2,194
$1,578
$795
$602
$106
$2,380
$1,671
$882
$742
$60
$2,634
$1,833
$960
$897
$34
$2,885
$1,954
Balance Sheet ($MM) - Yahoo! Inc.
Historical
FY 2006 FY 2007
Assets
Current Assets:
Cash and Cash Equivalents:
Short-Term Debt Investments:
Accounts Receivable, Net:
Prepaid Expenses & Other Current Assets:
Total Current Assets:
Long-Term Debt Investments:
Net PP&E:
Goodwill:
Net Intangible Assets:
Other Long-Term Assets:
Investments in Equity Interests:
Total Assets:
Liabilities & Shareholders' Equity
Current Liabilities:
Accounts Payable:
Accrued Expenses & Other Current Liabilities:
Short-Term Deferred Revenue:
Short-Term Debt:
Total Current Liabilities:
Projected
$1,570
$1,032
$931
$218
$3,750
$936
$1,101
$2,969
$406
$460
$1,892
$11,514
$1,514
$488
$1,056
$181
$3,238
$362
$1,332
$4,002
$611
$504
$2,181
$12,230
$817
$488
$1,191
$241
$2,737
$362
$1,663
$4,002
$364
$504
$2,181
$11,813
$839
$488
$1,334
$270
$2,932
$362
$1,966
$4,002
$225
$504
$2,181
$12,172
$980
$488
$1,482
$300
$3,249
$362
$2,229
$4,002
$119
$504
$2,181
$12,647
$1,246
$488
$1,651
$334
$3,719
$362
$2,453
$4,002
$59
$504
$2,181
$13,280
$1,662
$488
$1,803
$365
$4,318
$362
$2,610
$4,002
$25
$504
$2,181
$14,002
$109
$1,047
$318
$0
$1,474
$176
$1,006
$368
$750
$2,300
$175
$1,290
$411
$0
$1,876
$196
$1,447
$461
$0
$2,104
$220
$1,626
$512
$0
$2,357
$246
$1,814
$570
$0
$2,630
$269
$1,989
$623
$0
$2,881
Long-Term Deferred Revenue:

Long-Term Debt:
Other Long-Term Liabilities:
Deferred and Other Long-Term Tax Liabilities, Net:
Commitments and Contingincies:
Minority Interests:
Shareholders' Equity:
Common Stock:
Additional Paid-In Capital:
Treasury Stock:
Retained Earnings:
Accumulated Other Comprehensive Income:
Total Shareholders' Equity:
Total Liabilities & Shareholders' Equity:
BALANCE CHECK
$65
$750
$37
$19
$0
$8
$95
$0
$28
$261
$0
$12
$95
$0
$28
$261
$0
$12
$107
$0
$28
$261
$0
$12
$1.493
$8,616
($3,325)
$3,718
$151
$9,161
$11,514
$1.527
$9,937
($5,161)
$4,424
$331
$9,533
$12,230
$1.527
$10,942
($6,747)
$4,973
$371
$9,540
$11,813
$1.527
$12,028
($8,333)
$5,552
$411
$9,659
$12,172
($0)
($0)
($0)
($0)
$119
$0
$28
$261
$0
$12
$132
$0
$28
$261
$0
$12
$144
$0
$28
$261
$0
$12
$1.527
$1.527
$1.527
$13,198 $14,455 $15,790
($9,918) ($11,504) ($13,090)
$6,139
$6,775
$7,445
$450
$490
$530
$9,870 $10,217 $10,676
$12,647 $13,280 $14,002
($0)
($0)
($0)
Cash Flow Statement ($MM) - Yahoo! Inc.
Historical
FY 2006 FY 2007
Cash Flow from Operations:
Net Income:
Adjustments to Reconcile Net Income:
Depreciation:
Tax-Benefits from SBC:
Excess Tax Benefits from SBC:
Deferred Income Taxes:
Dividends Received:
Gains from Sale of Investments & Assets:
Changes in Operating Assets/Liabilities:
Projected
$751
$660
$682
$712
$719
$769
$803
$302
$238
$425
$626
($597)
($274)
($112)
$13
$1
($15)
$409
$250
$572
$76
($35)
($213)
($151)
$15
$3
($28)
$365
$247
$630
$0
$0
$0
($151)
$15
$3
$0
$477
$139
$711
$0
$0
$0
($151)
$15
$3
$0
$602
$106
$795
$0
$0
$0
($151)
$15
$3
$0
$742
$60
$882
$0
$0
$0
($151)
$15
$3
$0
$897
$34
$960
$0
$0
$0
($151)
$15
$3
$0

Accounts Payable:
Accrued Expenses & Other Liabilities:
Deferred Revenue:
Net Cash Provided by Operating Activities:
($185)
($10)
$30
$175
$4
$1,372
($89)
$133
$45
$185
$86
$1,919
($135)
($60)
($1)
$284
$43
$1,920
($144)
($29)
$21
$157
$61
$1,973
($147)
($30)
$24
$178
$63
$2,178
($170)
($34)
$26
$189
$72
$2,402
($152)
($31)
$24
$175
$65
$2,641
Cash Flow from Investing:

Capital Expenditures, Net:
Purchases of Debt Securities:
Proceeds from Sale & Maturities of Debt:
Acquisitions, Net of Cash Acquired
Proceeds from Sale of Equity Securities:
Purchases of Intangible Assets:
Other Investing Activities, Net:
Net Cash Used in Investing Activities:
($689)
($1,329)
$1,951
($142)
$0
($6)
$21
($194)
($602)
($1,105)
$2,244
($974)
$0
($110)
($25)
($573)
($696)
$0
$0
$0
$0
$0
$0
($696)
($780)
$0
$0
$0
$0
$0
$0
($780)
($866)
$0
$0
$0
$0
$0
$0
($866)
($965)
$0
$0
$0
$0
$0
$0
($965)
($1,054)
$0
$0
$0
$0
$0
$0
($1,054)
Cash Flow from Financing:

Proceeds from Issuance of Common Stock, Net:
Repurchases of Common Stock:
Structured Stock Repurchases, Net:
Repayment of Short-Term Debt:
Other Financing Activities, Net:
Net Cash Used in Financing Activities:
Effect of Exchange Rate Changes on Cash:
Net Change in Cash & Cash Equivalents:
Beginning Cash Balance:
Ending Cash Balance:
$318
($1,782)
($228)
$597
$0
$0
($1,095)
$57
$140
$1,430
$1,570
$375
($1,586)
($250)
$35
$0
($17)
($1,442)
$40
($56)
$1,570
$1,514
$375
($1,586)
$0
$0
($750)
$0
($1,960)
$40
($696)
$1,514
$817
$375
($1,586)
$0
$0
$0
$0
($1,211)
$40
$22
$817
$839
$375
($1,586)
$0
$0
$0
$0
($1,211)
$40
$141
$839
$980
$375
($1,586)
$0
$0
$0
$0
($1,211)
$40
$266
$980
$1,246
$375
($1,586)
$0
$0
$0
$0
($1,211)
$40
$416
$1,246
$1,662
Operating Model Assumptions - Yahoo! Inc.
Historical
FY 2006 FY 2007
Projected
Accounts Receivable % Sales:

Accounts Receivable Days:
Prepaid Expenses & Other Current Assets % Sales:
20.4%
74.5
4.8%
20.6%
75.4
3.5%
20.5%
74.9
4.2%
20.5%
74.9
4.2%
20.5%
74.9
4.2%
20.5%
74.9
4.2%
20.5%
74.9
4.2%
Accounts Payable % OpEx:

Accounts Payable Days:
Accrued Expenses & Other Current Liabilities % OpEx:
Short-Term Deferred Revenue % Sales:
Long-Term Deferred Revenue % Sales:
3.9%
14.2
37.3%
7.0%
1.4%
5.1%
18.7
29.3%
7.2%
1.9%
4.5%
16.4
33.3%
7.1%
1.6%
4.5%
16.4
33.3%
7.1%
1.6%
4.5%
16.4
33.3%
7.1%
1.6%
4.5%
16.4
33.3%
7.1%
1.6%
4.5%
16.4
33.3%
7.1%
1.6%
Amortization of Net Intangible Assets:

% Amortization in OpEx:
$238
52.5%
$250
42.9%
$247
47.7%
$139
47.7%
$106
47.7%
$60
47.7%
$34
47.7%
4.5%
5.0%
4.3%
4.3%
4.6%
3.9%
4.4%
4.8%
4.1%
4.4%
4.8%
4.1%
4.4%
4.8%
4.1%
4.4%
4.8%
4.1%
4.4%
4.8%
4.1%
Short-Term Securities Interest Rate:

Long-Term Securities Interest Rate:
Effective Cash Interest Rate:
PP&E Schedule - Yahoo! Inc.
Historical
FY 2006 FY 2007
Gross PP&E:
Land:
Buildings:
Leasehold Improvements:
Computers & Equipment:
Furniture & Fixtures:
Assets Not Yet In Use:
Total Gross PP&E:
Useful Lives, In Years:
Buildings:
$162
$196
$150
$1,208
$93
$146
$1,955
$163
$253
$195
$1,578
$99
$120
$2,408
25
10
5
5
Projected
$163
$369
$282
$2,042
$128
$120
$3,104
$163
$499
$380
$2,562
$161
$120
$3,884
$163
$644
$488
$3,139
$197
$120
$4,750
$163
$804
$609
$3,783
$237
$120
$5,716
$163
$980
$741
$4,485
$281
$120
$6,770
Depreciation Waterfall Schedule:

Original Balance:
Year 1 Additions:
Year 2 Additions:
Year 3 Additions:
Year 4 Additions:
Total Depreciation:
CapEx % Revenue by Segment:
Buildings:
Total CapEx % Revenue:
Capital Expenditures Schedule:
Buildings:
Total CapEx:
Net PP&E:
Depreciation % Revenue:
Depreciation % CapEx:
CapEx % Revenue:
CapEx % Net PP&E:
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$302
$409
N/A
N/A
N/A
N/A
N/A
1.1%
0.9%
7.2%
0.1%
9.4%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$365
$0
$0
$0
$0
$365
$365
$112
$0
$0
$0
$477
$365
$112
$125
$0
$0
$602
$365
$112
$125
$139
$0
$742
$365
$112
$125
$139
$155
$897
2.0%
1.5%
8.0%
0.5%
12.0%
2.0%
1.5%
8.0%
0.5%
12.0%
2.0%
1.5%
8.0%
0.5%
12.0%
2.0%
1.5%
8.0%
0.5%
12.0%
2.0%
1.5%
8.0%
0.5%
12.0%
$130
$97
$520
$32
$780
$144
$108
$577
$36
$866
$161
$121
$643
$40
$965
$176
$132
$703
$44
$1,054
$689
$602
$116
$87
$464
$29
$696
$1,101
$1,332
$1,663
$1,966
$2,229
$2,453
$2,610
6.6%
43.8%
15.1%
62.6%
8.0%
68.0%
11.8%
45.2%
6.3%
52.4%
12.0%
41.9%
7.3%
61.2%
12.0%
39.7%
8.3%
69.6%
12.0%
38.9%
9.2%
76.8%
12.0%
39.4%
10.2%
85.1%
12.0%
40.4%
Valuation Summary - Yahoo! Inc.

($ in millions, except per share amounts)
Valuation Statistics - Yahoo! Inc.
Methodology Name
Yahoo! Inc. - Range of Valuation Multiples / Premiums
Minimum
Multiple
25th
Pecentile
Multiple
Median
Multiple
75th
Pecentile
Multiple
Maximum
Multiple
Yahoo! Inc. - Implied Per Share Value Range

Applicable
Yahoo! Inc.
Figure
Minimum
Multiple
25th
Pecentile
Multiple
Median
Multiple
75th
Pecentile
Multiple
Maximum
Multiple
Public Company Comparables:

TTM TEV / Revenue:
12/31/2008 TEV / Revenue:
TTM TEV / EBITDA:
12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:
2.0 x
1.6 x
1.3 x
10.3 x
9.5 x
8.2 x
2.0 x
1.8 x
1.6 x
14.5 x
13.3 x
10.9 x
3.0 x
2.7 x
2.4 x
19.5 x
15.2 x
12.1 x
6.3 x
4.9 x
3.9 x
24.1 x
17.2 x
13.5 x
13.7 x $
9.3 x
6.8 x
27.5 x
21.4 x
16.9 x
5,113
5,801
6,500
1,927
2,045
2,194
12.98
12.00
11.55
20.02
19.79
18.66
13.00
13.11
13.15
25.98
25.48
22.95
16.56
16.82
16.73
32.52
28.21
24.91
29.20
26.30
24.23
38.31
30.96
27.24
53.31
42.91
36.62
42.51
36.57
32.25
$ 10,391
9,082
8,483
19,809
19,495
17,990
$ 10,424
10,572
10,619
27,976
27,289
23,820
$ 15,176
15,529
15,401
37,525
31,040
26,502
$ 32,398
28,411
25,578
46,530
35,099
29,708
$ 69,842
53,681
43,902
53,061
43,820
37,106
Precedent Transactions:
TTM TEV / Revenue:
Forward Year 1 TEV / Revenue:
TTM TEV / EBITDA:
Forward Year 1 TEV / EBITDA:
1.0 x
1.1 x
7.9 x
7.1 x
1.9 x
1.9 x
20.5 x
20.2 x
4.7 x
5.5 x
31.8 x
23.4 x
10.9 x
10.2 x
41.0 x
35.4 x
13.4 x $
12.1 x
47.0 x
48.6 x
5,113
5,801
1,927
2,045
9.21
9.86
16.55
16.10
12.46
13.39
33.83
34.92
23.18
29.02
47.78
39.18
44.08
46.34
59.26
54.94
52.37
53.69
66.69
72.28
$ 24,126
32,148
61,241
47,880
$ 55,496
59,015
79,086
72,377
$ 68,373
70,437
90,633
99,322
3.9%
15.6%
16.8%
24.1%
23.4%
26.8%
50.4%
59.5%
151.4% $
108.5%
19.05
23.72
19.78
27.43
22.26
29.44
23.50
30.07
28.65
37.84
47.89
49.45
14.93
16.98
20.38
26.99
44.72
Public Company Premiums:

1-Day Premiums:
20-Day Premiums:
Discounted Cash Flow Analysis:
5-9% Growth Rate, 11-15% Discount Rate
5,351
6,226
15,169
14,564
9,703
10,935
39,561
41,264
Public Company Comparables

TTM TEV / Revenue:
TTM TEV / EBITDA:
12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:
Precedent Transactions
TTM TEV / Revenue:
TTM TEV / EBITDA:
Public Company Premiums

1-Day Premiums:
20-Day Premiums:
Discounted Cash Flow Analysis

$-
$10.00
$20.00
$30.00
$40.00
$50.00
Min.
25th
Median
$ 14.93 $ 16.98 $ 20.38
20-Day Premiums:
1-Day Premiums:
$ 27.43 $ 29.44 $ 30.07

$ 19.78 $ 22.26 $ 23.50

TTM TEV / EBITDA:
TTM TEV / Revenue:
$ 16.10 $ 34.92 $
$ 16.55 $ 33.83 $
$ 9.86 $ 13.39 $
$ 9.21 $ 12.46 $
39.18
47.78
29.02
23.18
12/31/2009 TEV / EBITDA:

12/31/2008 TEV / EBITDA:
TTM TEV / EBITDA:
TTM TEV / Revenue:
$
$
$
$
$
$
24.91
28.21
32.52
16.73
16.82
16.56
18.66
19.79
20.02
11.55
12.00
12.98
$
$
$
$
$
$
22.95
25.48
25.98
13.15
13.11
13.00
$
$
$
$
$
$
Series1
Min to 25th
25th to Median
Median to 75th
$50.00
$60.00
$70.00
$80.00
75th
Max
Min Point 25 Point Med Point 75 Point Max Point
$ 26.99 $ 44.72 $ 14.93 $ 2.05 $ 3.40 $ 6.60 $ 17.73
$ 37.84 $ 49.45 $ 27.43 $
$ 28.65 $ 47.89 $ 19.78 $
2.01 $
2.47 $
0.63 $
1.25 $
$
$
$
$
54.94
59.26
46.34
44.08
$
$
$
$
72.28
66.69
53.69
52.37
$ 16.10 $ 18.82 $ 4.26 $

$ 16.55 $ 17.27 $ 13.95 $
$ 9.86 $ 3.52 $ 15.63 $
$ 9.21 $ 3.25 $ 10.71 $
$
$
$
$
$
$
27.24
30.96
38.31
24.23
26.30
29.20
$
$
$
$
$
$
32.25
36.57
42.51
36.62
42.91
53.31
$
$
$
$
$
$
18.66
19.79
20.02
11.55
12.00
12.98
$
$
$
$
$
$
4.29
5.69
5.96
1.60
1.11
0.02
$
$
$
$
$
$
1.95
2.73
6.54
3.58
3.71
3.55
7.77 $ 11.61
5.14 $ 19.24
15.76
11.48
17.33
20.90
$ 17.34
$ 7.43
$ 7.35
$ 8.29
$ 2.33
$ 2.75
$ 5.79
$ 7.51
$ 9.48
$ 12.64
$ 5.01
$ 5.61
$ 4.20
$ 12.39
$ 16.62
$ 24.11
Comparable Companies - Diversified Internet Companies with Over $1 Billion TTM Revenue
Operating Statistics
Company Name
Google Inc.
eBay Inc.
Amazon.com, Inc.
IAC/InterActiveCorp
Capitalization
Equity
Enterprise
Revenue
Value
Value
TTM
12/31/2008 12/31/2009
TTM
$ 174,565 $ 159,287 $ 11,660 $ 17,212 $ 23,583 $
6,921
34,925
29,889
7,672
8,674
9,978
2,908
31,964
30,151
14,835
19,258
23,102
1,095
14,408
13,009
6,373
6,817
7,463
817
Maximum
75th Percentile
Median
25th Percentile
Minimum
$ 174,565
69,835
$ 33,444
27,575
14,408
$ 159,287
62,435
$ 30,020
25,669
13,009
Yahoo! Inc.
Valuation Statistics
Company Name
Google Inc.
eBay Inc.
Amazon.com, Inc.
IAC/InterActiveCorp
Capitalization
Equity
Enterprise
Value
Value
$ 174,565 $ 159,287
34,925
29,889
31,964
30,151
14,408
13,009
Maximum
75th Percentile
Median
25th Percentile
Minimum
$ 174,565
69,835
$ 33,444
27,575
14,408
$ 159,287
62,435
$ 30,020
25,669
13,009
Yahoo! Inc.
25,473
25,473
18,509
18,509
14,835
12,454
9,666
7,348
6,373
19,258
17,724
12,943
8,210
6,817
5,113
23,583
23,222
16,540
9,349
7,463
6,921
3,911
2,001
1,025
817
5,801
6,500
1,927
Enterprise Value /
Revenue
TTM
12/31/2008 12/31/2009
13.7 x
9.3 x
6.8 x
3.9 x
3.4 x
3.0 x
2.0 x
1.6 x
1.3 x
2.0 x
1.9 x
1.7 x
EBITDA
Enterprise Value /
EBITDA
TTM
23.0 x
10.3 x
27.5 x
15.9 x
13.7 x
6.3 x
3.0 x
2.0 x
2.0 x
9.3 x
4.9 x
2.7 x
1.8 x
1.6 x
6.8 x
3.9 x
2.4 x
1.6 x
1.3 x
27.5 x
24.1 x
19.5 x
14.5 x
10.3 x
3.6 x
3.2 x
2.8 x
9.6 x
EBITDA
EPS
12/31/2008 12/31/2009
TTM
12/31/2008 12/31/2009
$ 10,118 $ 13,567 $
13.68 $
21.16 $
26.93
3,135
3,646
1.30
1.65
1.94
1,407
1,783
1.48
1.86
2.40
890
1,048
1.73
1.61
1.97
$
10,118
4,881
2,271
1,278
890
13,567
6,126
2,714
1,599
1,048
2,045
2,194
Enterprise Value /
EBITDA
12/31/2008 12/31/2009
15.7 x
11.7 x
9.5 x
8.2 x
21.4 x
16.9 x
14.6 x
12.4 x
13.68
4.72
1.61
1.44
1.30
21.16
6.69
1.76
1.64
1.61
0.86
0.86
Projected
Revenue
Growth
37.0%
15.0%
20.0%
9.5%
EBITDA Margin
TTM
12/31/2008
59.4%
58.8%
37.9%
36.1%
7.4%
7.3%
12.8%
13.1%
26.93
8.53
2.19
1.96
1.94
37.0%
24.2%
17.5%
13.6%
9.5%
59.4%
43.3%
25.4%
11.5%
7.4%
58.8%
41.8%
24.6%
11.6%
7.3%
0.87
12.1%
37.7%
35.3%
P / E Multiple
TTM
12/31/2008 12/31/2009
40.1 x
25.9 x
20.4 x
20.3 x
15.9 x
13.6 x
50.0 x
39.9 x
30.9 x
29.4 x
31.6 x
25.8 x
21.4 x
17.2 x
15.2 x
13.3 x
9.5 x
16.9 x
13.5 x
12.1 x
10.9 x
8.2 x
50.0 x
42.6 x
34.7 x
27.1 x
20.3 x
39.9 x
33.7 x
28.8 x
23.4 x
15.9 x
30.9 x
27.1 x
23.1 x
18.7 x
13.6 x
9.1 x
8.4 x
22.1 x
22.2 x
21.9 x
BITDA Margin
12/31/2009
57.5%
36.5%
7.7%
14.0%
57.5%
41.8%
25.3%
12.5%
7.7%
33.8%
GOOG
Google Inc.
Revenue:
COGS:
Gross Profit:
Operating Expenses:
Other Income / (Expense):
Pre-Tax Income:
Taxes:
Net Income:
Amortization:
Depreciation:
Non-Recurring Charges:
Tax Rate:
Pro Forma Net Income:
Pro Forma EPS:
EBITDA:
EBIT:
Calendarization
Old Partial New Partial
FY
$11,660
$1,715
$0
$0
$9,945
$4,861
$590
$0
$0
$5,674
$1,470
$0
$0
$0
$4,204
$160
$808
$869
$0
TTM
$11,660
$1,715
$9,945
$4,861
$590
$5,674
$1,470
$0
$4,204
$160
$808
$869
$0
35%
Calendarization
$0
$0
$0
$0
$0
$0
$0
$0
$4,357
$4,357
$13.68
$0
$0
$0
$0
$0
$0
$6,921
$5,953
$6,921
$5,953
$0
$0
$0
$0
Balance Sheet Data

Cash & Cash-Equivalents:
Debt:
Preferred Stock:
Minority Interest:
Balance Sheet Data

$15,278
$0
$0
$0
Equity Research Projections

12/31/2008 12/31/2009 12/31/2010
Equity Research Projection

12/31/2008 12/31/2009
Bank:
Date:
Revenue:
EBITDA:
EBIT:
Pro-Forma EPS:
CS
3.26.08
$17,212
$10,118
$8,674
$21.16
$23,583
$13,567
$11,422
$26.93
N/A
N/A
N/A
N/A
$8,674
$3,135
$2,735
$1.65
Diluted Shares Calculation

Current Share Price:
Common Shares:
Options:

$548.27
313.38
Total
2.28
1.68
1.39
1.79
1.47
3.72
0.15
0.05
Strike
$18.07
$176.42
$274.52
$329.55
$449.90
$556.92
$663.13
$718.16
Total Diluted Shares:
Dilution
2.20
1.14
0.69
0.71
0.26
0.00
0.00
0.00
0.00
318.39
Valuation Metrics
Equity Value:
Enterprise Value:
Beta:
TEV / Revenue:
TEV / EBITDA:
TEV / EBIT:
$9,978
$3,646
$3,140
$1.94
Total
117.86
Valuation Metrics
$174,565
$159,287
1.29
Valuation Multiples
TTM
12/31/2008 12/31/2009
13.7 x
9.3 x
6.8 x
23.0 x
15.7 x
11.7 x
26.8 x
18.4 x
13.9 x
12/31/2010
N/A
N/A
N/A
Valuation Multiples
TTM
12/31/2008
3.9 x
3.4 x
10.3 x
9.5 x
13.0 x
10.9 x
Pro-Forma P/E:
40.1 x
25.9 x
20.4 x N/A
20.3 x
Lookup Variables
Lookup Variables
12/31/2008 Revenue:
12/31/2008 EBITDA:
12/31/2008 EBIT:
12/31/2008 Pro-Forma EPS:
$17,212
$10,118
$8,674
$21.16
12/31/2009 Revenue:
12/31/2009 EBITDA:
12/31/2009 EBIT:
$23,583
$13,567
$11,422
$26.93
12/31/2010 Revenue:
12/31/2010 EBITDA:
12/31/2010 EBIT:
15.9 x
N/A
N/A
N/A
N/A
TTM TEV / Revenue:

TTM TEV / EBITDA:
TTM TEV / EBIT:
TTM Pro-Forma P/E:
13.7 x
23.0 x
26.8 x
40.1 x

12/31/2008 TEV / EBITDA:
12/31/2008 TEV / EBIT:
12/31/2008 Pro-Forma P/E:
9.3 x
15.7 x
18.4 x
25.9 x

12/31/2009 TEV / EBITDA:
12/31/2009 TEV / EBIT:
6.8 x
11.7 x
13.9 x
20.4 x

12/31/2010 TEV / EBITDA:
12/31/2010 TEV / EBIT:
N/A
N/A
N/A
N/A
EBAY
eBay Inc.
Calendarization
FY
$7,672
$1,763
$5,909
$5,296
$138
$751
$403
$0
$348
$204
$398
$302
$1,391
TTM
$7,672
$1,763
$5,909
$5,296
$138
$751
$403
$0
$348
$204
$398
$302
$1,391
35%
AMZN
Amazon.com, Inc.
Calendarization
FY
$14,835
$11,482
$0
$0
$3,353
$2,698
$5
$0
$0
$660
$184
$0
$0
$0
$476
$129
$117
$185
$9
TTM
$14,835
$11,482
$3,353
$2,698
$5
$660
$184
$0
$476
$129
$117
$185
$9
35%
IAC/InterActiveCorp
Calendarization
FY
$6,373
$3,374
$0
$0
$2,999
$3,159
$87
$0
$0
($72)
$138
$5
$0
$0
($206)
$206
$156
$106
$508
$1,721
$1,721
$1.30
$0
$0
$639
$639
$1.48
$0
$0
$491
$2,908
$2,306
$2,908
$2,306
$0
$0
$0
$0
$1,095
$849
$1,095
$849
$0
$0
$0
$0
$817
$454
Balance Sheet Data
uity Research Projections

12/31/2010
Balance Sheet Data

$5,036
$0
$0
$0
Balance Sheet Data

$3,112
$1,299
$0
$0

12/31/2008 12/31/2009 12/31/2010

12/31/2008 12/31/2009 12/31/2010
CS
3.11.08
N/A
N/A
N/A
N/A
Canaccord
3.17.08
$19,258
$1,407
$1,148
$1.86
iluted Shares Calculation
$23,102
$1,783
$1,497
$2.40
N/A
N/A
N/A
N/A

$26.30
1,327.95
Strike
$32.45
Dilution
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1,327.95
Valuation Metrics
N/A
N/A
N/A
N/A
Total
18.18
Strike
$17.46
Dilution
13.90
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
430.72
Valuation Metrics
12/31/2010
N/A
N/A
N/A
$7,463
$1,048
$579
$1.97
$74.21
416.82
$34,925
$29,889
1.96
Valuation Multiples
12/31/2009
3.0 x
8.2 x
9.5 x
$6,817
$890
$443
$1.61
Total
0.91
1.68
3.46
4.03
1.87
0.06
0.01
0.00
0.02
Strike
$6.05
$14.64
$25.18
$34.28
$47.39
$51.23
$68.18
$71.91
$102.12
Valuation Metrics
$31,964
$30,151
1.28
Valuation Multiples
TTM
12/31/2008 12/31/2009
2.0 x
1.6 x
1.3 x
27.5 x
21.4 x
16.9 x
35.5 x
26.3 x
20.1 x
12/31/2010
N/A
N/A
N/A
Valuation Multiples
TTM
12/31/2008 12/31/2009
2.0 x
1.9 x
1.7 x
15.9 x
14.6 x
12.4 x
28.7 x
29.4 x
22.5 x
13.6 x N/A
50.0 x
Lookup Variables
39.9 x
30.9 x N/A
29.4 x
Lookup Variables
25.8 x
Lookup Variables
$8,674
$3,135
$2,735
$1.65
$19,258
$1,407
$1,148
$1.86
$9,978
$3,646
$3,140
$1.94
$23,102
$1,783
$1,497
$2.40
N/A
N/A
N/A
N/A
31.6 x
N/A
N/A
N/A
N/A
3.9 x
10.3 x
13.0 x
20.3 x
2.0 x
27.5 x
35.5 x
50.0 x
3.4 x
9.5 x
10.9 x
15.9 x
1.6 x
21.4 x
26.3 x
39.9 x
3.0 x
8.2 x
9.5 x
13.6 x
1.3 x
16.9 x
20.1 x
30.9 x
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
IACI
IAC/InterActiveCorp
zation
TTM
$6,373
$3,374
$2,999
$3,159
$87
($72)
$138
$5
($206)
$206
$156
$106
$508
35%
YHOO
Yahoo! Inc.
Calendarization
FY
$5,113
$982
$0
$0
$4,131
$3,435
$154
$0
$0
$849
$337
($3)
$660
$250
$409
$572
$0
TTM
$5,113
$982
$4,131
$3,435
$154
$849
$337
($3)
$660
$250
$409
$572
$0
40%
$491
$1.73
$0
$0
$1,151
$1,151
$0.86
$817
$454
$0
$0
$0
$0
$1,927
$1,268
$1,927
$1,268
eet Data
h Projections
$2,386
$946
$0
$40
$2,363
$750
$0
$12
Projections
12/31/2008 12/31/2009 12/31/2010
Oppenh.
3.4.08
N/A
N/A
$5,801
$2,045
$1,433
$0.86
$6,500
$2,194
$1,578
$0.87
$7,217
$2,380
$1,671
$0.90
Calculation
$50.88
277.99
Dilution
0.80
1.20
1.75
1.31
0.13
0.00
0.00
0.00
0.00
283.18
$19.05
1,337.17
Total
180.40
36.57
Strike
$29.36
$22.55
Dilution
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1,337.17
Metrics
$14,408
$13,009
0.80
$25,473
$18,509
1.39
12/31/2010
N/A
N/A
N/A
Valuation Multiples
TTM
12/31/2008 12/31/2009 12/31/2010
3.6 x
3.2 x
2.8 x
2.6 x
9.6 x
9.1 x
8.4 x
7.8 x
14.6 x
12.9 x
11.7 x
11.1 x
Multiples
$23.72
N/A
22.1 x
22.2 x
21.9 x
21.3 x
riables
$6,817
$890
$443
$1.61
$5,801
$2,045
$1,433
$0.86
$7,463
$1,048
$579
$1.97
$6,500
$2,194
$1,578
$0.87
N/A
N/A
N/A
N/A
$7,217
$2,380
$1,671
$0.90
2.0 x
15.9 x
28.7 x
29.4 x
3.6 x
9.6 x
14.6 x
22.1 x
1.9 x
14.6 x
29.4 x
31.6 x
3.2 x
9.1 x
12.9 x
22.2 x
1.7 x
12.4 x
22.5 x
25.8 x
2.8 x
8.4 x
11.7 x
21.9 x
N/A
N/A
N/A
N/A
2.6 x
7.8 x
11.1 x
21.3 x
Yahoo! Inc. - Yahoo! Japan Ownership Valuation
Market Cap (B Yen):

Yen Exchange Rate:
Market Cap (USD):
Ownership Stake:
Value of Yahoo's Stake:
Lack of Control Discount:
Sale Value:
Taxes:
Proceeds to Yahoo:
2,267,000.0
106.9
$21,206.7
33%
$6,998.2
20%
$5,598.6
$2,239.4
$3,359.1
Yahoo! Inc. - GMarket Ownership Valuation
Market Cap (USD):

Ownership Stake:
Sale Value:
Taxes:
Proceeds to Yahoo:
$1,047.0
10%
$104.7
20%
$83.8
$33.5
$50.3
Total Value of Non-Core Assets:
$5,362.3
Yahoo! Inc. - Alibaba.com Ownership Valuation
Market Cap (HKD):

HKD Exchange Rate:
Market Cap (USD):
Ownership Stake:
Sale Value:
Taxes:
Proceeds to Yahoo:
HKD 100,800.0
7.8
$12,923.1
28%
$3,618.5
20%
$2,894.8
$1,157.9
$1,736.9
Yahoo! Inc. - Alibaba Group Other Assets Valuation
Book Value of Alibaba Assets:

% in Non-Public Assets:
Sale Value:
Taxes:
Proceeds to Yahoo:
$1,440.3
25%
$360.1
$360.1
$144.0
$216.0
Yahoo! Inc. - Net Operating Loss Valuation Method 1
Discount Rate:
Federal NOLs:
State NOLs:
Total NOLs:
10%
$808.0
$354.0
$1,162.0
Historical
FY 2006
FY 2007
$1,098
$849
$458
$337
Pre-Tax Income:
Normal Taxes:
Projected
FY 2008E
$890
$356
NOL-Adjusted Pre-Tax Income:

Post-NOL Taxes:
Remaining NOLs:
Tax Savings:
NPV of Tax Savings:
$0
$0
$272
$356
FY 2009E
$940
$376
$668
$267
$0
$109
$413.5
Yahoo! Inc. - Net Operating Loss Valuation Method 2 (Merger Model)
Yahoo! Purchase Price:

Adjusted Long-Term Rate:
Discount Rate:
Federal NOLs:
State NOLs:
Total NOLs:
Allowed NOL Usage Per Year:
$10,000.0
4.48%
10%
$808.0
$354.0
$1,162.0
$448.0
Historical
FY 2006
FY 2007
$1,098
$849
$458
$337
Pre-Tax Income:
Normal Taxes:
Potential NOL Usage:
Allowed NOL Usage:
Post-NOL Taxes:
Remaining NOLs:
Tax Savings:
NPV of Tax Savings:
Projected
FY 2008E
$890
$356
$890
$448
$442
$177
$714
$179
$390.9
FY 2009E
$940
$376
$714
$448
$492
$197
$266
$179
Projected
FY 2010E
$952
$381
$952
$381
$0
$0
Projected
FY 2010E
$952
$381
$266
$266
$686
$275
$0
$106
FY 2011E
$1,035
$414
$1,035
$414
$0
$0
FY 2011E
$1,035
$414
$0
$0
$1,035
$414
$0
$0
FY 2012E
$1,093
$437
$1,093
$437
$0
$0
FY 2012E
$1,093
$437
$0
$0
$1,093
$437
$0
$0
Precedent Transactions - Internet M&A Deals Worth Over $500MM with US-Based Sellers Since 1/1/2006
Yahoo! Inc. - Comparable M&A Transactions
Acquirer Name
Microsoft
Google
Publicis
Yahoo
Investor Group
NBC Universal
WPP Group
Target Name
aQuantive
DoubleClick
Digitas
Right Media (Remaining 80%)
Vertrue
iVillage
24/7 Real Media
Maximum
75th Percentile
Median
25th Percentile
Minimum
Operating Metr
Acquisition
Equity
Enterprise
TTM
Date
Value
Value
Revenue
5/18/2007 $
6,356 $
6,041 $
493
4/13/2007
3,100
3,100
232
12/21/2006
1,285
1,137
713
4/29/2007
850
850
N/A
3/22/2007
641
730
697
3/6/2006
660
604
91
5/17/2007
669
603
215
$
$
6,356
2,192
850
664
641
$
$
6,041
2,119
850
667
603
$
$
713
646
362
219
91
ers Since 1/1/2006
Operating Metrics
Forward
Year 1
TTM
Revenue
EBITDA
$
610 $
128
297
72
743
64
70
N/A
680
93
109
17
269
21
Forward
Year 1
EBITDA
$
154
98
63
18
102
26
27
743
645
297
189
70
$
$
128
87
68
32
17
154
100
63
26
18
Valuation Multiples - Acquisition

Forward
Forward
TTM
Year 1
TTM
Year 1
Revenue
Revenue
EBITDA
EBITDA
12.3 x
9.9 x
47.0 x
39.1 x
13.4 x
10.4 x
43.1 x
31.7 x
1.6 x
1.5 x
17.8 x
18.0 x
N/A
12.1 x
N/A
48.6 x
1.0 x
1.1 x
7.9 x
7.1 x
6.6 x
5.5 x
34.8 x
23.4 x
2.8 x
2.2 x
28.7 x
22.4 x
13.4 x
10.9 x
4.7 x
1.9 x
1.0 x
12.1 x
10.2 x
5.5 x
1.9 x
1.1 x
47.0 x
41.0 x
31.8 x
20.5 x
7.9 x
48.6 x
35.4 x
23.4 x
20.2 x
7.1 x
AQNT
aQuantive
Microsoft
Revenue:
COGS:
Gross Profit:
Operating Expenses:
Amortization:
Depreciation:
Non-Recurring Charges:
EBITDA:
EBIT:
Old Partial
$92
$13
$79
$68
$2
$4
$5
$2
$24
$18
Calendarization
New Partial
FY
$143
$442
$24
$68
$119
$375
$100
$299
$3
$9
$5
$16
$5
$19
$0
$0
$32
$24
$120
$95
TTM
$493
$78
$415
$331
$10
$18
$19
($2)
Calendarization
$0
$128
$100
Balance Sheet Data

Cash & Cash-Equivalents:
Debt:
Preferred Stock:
Minority Interest:
Balance Sheet Data

$316
$0
$0
$0

12/31/2007 12/31/2008
Bank:
Date:
Revenue:
EBITDA:
EBIT:
$0
Equity Research Projection

12/31/2007 12/31/2008
CS
5.8.07
$610
$154
$119
$749
$198
$153
$297
$98
N/A
$379
$101
N/A
Announcement Date:
Offer Price:
Common Shares:
Options:
5/18/2007
$66.50
78.92
Total
12.64
6.16
Strike
$11.27
$12.98
Total Diluted Shares:
Dilution
10.50
6.16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
95.58
Valuation Metrics
Equity Value:
Enterprise Value:
TEV / Revenue:
TEV / EBITDA:
TEV / EBIT:
Valuation Metrics
$6,356
$6,041
Valuation Multiples
TTM
12/31/2007 12/31/2008
12.3 x
9.9 x
8.1 x
47.0 x
39.1 x
30.5 x
60.2 x
50.7 x
39.4 x
Valuation Multiples
TTM
12/31/2007
13.4 x
10.4 x
43.1 x
31.7 x
N/A
N/A
Lookup Variables
Forward Year 1 Revenue:
Forward Year 1 EBITDA:
Forward Year 1 EBIT:
Total
Lookup Variables
$610
$154
$119
Forward Year 2 Revenue:

Forward Year 2 EBITDA:
Forward Year 2 EBIT:
$749
$198
$153
TTM TEV / Revenue:

TTM TEV / EBITDA:
TTM TEV / EBIT:
12.3 x
47.0 x
60.2 x

Forward Year 1 TEV / EBIT:
9.9 x
39.1 x
50.7 x

Forward Year 2 TEV / EBIT:
8.1 x
30.5 x
39.4 x
DBLK
DoubleClick
DTAS
Digitas
Google
Publicis
Calendarization
FY
$232
$232
$72
N/A
TTM
$232
$0
$232
$0
$0
$0
$0
$0
Old Partial
$406
$149
$257
$230
$2
$7
$2
$0
$72
$38
$29
N/A
Balance Sheet Data
$49
$37
$53
$41
TTM
$713
$223
$489
$451
$4
$11
$7
$3
Calendarization
FY
N/A
N/A
N/A
$64
$49
N/A
N/A
N/A
Balance Sheet Data
Balance Sheet Data

$147
$0
$0
$0
uity Research Projections
iluted Shares Calculation
Calendarization
New Partial
FY
$554
$565
$174
$198
$379
$367
$350
$330
$3
$3
$9
$10
$6
$2
$2
$1
Right Media (Remaining 80%)

12/31/2006 12/31/2007
JPM
3.11.08

12/31/2007 12/31/2008
JEF
1/31/2007
$743
$63
$47
$899
$78
$58
N/A
$70 N/A
$18 N/A
N/A
4/13/2007
N/A
N/A
Strike
Dilution
Valuation Metrics
12/21/2006
$13.50
86.51
Total
1.24
5.75
1.94
2.15
2.50
0.91
0.13
Strike
$1.00
$2.65
$4.31
$7.54
$10.18
$14.43
$18.59
Dilution
1.15
4.62
1.32
0.95
0.62
0.00
0.00
0.00
0.00
0.00
0.00
95.16
Total
Valuation Metrics
$3,100
$3,100
Valuation Multiples
12/31/2008
8.2 x
30.8 x
N/A
Valuation Metrics
$1,285
$1,137
Valuation Multiples
TTM
12/31/2006 12/31/2007
1.6 x
1.5 x
1.3 x
17.8 x
18.0 x
14.6 x
23.3 x
24.0 x
19.6 x
Lookup Variables
TTM
N/A
N/A
N/A
Lookup Variables
$297
$98
N/A
Strike
Valuation Multiples
12/31/2007 12/31/2008
12.1 x N/A
48.6 x N/A
N/A
N/A
Lookup Variables
$743
$63
$47
$379
$101
$899
$78
$58
13.4 x
43.1 x
1.6 x
17.8 x
23.3 x
10.4 x
31.7 x
1.5 x
18.0 x
24.0 x
8.2 x
30.8 x
1.3 x
14.6 x
19.6 x
N/A
N/A
N/A
N/A
RTMD
Media (Remaining 80%)
VTRU
Vertrue
IVIL
iVillage
Yahoo
Investor Group
NBC Universal
zation
TTM
N/A
$0
N/A
$0
$0
$0
$0
$0
Old Partial
$318
$0
$318
$283
$5
$8
$2
$0
N/A
N/A
Calendarization
New Partial
FY
$356
$659
$0
$0
$356
$659
$324
$594
$4
$8
$9
$17
$2
$5
$0
$0
$50
$37
$47
$34
$95
$70
TTM
$697
$0
$697
$634
$8
$17
$5
$0
Calendarization
FY
$93
$67
$0
$0
$0
$0
$0
$0
eet Data
TTM
$91
$0
$91
$83
$7
$2
$0
$0
$17
$8
$17
$8
Balance Sheet Data

N/A
N/A
N/A
N/A
$60
$149
$0
$0
h Projections
Calculation
$91
$0
$91
$83
$7
$2
$0
$0

12/31/2006 12/31/2007
12/31/2007 12/31/2008
N/A
N/A
$56
$0
$0
$0
FBW
5.8.07
N/A
$680 N/A
$102 N/A
N/A
DB
3.6.06
$109
$26
N/A
$125
$34
N/A
4/29/2007
N/A
N/A
Dilution
3/22/2007
$48.50
9.70
Total
0.42
0.38
0.55
0.83
0.36
2.23
Strike
$12.40
$16.43
$20.65
$29.47
$36.86
$40.37
Dilution
0.31
0.25
0.31
0.33
0.09
2.23
0.00
0.00
0.00
0.00
0.00
13.21
Metrics
3/6/2006
$8.50
72.73
Total
0.15
1.80
2.09
0.86
0.21
2.53
0.31
0.15
0.27
0.04
0.00
Strike
$0.63
$1.20
$1.51
$2.71
$3.51
$5.91
$7.72
$16.17
$25.00
$38.53
$72.94
Dilution
0.14
1.55
1.72
0.59
0.12
0.77
0.03
0.00
0.00
0.00
0.00
77.64
Valuation Metrics
$850
$850
Multiples
$641
$730
Valuation Multiples
TTM
12/31/2007 12/31/2008
1.0 x
1.1 x N/A
7.9 x
7.1 x N/A
10.8 x N/A
N/A
$660
$604
Valuation Multiples
TTM
12/31/2006 12/31/2007
6.6 x
5.5 x
4.8 x
34.8 x
23.4 x
17.6 x
71.5 x N/A
N/A
riables
Lookup Variables
$70
$18
N/A
$680
$102
N/A
$109
$26
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
12.1 x
48.6 x
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$125
$34
N/A
1.0 x
7.9 x
10.8 x
6.6 x
34.8 x
71.5 x
1.1 x
7.1 x
5.5 x
23.4 x
N/A
4.8 x
17.6 x
N/A
TFSM
24/7 Real Media
C Universal
WPP Group
Old Partial
$43
$27
$16
$23
$1
$1
$9
$0
Calendarization
New Partial
FY
$58
$200
$39
$129
$19
$71
$19
$79
$1
$4
$1
$4
$3
$20
$0
$0
$4
$2
$4
$3
$20
$12
TTM
$215
$141
$74
$75
$4
$4
$14
$0
$21
$13
Balance Sheet Data

$68
$0
$0
$2
12/31/2007 12/31/2008
RBC
5.17.07
$269
$27
N/A
$355
$38
N/A
5/17/2007
$11.75
51.00
Total
1.10
2.71
3.17
0.15
1.71
0.40
Strike
$1.12
$4.19
$6.65
$80.06
$8.75
$9.57
Dilution
1.00
1.74
1.38
0.00
1.71
0.07
0.00
0.00
0.00
0.00
0.00
56.90
Valuation Metrics
$669
$603
Valuation Multiples
TTM
12/31/2007 12/31/2008
2.8 x
2.2 x
1.7 x
28.7 x
22.4 x
15.8 x
45.2 x N/A
N/A
Lookup Variables
$269
$27
N/A
$355
$38
N/A
2.8 x
28.7 x
45.2 x
2.2 x
22.4 x
N/A
1.7 x
15.8 x
N/A
Premiums Analysis - Internet M&A Deals Worth Over $100MM with Public, US-Based Sellers Since 1/1/2006
Yahoo! Inc. - Internet M&A Premiums
Acquirer Name
Microsoft
Publicis
NBC Universal
WPP Group
Investor Group
Omniture
Amazon.com
Nokia
Target Name
aQuantive
Digitas
iVillage
24/7 Real Media
Vertrue
Visual Sciences
Audible
Loudeye
Maximum
75th Percentile
Median
25th Percentile
Minimum
Share Price History
Acquisition
Equity
Date
Value
5/18/2007 $
6,356
12/21/2006
1,285
3/6/2006
660
5/17/2007
669
3/22/2007
641
10/25/2007
384
1/31/2008
247
8/7/2006
127
$
$
6,356
823
650
350
127
Offer
Price
$
66.50
13.50
8.50
11.75
48.50
18.04
11.50
4.50
$
$
66.50
25.66
12.63
10.75
4.50
$
$
1-Day
35.87
10.93
8.12
8.47
40.12
17.37
9.33
1.79
40.12
22.00
10.13
8.38
1.79
$
$
20-Day
31.90
10.96
7.35
8.13
38.88
14.50
8.93
2.20
38.88
18.85
9.95
7.94
2.20
Premiums
Sellers Since 1/1/2006
Premiums
1-Day
85.4%
23.5%
4.7%
38.7%
20.9%
3.9%
23.3%
151.4%
20-Day
108.5%
23.2%
15.6%
44.5%
24.7%
24.4%
28.8%
104.5%
151.4%
50.4%
23.4%
16.8%
3.9%
108.5%
59.5%
26.8%
24.1%
15.6%
Yahoo! Inc. - DCF Cash Flow Projections

FY 2008E FY 2009E FY 2010E FY 2011E
Revenue:
EBITDA:
Operating Income:
5,801
2,045
803
6,500
2,194
867
7,217
2,380
876
8,043
2,634
950
Less: Taxes
321
347
351
380
Plus: Depreciation
Plus: Amortization
Plus: Stock-Based Compensation
365
247
630
477
139
711
602
106
795
742
60
882
Less: Changes in Working Capital:

Less: Capital Expenditures
(130)
696
(67)
780
(88)
866
(82)
965
Unlevered Free Cash Flow

Present Value of Free Cash Flow
Projection Year:
Stub Mid-Year Conversion Discount:
Normal Mid-Year Conversion Discount:
Free Cash Flow Growth Rate:
$
$
0.000
0.000
$
$
1,157
1,089
1.000
0.500
0.500
$
$
1,134
945
$
$
1,251
922
$
$
1,371
895
2.000
1.500
1.500
3.000
2.500
2.500
4.000
3.500
3.500
(2.0%)
10.3%
9.6%
$
$
$
$
$
$
15.0%
14.30
14.93
15.70
16.66
17.90
19.56
$
$
$
$
$
$
16.0%
13.56
14.07
14.68
15.43
16.36
17.56
Yahoo! Inc. - Net Present Value Sensitivity - Terminal EBITDA Multiples

Discount Rate
$ 20.47
10.0%
11.0%
12.0%
13.0%
14.0%
6.0 x $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
7.0 x $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
8.0 x $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
9.0 x $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
10.0 x $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
11.0 x $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
$
$
$
$
$
$
15.0%
16.66
16.66
16.66
16.66
16.66
16.66
$
$
$
$
$
$
16.0%
15.43
15.43
15.43
15.43
15.43
15.43
Terminal
EBITDA
Multiple
Terminal
Growth Rate
Yahoo! Inc. - Net Present Value Sensitivity - Terminal Growth Rates

Discount Rate
$ 20.47
10.0%
11.0%
12.0%
13.0%
14.0%
4.0% $ 21.75 $ 19.41 $ 17.65 $ 16.28 $ 15.19
5.0% $ 24.35 $ 21.28 $ 19.01 $ 17.31 $ 15.99
6.0% $ 28.29 $ 23.80 $ 20.82 $ 18.63 $ 16.98
7.0% $ 34.23 $ 27.63 $ 23.28 $ 20.38 $ 18.26
8.0% $ 45.85 $ 33.46 $ 26.99 $ 22.78 $ 19.96
9.0% $ 80.73 $ 44.72 $ 32.72 $ 26.37 $ 22.35
Yahoo! Inc. - DCF Assumptions & Output

FY 2012E
$
8,784
2,885
994
398
897
34
960
(80)
1,054
$
$
1,513
874
5.000
4.500
4.500
Use Stub Period?

Stub Period:
Use Multiples Method?
No
0.250
No
Discount Rate:
13.0%
Terminal EBITDA Multiple:

Terminal Growth Rate:
Terminal Value:
Implied EBITDA Multiple:
9.0 x
7.0%
$ 27,143
9.4 x
PV of Terminal Value:
Sum of PV of Cash Flows:
Enterprise Value:
$ 15,682
4,725
$ 20,408
Terminal Value % EV:
76.8%
Enterprise Value:
Balance Sheet Adjustment:
Equity Interests:
Cancel Convertible?:
Implied Equity Value:
$ 20,408
1,602
5,362
$ 27,371
Diluted Shares Outstanding:

Implied Share Price:
10.3%
$
$
$
$
$
$
17.0%
12.93
13.35
13.84
14.43
15.16
16.07
$
$
$
$
$
$
17.0%
14.43
14.43
14.43
14.43
14.43
14.43
Options:
Convert:
180.40
36.57
29.36
22.55
1,337
20.47
-
Discount Rate Calculation - Assumptions

Risk-Free Rate:
Equity Risk Premium:
Interest Rate on Debt:
4.31%
7.00%
0.00%
Comparable Companies - Unlevered Beta Calculation

Levered
Name
Beta
Debt
Google Inc.
1.29 $
eBay Inc.
1.96
Amazon.com, Inc.
1.28
1,299
IAC/InterActiveCorp
0.80
946
Equity
Value
$ 174,565
34,925
31,964
14,408
Tax Rate
35%
35%
35%
35%
Median
Yahoo! Inc.
1.27
1.39
Yahoo! Inc. - Levered Beta & WACC Calculation

Unlevered
Beta
Debt
Yahoo! Inc.
Unlevered
Beta
1.29
1.96
1.25
0.77
1.27
Cost of Equity Based on Comparables:

Cost of Equity Based on Historical Beta:
750
Equity
Value
$
25,473
Tax Rate
Levered
Beta
40%
1.29
13.35%
14.04%
WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Preferre
WACC
12.96%
f Preferred Stock * % Preferred Stock
Present Value of Yahoo! Inc. Share Price - Assumptions

Current Share Price:
$
19.05
TTM Pro Forma EPS:
$
0.86
$
0.86
TTM Pro-Forma P/E:
22.1 x
Median Pro-Forma P/E of Comparables:
34.7 x
Implied Share Price Based on P/E

Median
P/E of
Comparables
34.7 x
Yahoo! Inc. - Present Value of Share Price at Range of Discount Rates

Implied
Future
Share
Price
P/E
20.0 x
22.0 x
22.1 x
24.0 x
26.0 x
28.0 x
30.0 x
32.0 x
34.0 x
34.7 x
36.0 x
38.0 x
40.0 x
$
$
$
$
$
$
$
$
$
$
$
$
$
17.19
18.90
19.02
20.62
22.34
24.06
25.78
27.50
29.22
29.83
30.93
32.65
34.37
10.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
15.62
17.19
17.29
18.75
20.31
21.87
23.43
25.00
26.56
27.12
28.12
29.68
31.25
11.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
15.48
17.03
17.13
18.58
20.13
21.68
23.22
24.77
26.32
26.88
27.87
29.42
30.96
12.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
15.34
16.88
16.98
18.41
19.95
21.48
23.02
24.55
26.09
26.64
27.62
29.15
30.69
Implied Share Price Based on P/E of Comparables

Yahoo! Inc.
Implied
12/31/2008
Future
Pro-Forma
Share
EPS
Price
$
0.86
$
29.83
13.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
15.21
16.73
16.83
18.25
19.77
21.29
22.81
24.33
25.85
26.40
27.38
28.90
30.42
14.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
15.08
16.58
16.68
18.09
19.60
21.11
22.61
24.12
25.63
26.17
27.14
28.64
30.15
15.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
14.94
16.44
16.54
17.93
19.43
20.92
22.42
23.91
25.40
25.94
26.90
28.39
29.89
16.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
14.82
16.30
16.40
17.78
19.26
20.74
22.22
23.70
25.19
25.72
26.67
28.15
29.63
Yahoo! Inc. - Sum of the Parts Valuation Based on Estimated Revenue Multiples
Projected
FY 2008E
Revenue by Segment:
Search Advertising:
Affiliate Site Revenue:
Premium Fees:
Other Revenue:
Total:
1,384
2,415
656
934
412
5,801
Low
Multiple
6.0 x
4.0 x
2.0 x
2.0 x
1.0 x
15.0 x
High
Multiple
7.0 x
5.0 x
3.0 x
3.0 x
2.0 x
20.0 x
Implied Share Value:
Low
EV
High
EV
8,302
9,660
1,313
1,868
412
$ 21,554
21.33
9,685
12,075
1,969
2,802
823
$ 27,355
25.53
Yahoo! Inc. - Liquidation Valuation Based on 12/31/2007 Balance Sheet

Assumed Recovery
FY 2007
Assets
Current Assets:
Short-Term Debt Investments:
Long-Term Debt Investments:
Net PP&E:
Goodwill:
Investments in Equity Interests:
Total Assets:
Liabilities
Accounts Payable:
Accrued Expenses & Other Current Liabilities:
Short-Term Debt:
Long-Term Debt:
Deferred and Other Long-Term Tax Liabilities, Net:
Commitments and Contingincies:
Minority Interests:
Total Liabilities:
$1,514
$488
$1,056
$181
$3,238
$362
$1,332
$4,002
$611
$504
$2,181
$12,230
Low
95.0%
70.0%
95.0%
95.0%
70.0%
90.0%
0.0%
0.0%
90.0%
N/A
$176
$1,006
$368
$750
$2,300
$95
$0
$28
$261
$0
$12
$2,697
Value Available to Shareholders:

Per Share Value:
Assumed Recovery
Liquidation Value
High
100.0%
90.0%
100.0%
100.0%
90.0%
95.0%
0.0%
0.0%
95.0%
N/A
Value Available to Shareholders:

Per Share Value:
Low
High
$1,438
$341
$1,003
$172
$2,954
$253
$1,198
$0
$0
$454
$5,362
$10,222
$1,514
$439
$1,056
$181
$3,189
$326
$1,265
$0
$0
$479
$5,362
$10,621
$176
$1,006
$368
$750
$2,300
$95
$0
$28
$261
$0
$12
$2,697
$176
$1,006
$368
$750
$2,300
$95
$0
$28
$261
$0
$12
$2,697
$7,525
$ 10.84
$7,924
$ 11.13
Valuation / Contribution Analysis Calcs.
Options:
Convert:
Number Strike Price

180.40 $ 29.36
36.57 $ 22.55
Enterprise Value:
Equity Interests:
Shares:
Share Price:
Options:
Convert:
Valuation Summary Calculations:

$ 10,391 $ 10,424 $ 15,176 $ 32,398 $ 69,842
$ 21.33 $ 12.98 $ 13.00 $ 16.56 $ 29.20 $ 53.31
$ 9,082 $ 10,572 $ 15,529 $ 28,411 $ 53,681
$ 21.33 $ 12.00 $ 13.11 $ 16.82 $ 26.30 $ 42.91
$ 8,483 $ 10,619 $ 15,401 $ 25,578 $ 43,902
$ 21.33 $ 11.55 $ 13.15 $ 16.73 $ 24.23 $ 36.62
$ 21,554
$ 1,602
$ 5,362
$
$ 28,518
1,337.17
$ 21.33
0.00
0.00
Sum of Parts Calculation:
$ 21.33
Liquidation Calculation:
$ 21.33
Merger Model Scenarios - Equity

$ 19,809 $ 27,976 $ 37,525 $ 46,530 $ 53,061
$ 21.33 $ 20.02 $ 25.98 $ 32.52 $ 38.31 $ 42.51
$ 42,882
$ 19,495 $ 27,289 $ 31,040 $ 35,099 $ 43,820
$ 21.33 $ 19.79 $ 25.48 $ 28.21 $ 30.96 $ 36.57
$ 17,990 $ 23,820 $ 26,502 $ 29,708 $ 37,106
$ 21.33 $ 18.66 $ 22.95 $ 24.91 $ 27.24 $ 32.25
$ 5,351 $ 9,703 $ 24,126 $ 55,496 $ 68,373
$ 21.33 $ 9.21 $ 12.46 $ 23.18 $ 44.08 $ 52.37
Merger Model Scenarios - Enterp
$ 35,168
Merger Model - Contribution An
$ 6,226 $ 10,935 $ 32,148 $ 59,015 $ 70,437

$ 21.33 $ 9.86 $ 13.39 $ 29.02 $ 46.34 $ 53.69
$ 28,518
$ 15,169 $ 39,561 $ 61,241 $ 79,086 $ 90,633

$ 21.33 $ 16.55 $ 33.83 $ 47.78 $ 59.26 $ 66.69
$ 21.33
$ 14,564 $ 41,264 $ 47,880 $ 72,377 $ 99,322

$ 21.33 $ 16.10 $ 34.92 $ 39.18 $ 54.94 $ 72.28
Merger Model Calcs.

Per-Share Price:
Shares:
Equity Interests:
Implied Enterprise Value:
Options:
Convert:
Sum of Parts Calculation:
$ 21,554 $ 27,355
$ 21.33 $ 25.53
Liquidation Calculation:
Funds Required:
Equity Value:
Plus: Transaction Fees:
Plus: Financing Fees:
Plus: Debt Refinanced:
Less: Excess Cash Used:
Total Funds Required:
Calculations for Scenario 1 - Sens

$ 31.00
1,383.28
$ 42,882
($1,602)
$ 5,362
$
750
$ 35,168
9.54
36.57
$ 42,882
53
53
$ 42,882
$7,525
$7,924
$ 10.84 $ 11.13
Merger Model Scenarios - Equity Value Calculation:
$ 19.05 $ 31.00 $ 31.00 $ 31.00 $ 31.00 $ 35.00
$ 25,473 $ 42,882 $ 42,882 $ 42,882 $ 42,882 $ 49,098
Merger Model Scenarios - Enterprise Value Calculation:
$ 19.05 $ 31.00 $ 31.00 $ 31.00 $ 31.00 $ 35.00
$ 18,509 $ 35,168 $ 35,168 $ 35,168 $ 35,168 $ 41,385
Merger Model - Contribution Analysis Calculations:
$ 25,220 $ 26,223 $ 20,300 $ 20,852 $ 15,588 $ 15,131 $ 8,468 $ 8,184
$ 32,934 $ 33,936 $ 27,264 $ 27,815 $ 22,552 $ 22,095 $ 15,432 $ 15,148
$ 25,220 $ 26,223 $ 20,300 $ 20,852 $ 15,588 $ 15,131 $ 8,468 $ 8,184
$ 23.97 $ 24.70 $ 20.39 $ 20.80 $ 16.87 $ 16.52 $ 11.54 $ 11.33
Per-Share Price:
Shares:
Equity Interests:
Options:
Convert:
Calculations for Scenario 1 - Sensitivity Table

Per-Share Price:
Equity Interests:
$ 31.00
1,383.28
$ 42,882
($1,602)
$ 5,362
$
750
$ 35,168
9.54
36.57
Current Yahoo! Inc. Market Data:

Current Price:
Equity Market Value:
Plus: Total Debt
Plus: Preferred Stock
Plus: Minority Interest
Less: Cash & Cash-Equivalents
Less: Equity Investments
Total Enterprise Value:
$ 19.05
1,337.2
$ 25,473
$750
$0
$12
$2,363
$5,362
$ 18,509
Current Valuation Multiples:
Transaction Metrics:
Consideration Per Share:
Implied Diluted Equity Value:
Plus: Total Debt
Implied Transaction Multiples:
Statistic
Current
Multiple
TTM TEV / Revenue:

$ 5,113
$ 5,801
$ 6,500
3.6 x
3.2 x
2.8 x
TTM TEV / Revenue:

TTM TEV / EBITDA:

12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:
$ 1,927
$ 2,045
$ 2,194
9.6 x
9.1 x
8.4 x
TTM TEV / EBITDA:

12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:
TTM Pro-Forma P/E:

$
$
$
22.1 x
22.2 x
21.9 x
TTM Pro-Forma P/E:

0.86
0.86
0.87
Transaction Metrics:
Consideration Per Share:
Implied Diluted Equity Value:
Plus: Total Debt
$ 31.00
1,383.3
$ 42,882
$0
$0
$12
$2,363
$5,362
$ 35,168
Implied Transaction Multiples:

Implied
Multiple
Public
Comps
Trans.
Comps
TTM TEV / Revenue:

6.9 x
6.1 x
5.4 x
3.0 x
2.7 x
2.4 x
4.7 x
5.5 x
N/A
TTM TEV / EBITDA:

12/31/2008 TEV / EBITDA:
12/31/2009 TEV / EBITDA:
18.2 x
17.2 x
16.0 x
19.5 x
15.2 x
12.1 x
31.8 x
23.4 x
N/A
TTM Pro-Forma P/E:

36.0 x
36.1 x
35.7 x
34.7 x
28.8 x
23.1 x
N/A
N/A
N/A
Buyer Assumptions - Microsoft Corporation

Name:
Microsoft Corporation
Ticker:
MSFT
Fiscal Year Ends:
30-Jun
Share Price:
$ 32.20
Fully Diluted Shares Outstanding:
9,377.6
Market Capitalization:
$ 301,959
Cash & Cash Equivalents:
30,489
Equity Investments:
Debt:
Preferred Stock:
Minority Interest:
Enterprise Value:
$ 271,470
Tax Rate:
30.0%
Minimum Cash Balance:
$ 5,000
Seller Assumptions - Yahoo! Inc.

Name:
Ticker:
Fiscal Year Ends:
Share Price:
Fully Diluted Shares Outstanding:
Market Capitalization:
Equity Investments:
Debt:
Preferred Stock:
Minority Interest:
Enterprise Value:
Tax Rate:
Transaction Structure & Assumptions - Scenarios

Select Scenario:
Transaction Type:
(1 = Stock, 0 = Asset or 338(h)(10) )
Scenario:
Per-Share Purchase Price:
Equity Purchase Price:
Implied Premium:
Revenue Synergy %:
Expense Synergy %:
Refinanced Debt:
Financing Fees:
Transaction Fees:
Funds Required:
% Cash:
% Stock:
% Debt:
% Term Loan A Debt:
Cash Used:
Stock Used:
Common Shares Issued:
Debt, Term Loan A:
Debt, High-Yield:
Foregone Cash Interest Rate:
Term Loan A Interest Rate:
High-Yield Debt Interest Rate:
1
1
Selected
Scenario
1
$ 31.00
$ 42,882
62.7%
10.0%
10.0%
$
$
$
53
$ 42,882
50.0%
50.0%
0.0%
50.0%
$ 21,441
$ 21,441
665.86
$
$
4.4%
L + 400
11.0%
Financing Fees:
Advisory Fees:
Legal & Misc. Fees:
$
$
$
$
$
$
$
$
$
$
1
31.00
42,882
62.7%
10.0%
10.0%
53
42,882
50.0%
50.0%
0.0%
50.0%
21,441
21,441
665.86
4.4%
L + 400
11.0%
$
$
$
$
$
$
$
$
$
$
2
31.00
42,882
62.7%
10.0%
10.0%
143
53
43,025
33.3%
33.3%
33.3%
50.0%
14,342
14,342
445.39
7,171
7,171
4.4%
L + 400
11.0%
Sources & Uses

Sources:
Buyer Cash:
Buyer Stock Issuance:
Term Loan A:
High-Yield Debt:
Excess Cash:
Total Sources:
Uses:
Equity Value of Company:
Transaction Fees:
Capitalized Financing Fees:
Debt Refinanced:
Total Uses:
$ 21,441
21,441
53
$ 42,934
Purchase Price Allocation & Pro-Forma Balance Sheet Adjustments

Goodwill Calculation:
Less: Seller Book Value:
Plus: Write-Off of Existing Goodwill:
Total Allocable Purchase Premium:
$ 42,882
$9,600
$4,002
$ 37,284
Less: Write-Up of PP&E:

Less: Write-Up of Intangibles:
Less: Write-Off of Existing DTL:
Plus: Write-Down of Existing DTA:
Plus: New Deferred Tax Liability:
Total Goodwill Created:
181
7,457
261
2,291
$ 31,676
Goodwill Period (Years) - Book:

Goodwill Period (Years) - Tax:
Yearly Goodwill Expense - Book:
Yearly Goodwill Expense - Tax:
$
$
Fixed Asset Write-Up:

PP&E Write-Up %:
PP&E Write-Up Amount:
Depreciation Period (Years) - Book:
Depreciation Period (Years) - Tax:
Yearly Depreciation Expense - Book:
Yearly Depreciation Expense - Tax:
Intangible Asset Write-Up:
Excess Purchase Price to Allocate:
% Allocated to Intangibles:
Intangibles Write-Up Amount:
Amortization Period (Years) - Book:
Amortization Period (Years) - Tax:
Yearly Amortization Expense - Book:
Yearly Amortization Expense - Tax:
N/A
15
-
New Deferred Tax Liability:

Deferred Revenue Write-Down:
Seller Deferred Revenue:
% Fair Value:
Write-Down Period (Years):
Yearly Deferred Revenue Expense:
$
$
$436
50.0%
218
1
218
Buyer Income Statement ($MM) - Summary - Microsoft Corporation

Historical
Projected
FY 2006
FY 2007 FY 2008E FY 2009E
Revenue:
Operating Income:
Pre-Tax Income:
Pro-Forma EPS:
$44,282
$16,472
$18,262
$13,870
$1.32
$51,122
$18,524
$20,101
$15,315
$1.55
$60,141
$24,163
$25,360
$18,763
$1.98
$67,702
$26,127
$27,779
$20,456
$2.19
Seller Income Statement ($MM) - Summary - Yahoo! Inc. - Based on Buyer Fiscal Years
Historical
Projected
FY 2006
FY 2007 FY 2008E FY 2009E
Revenue:
Operating Income:
Pre-Tax Income:
Pro-Forma EPS:
$4,836
$818
$974
$1,147
$0.80
$5,457
$749
$869
$1,182
$0.84
$6,150
$835
$915
$1,215
$0.86
Combined Income Statement and Transaction Adjustments ($MM)

FY 2009E
Buyer + Seller Revenue:
Revenue Synergies:
Revenue:
Buyer + Seller Operating Income:
Revenue Synergies:
Expenses Associated with Revenue Synergies:
Cost Synergies:
Operating Income:
Interest / Investment Income:
Acquisition Effects:
Foregone Interest on Cash:
New Interest Expense:
New Amortization Expense:
Financing Fees Amortization:
New Depreciation Expense:
Pre-Tax Income:
Book Taxes:
GAAP Net Income:
Shares Issued in Transaction:
Total New Shares Outstanding:
GAAP EPS:
GAAP EPS - Buyer Standalone:
GAAP EPS Accretion / Dilution:
Debit
Adjustments
Credit
FY 2009E
Combined Y
Total Amortization of Intangibles:

Total Stock-Based Compensation:
Book Taxes:
Pro-Forma EPS:
Pro-Forma EPS - Buyer Standalone:
Pro-Forma EPS Accretion / Dilution:
Breakeven Incremental Synergies for PF EPS:
Combined Balance Sheets & Pro-Forma Adjustments ($MM)
Pre-Transaction
Adjustments
Buyer
Seller
Debit
Credit
FY 2009E
Assets
Current Assets:
$31,100
$828
$0 $ 21,494 $10,435
Short-Term Investments:
$13,068
$488
$0
$0 $13,556
$13,350
$1,263
$0
$0 $14,613
$1,600
$0
$0
$0
$1,600
Inventory:
$2,333
$0
$0
$0
$2,333
Other Current Assets:
$2,393
$256
$0
$0
$2,649
$63,844
$2,834
$0 $ 21,494 $45,185
Capitalized Financing Fees:
Net PP&E:
Equity & Other Investments:
Goodwill:
Total Assets:
$0
$6,795
$10,117
$10,038
$386
$2,874
$1,509
$95,563
$0
$1,814
$2,181
$4,002
$295
$0
$866
$11,992

Accounts Payable:
Accrued Expenses:
Income Taxes:
Short-Term Deferred Rev.:
Other:
$4,468
$2,252
$1,138
$13,948
$5,829
$27,635
$185
$1,369
$0
$436
$0
$1,990
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$4,653
$3,621
$1,138
$14,384
$5,829
$29,625
$0
$0
$0
$0
Debt Refinanced:
$0
$181
$0
$31,676
$7,457
$0
$0
$39,314
$0
$0
$0
$8,791
$0 $12,298
$4,002 $41,714
$0
$8,138
$0
$2,874
$0
$2,375
$25,496 $121,374
Combined Y
Debt, Term Loan A:

Debt, High-Yield:
Deferred Tax Liabilities:
Minority Interests:
$0
$0
$2,260
$8,692
$0
$0
$0
$0
$101
$28
$261
$12
$56,976
$9,600
$9,653
Total Liabilities & SE:
$95,563
$11,992
$9,914
BALANCE CHECK
OK!
($0)
$0
$0
$0
$0
$261
$0
$49,228
$0
$0
$2,291
$0
21,441
$0
$0
$2,361
$8,720
$2,291
$12
$78,364
$23,732 $121,374
$49,228
($0)
Combined Cash Flow Statement ($MM)

Debit
Net Income:
Depreciation:
Amortization of Financing Fees:
Tax Benefits from SBC:
Gains on Investments:
Change in Deferred Revenue:
Dividends Received:
Other Current Liabilities:
Deferred Tax Liabilities:
Net Cash Provided from Operations:
Acquisitions, Net of Cash:
Purchases of Investments:
Maturities of Investments:
Sales of Investments:
Securities Lending Payable:
Net Cash Used from Investing:
Adjustments
Credit
FY 2009E
Combined Y

Common Stock Issued:
Common Stock Repurchased:
Common Stock Cash Dividends:
Other:
Net Cash Used from Financing:
Effect of Exchange Rates:
Beginning Cash:
Plus: Net Change in Cash:
Less: Minimum Cash:
Cash Available for Debt Repayment:
Cash Used for Debt Repayment:
Net Change in Cash:
Debt Schedules ($MM)
Debit
Adjustments
Credit
FY 2009E
Combined Y
LIBOR Curve:
Debt, Term Loan A:
Beginning Balance:
Mandatory Repayment:
Optional Repayment:
Ending Balance:
Interest:
$0
5.0%
$0
L + 400
Debt, High-Yield:
Beginning Balance:
Mandatory Repayment:
Optional Repayment:
Ending Balance:
Interest:
$0
0.0%
$0
11.0%
Total Cash Used for Debt Repayment:

Total Cash Interest Expense:
Sensitivity Analysis - Pro-Forma Year 1 EPS Accretion/Dilution and Purchase Price vs. Cash/Stock Split
Purchase Consideration - % Cash:
Per Share Purchase Price
$
$
$
$
$
$
$
$
$
$
(1.6%)
35.00
34.00
33.00
32.00
31.00
30.00
29.00
28.00
27.00
26.00
30.0%
(4.6%)
(4.2%)
(3.9%)
(3.5%)
(3.1%)
(2.7%)
(2.3%)
(2.0%)
(1.6%)
(1.3%)
35.0%
(4.2%)
(3.8%)
(3.5%)
(3.1%)
(2.7%)
(2.3%)
(2.0%)
(1.7%)
(1.3%)
(1.0%)
40.0%
(3.8%)
(3.4%)
(3.1%)
(2.7%)
(2.3%)
(2.0%)
(1.6%)
(1.3%)
(1.0%)
(0.6%)
45.0%
(3.4%)
(3.0%)
(2.7%)
(2.3%)
(2.0%)
(1.6%)
(1.3%)
(0.9%)
(0.6%)
(0.3%)
50.0%
(2.9%)
(2.6%)
(2.3%)
(1.9%)
(1.6%)
(1.2%)
(0.9%)
(0.6%)
(0.3%)
0.0%
55.0%
(2.5%)
(2.2%)
(1.8%)
(1.5%)
(1.2%)
(0.8%)
(0.5%)
(0.2%)
0.1%
0.4%
Sensitivity Analysis - Pro-Forma Year 1 EPS Accretion/Dilution and Purchase Price vs. Revenue Synergies (50% C
$
$
$
$
$
$
$
$
$
$
(1.6%)
35.00
34.00
33.00
32.00
31.00
30.00
29.00
28.00
27.00
26.00
0.0%
(4.0%)
(3.7%)
(3.4%)
(3.0%)
(2.7%)
(2.3%)
(2.0%)
(1.7%)
(1.4%)
(1.1%)
2.0%
(3.8%)
(3.5%)
(3.1%)
(2.8%)
(2.5%)
(2.1%)
(1.8%)
(1.5%)
(1.2%)
(0.9%)
Revenue Synergies - % Seller Existing Revenue:

4.0%
6.0%
8.0%
10.0%
(3.6%)
(3.4%)
(3.1%)
(2.9%)
(3.2%)
(3.0%)
(2.8%)
(2.6%)
(2.9%)
(2.7%)
(2.5%)
(2.3%)
(2.6%)
(2.4%)
(2.1%)
(1.9%)
(2.2%)
(2.0%)
(1.8%)
(1.6%)
(1.9%)
(1.7%)
(1.4%)
(1.2%)
(1.6%)
(1.3%)
(1.1%)
(0.9%)
(1.3%)
(1.0%)
(0.8%)
(0.6%)
(1.0%)
(0.7%)
(0.5%)
(0.3%)
(0.6%)
(0.4%)
(0.2%)
0.0%
Sensitivity Analysis - Pro-Forma Year 1 EPS Accretion/Dilution and Purchase Price vs. Expense Synergies (50% Ca
$
$
$
$
$
$
$
$
$
$
(1.6%)
35.00
34.00
33.00
32.00
31.00
30.00
29.00
28.00
27.00
26.00
0.0%
(3.9%)
(3.6%)
(3.2%)
(2.9%)
(2.6%)
(2.2%)
(1.9%)
(1.6%)
(1.3%)
(1.0%)
Expense Synergies - % SG&A Reduction and Operating Lease Consolidation:

2.0%
4.0%
6.0%
8.0%
10.0%
(3.7%)
(3.5%)
(3.3%)
(3.1%)
(2.9%)
(3.4%)
(3.2%)
(3.0%)
(2.8%)
(2.6%)
(3.0%)
(2.8%)
(2.6%)
(2.4%)
(2.3%)
(2.7%)
(2.5%)
(2.3%)
(2.1%)
(1.9%)
(2.4%)
(2.2%)
(2.0%)
(1.8%)
(1.6%)
(2.0%)
(1.8%)
(1.6%)
(1.4%)
(1.2%)
(1.7%)
(1.5%)
(1.3%)
(1.1%)
(0.9%)
(1.4%)
(1.2%)
(1.0%)
(0.8%)
(0.6%)
(1.1%)
(0.9%)
(0.7%)
(0.5%)
(0.3%)
(0.8%)
(0.6%)
(0.4%)
(0.2%)
0.0%
Sensitivity Analysis - Incremental Pre-Tax Breakeven Synergies for Year 1 EPS Accretion/Dilution and Purchase P
chase Price
53479.6%
$ 35.00
0.0%
$1,340
Expense Synergies - % SG&A Reduction and Operating Lease Consolidation:

2.0%
4.0%
6.0%
8.0%
10.0%
$1,274
$1,207
$1,140
$1,073
$1,007
$
$
$
$
$
$
$
$
$
34.00
33.00
32.00
31.00
30.00
29.00
28.00
27.00
26.00
$1,222
$1,105
$987
$869
$751
$638
$534
$429
$325
$1,156
$1,038
$920
$802
$684
$571
$467
$362
$258
$1,089
$971
$853
$735
$617
$504
$400
$296
$191
$1,022
$904
$786
$668
$550
$437
$333
$229
$125
$955
$837
$720
$602
$484
$371
$266
$162
$58
$889
$771
$653
$535
$417
$304
$200
$95
($9)
mptions - Yahoo! Inc.

Yahoo! Inc.
YHOO
31-Dec
$ 19.05
1,337.2
$ 25,473
2,363
5,362
750
12
$ 18,509
40.0%
d Shares Outstanding:
h Equivalents:
%:
Amount:
1.0% $
0.1% $ 42.9
$ 10.0
$
$
$
$
$
$
$
$
$
$
3
31.00
42,882
62.7%
10.0%
10.0%
215
53
43,097
0.0%
50.0%
50.0%
30.0%
21,549
669.21
6,465
15,084
4.4%
L + 500
12.0%
$
$
$
$
$
$
$
$
$
$
4
31.00
42,882
62.7%
10.0%
10.0%
215
53
43,097
50.0%
0.0%
50.0%
50.0%
21,549
10,774
10,774
4.4%
L + 600
11.5%
Period:
5
N/A
N/A
$
$
$
$
$
$
$
$
$
$
5
35.00
49,098
83.7%
10.0%
10.0%
59
49,098
50.0%
50.0%
0.0%
50.0%
24,549
24,549
762.39
4.4%
L + 400
11.0%
lue of Company:
$ 42,882
53
$ 42,934
ed Financing Fees:
e-Up Amount:
on Period (Years) - Book:
on Period (Years) - Tax:
reciation Expense - Book:
reciation Expense - Tax:
$
$
10.0%
181
8
6
23
-
Asset Write-Up:
chase Price to Allocate:
d to Intangibles:
Write-Up Amount:
on Period (Years) - Book:
on Period (Years) - Tax:
ortization Expense - Book:
ortization Expense - Tax:
$ 37,284
20.0%
$ 7,457
5
15
$ 1,491
$
-
red Tax Liability:
$ 2,291
Projected
FY 2010E FY 2011E FY 2012E
$73,825
$28,087
$30,336
$22,208
$2.43
$78,993
$30,053
$32,958
$24,051
$2.63
$82,942
$31,556
$35,184
$25,640
$2.80
Projected
FY 2010E FY 2011E FY 2012E
$6,859
$872
$946
$1,241
$0.88
$7,630
$913
$994
$1,297
$0.92
$8,414
$972
$1,064
$1,367
$0.97
Combined Years
FY 2010E FY 2011E FY 2012E
$80,684
$469
$81,153
$86,623
$537
$87,160
$91,356
$608
$91,964
$28,959
$469
($94)
$334
$29,668
$30,966
$537
($109)
$367
$31,762
$32,528
$608
($125)
$400
$33,411
$2,324
$2,985
$3,720
($944)
$0
($1,491)
$0
($23)
($218)
$29,316
($985)
$0
($1,491)
$0
($23)
$0
$32,248
($1,028)
$0
($1,491)
$0
($23)
$0
$34,588
$8,795
$148
$9,674
$148
$10,376
$148
$20,669
9,142
666
9,808
$2.11
$2.32
(9.3%)
$22,721
9,142
666
9,808
$2.32
$2.52
(8.2%)
$24,360
9,142
666
9,808
$2.48
$2.69
(7.8%)
($1,798)
($1,958)
($218)
$33,290
($1,685)
($2,128)
$0
$36,061
($1,629)
($2,275)
$0
$38,493
$9,987
$148
$10,818
$148
$11,548
$148
$23,451
$2.39
$2.43
(1.6%)
$25,391
$2.59
$2.63
(1.6%)
$27,093
$2.76
$2.80
(1.5%)
$535
$589
$593
Combined Years
FY 2010E FY 2011E FY 2012E
$25,940
$13,179
$14,415
$1,607
$3,352
$2,678
$61,171
$43,308
$13,179
$15,484
$1,607
$3,587
$2,710
$79,875
$62,029
$13,179
$16,341
$1,607
$3,766
$2,743
$99,664
$0
$0
$0
$10,564 $12,404 $14,271
$12,298 $12,298 $12,298
$41,714 $41,714 $41,714
$6,340
$4,655
$3,025
$3,086
$3,086
$3,086
$2,375
$2,375
$2,375
$137,548 $156,406 $176,433
$5,080
$3,963
$1,313
$14,644
$5,831
$30,832
$5,446
$4,317
$1,313
$15,923
$5,831
$32,830
$5,731
$4,628
$1,313
$16,748
$5,831
$34,251
$0
$0
$0
$0
$0
$2,519
$8,724
$2,186
$12
$0
$0
$2,700
$8,724
$1,732
$12
$0
$0
$2,841
$8,724
$1,277
$12
$93,275 $110,408 $129,327

$137,548 $156,406 $176,433
($0)
($0)
($0)
Combined Years
FY 2010E FY 2011E FY 2012E
$20,669
$22,721
$24,360
$1,669
$1,798
$0
$1,958
$0
($219)
$0
$418
($151)
$15
$3
$1,879
$1,685
$0
$2,128
$0
$0
$0
$1,460
($151)
$15
$3
$2,086
$1,629
$0
$2,275
$0
$0
$0
$966
($151)
$15
$3
$198
($1,048)
$0
$946
$4
($106)
$26,154
($1,069)
($267)
$0
$719
$0
($454)
$28,671
($857)
($212)
$0
$597
$0
($454)
$30,257
($3,443)
$0
$0
$377
$0
$0
($3,066)
($3,719)
$0
$0
$0
$0
$0
($3,719)
($3,953)
$0
$0
$0
$0
$0
($3,953)
$2,400
($6,000)
($4,023)
$0
($7,623)
$40
$10,435
$15,505
($5,000)
$20,940
$40
$25,940
$17,368
($5,000)
$38,308
$2,400
($6,000)
($4,023)
$0
($7,623)
$40
$43,308
$18,721
($5,000)
$57,029
$0
$0
$0
$15,505
$10,435
$25,940
$17,368
$25,940
$43,308
$18,721
$43,308
$62,029
Combined Years
FY 2010E FY 2011E FY 2012E
4.12%
4.34%
4.55%
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
ce vs. Cash/Stock Split
n - % Cash:
$2,400
($6,000)
($4,023)
$0
($7,623)
60.0%
(2.0%)
(1.7%)
(1.4%)
(1.1%)
(0.8%)
(0.5%)
(0.1%)
0.1%
0.4%
0.7%
65.0%
(1.6%)
(1.3%)
(1.0%)
(0.7%)
(0.4%)
(0.1%)
0.2%
0.5%
0.8%
1.1%
70.0%
(1.1%)
(0.8%)
(0.6%)
(0.3%)
0.0%
0.3%
0.6%
0.9%
1.1%
1.4%
ce vs. Revenue Synergies (50% Cash/Stock)
Existing Revenue:
12.0%
(2.7%)
(2.4%)
(2.0%)
(1.7%)
(1.4%)
(1.0%)
(0.7%)
(0.4%)
(0.1%)
0.2%
14.0%
(2.5%)
(2.2%)
(1.8%)
(1.5%)
(1.1%)
(0.8%)
(0.5%)
(0.1%)
0.2%
0.5%
16.0%
(2.3%)
(1.9%)
(1.6%)
(1.3%)
(0.9%)
(0.6%)
(0.2%)
0.1%
0.4%
0.7%
ce vs. Expense Synergies (50% Cash/Stock)

Operating Lease Consolidation:
12.0%
14.0%
(2.7%)
(2.5%)
(2.4%)
(2.2%)
(2.1%)
(1.9%)
(1.7%)
(1.5%)
(1.4%)
(1.2%)
(1.0%)
(0.8%)
(0.7%)
(0.5%)
(0.4%)
(0.2%)
(0.1%)
0.1%
0.2%
0.4%
16.0%
(2.3%)
(2.0%)
(1.7%)
(1.3%)
(1.0%)
(0.6%)
(0.3%)
0.0%
0.3%
0.6%
ccretion/Dilution and Purchase Price vs. Expense Synergies (50% Cash/Stock)

Operating Lease Consolidation:
12.0%
14.0%
$940
$873
16.0%
$806
$822
$704
$586
$468
$350
$237
$133
$29
($76)
$755
$637
$519
$401
$283
$170
$66
($38)
($142)
$688
$570
$452
$334
$217
$104
($1)
($105)
($209)
Buyer Income Statement ($MM) - Microsoft Corporation

Historical
FY 2006 FY 2007
Projected
FY 2008E FY 2009E
Revenue:
Revenue Growth:
Cost of Revenue:
Gross Profit:
Gross Margin:
$44,282
11.3%
$7,650
$36,632
82.7%
$51,122
15.4%
$10,693
$40,429
79.1%
$60,141
17.6%
$11,811
$48,330
80.4%
$67,702
12.6%
$12,934
$54,768
80.9%
Operating Expenses:
Research & Development:
% Revenue:
Sales & Marketing:
% Revenue:
% Revenue:
Total Operating Expenses:
$6,584
14.9%
$9,818
22.2%
$3,758
8.5%
$20,160
$7,121
13.9%
$11,455
22.4%
$3,329
6.5%
$21,905
$7,893
13.1%
$12,527
20.8%
$3,747
6.2%
$24,167
$9,393
13.9%
$14,862
22.0%
$4,386
6.5%
$28,641
Operating Income:
Investment Income:
Pre-Tax Income:
Income Tax Provision:
$16,472
$1,790
$18,262
$5,663
31.0%
$18,524
$1,577
$20,101
$6,036
30.0%
$24,163
$1,197
$25,360
$7,608
30.0%
$26,127
$1,652
$27,779
$8,334
30.0%
GAAP Net Income:

Diluted Shares:
GAAP Diluted EPS:
$12,599
10,531
$1.20
$14,065
9,886
$1.42
$17,752
9,483
$1.87
$19,446
9,323
$2.09
$127
$1,715
$20,104
31.0%
$236
$1,550
$21,887
30.0%
$263
$1,181
$26,804
30.0%
$229
$1,215
$29,223
30.0%

Pro-Forma EPS:
$13,870
$1.32
$15,315
$1.55
$18,763
$1.98
$20,456
$2.19
% Revenue:
Combined D&A:
Depreciation:
% Revenue:
Amortization:
EBITDA:
EBIT:
$1,715
3.9%
$903
$776
1.8%
$127
$19,090
$18,187
$1,550
3.0%
$1,440
$1,204
2.4%
$236
$21,514
$20,074
$1,181
2.0%
$1,707
$1,444
2.4%
$263
$27,051
$25,344
$1,215
1.8%
$1,490
$1,261
1.9%
$229
$28,832
$27,342
Buyer Balance Sheet ($MM) - Microsoft Corporation

Historical
Projected
FY 2006 FY 2007 FY 2008E FY 2009E
Assets
Current Assets:
$6,714
$6,111 $17,523 $31,100
Short-Term Investments:
$27,447 $17,300 $13,572 $13,068
$9,316 $11,338 $12,983 $13,350
$1,940
$1,899
$1,567
$1,600
Inventory:
$1,478
$1,127
$1,495
$2,333
$2,115
$2,393
$2,393
$2,393
$49,010 $40,168 $49,533 $63,844
Net PP&E:
Equity & Other Investments:
Goodwill:
Total Assets:
$3,044
$9,232
$3,866
$539
$2,611
$1,295
$69,597
$4,350
$10,117
$4,760
$878
$1,389
$1,509
$63,171
$5,409
$10,117
$10,220
$615
$2,907
$1,509
$80,310
$6,795
$10,117
$10,038
$386
$2,874
$1,509
$95,563

Accounts Payable:
Accrued Compensation:
Income Taxes:
Other:
$2,909
$1,938
$1,557
$9,138
$6,900
$22,442
$1,764
$5,287
$3,247
$2,325
$1,040
$10,779
$6,363
$23,754
$1,867
$6,453
$3,909
$2,077
$963
$12,544
$5,853
$25,346
$2,091
$8,855
$4,468
$2,252
$1,138
$13,948
$5,829
$27,635
$2,260
$8,692
$40,104
$31,097
$44,018
$56,976
Total Liabilities & Shareholders' Equity:
$69,597
$63,171
$80,310
$95,563
Buyer Cash Flow Statement ($MM) - Microsoft Corporation

Historical
FY 2006 FY 2007
Net Income:
Depreciation:
$12,599
$776
$127
$1,715
($89)
$14,065
$1,204
$236
$1,550
($77)
Projected
FY 2008E FY 2009E
$17,752
$19,446
$1,444
$263
$1,181
$0
$1,261
$229
$1,215
$0

Gains on Investments:
Change in Deferred Revenue:
Other Current Liabilities:
Net Cash Provided from Operations:
$219
($270)
$1,724
$421
($292)
$1,650
($1,186)
$0
$1,989
$0
$0
$1,573
($2,071)
($1,405)
($49)
($145)
$1,273
$14,404
($1,764)
$232
($435)
($552)
$1,558
$17,796
($1,645)
($368)
($5,460)
($173)
$2,402
$16,199
($367)
($838)
$182
$885
($163)
$23,423

Acquisitions, Net of Cash:
Purchases of Investments:
Maturities of Investments:
Sales of Investments:
Securities Lending Payable:
Net Cash Used from Investing:
($1,578) ($2,264) ($2,503)

($649) ($1,150)
$0
($51,117) ($36,308) ($12,314)
$3,877
$4,736
$800
$54,353 $41,451 $15,242
$3,117
($376)
$0
$8,003
$6,089
$1,225
($2,647)
$0
$0
$504
$0
$0
($2,143)

Common Stock Issued:
Common Stock Repurchased:
Common Stock Cash Dividends:
Other:
Net Cash Used from Financing:
$2,101
$6,782
($19,207) ($27,575)
($3,545) ($3,805)
$89
$54
($20,562) ($24,544)
$7,651
($9,987)
($3,864)
$102
($6,098)
$2,400
($6,000)
($4,102)
$0
($7,702)
$86
$11,412
$6,111
$17,523
$0
$13,578
$17,523
$31,100
Effect of Exchange Rates:

Net Change in Cash:
$18
$1,863
$4,851
$6,714
$56
($603)
$6,714
$6,111
Operating Model Assumptions - Microsoft Corporation

Historical
FY 2006 FY 2007
Projected
FY 2008E FY 2009E
Accounts Receivable % Sales:

Accounts Receivable Days:
Inventory % COGS:
21.0%
76.8
19.3%
22.2%
81.0
10.5%
21.6%
78.8
12.7%
19.7%
72.0
18.0%
Accounts Payable % OpEx:

Accounts Payable Days:
Accrued Compensation % OpEx:
Short-Term Deferred Revenue % Sales:
Long-Term Deferred Revenue % Sales:
14.4%
52.7
9.6%
20.6%
4.0%
14.8%
54.1
10.6%
21.1%
3.7%
16.2%
59.0
8.6%
20.9%
3.5%
15.6%
56.9
7.9%
20.6%
3.3%
3.6%
4.4%
4.2%
3.9%
Capital Expenditures % Revenue:
Total Cash & ST Investments:

Dividends & Interest:
Effective Interest Rate:
$37,751
$34,161
$1,510
4.2%
$23,411
$1,319
4.6%
$31,095
$1,197
4.4%
$44,168
$1,652
4.4%
Enterprise Value Calculation - Microsoft Corporation

Share Price:
Common Shares:
Outstanding Options:
Exercise Price:
Dilution:
$32.20
9,306.98
524.00
$27.86
70.63
9,377.61
Equity Value:
Equity Investments:
Debt:
Minority Interest:
Preferred Stock:
Enterprise Value:
Projected
FY 2010E FY 2011E FY 2012E
$73,825
9.0%
$14,219
$59,606
80.7%
$78,993
7.0%
$15,214
$63,778
80.7%
$82,942
5.0%
$15,975
$66,967
80.7%
$10,410
14.1%
$16,266
22.0%
$4,843
6.6%
$31,519
$11,139
14.1%
$17,405
22.0%
$5,182
6.6%
$33,725
$11,696
14.1%
$18,275
22.0%
$5,441
6.6%
$35,412
$28,087
$2,249
$30,336
$9,101
30.0%
$30,053
$2,905
$32,958
$9,887
30.0%
$31,556
$3,628
$35,184
$10,555
30.0%
$21,235
9,142
$2.32
$23,071
9,142
$2.52
$24,629
9,142
$2.69
$184
$1,205
$31,725
30.0%
$111
$1,289
$34,358
30.0%
$91
$1,354
$36,629
30.0%
$22,208
$2.43
$24,051
$2.63
$25,640
$2.80
$1,205
1.6%
$1,291
$1,107
1.5%
$184
$30,583
$29,292
$1,289
1.6%
$1,295
$1,184
1.5%
$111
$32,638
$31,342
$1,354
1.6%
$1,335
$1,244
1.5%
$91
$34,244
$32,910
Projected
FY 2010E FY 2011E FY 2012E
$45,586
$12,691
$13,007
$1,607
$3,352
$2,393
$78,636
$61,355 $78,519
$12,691 $12,691
$13,917 $14,613
$1,607
$1,607
$3,587
$3,766
$2,393
$2,393
$95,550 $113,589
$8,308
$9,927 $11,627
$10,117 $10,117 $10,117
$9,857
$9,857
$9,857
$202
$91
$0
$3,086
$3,086
$3,086
$1,509
$1,509
$1,509
$111,715 $130,137 $149,785
$4,872
$2,427
$1,313
$14,376
$5,831
$28,819
$2,406
$8,696
$5,213
$2,597
$1,313
$15,382
$5,831
$30,336
$2,574
$8,696
$5,474
$2,727
$1,313
$16,151
$5,831
$31,496
$2,703
$8,696
$71,794
$88,531 $106,890
$111,715 $130,137 $149,785
Projected
FY 2010E FY 2011E FY 2012E
$21,235
$23,071
$24,629
$1,107
$184
$1,205
$0
$1,184
$111
$1,289
$0
$1,244
$91
$1,354
$0
($219)
$0
$574
$0
$0
$1,175
$0
$0
$898
$343
($1,019)
$181
$756
$4
$24,351
($910)
($235)
$0
$511
$0
$26,196
($696)
($179)
$0
$390
$0
$27,730
($2,620)
$0
$0
$377
$0
$0
($2,243)
($2,803)
$0
$0
$0
$0
$0
($2,803)
($2,944)
$0
$0
$0
$0
$0
($2,944)
$2,400
($6,000)
($4,023)
$0
($7,623)
$2,400
($6,000)
($4,023)
$0
($7,623)
$2,400
($6,000)
($4,023)
$0
($7,623)
$0
$14,485
$31,100
$45,586
$0
$15,770
$45,586
$61,355
$0
$17,164
$61,355
$78,519
Projected
FY 2010E FY 2011E FY 2012E
17.6%
64.3
23.6%
17.6%
64.3
23.6%
17.6%
64.3
23.6%
15.5%
56.4
7.7%
19.5%
3.3%
15.5%
56.4
7.7%
19.5%
3.3%
15.5%
56.4
7.7%
19.5%
3.3%
3.5%
3.5%
3.5%
$58,277
$2,249
4.4%
h Equivalents:
$74,046
$2,905
4.4%
$91,210
$3,628
4.4%
$301,959
$30,489
$0
$0
$0
$0
$271,470
Transaction Assumptions - Revenue Synergies ($MM Except Per Search and Per Pageview Data)
Revenue Synergies from Improved Monetization (Seller):
Search Advertising:
Revenue Per Search (RPS) - Yahoo! Inc.:
% Increase from Buyer:
New Revenue Per Search (RPS):
Search Revenue Synergies:
Revenue Per Pageview - Yahoo! Inc.:
% Increase from Buyer:
New Revenue Per Pageview:
Combined Years
FY 2010E FY 2011E FY 2012E
$1,706
$1,971
$2,236
$2,993
$3,409
$3,848
$0.016
10.0%
$0.018
$0.017
10.0%
$0.019
$0.018
10.0%
$0.020
$170
$197
$223
$0.0015
10.0%
$0.0016
$0.0016
10.0%
$0.0017
$0.0016
10.0%
$0.0018
Display Revenue Synergies:
$299
$341
$384
Total Revenue Synergies:

Seller Existing Gross Margin:
Cost of Revenue Synergies:
$469
80.0%
$94
$537
79.7%
$109
$608
79.5%
$125
Transaction Assumptions - Cost Synergies ($MM Except Per Employee Data)

Cost Synergies from Reduction in Force (Seller):
# Employees - Sales & Marketing:

# Employees - General & Administrative:
Average Expense Per S&M Employee:
Average Expense Per G&A Employee:
Combined Years
FY 2010E FY 2011E FY 2012E
5,047
5,615
6,192
4,249
4,727
5,212
$427,763 $432,040 $434,152
$202,749 $205,565 $207,389
Reduction in Force - Sales & Marketing:

Reduction in Force - General & Administrative:
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
S&M Employees Post-Transaction:

G&A Employees Post-Transaction:
4,543
3,824
5,054
4,254
5,573
4,691
Sales & Marketing Expense Synergies:

General & Administrative Expense Synergies:
$216
$86
$243
$97
$269
$108
Cost Synergies from Building Consolidation and Rental Savings (Buyer & Seller):
Buyer - Operating Lease Commitments:

Seller - Operating Lease Commitments:
Total Operating Lease Commitments:
Incremental Savings from Consolidation:
Rental Expense Synergies:
Total Expense Synergies:
Combined Years
FY 2010E FY 2011E FY 2012E
$202
$174
$150
$117
$99
$85
$319
$273
$235
10.0%
10.0%
10.0%
$32
$334
$27
$367
$23
$400
r Pageview Data)
Book / Cash Tax and Section 382 Net Operating Loss Schedule

Adjusted Long-Term Rate:
Federal NOLs:
State NOLs:
Total NOLs:
Allowed NOL Usage Per Year:
NOL Expiration (Years):
NOL Write-Down:
Post-Transaction Total NOLs:
$ 42,882
4.48%
$808
$354
$1,162
$1,921
10
$0
$1,162
Book Taxable Income:

Book Income Tax Expense:
GAAP
FY 2010E FY 2011E FY 2012E
$29,316 $32,248 $34,588
$8,795
$9,674 $10,376
Cash Tax Calculation:

Plus: Book Amortization of Intangibles Write-Up:
Plus: Book Amortization of Goodwill:
Plus: Book Depreciation of Asset Write-Up:
Less: Tax Amortization of Intangibles Write-Up:
Less: Tax Amortization of Goodwill:
Less: Tax Depreciation of Asset Write-Up:
Pre-NOL Taxable Income:
$1,491
$0
$23
$0
$0
$0
$30,830
$1,491
$0
$23
$0
$0
$0
$33,762
$1,491
$0
$23
$0
$0
$0
$36,102
Potential NOL Usage:

Allowed NOL Usage:
Remaining NOLs:
$1,162
$1,162
$29,668
$0
$0
$0
$33,762
$0
$0
$0
$36,102
$0
$10,129
($454)
$10,831
($454)
Cash Taxes Payable:

Increase / Decrease in Deferred Tax Liability:
$8,900
($106)
Pro-Forma
FY 2010E FY 2011E FY 2012E
$33,290 $36,061 $38,493
$9,987 $10,818 $11,548
$0
$0
$23
$0
$0
$0
$33,312
$0
$0
$23
$0
$0
$0
$36,084
$0
$0
$23
$0
$0
$0
$38,515
$1,162
$1,162
$32,150
$0
$0
$0
$36,084
$0
$0
$0
$38,515
$0
$9,645
$342
$10,825
($7)
$11,555
($7)
Relative Contribution Analysis ($MM)
Buyer
Amount
%
Seller
Amount
%
Revenue:
FY 2010E
FY 2011E
$73,825
$78,993
91.5%
91.2%
$6,859
$7,630
8.5%
8.8%
EBITDA:
FY 2010E
FY 2011E
$30,583
$32,638
93.0%
92.9%
$2,287
$2,507
7.0%
7.1%

FY 2010E
$31,725
FY 2011E
$34,358
94.6%
94.7%
$1,822
$1,915
5.4%
5.3%
GAAP Pre-Tax Income:

FY 2010E
FY 2011E
97.0%
97.1%
$946
$994
3.0%
2.9%
$30,336
$32,958
Combined
Pro-Forma Value
Combined
Pro-Forma Value
EV
Equity
Implied
Seller Value
EV
Equity
Implied Pro-Forma
Ownership
Buyer
Seller
$296,690 $334,143
$297,692 $335,145
$25,220
$26,223
$32,934
$33,936
90.2%
89.9%
9.8%
10.1%
$291,770 $329,223
$292,321 $329,774
$20,300
$20,852
$27,264
$27,815
91.7%
91.6%
8.3%
8.4%
$287,058 $324,511
$286,601 $324,054
$15,588
$15,131
$22,552
$22,095
93.1%
93.2%
6.9%
6.8%
$279,938 $317,391
$279,654 $317,106
$8,468
$8,184
$15,432
$15,148
95.1%
95.2%
4.9%
4.8%
Implied
Share
Price
$ 23.97
$ 24.70
$ 20.39
$ 20.80
$ 16.87
$ 16.52
$ 11.54
$ 11.33

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Standalone Operating Model - Assumptions - Yahoo! Inc.

Effective Tax Rate:

Blue indicates hard-coded numbers.

Lookup Cells for Public Company Comparables:

Labels for Comparables:

Lookup Cells for Precedent Transactions:

Forward Year 2 Revenue Multiple

Total Net Revenue (Ex-TAC) ($MM) - Yahoo! Inc.

Search Advertising - Yahoo! Inc.

Total # Searches - Global (MM):

Display Advertising - Yahoo! Inc.

Daily Avg. Pageviews (MM) - Yahoo! Inc.:

Pageviews (MM) - Yahoo! Inc. - Growth:

Yahoo! Inc. - Revenue Per Pageview Growth:

Subscription Fees - Yahoo! Inc.

Total Subscribers (MM):

Yahoo! Inc. - Fees Per Subscriber Growth:

Miscellaneous Revenue - Yahoo! Inc.

Affiliate Site Net Revenue ($MM):

Affiliate Site Net Revenue ($MM) - Yahoo! Inc. - Growth:

Cost of Revenue & Operating Expenses ($MM) - Yahoo! Inc.

Cost of Revenue (Ex-TAC):

Assumptions - Average Total Expenses Per Employee by Division - Yahoo! Inc.

Cost of Revenue (Ex-TAC):

Assumptions - # Employees by Division - Yahoo! Inc.

Cost of Revenue (Ex-TAC):

Cost of Revenue - Employee Expense Breakout - Yahoo! Inc.

Cost of Revenue Employees:

Cost of Revenue SBC ($MM):

Product Development - Employee Expense Breakout - Yahoo! Inc.

Product Development Employees:

Salary Per Employee:

$124,889 $128,060 $125,803 $129,577 $133,464 $137,468 $140,217 $143,022

Sales & Marketing - Employee Expense Breakout - Yahoo! Inc.

Sales & Marketing Employees:

$142,789 $148,296 $144,997 $149,347 $153,827 $158,442 $161,611 $164,843

General & Administrative - Employee Expense Breakout - Yahoo! Inc.

General & Administrative Employees:

Income Statement ($MM) - Yahoo! Inc.

Pro-Forma Net Income:

Balance Sheet ($MM) - Yahoo! Inc.

Long-Term Deferred Revenue:

Cash Flow Statement ($MM) - Yahoo! Inc.

Accounts Receivable, Net:

Cash Flow from Investing:

Cash Flow from Financing:

Operating Model Assumptions - Yahoo! Inc.

Accounts Receivable % Sales:

Accounts Payable % OpEx:

Amortization of Net Intangible Assets:

Short-Term Securities Interest Rate:

Depreciation Waterfall Schedule:

Valuation Summary - Yahoo! Inc.

Yahoo! Inc. - Range of Valuation Multiples / Premiums

Yahoo! Inc. - Implied Per Share Value Range

Public Company Comparables:

Public Company Premiums:

Public Company Comparables

Public Company Premiums

Discounted Cash Flow Analysis

5-9% Growth Rate, 11-15% Discount Rate

$ 27.43 $ 29.44 $ 30.07

Forward Year 1 TEV / EBITDA: