Yahoo! Inc. (YHOO)
Q4 2009 Earnings Call Transcript
January 26, 2010 5:00 p.m. ET

Executives

Marta Nicols – Investor Relations
Carol A. Bartz – President, Chief Executive Officer & Director
Timothy R. Morse – Chief Financial Officer

Analysts

Imran Khan – JPMorgan Chase & Co.
Sandeep Aggarwal - Collins Stewart LLC
Benjamin Schachter - Broadpoint AmTech
Mark Mahaney - Citigroup Smith Barney
Jason Helfstein – Oppenheimer & Co.
James Mitchell – Goldman Sachs
Justin Post – Bank of America/Merrill Lynch
Douglas Anmuth - Barclays Capital
Brian Pitz – UBS
Scott Kessler – Standard & Poor’s Equity
Youssef Squali - Jefferies & Company, Inc.
Jeetil Patel – Deutsche Bank
Heath Terry – FBR Capital Markets
Mary Meeker – Morgan Stanley
Scott Devitt – Morgan Stanley

Presentation

Operator

Good afternoon, ladies and gentlemen and welcome to the Yahoo! Q4 2009 earnings conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now like to turn the call over to Ms. Marta Nicols. Ms. Nicols, you may begin.

Marta Nicols

Good afternoon and welcome to Yahoo!’s fourth quarter 2009 earnings conference call. On the call today will be Carol Bartz, Chief Executive Officer and Tim Morse, Chief Financial Officer.

Before we begin, I would like to remind you that today’s call will contain forward-looking statements concerning matters such as our expected financial and operational performance, our marketing and product plans, cost initiatives, planned investments, technology improvements and corporate strategy, as well as our expectations for the economy in general and online advertising in particular. Actual results may differ materially from the results predicted in our statements and reported results should not be considered indicative of future performance.

The potential risks and uncertainties that could cause our business and financial results to differ materially from our forward-looking statements are described in our Form 10-Q filed with the SEC on November 6, 2009, as well as in the earnings release included as Exhibit 99.1 to the Form 8-K we furnished today to the SEC. All information discussed on this call is as of today, January 26, 2010 and Yahoo! does not intend and undertakes no duty to update this information to reflect future events or circumstances.

On today’s call we will also discuss some non-GAAP financial measures as we talk about the company''s performance. These may include operating income before depreciation, amortization and stock-based compensation expense, which will be referred to as operating cash flow; revenue excluding traffic acquisition costs, which we will refer to as revenue ex-TAC; non-GAAP net income and non-GAAP net income per share. Reconciliations of these non-GAAP measures to the GAAP measures we consider most comparable can be found on our corporate website, info.yahoo.com, under Investor Relations.

We will have prepared remarks that will last about 30 minutes and then we will have a brief Q&A session with Carol and Tim. And now I would like to turn the call over to Carol.

Carol A. Bartz

Thanks Marta and welcome back. Good afternoon and thank all of you for joining us. Today we are going to briefly recap 2009 and the progress we made during a year of significant change at Yahoo!, talk about our financial results in detail, address some of the key topics of interest for Yahoo! and our industry and outline our strategy and some of our plans for 2010.

I recently celebrated my one-year anniversary with the company and what a ride it has been. In fact I might say I made it through my first year with the company and it was a wonderful ride. Very bumpy and frankly like many other business leaders I am very, very glad it is over. But it was also a great opportunity to restructure, reset and reposition Yahoo! for the next era of growth.

I view my first year at Yahoo! in three phases. First, I took a look at our consumers and the experience we provide them. I realized that we had to invest in the products that users engage with the most like the homepage, mail, messenger, news, sports, finance and entertainment. We also decided to close down products that didn’t drive engagement or proudly represent Yahoo! In that same vein I even asked employees to sign their names next to projects they have done and if they can’t then they need to go back and make it right so they are proud of what they deliver.

The second phase was listening to advertisers. Working to improve our relationships with them and to continue to deliver quality data, insight and innovative ad platforms. With 600 million users on Yahoo! branded sites we have one of the largest, most valuable and highest quality audiences on the Internet and we are constantly coming up with new ways to connect advertisers with the consumers they seek.

Then came the third phase. I really started to focus on how we generate value. For us it is the vast amount of data we gather and use to deliver a better, more personal experience for users and a better, more targeted audience for our advertisers.