Yahoo! Inc. | Phenomenal Growth in the 2000s
Phenomenal Growth in the 2000s
By the end of the 20th century, the computer industry, and the Internet industry in particular, was becoming increasingly inundated with new players. In July 1998, NBC had purchased a 19 percent interest in Snap!, another portal operated by CNET Inc. Disney followed suit by grabbing a 43 percent stake in Infoseek Corporation. At Home Corporation purchased Excite, Inc., and Microsoft Corporation increased promotion of its MSN portal. Even America Online made moves to increase its scope through the acquisition of Netscape and its Netcenter portal. Nobody wanted to be left out of the Internet game, since many analysts predicted that it would be the next true media industry.
Yahoo! tried to maintain its large share of the market by continuing to focus on its users and their satisfaction. Recognizing that it would only take one click of a computer mouse for a Yahoo! user to defect to one of its competitors, the company began to provide its users with even more features and services. In January 1999, Yahoo! announced the purchase of GeoCities, the third most-visited Web site in December 1998 (directly behind top-rated AOL.com) and second-rated Yahoo.com. The GeoCities site was a creator of electronic communities for people. Based on people's interests, GeoCities allowed its users to set up their own personal home pages. Yahoo! hoped that the acquisition of GeoCities would bring many of that site's users to Yahoo!, and vice versa.
The new century saw a dramatic rise in both sales and profits for Yahoo! In 2001 the company had sales of $717 million; in 2002, $953 million; in 2003, $1.6 billion; and in 2004, $3.5 billion, a one-year increase of 120 percent. This period began with a loss of $92.8 million in 2001. In 2002, however, the company posted a net income of $42.8 million. This rose in 2003 to $237.9 million and to a healthy $839.6 million net income in 2004. Such phenomenal growth was fueled by a number of factors, including steady acquisitions of other Internet companies. During the years 2000 to 2004, Yahoo! acquired thirteen companies: Arthas.com, eGroups, Kimo, Sold.com, Launch Media, HotJobs, Inktomi, Overture Services, Beijing 3721 Technology Co. Ltd., FareChase, OddPost Inc., Music-Match, and Kelkoo. Web traffic increases have also played a part. As of March 2004, the Yahoo! network of properties received some 2.4 billion page views per day.
A flurry of new joint ventures also promised continuing growth for Yahoo! In November 2001, the company teamed with SBC Communications to offer co-branded DSL and Dial services. This partnership was reaffirmed in November 2004 when the two companies agreed to a multi-year extension of their venture. They planned to move beyond products offered only on a home computer to products for home television and audio systems, Cingular wireless phones, SBC FreedomLink Wi-Fi, and SBC Home Networking equipment. Yahoo! CEO Terry Semel explained: "The new services that will be developed out of this expanded relationship represent the next step in Yahoo!'s strategy to further deepen consumer relationships by extending our products and services beyond the desktop. SBC and Yahoo! are putting consumers in the driver's seat, delivering what they want—when, how and where they want it." In December 2004, the company teamed with Nextel Communications Inc. to offer a group of Yahoo! products and services, including e-mail, instant messaging, games, and news content, on Nextel handheld devices. The venture combined Yahoo!'s wireless messaging capabilities with Nextel's nationwide network. In January 2005, the company signed a deal with Verizon Communications Inc. to offer Verizon's broadband customers a new Verizon Yahoo! portal. "We are very excited to team up with Verizon, the largest communications company in the U.S., as their partner of choice, in order to provide Verizon's subscribers with a compelling new Verizon Yahoo! offering," said Dan Rosensweig, Yahoo!'s chief operating officer. With such ambitious plans for the future, growth projections for Yahoo! remained optimistic.