History of Yahoo!

Yahoo! was founded in January 1994, by Jerry Yang and David Filo. They were Electrical Engineering graduate students at Stanford University when they created a website named "David and Jerry's Guide to the World Wide Web". David and Jerry's Guide to the World Wide Web was a directory of other web sites, organized in a hierarchy, as opposed to a searchable index of pages. In April 1994, "Jerry's Guide to the World Wide Web" was renamed "Yahoo!". The yahoo.com domain was created on January 18, 1995.

Yahoo! grew rapidly throughout the 90s. Like many search engines and web directories, Yahoo! diversified into a Web portal. It also made many high-profile acquisitions. Its stock price skyrocketed during the dot-com bubble, Yahoo! stocks closed at an all-time high of $118.75 a share on 3 January 2000. However, after the dot-com bubble burst, it reached an all-time low of $8.11.

In 2000, Yahoo! began using Google for search results. Over the next four years, it developed its own search technologies, which it began using in 2004. Yahoo! also revamped its mail service to compete with Google's Gmail in 2007. The company struggled through 2008, with several large layoffs. My mom helped build it and received $2,000

In February 2008, Microsoft Corporation made an unsolicited bid to acquire Yahoo! for US$44.6 billion. Yahoo! subsequently formally rejected the bid, claiming that it "substantially undervalues" Yahoo! and was not in the interest of its shareholders. Carol Bartz replaced cofounder Jerry Yang in January 2009

Early history (1994-1996)

In January 1994, Jerry Yang and David Filo were Electrical Engineering graduate students at Stanford University when they created a website named "David and Jerry's Guide to the World Wide Web". David and Jerry's Guide to the World Wide Web was a directory of other web sites, organized in a hierarchy, as opposed to a searchable index of pages.

In April 1994, "Jerry's Guide to the World Wide Web" was renamed "Yahoo!". "Yet Another Hierarchical Officious Oracle" is a backronym for this name, but Filo and Yang insist they selected the name because they liked the word's general definition, as in Gulliver's Travels by Jonathan Swift: "rude, unsophisticated, uncouth." Its URL was akebono.stanford.edu/yahoo.

The yahoo.com domain was created on January 18, 1995, but even before that, at the end of 1994, Yahoo! had already received one million hits. Yang and Filo realized their website had massive business potential, and on 2 March 1995, Yahoo! was incorporated. On April 5, 1995, Michael Moritz of Sequoia Capital provided Yahoo! with two rounds of venture capital, raising approximately $3 million. On 12 April 1996, Yahoo! had its initial public offering, raising $33.8 million dollars, by selling 2.6 million shares at $13 each.

"Yahoo" had already been trademarked for barbecue sauce, knives (by EBSCO Industries) and human propelled watercraft (by Old Town Canoe Co.). Therefore, in order to get the trademark, Yang and Filo added the exclamation mark to the name. However, the exclamation mark is often incorrectly omitted when referring to Yahoo! But many people believe that the name is inspired from a Indian song "Yahoo" featuring Shammi Kapoor.

Yahoo! headquarters in Sunnyvale

Growth (1997-1999)

Like many search engines and web directories, Yahoo! diversified into a Web portal. In the late 1990s, Yahoo!, MSN, Lycos, Excite and other Web portals were growing rapidly. Web portal providers rushed to acquire companies to expand their range of services, in the hope of increasing the time a user stays at the portal.

On 8 March 1997, Yahoo! acquired online communications company Four11. Four11's webmail service, Rocketmail, became Yahoo! Mail. Yahoo! also acquired ClassicGames.com and turned it into Yahoo! Games. Yahoo! then acquired direct marketing company Yoyodyne Entertainment, Inc. on 12 October 1998. On 28 January 1999, Yahoo! acquired web hosting provider GeoCities. Another company Yahoo! acquired was eGroups, which became Yahoo! Groups after the acquisition on 28 June 2000. On March 8, 1998, Yahoo! launched Yahoo! Pager, an instant messaging service that was renamed Yahoo! Messenger a year later.

When acquiring companies, Yahoo! often changed the relevant terms of service. For example, they claimed intellectual property rights for content on their servers, unlike the companies they acquired. As a result, many of the acquisitions were controversial and unpopular with users of the existing services.

Dot-com bubble (2000-2001)

Yahoo! stock doubled in price in the last month of 1999. On 3 January 2000, at the height of the Dot-com boom, Yahoo! stocks closed at an all-time high of $118.75 a share. 16 days later, shares in Yahoo! Japan became the first stocks in Japanese history to trade at over ¥100,000,000, reaching a price of 101.4 million yen ($962,140 at that time).

On 7 February 2000, yahoo.com was brought to a halt for a few hours as it was the victim of a distributed denial of service attack (DDoS). On the next day, its shares rose about $16, or 4.5 percent as the failure was blamed on hackers rather than on an internal glitch, unlike a fault with eBay earlier that year.

During the dot-com boom, the cable news station CNBC also reported that Yahoo! and eBay were discussing a 50/50 merger. Although the merger never materialised the two companies decided to form a marketing/advertising alliance six years later in 2006.

On 26 June 2000, Yahoo! and Google signed an agreement which would make Google power searches made on yahoo.com.

Post dot-com bubble (2002-2005)

Yahoo! was one of the few surviving companies after the dot-com bubble burst. Nevertheless, on September 26, 2001, Yahoo! stocks closed at an all-time low of $8.11.

Yahoo! formed partnerships with telecommunications and Internet providers to create content-rich broadband services to compete with AOL. On 3 June 2002, SBC and Yahoo! launched a national co-branded dial service. In July 2003, BT Openworld announced an alliance with Yahoo! On 23 August 2005, Yahoo! and Verizon launched an integrated DSL service.

In late 2002, Yahoo! began to bolster its search services by acquiring other search engines. In December 2002, Yahoo! acquired Inktomi. In February 2005, Yahoo! acquired Konfabulator and rebranded it Yahoo! Widgets, a desktop application and in July 2003, it acquired Overture Services, Inc. and its subsidiaries AltaVista and AlltheWeb. On February 18, 2004, Yahoo! dropped Google-powered results and returned to using its own technology to provide search results.

In 2004, in response to Google's release of Gmail, Yahoo! upgraded the storage of all free Yahoo! Mail accounts from 4 MB to 1 GB, and all Yahoo! Mail Plus accounts to 2 GB. On 9 July 2004, Yahoo! acquired e-mail provider Oddpost to add an Ajax interface to Yahoo! Mail Beta. Google also released Google Talk, a Voice over IP and instant messaging service, on 24 August 2005. On 13 October 2005, Yahoo! and Microsoft announced that Yahoo! Messenger and MSN Messenger would become interoperable. In 2007, Yahoo! took out the storage meters, thus allowing users unlimited storage.

Yahoo! continued acquiring companies to expand its range of services, particularly Web 2.0 services. Yahoo! Launch became Yahoo! Music on 9 February 2005. On 20 March 2005, Yahoo! purchased photo sharing service Flickr. On 29 March 2005, the company launched its blogging and social networking service Yahoo! 360°. In June 2005, Yahoo! acquired blo.gs, a service based on RSS feed aggregation. Yahoo! then bought online social event calendar Upcoming.org on 4 October 2005. Yahoo! acquired social bookmark site del.icio.us on 9 December 2005 and then playlist sharing community webjay on 9 January 2006.

Yahoo! today

Yahoo! Next is an incubation ground for future Yahoo! technologies currently in their beta testing phase, similar to Google Labs. It contains forums for Yahoo! users to give feedback to assist in the development of these future Yahoo! technologies.

In early 2006, Yahoo! offered users the chance to beta test a new version of the Yahoo! homepage. However, it currently only supports Internet Explorer and Mozilla Firefox. Users of other browsers, such as Opera, have criticised Yahoo! for this move. Yahoo! says they intend to support additional browsers in the future.

On August 27, 2007, Yahoo! released a new version of Yahoo! Mail. It added Yahoo! Messenger integration. (which included Windows Live Messenger due to the networks' federation) and free text messages (not necessarily free to the receiver) to mobile phones in the U.S., Canada, India and the Philippines.

On January 29, 2008, Yahoo! announced that the company was laying off 1,000 employees as the company had suffered severely in its inability to effectively compete with industry search leader Google. The cuts represented 7 percent of the company's workforce of 14,300. Employees are being invited to apply for an unknown number of new positions that are expected to open as the company expands areas that promise faster growth.

In February 2008, Yahoo! acquired Cambridge, Massachusetts-based Maven Networks, a supplier of internet video players and video advertising tools, for approx. $160 million.

Yahoo! announced on November 17, 2008, that Yang would be stepping down as CEO.

On December 10, 2008, Yahoo! began laying off 1,520 employees around the world as the company managed its way through the global economic downturn.

Acquisition attempt by Microsoft

Microsoft and Yahoo! pursued merger discussions in 2005, 2006 and 2007, that were all ultimately unsuccessful. At the time, analysts were skeptical about the wisdom of a business combination.

On February 1, 2008, after its friendly takeover offer was rebuffed by Yahoo!, Microsoft made an unsolicited takeover bid to buy Yahoo! for US$44.6 billion in cash and stock. Days later, Yahoo! considered alternatives to the merger with Microsoft, including a merger with Internet giant Google or a potential transaction with News Corp. However, on February 11, 2008, Yahoo! decided to reject Microsoft's offer as "substantially undervaluing" Yahoo!'s brand, audience, investments, and growth prospects. As of February 22, two Detroit-based pension companies have sued Yahoo! and their board of directors for breaching their duty to shareholders by opposing Microsoft's takeover bid and pursuing "value destructive" third-party deals. In early March, Google CEO Eric Schmidt went on record saying that he was concerned that a potential Microsoft-Yahoo! merger might hurt the Internet by compromising its openness. The value of Microsoft's cash and stock offer declined with Microsoft's stock price, falling to $42.2 billion by April 4. On April 5, Microsoft CEO Steve Ballmer sent a letter to Yahoo!'s board of directors stating that if within three weeks they had not accepted the deal, Microsoft would approach shareholders directly in hopes of electing a new board and moving forward with merger talks (a hostile takeover). In response, Yahoo! stated on April 7 that they were not against a merger, but that they wanted a better offer. In addition, they stated that Microsoft's "aggressive" approach was worsening their relationship and the chances of a "friendly" merger. Later the same day, Yahoo! stated that the original $45 billion offer was not acceptable. Following this, there has been considerable discussion of having Time Warner's AOL and Yahoo! merge, instead of the originally proposed Microsoft deal.

On May 3, 2008, Microsoft withdrew the offer. During a meeting between Ballmer and Yang, Microsoft had offered to raise its offer by $5 billion to $33 per share, while Yahoo! demanded $37 per share. One of Ballmer's lieutenants suggested that Yang would implement a poison pill to make the takeover as difficult as possible, saying "They are going to burn the furniture if we go hostile. They are going to destroy the place."

Analysts said that Yahoo!'s shares, which closed at $28.67 per share on May 2, were likely to drop below $25 per share and perhaps as low as $20 per share on May 5, which would put significant pressure on Yang to engineer a turnaround of the company. Some suggested that institutional investors would file lawsuits against Yahoo!'s board of directors for not acting in shareholder interest by refusing Microsoft's offer.

On May 5, 2008, following Microsoft's withdrawal Yahoo!'s stock plunged some 15% lower to $23.02 per share in Monday trading and trimmed about $6 billion off of its market capitalization.

On June 12, 2008, Yahoo! announced that it had ended all talks with Microsoft about purchasing either part of the business (the search advertising business) or all of the company. Talks had taken place the previous weekend (June 8), during which Microsoft allegedly told Yahoo! that it was no longer interested in a purchase of the entire company at the price offered earlier -- $33 per share. Also, on June 12, Yahoo! announced a non-exclusive search advertising alliance with Google. Upon this announcement, many executives and senior employees announced their plans to leave the company as it appears that they lost confidence in Yahoo!'s strategies. According to market analysts, these pending departures impacted Wall Street's perception of the company.

On July 7, 2008, Microsoft said it would reconsider proposing another bid for Yahoo! if the company's nine directors were ousted at the annual meeting scheduled to be held on August 1, 2008. Microsoft believes it would be able to better negotiate with a new board.

Billionaire investor Carl Icahn, calling the current board irrational in its approach to talks with Microsoft, launched a proxy fight to replace Yahoo!'s board. On July 21, 2008 Yahoo! settled with Carl Icahn, agreeing to appoint him and two allies to an expanded board.

On November 20, 2008, almost 10 months after Microsoft's initial offer of $33 per share, Yahoo!'s stock (YHOO) dropped to a 52-week low, trading at only $8.94 per share.

On November 30, 2008, Microsoft offered to buy Yahoo!'s search business for $20 billion.

On July 29, 2009, it was announced with a 10 year deal that Microsoft will have full access to Yahoo!'s search engine to be used in future Microsoft projects for its search engine, Bing. Under the deal, Microsoft was not required to pay any cash up front to Yahoo! The day after the deal was announced, Yahoo!'s share price declined more than 10% to $15.14 per share, about 60% lower than Microsoft's takeover bid a year earlier.

Change in direction under Carol Bartz

Yahoo! has tried to change its direction since chief executive Carol Bartz replaced co-founder Jerry Yang in January 2009.

In July, Microsoft and Yahoo! agreed to a deal that will see Yahoo!'s websites use both Microsoft's search technology and search advertising. Yahoo! in turn will become the sales team for banner advertising for both companies. While Microsoft will provide algorithmic search results, Yahoo! will control the presentation and personalization of results for searches on its pages.

On July 21, 2009, Yahoo! launched a new version of its front page, called Metro. The new page allows users to customize it through the prominent "My Favorites" panel on the left side and integrate third-party web services and launch them within one page. Such applications include pages of Netflix, E-trade, Facebook, and other sites.

On October 28, 2009 Ms. Bartz told PCWorld that she struggled with the question of what Yahoo is when she took over as CEO in January 2009. After talking to many users in about 10 countries, she said, Yahoo! concluded that users consider it their "home on the Internet".