Yahoo! (YHOO)

Significant acquisitions and strategic investments completed in the last three years include the following:

·  March 2003 — Inktomi, a provider of Internet search and paid inclusion services for a total purchase price of $290 million;

·  October 2003 — Overture, a provider of commercial search services including sponsored search services for a total purchase price of $1.7 billion;

·  January 2004 — 3721, a Hong Kong-based software development company focused on keyword search technology for a total purchase price of $95 million.  In October 2005, we subsequently divested 3721 as part of Yahoo! China which was partial consideration for our investment in Alibaba;

·  April 2004 — Kelkoo, a European online comparison shopping service for a total purchase price of $571 million;

·  October 2004 — Musicmatch, a provider of personalized music software and services for a total purchase price of $158 million;

·  February 2005 — Verdisoft, a software development company for a total purchase price of $58 million as well as restricted stock valued at $35 million;

·  October 2005 — Strategic investment of approximately 46 percent (40 percent on a fully diluted basis) of the outstanding common stock of Alibaba, an e-commerce company based in China in exchange for $1.0 billion in cash and the contribution of Yahoo! China; and

·  November 2005 — Purchase of the remaining outstanding shares of Yahoo! Europe and Yahoo! Korea for a total purchase price of $501 million.

See Note 3 — “Acquisitions” in the consolidated financial statements for additional information relating to these and other acquisitions.

We expect to continue to evaluate possible acquisitions of, or strategic investments in, businesses, products, and technologies that are complementary to our business, which may require the use of cash.

Note 3—Acquisitions

During the three months ended March 31, 2005 the Company acquired a software development company. The transaction was treated as an asset acquisition for accounting purposes and therefore no goodwill was recorded. The total estimated purchase price was approximately $58 million and consisted of $54 million in cash consideration, $3 million related to stock options exchanged and $1 million of direct transaction costs. For accounting purposes, approximately $93 million was allocated to amortizable intangible assets, with lives not exceeding three years, $37 million to liabilities, primarily deferred income tax liabilities, and $2 million to deferred stock-based compensation. In connection with the acquisition, the Company also issued approximately 1 million shares of restricted stock valued at $35 million that will be recognized as expense over three years.

In January 2004, the Company acquired 3721 Network Software Company Limited ("3721"), a Hong Kong-based software development company, for approximately $74 million consisting of $51 million of cash, $2 million related to stock options exchanged, direct transaction costs of $1 million and $20 million related to a contingent earnout that will be paid in 2005. In April 2004, the Company acquired Kelkoo S. A. ("Kelkoo"), a leading European online comparison shopping service, for approximately $571 million consisting of $562 million of cash, $6 million in incurred liabilities and direct transaction costs of $3 million. In October 2004, the Company acquired Musicmatch, Inc. ("Musicmatch"), a leading provider of personalized music software and services, for approximately $157 million consisting of $156 million of cash and direct transaction costs of $1 million. The Company also completed a number of smaller acquisitions during the last twelve months. The results of operations of companies acquired have been included in the Company's consolidated statements of operations since the closing dates of the acquisitions. Pro forma results of operations have not been presented for the acquisitions completed during the last twelve months as the results of the acquired companies either individually or in the aggregate were not material to the Company. For details of these acquisitions see Note 3—"Acquisitions" in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

Acquisitions

In the two years ended December 31, 2004, the aggregate purchase price for all acquisitions was approximately $2.9 billion of which $2.1 billion was allocated to goodwill, $557 million to amortizable intangibles and the residual to net tangible assets.

Acquisitions completed in the last two years include the following:

•

March 2003 – Inktomi, a provider of Web search and paid inclusion services for a total purchase price of $290 million;



•

October 2003 – Overture, a provider of commercial search services, including sponsored search services for a total purchase price of $1,732 million;



•

January 2004 – 3721, a Hong Kong-based software development company; focused on keyword search technology for a total purchase price of $74 million;



•

April 2004 – Kelkoo, a European online comparison shopping service for a total purchase price of $571 million;



•

October 2004 – Musicmatch, a provider of personalized music software and services for a total purchase price of $157 million.

See Note 3 – "Acquisitions" in the consolidated financial statements for additional information relating to these acquisitions.

We may continue to evaluate possible acquisitions of, or investments in businesses, products, and technologies that are complementary to our business, which may require the use of cash.