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                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                   FORM 10-K
 
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
 
                         COMMISSION FILE NUMBER 0-28018
                            ------------------------
 
                                  YAHOO! INC.
 
             (Exact name of Registrant as specified in its charter)
 
                 CALIFORNIA                            77-0398689
      (State or other jurisdiction of        (I.R.S. Employer Identification
       incorporation or organization)                     No.)
 
                            3420 CENTRAL EXPRESSWAY
                         SANTA CLARA, CALIFORNIA 95051
                    (Address of principal executive offices)
 
       Registrant's telephone number, including area code: (408) 731-3300
 
          Securities registered pursuant to Section 12(b) of the Act:
 
                                      NONE
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                        COMMON STOCK, $.00067 PAR VALUE
                                (Title of Class)
                            ------------------------
 
    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
 
    As of February 27, 1998, the aggregate market value of voting stock held by
non-affiliates of the Registrant, based upon the closing sales price for the
Registrant's Common Stock, as reported in the NASDAQ National Market System, was
$1,419,023,000. Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for any other
purpose.
 
    The number of shares of the Registrant's Common Stock outstanding as of
February 27, 1998 was 45,829,896.
 
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                      DOCUMENTS INCORPORATED BY REFERENCE
 
    The following documents (or parts thereof) are incorporated by reference
into the following parts of this Form 10-K:
 
    (1) 1997 Annual Report to Shareholders -- Items 5, 6, 7, 8 and 14(a)(1).
 
    (2) Proxy Statement for the 1998 Annual Meeting of Shareholders -- Items 10,
       11, 12 and 13.
 

                                     PART I
 

ITEM 1. BUSINESS
 
    EXCEPT FOR HISTORICAL INFORMATION, THE FOLLOWING DESCRIPTION OF THE
COMPANY'S BUSINESS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
SET FORTH IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
FACTORS, INCLUDING THOSE SET FORTH IN THIS ANNUAL REPORT UNDER THE HEADING,
"RISK FACTORS."
 
OVERVIEW
 
    Yahoo! Inc. (including its subsidiaries, "Yahoo!" or the "Company") is a
global Internet media company that offers a network of branded World Wide Web
(the "Web") programming that serves millions of users daily. As the first online
navigational guide to the Web, WWW.YAHOO.COM is the single largest guide in
terms of traffic, advertising, household and business user reach, and is one of
the most recognized brands associated with the Internet. The Company provides
targeted Internet resources and communications services for a broad range of
audiences, based on demographic, key-subject and geographic interests. Yahoo!
was developed and first made available in 1994 by the Company's founders, David
Filo and Jerry Yang, while they were graduate students at Stanford University.
The Company was incorporated in California on March 5, 1995 and commenced
operations on that date. In August 1995, the Company commenced selling
advertisements on its Web pages and recognized its initial revenues. In April
1996, the Company completed its initial public offering. During October 1997,
the Company completed the acquisition of Four11 Corporation, a privately-held
online communications and Internet directory company.
 
    Under the Yahoo! brand, the Company provides intuitive, context-based guides
to online content, Web search capabilities, aggregated third-party content,
email, and community and personalization features. In December 1997, Internet
users viewed an average of approximately 65 million Web pages per day on Yahoo!
and other Yahoo!-branded online media properties.
 
    The Company makes its properties available without charge to users, and
generates revenue primarily through the sale of banner advertisements on
short-term contracts. During 1997, the Company also began selling a combination
of sponsorship and banner advertising contracts. Advertising on domestic Yahoo!
properties is sold through the Company's internal advertising sales force and
advertising on international Yahoo! properties is sold through a combination of
the Company's internal advertising sales force and third party agents. During
1997, approximately 2,600 customers advertised on Yahoo! properties.
Additionally during 1997, Yahoo! received revenues from electronic commerce
transactions, although not significant in amount.
 
PRODUCTS AND MEDIA PROPERTIES
 
YAHOO! MAIN SITE
 
    The Company's principal offering, Yahoo!, provides the flagship product for
its global internet media network that offers branded programming and services
used by millions of people each day. Yahoo! offers a comprehensive, intuitive
and user-friendly online guide to Web navigation, aggregated information
content, communication services, a strong user community, and commerce. Yahoo!
includes a hierarchical,
 
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subject-based directory of Web sites, which enables Web users to locate and
access desired information and services through hypertext links included in the
directory. As of December 1997, Yahoo! organized over 750,000 Web site listings
under the following 14 principal categories: Arts and Humanities, Business and
Economy, Computers and Internet, Education, Entertainment, Government, Health,
News and Media, Recreation and Sports, Reference, Regional, Science, Social
Science, and Society and Culture. Web sites are further organized under these
major headings by hierarchical subcategories. Users can browse the directory
listings by subject matter through a rapid keyword search request that scans the
contents of the entire directory or any subcategory within Yahoo!. The basic Web
site listings are in many cases supplemented with brief descriptive commentary,
and a special symbol is used to indicate listings that, in the view of the
Company's editorial staff, provide unique presentation or content within their
topic area. Yahoo! also provides Web-wide text search results from the AltaVista
search engine. These results are integrated into the directory search function
so that Web-wide search results are presented in the absence of relevant
listings from the Yahoo! directory.
 
    Yahoo! also incorporates a rich set of current and reference information
from leading content providers, including real-time news (provided by Reuters
New Media), stock quotes (Reuters), corporate earnings reports (Zacks), mutual
fund holdings (CDA/Wiesenberger), stock investing commentary (Motley Fool),
sports scores (ESPN SportsTicker), sports commentary (The Sporting News),
weather information (Weathernews, Inc), and entertainment industry gossip (E!
Online). Yahoo! also organizes hypertext links to Web sites featuring current
events and issues of interest, such as elections, holidays, political issues and
major weather conditions, organized in a topical format and updated regularly.
Other content offered by Yahoo! includes Yellow Pages, maps, driving directions,
and classifieds listings.
 
    Yahoo! has also established itself as a leading communications hub on the
Internet. Through its integrated chat service and message boards, Yahoo! members
can contact each other as well as communicate with the Web community at large.
Yahoo! has built a community of members who register with Yahoo!, establish a
personalized version of Yahoo!, use Web-based Yahoo! Mail for email, and submit
classifieds advertisements.
 
    In addition, one of the Company's primary strategies is to provide a
marketplace for commerce on the Web. Through sponsorship arrangements with
premier merchants, Yahoo! offers its members the opportunity to purchase goods
and services such as books (Amazon.com), music (CDNow), videos (Reel.com,
Videoserve), automotive services (Autoweb, Microsoft Carpoint), mortgages
(E-Loan), and brokerage services (DLJ direct, E*Trade, Ameritrade, Datek).
 
TARGETED ONLINE PROPERTIES
 
    The comprehensive subject-based, demographic and geographic listings in
Yahoo! have provided a platform for the Company to develop and offer independent
navigational tools and information services that are targeted to particular
interests and Web users and are presented within the familiar Yahoo! framework
and style. The Company works with appropriate strategic partners who develop
localized or targeted content and, in some cases, promote and sell advertising.
The Company also has developed Web-based media properties that allow the user to
personalize and tailor the presentation of information and navigational
resources. The Company believes that, if implemented successfully, these
services further strengthen customer loyalty to the Yahoo! brand and create
additional revenue opportunities through a broader end user and advertiser base
and increasingly targeted advertising opportunities.
 
GEOGRAPHIC PROPERTIES
 
    The Company seeks to build upon its global user base by developing Internet
properties focused on geographic regions, which include foreign countries as
well as domestic major metropolitan areas. As of the date of this Report, the
Company had launched twenty-three geographically targeted Web properties.
 
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    INTERNATIONAL ONLINE PROPERTIES.  The Company has developed 11 international
online properties including localized versions of Yahoo! in Australia/New
Zealand, Canada, Denmark, France, Germany, Japan, Korea, Norway, Singapore
(English language), Sweden, and the United Kingdom/Ireland. For international
properties, the Company has relied primarily upon the editorial efforts of third
parties in such geographical areas to localize Yahoo! for language, customs and
cultural interests, language-specific search capabilities, and to maintain Web
site listings that are relevant to the country or metropolitan areas.
 
      YAHOO! JAPAN -- Yahoo!'s first geographic property was developed during
1996 through a joint venture with SOFTBANK, a holder of approximately 31% of the
Company's Common Stock at December 31, 1997 and Japan's largest distributor of
computer software, peripherals and systems, as well as one of Japan's largest
publishers of computer-related magazines and books. Yahoo! Japan was formed to
establish and manage in Japan a Japanese version of Yahoo!, develop related
Japanese online navigational services, and conduct other related business.
Yahoo! Japan completed its initial public offering on the Japanese
over-the-counter market in November 1997. At December 31, 1997, the Company
owned approximately 34% of Yahoo! Japan.
 
      YAHOO! EUROPE -- During November 1996, the Company signed a joint venture
agreement with a subsidiary of SOFTBANK whereby separate companies were formed
in Germany, the United Kingdom, and France ("Yahoo! Europe") to establish and
manage versions of Yahoo! for those countries, develop related online
navigational services, and conduct other related business. The Company owns
approximately 70% of each of the Yahoo! Europe entities.
 
      YAHOO! KOREA -- During August 1997, the Company signed a joint venture
agreement with SOFTBANK and other SOFTBANK affiliate companies to develop and
operate Yahoo! Korea, a Korean version of Yahoo!, to develop related Korean
online navigational services, and to conduct other related business. The Company
owns approximately 60% of the joint venture.
 
    REGIONAL ONLINE PROPERTIES.  As of the date of this Report, the Company
offered twelve regional Yahoo! properties for Atlanta, Austin, Boston, Chicago,
Dallas/Ft. Worth, Los Angeles, Miami, Minneapolis, New York, the San Francisco
Bay Area, Seattle, and Washington D.C. These offerings, which are developed and
maintained by the Company, include listings from the main Yahoo! service
selected and organized on the basis of regional focus, as well as aggregated
local content, such as local news, weather, traffic and Yellow Pages listings
licensed from third-party content providers, including local television and
radio stations, newspapers and entertainment guides, and localized community
features, such as bulletin boards, personals and classifieds listings.
 
    LOCAL ONLINE PROPERTIES.  As an extension of Yahoo!'s comprehensive regional
programming, the Company offers Yahoo! Get Local, which provides users with
local online resources for more than 30,000 U.S. cities which is organized and
presented to users on the basis of the user's zip code. Get Local automatically
creates a specialized page for the chosen locale with city and regional news,
scores from local sports teams, weather reports, and zip code-specific links to
a wide variety of resources for entertainment, businesses and activities that
affect the local area. The Company believes that these local properties provide
local advertisers a cost-effective means of targeting their online audience, as
well as allowing national advertisers to target key geographic markets.
 
SUBJECT-BASED PROPERTIES
 
    The Company has developed subject-based Internet properties, including
Yahoo! Sports (sports scores and information), Yahoo! Autos (new and used car
buying information), Yahoo! Travel (travel arrangement and booking information),
Yahoo! Games (Java-based games), and Yahoo! Finance (stock quotes and company
and industry information). The Company also developed the VISA Shopping Guide by
Yahoo! focused on Internet resources for online shopping for goods and services
and MTV/Yahoo! UnfURLed focused on music-related Web resources, produced in
conjunction with MTV Networks. Yahoo! intends to continue to seek relationships
with leading content providers to develop additional
 
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Internet properties focused on interest areas that the Company believes to be
desirable advertising vehicles.
 
DEMOGRAPHIC PROPERTIES
 
    The Company also has developed and offers online properties focused on
targeted demographic groups, initially children. In March 1996, the Company
introduced Yahooligans!, a version of Yahoo! designed for children aged 7 to 12.
The Web sites included in Yahooligans! are selected by professional educators as
appropriate for children. In March 1998, the Company launched Yahoo! Seniors'
Guide which is designed for the growing population of active, older adults. The
Company seeks to develop additional Internet properties that are focused on
specific demographic groups which provide attractive advertising opportunities.
 
PERSONALIZED INFORMATION SERVICES
 
    In July 1996, the Company launched My Yahoo!, a personalized Web information
service. My Yahoo! allows users to create a personal profile which directly
organizes and delivers to the user information of personal interest such as
selected stock quotes, stock portfolio management, local and national headlines,
local and national weather and sports news, as well as the user's favorite Web
searches and Yahoo! categories. The Company has developed a universal
registration system that permits Yahoo! users to easily use several Yahoo!
services under a single username, including My Yahoo!, Yahoo! Chat, Yahoo! Mail,
Yahoo! Portfolios, Yahoo! Message Boards, and Yahoo! Classifieds. The Company
has also developed and operates a property known as Netscape Guide By Yahoo!
which is a personalized navigation and information service made available in
connection with Netscape's Web site and browser. See "Strategic Alliances --
Distribution Alliances -- Leading Web Sites and Browsers."
 
PRINT AND OTHER OFFLINE PROPERTIES
 
    The Company seeks to extend the Yahoo! brand into print and other offline
media, primarily for the purpose of promoting the brand and creating greater
demand for the Company's online properties. The Company continued its agreement
with Ziff-Davis Publishing Company, a subsidiary of SOFTBANK, for the
publication of Yahoo! Internet Life, a monthly print magazine companion to the
online magazine. The Company also has entered into a multiple-book publishing
arrangement with IDG Books Worldwide, Inc., a leading publisher of computer
books and magazines. Under this agreement, several guides to the Internet have
been published, including Yahoo! Unplugged, Yahoo! Wild Web Rides, and
Yahooligans! Way Cool Web Sites. Royalty revenues under these arrangements have
been and are expected to continue to be nominal.
 
ADVERTISING SALES AND ELECTRONIC COMMERCE
 
    The Company has derived substantially all of its revenues to date from the
sale of banner advertisements. Other revenue sources include placement fees,
promotions, and transactions on Yahoo! properties. The Company's advertising
products currently consist primarily of banner advertisements that appear on
pages within Yahoo! properties, higher profile promotional sponsorships that are
typically focused on a particular event, such as a sweepstakes, and merchant
buttons on targeted advertising inventory encouraging users to complete a
transaction. Hypertext links are embedded in each banner advertisement or button
to provide the user with instant access to the advertiser's Web site, to obtain
additional information, or to purchase products and services.
 
    Although a substantial majority of advertising purchases on Yahoo!
properties are for general rotation on pages within the services, the Company
seeks to offer increasingly targeted properties that will deliver greater value
to advertisers through more focused audiences. By developing an extended family
of Yahoo!-branded properties, the Company seeks to offer advertisers a wide
range of placement options.
 
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ADVERTISING SALES ORGANIZATION
 
    In late 1996, the Company established an internal sales force. As of
February 28, 1998, advertising sales professionals were employed in eight
locations across the U.S., including Atlanta, Boston, Chicago, Dallas, Detroit,
Los Angeles, New York, and San Francisco. The Company's advertising sales
organization consults regularly with agencies and customers on design and
placement of Web-based advertising, and provides clients with measurement and
analysis of advertising effectiveness.
 
    In international markets, Yahoo!'s advertising sales are handled by a
combination of the Company's internal sales representatives and, in some
countries, the international affiliate responsible for localization and
operation of the service within the territory.
 
ADVERTISING PRICING
 
    The Company's contracts with advertisers typically guarantee the advertiser
a minimum number of "impressions," or times that an advertisement appears in
pages viewed by users of Yahoo! properties. Yahoo!'s standard rates for banner
advertisements currently range from $0.02 to $0.07 per impression, depending
upon location of the advertisement within Yahoo!'s properties and the extent to
which it is targeted for a particular audience. Discounts may be provided from
standard rates for high volume, longer-term contracts.
 
    The Company also offers context-based keyword advertising, which permits
advertisers to target users based upon specified keywords that a user enters
when searching within Yahoo!. For example, if a user enters the term
"automobile" or "car," an automobile manufacturer's advertisement could appear
on pages displaying the results of such a search. The Company's standard rate
for context-based keyword advertisements currently ranges from $0.03 to $0.08
per impression. Discounts may be provided from standard rates for high volume,
longer-term contracts.
 
    In addition to banner advertising, the Company offers premium positions on
the top page of Yahoo! properties that typically are used in connection with
promotions and special events. The Company's strategy is to use these
sponsorship positions for high-profile promotions that can also result in
additional visibility and awareness for Yahoo!. Yahoo! has also created special
holiday- and event-oriented promotional spaces for holidays and events such as
Back to School, Halloween, Mother's Day, Father's Day, Valentine's Day, Home
Improvement, and Christmas.
 
STRATEGIC ALLIANCES
 
    In order to serve users more effectively and to extend the Yahoo! brand to
new media properties, the Company has entered into strategic relationships with
business partners who offer content, technology, and distribution capabilities.
 
CONTENT AND COMMERCE ALLIANCES
 
    Yahoo! has entered into strategic alliances with selected leading providers
- - -- including Ziff-Davis, SOFTBANK, Rogers Communications, Reuters, Granite
Broadcasting, Sporting News, ESPN SportsTicker, E! Online, MSNBC, MTV, and the
Motley Fool -- which permit the Company to bring Yahoo!-branded, targeted media
products to market more quickly, while avoiding the cost of producing original
editorial content.
 
DISTRIBUTION ALLIANCES
 
    In order to broaden Yahoo!'s user base, the Company has established
co-promotional relationships with commercial online services, Internet access
providers and operators of leading Web sites. The Company believes these
arrangements are important to the promotion of Yahoo!, particularly among new
 
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Web users who may first access the Web through these services or Web sites.
These co-promotional arrangements typically are terminable upon short or no
notice.
 
    LEADING WEB SITES AND BROWSERS.  The Company seeks to establish
co-promotional relationships with the operators of leading Web sites in order to
draw additional users to Yahoo!. During March 1997, the Company entered into an
agreement with Netscape Communications Corporation ("Netscape") whereby it was
designated as one of four "Premier Providers" of domestic navigational services
within the Netscape Web site. Under the terms of the agreement, the Company is
required to make minimum payments of $3,200,000 in cash and is obligated to
provide $1,500,000 in the Company's advertising services in return for certain
minimum guaranteed exposures over the course of the one-year term of the
agreement, which commenced in May 1997. The minimum payments are amortized over
the term of the agreement. To the extent that the minimum guaranteed exposures
are exceeded, the Company is obligated to remit additional payments to Netscape.
 
    During June 1997, the Company entered into certain agreements with Netscape
whereby it was designated as a Premier Provider of international search and
navigational guide services for the Netscape Net Search program. Under the terms
of the agreements, the Company will provide services in 12 countries, including
Australia, Denmark, France, Germany, Italy, Japan, Korea, the Netherlands,
Portugal, Spain, Sweden, and the United Kingdom. Under the terms of the
agreements, the Company made a cash payment of $2,900,000 in July 1997 and is
obligated to provide $100,000 in the Company's advertising services in return
for certain minimum guaranteed exposures over the course of the one-year term of
the agreements, which commenced in July 1997. The Company amortizes the total
cost of these agreements over their one-year term.
 
    During March 1997, the Company entered into certain agreements with Netscape
under which the Company has developed and operates an Internet information
navigation service called Netscape Guide by Yahoo! (the "Guide"). The
personalized guide is designed to provide Internet users with a central
comprehensive source of sites, news and other valuable services on the Web.
Netscape Guide by Yahoo! is accessible through the Netscape Internet site and
from the tool bar of Netscape Communicator by clicking on the "Guide" button or
a comparably titled button. The navigational service provides users with central
access to eight of the most popular information categories on the Web. The
Co-Marketing agreement provides that revenue from advertising on the Guide,
which is managed by the Company, is to be shared between the Company and
Netscape. Under the terms of the Trademark License agreement, the Company made a
one-time non-refundable trademark license fee payment of $5,000,000 in March
1997 which is being amortized over the initial two-year term, which commenced in
May 1997. Under the terms of the Co-Marketing agreement as amended in June 1997,
the Company also provided Netscape with a minimum of up to $4,660,000 in
guarantees against shared advertising revenues in the first year of the
agreement, subject in the first year to a minimum level of gross revenue being
met, and up to $15,000,000 in the second year of the agreement, subject in the
second year to certain minimum levels of impressions being reached on the Guide.
Actual payments will relate directly to the overall revenue and impressions
recognized from the Guide. See "Risk Factors -- Risks Associated With Netscape
Guide By Yahoo!."
 
    The Company also has short-term distribution relationships with Microsoft
Corporation ("Microsoft"). The Company is one of the premier navigational guides
distributed through Microsoft Internet Explorer, the Microsoft home page, and
the Microsoft Network. In addition, Microsoft and the Company have entered into
an agreement under which MSN, the Microsoft Network online service, has made
Yahoo! the exclusive third-party consumer-branded provider of global directory
services on the MSN Premier subscription service and on MSN.com, the online
service's free Web site. Yahoo!'s directory will complement the current search
and directory services on MSN.
 
    INTERNET ACCESS PROVIDERS.  The Company also has relationships with
companies such as AT&T, MCI, @Home, MediaOne, Roadrunner, US West, and WebTV,
and under which these Internet access providers feature Yahoo! as a key
navigational tool and engage in certain promotional activities.
 
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    OEM'S.  Yahoo! has established distribution agreements with Compaq and
Gateway whereby links to Yahoo! services will be offered on the desktop of new
computers. My Yahoo!, Yahoo! Search, Yahoo! Weather, and My Yahoo! NewsTicker
are integrated into customized versions of Microsoft Internet Explorer.
 
    YAHOO! ONLINE SERVICE.  The Company and MCI entered into a co-marketing and
distribution agreement to launch a new co-branded, co-marketed online service.
The service, Yahoo! Online powered by MCI Internet which currently is expected
to launch by the end of March 1998, is designed to provide consumers with an
integrated and simple solution to easily explore the Internet with nationwide
dial-up access coverage.
 
OPERATIONS AND TECHNOLOGY
 
    The Company makes Yahoo! available to users through a set of network servers
operating with public domain server software that has been optimized internally
to provide an efficient and responsive user experience. The Company has
developed a set of proprietary database tools that it uses to maintain and
update directory listings on Yahoo! and other directory properties.
Substantially all of the listings on Yahoo! are submitted by Web site
developers. The Company's "surfers" review submissions and categorize them into
appropriate category headings. The Company also uses automated systems to
regularly check Web sites in the Yahoo! directory listings, and to remove sites
that are no longer available.
 
    Yahoo! includes an internally developed responsive keyword search function
that is used to locate listings within the directory. This search function not
only returns relevant Web site listings but also appropriate category headings,
which link to further listings that may be relevant to the user's query. The
Company has also internally developed an extensive classifieds system capable of
listing and searching millions of items in multiple categories. Additionally,
Yahoo! has internally developed a personalization system, My Yahoo!, to allow
users to customize and localize the information they regularly view, such as
stock quotes, news categories, sports scores, and weather. The Company utilizes
the Web-wide searching technology and Web index from a third party.
 
COMPETITION
 
    The market for Internet products and services is highly competitive and
competition is expected to continue to increase significantly. There are no
substantial barriers to entry in these markets, and the Company expects that
competition will continue to intensify. Although the Company currently believes
that the diverse segments of the Internet market will provide opportunities for
more than one supplier of products and services similar to those of the Company,
it is possible that a single supplier may dominate one or more market segments.
 
    The Company competes with many other providers of online navigation,
information and community services. Many companies offer competitive products or
services addressing Web navigation services, including, among others, America
Online Inc. (Netfind), Digital Equipment Corporation (AltaVista), Excite, Inc.
(including WebCrawler), Infoseek Corporation, Inktomi Corporation, Lycos, Inc.
(including Tripod), C--NET, Inc. (Snap! Online), and Wired Ventures, Inc.
(hotbot). In addition, the Company competes with metasearch services and
software applications, such as C--NET's search.com service, that allow a user to
search the databases of several directories and catalogs simultaneously. The
Company also competes indirectly with database vendors that offer information
search and retrieval capabilities with their core database products. The Company
also faces competition from providers of software and other Internet products
and services that incorporate search and retrieval features into their
offerings. For example, Web browsers offered by Netscape and Microsoft, which
are the most widely used browsers, incorporate prominent search buttons and
similar features, such as features based on "push" technologies, that direct
search traffic to competing services, including those that may be developed or
licensed by such parties. In the future, Netscape and Microsoft and other
browser suppliers may more tightly integrate
 
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products and services similar to Yahoo!'s into their browsers or their browsers'
pre-set home pages. In addition, entities that sponsor or maintain high-traffic
Web sites or that provide an initial point of entry for Internet users, such as
the Regional Bell Operating Companies or Internet Service Providers ("ISPs")
such as Microsoft and America Online ("AOL"), currently offer and could further
develop, acquire or license Internet search and navigation functions that
compete with those offered by the Company and could take actions that make it
more difficult for consumers to find and use Yahoo! services. For example,
Microsoft recently announced that it will offer Internet search engine services
provided by Inktomi in the Microsoft Network and other Microsoft online
properties. The Company expects that such search services may be tightly
integrated into the Microsoft operating system, the Internet Explorer browser
and other software applications, and that Microsoft may promote such services
within the Microsoft Network or through other end-user services such as WebTV.
Insofar as Microsoft's Internet navigational offerings may be more conveniently
accessed by users than those of the Company, this may provide Microsoft with
significant competitive advantages that could have a material adverse effect on
the Company's business. A large number of Web sites and online services
(including, among others, the Microsoft Network, AOL, and other Web navigation
companies such as Excite, Lycos, and Infoseek) offer informational and community
features, such as news, stock quotes, sports coverage, Yellow Pages and email
listings, weather news, chat services and bulletin board listings that are
competitive with the services offered by the Company. A number of companies,
including HotMail (which was recently acquired by Microsoft) and WhoWhere?,
offer Web-based email service similar to those offered by the Company, and such
companies have and are expected to continue to provide such services in tandem
with larger navigational sites and online services. Several companies, including
large companies such as Microsoft and AOL and their affiliates, also are
developing or currently offer online information services for local markets,
which compete with the Company's regional Yahoo! online properties. The Company
also faces intense competition in international markets, including competition
from U.S.-based competitors as well as media and online companies that are
already well established in those foreign markets. Many of the Company's
existing competitors, as well as a number of potential new competitors, have
significantly greater financial, technical, marketing and distribution
resources. In addition, providers of Internet tools and services may be acquired
by, receive investments from, or enter into other commercial relationships with
larger, well-established and well-financed companies, such as Microsoft or AOL.
For example, AOL is a significant shareholder of Excite, and a version of the
Excite service (AOL NetFind) has been designated as the exclusive Internet
search service for use by AOL's subscribers. Greater competition resulting from
such relationships could have a material adverse effect on the Company's
business, operating results and financial condition.
 
    The Company also competes with online services, other Web site operators and
advertising networks, as well as traditional offline media such as television,
radio and print for a share of advertisers' total advertising budgets. The
Company believes that the number of companies selling Web-based advertising and
the available inventory of advertising space have increased substantially during
recent periods. Accordingly, the Company may face increased pricing pressure for
the sale of advertisements and reductions in the Company's advertising revenues.
 
    The Company believes that the principal competitive factors in its markets
are brand recognition, ease of use, comprehensiveness, independence, quality and
responsiveness of search results, the availability of high-quality, targeted
content and focused value added products and services, quality and brand appeal,
access to end users, and, with respect to advertisers and sponsors, the number
of users, duration and frequency of visits and user demographics. Competition
among current and future suppliers of Internet navigational and informational
services, high-traffic Web sites and ISPs, as well as competition with other
media for advertising placements, could result in significant price competition
and reductions in advertising revenues. Additionally, the Company has faced and
expects to continue to face competition with respect to the acquisition of
strategic businesses and technologies. There can be no assurance that the
Company will be able to compete successfully or that the competitive pressures
faced by the Company will not have a material adverse effect on the Company's
business, operating results, and financial condition.
 
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PROPRIETARY RIGHTS
 
    The Company regards its copyrights, trademarks, trade dress, trade secrets,
and similar intellectual property as critical to its success, and the Company
relies upon trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with its employees, customers,
partners and others to protect its proprietary rights. The Company pursues the
registration of its trademarks in the United States and internationally, and has
applied for and obtained the registration for a number of its trademarks,
including "Yahoo!" and "Yahooligans!." Effective trademark, copyright, and trade
secret protection may not be available in every country in which the Company's
products and media properties are distributed or made available through the
Internet. The Company has licensed in the past, and it expects that it may
license in the future, elements of its distinctive trademarks, trade dress, and
similar proprietary rights to third parties, including in connection with
branded mirror sites of Yahoo! and other media properties that may be controlled
operationally by third parties. Substantially all content appearing in the
Company's online properties, such as news, weather, sports scores and stock
quotes, is licensed from third parties under short-term agreements.
 
EMPLOYEES
 
    As of December 31, 1997, the Company had 386 full-time employees including
199 in sales and marketing, 80 "surfers" involved in the classification and
organization of listings within Yahoo!, 75 in research and product development,
and 32 in administration and finance. Yahoo!'s future success is substantially
dependent on the performance of its senior management and key technical
personnel, and its continuing ability to attract and retain highly qualified
technical and managerial personnel.
 
RISK FACTORS
 
    In addition to the other information in this Report (including under the
captions "Competition" and "Proprietary Rights"), the following factors should
be considered carefully in evaluating the Company's business and prospects:
 
EXTREMELY LIMITED OPERATING HISTORY
 
    The Company was incorporated in March 1995 and did not commence generating
advertising revenues until August 1995. Accordingly, the Company has a limited
operating history upon which an evaluation of the Company can be based, and its
prospects are subject to the risks, expenses and uncertainties frequently
encountered by companies in the new and rapidly evolving markets for Internet
products and services, including the Web-based advertising market. Specifically,
such risks include, without limitation, the failure to continue to develop and
extend the Yahoo! brand, the failure to develop new media properties, the
inability of the Company to maintain and increase the levels of traffic on
Yahoo! properties, the development or acquisition of equal or superior services
or products by competitors, the failure of the market to adopt the Web as an
advertising medium, the failure to successfully sell Web-based advertising
through the Company's recently developed internal sales force, potential
reductions in market prices for Web-based advertising as a result of competition
or other factors, the failure of the Company to effectively generate
commerce-related revenues through sponsored services and placements in Yahoo!
properties, the inability of the Company to effectively integrate the technology
and operations or any other acquired businesses or technologies with its
operations such as the recent acquisition of Four11 Corporation, the failure of
the Company to successfully develop and offer personalized Web-based services,
such as email services, to consumers without errors or interruptions in service,
and the inability to continue to identify, attract, retain and motivate
qualified personnel. There can be no assurance that the Company will be
successful in addressing such risks.
 
    As of December 31, 1997, the Company had an accumulated deficit of
$27,971,000. The limited operating history of the Company and the uncertain
nature of the markets addressed by the Company
 
                                       10

<PAGE>
make the prediction of future results of operations difficult or impossible and,
therefore, the recent revenue growth experienced by the Company should not be
taken as indicative of the rate of revenue growth, if any, that can be expected
in the future. The Company believes that period-to-period comparisons of its
operating results are not meaningful and that the results for any period should
not be relied upon as an indication of future performance. The Company currently
expects to continue to significantly increase its operating expenses related to
expanding its sales and marketing operations, to continue to develop and extend
the Yahoo! brand, to fund greater levels of product development, to develop and
commercialize additional media properties, and to acquire complementary
businesses and technologies. As a result of these factors, there is no assurance
that the Company will not incur significant losses on a quarterly and annual
basis in the future.
 
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
 
    As a result of the Company's limited operating history, the Company does not
have historical financial data for a significant number of periods on which to
base planned operating expenses. The Company derives the majority of its
revenues from the sale of advertisements under short-term contracts, which are
difficult to forecast accurately. The Company's expense levels are based in part
on its expectations concerning future revenue and, to a large extent, are fixed.
The Company also has fixed expenses in the form of advertising revenue
guarantees of up to $18,500,000 over the next 15 months ending March 31, 1999
relating to the Netscape Guide By Yahoo!, which subject the Company to
additional risk in the event that advertising revenues from this property are
not sufficient to offset guaranteed payments and related operating expenses.
Quarterly revenues and operating results depend substantially upon the
advertising revenues received within the quarter, which are difficult to
forecast accurately. Accordingly, the cancellation or deferral of a small number
of advertising or sponsorship contracts could have a material adverse effect on
the Company's business, results of operations, and financial condition. The
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall. In such a case, any significant revenue
shortfall in relation to the Company's expectations would have an immediate
adverse effect on the Company's business, operating results, and financial
condition. In addition, the Company plans to continue to significantly increase
its operating expenses related to expanding its sales and marketing operations,
to continue to develop and extend the Yahoo! brand, to fund greater levels of
product development, and to develop and commercialize additional media
properties. To the extent such expenses precede or are not subsequently followed
by increased revenues, the Company's business, operating results, and financial
condition will be materially and adversely affected.
 
    The Company's operating results may fluctuate significantly in the future as
a result of a variety of factors, many of which are outside the Company's
control. These factors include the level of usage of the Internet, demand for
Internet advertising, the addition or loss of advertisers, the level of user
traffic on Yahoo! and the Company's other online media properties, the
advertising budgeting cycles of individual advertisers, the amount and timing of
capital expenditures and other costs relating to the expansion of the Company's
operations, the introduction of new products or services by the Company or its
competitors, pricing changes for Web-based advertising, the timing of initial
set-up, engineering or development fees that may be paid in connection with
larger advertising and distribution arrangements, technical difficulties with
respect to the use of Yahoo! or other media properties developed by the Company,
incurrence of costs relating to future acquisitions, general economic
conditions, and economic conditions specific to the Internet and online media.
As a strategic response to changes in the competitive environment, the Company
may from time to time make certain pricing, service or marketing decisions, or
business combinations that could have a material adverse effect on the Company's
business, results of operations, and financial condition. The Company has
experienced, and expects to continue to experience, seasonality in its business,
with user traffic on Yahoo! and the Company's other online media properties
being lower during the summer and year-end vacation and holiday periods, when
usage of the Web and the Company's services typically experience slower growth
or decline. Additionally, seasonality may affect the amount of
 
                                       11

<PAGE>
customer advertising dollars placed with the Company in the first and third
calendar quarters as advertisers historically spend less during these quarters.
 
    A key element of the Company's strategy is to generate advertising revenues
through sponsored services and placements by third parties in Yahoo! online
properties in addition to banner advertising. In connection with these
arrangements, the Company may receive sponsorship fees as well as a portion of
transaction revenues received by the third-party sponsor from users originated
through the Yahoo! placement, in return for minimum levels of user impressions
to be provided by the Company. To the extent implemented, these arrangements
expose the Company to potentially significant financial risks, including the
risk that the Company fails to deliver required minimum levels of user
impressions and that third party sponsors do not renew the agreements at the end
of their term. In addition, because the Company has limited experience with
these arrangements, the Company is unable to determine what effect such
arrangements will have on gross margins and results of operations. Although
transaction-based fees have not to date represented a material portion of the
Company's net revenues, if and to the extent such revenues become significant,
the foregoing factors could result in greater variations in the Company's
quarterly operating results and could have a material adverse effect on the
Company's business, results of operations, and financial condition.
 
    Due to all of the foregoing factors, in some future quarter the Company's
operating results may fall below the expectations of securities analysts and
investors. In such an event, the trading price of the Company's Common Stock
would likely be materially and adversely affected.
 
RISKS ASSOCIATED WITH NETSCAPE GUIDE BY YAHOO!
 
    During March 1997, the Company entered into certain agreements with Netscape
under which the Company has developed and operates an Internet information
navigation service called Netscape Guide by Yahoo! (the "Guide"). The
Co-Marketing agreement provides that revenue from advertising on the Guide,
which is managed by the Company, is to be shared between the Company and
Netscape. Under the terms of the Trademark License agreement, the Company made a
one-time non-refundable trademark license fee payment of $5,000,000 in March
1997 which is being amortized over the initial two-year term, which commenced in
May 1997. Under the terms of the Co-Marketing agreement as amended in June 1997,
the Company also provided Netscape with a minimum of up to $4,660,000 in
guarantees against shared advertising revenues in the first year of the
agreement, subject in the first year to a minimum level of gross revenue being
met, and up to $15,000,000 in the second year of the agreement, subject in the
second year to certain minimum levels of impressions being reached on the Guide.
Actual payments will relate directly to the overall revenue and impressions
recognized from the Guide.
 
    The Guide agreements expose the Company to a number of significant risks and
uncertainties, including, without limitation: the risk that the Company will
fail to generate sufficient advertising revenue to offset the initial and future
guaranteed payments to Netscape, including any failure that results from
negative trends in the Web-based advertising business (such as price erosion);
the risk that projected user traffic levels for the Guide will not be achieved,
which may be affected by several factors, such as declines or slower growth in
the number of users of Netscape's browser product, particularly as a result of
continued increases in the market share of Microsoft's Internet Explorer browser
product; the effect of competitive personalized information services from other
parties; and the risk that Netscape does not elect to renew the agreement at the
end of the two year term, after which the agreement permits Netscape to use
certain elements of the user interface developed by the Company without payment
of any consideration to the Company. As a result of the foregoing factors, there
can be no assurance that the Guide activities will not have a material adverse
effect on the Company's business, operating results, or financial condition.
 
                                       12

<PAGE>
DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET; TECHNOLOGICAL CHANGE
 
    The Company's future success is substantially dependent upon continued
growth in the use of the Internet and the Web in order to support the sale of
advertising on the Company's online media properties. There can be no assurance
that communication or commerce over the Internet will become more widespread or
that extensive content will continue to be provided over the Internet. The
Internet may not prove to be a viable commercial marketplace for a number of
reasons, including lack of acceptable security technologies, potentially
inadequate development of the necessary infrastructure, such as a reliable
network backbone, or timely development and commercialization of performance
improvements, including high speed modems. In addition, to the extent that the
Internet continues to experience significant growth in the number of users and
level of use, there can be no assurance that the Internet infrastructure will
continue to be able to support the demands placed upon it by such potential
growth or that the performance or reliability of the Web will not be adversely
affected by this continued growth. If use of the Internet does not continue to
grow, or if the Internet infrastructure does not effectively support growth that
may occur, the Company's business, operating results, and financial condition
would be materially and adversely affected. The market for Internet products and
services is characterized by rapid technological developments, evolving industry
standards and customer demands, and frequent new product introductions and
enhancements. These market characteristics are exacerbated by the emerging
nature of this market and the fact that many companies are expected to introduce
new Internet products and services in the near future. Failure of the Company to
effectively adapt to technological developments could adversely affect the
Company's business, operating results, and financial condition.
 
DEVELOPING MARKET; UNPROVEN ACCEPTANCE OF THE COMPANY'S PRODUCTS AND MEDIA
  PROPERTIES
 
    The markets for the Company's products and media properties have only
recently begun to develop, are rapidly evolving, and are characterized by an
increasing number of market entrants who have introduced or developed
information navigation products and services for use on the Internet and the
Web. As is typical in the case of a new and rapidly evolving industry, demand
and market acceptance for recently introduced products and services are subject
to a high level of uncertainty and risk. Because the market for the Company's
products and media properties is new and evolving, it is difficult to predict
the future growth rate, if any, and size of this market. There can be no
assurance either that the market for the Company's products and media properties
will continue to develop or that demand for the Company's products or media
properties will be sustainable. If the market develops more slowly than expected
or becomes saturated with competitors, or if the Company's products and media
properties do not sustain market acceptance, the Company's business, operating
results, and financial condition will be materially and adversely affected.
 
                                       13

<PAGE>
RISKS ASSOCIATED WITH BRAND DEVELOPMENT
 
    The Company believes that establishing and maintaining the Yahoo! brand is a
critical aspect of its efforts to attract and expand its audience and that the
importance of brand recognition will increase due to the growing number of
Internet sites and the relatively low barriers to entry. Promotion and
enhancement of the Yahoo! brand will depend largely on the Company's success in
providing high-quality products and services, which success cannot be assured.
In order to attract and retain Internet users and to promote and maintain the
Yahoo! brand in response to competitive pressures, the Company may find it
necessary to increase substantially its financial commitment to creating and
maintaining a distinct brand loyalty among consumers. If the Company is unable
to provide high-quality products and services or otherwise fails to promote and
maintain its brand, or if the Company incurs excessive expenses in an attempt to
improve its products and services or promote and maintain its brand, the
Company's business, operating results, and financial condition will be
materially and adversely affected.
 
RELIANCE ON ADVERTISING REVENUES AND UNCERTAIN ADOPTION OF THE WEB AS AN
  ADVERTISING MEDIUM
 
    The Company derives substantially all of its revenues from the sale of
advertisements on its Web pages under short-term contracts. Most of the
Company's advertising customers have only limited experience with the Web as an
advertising medium, have not devoted a significant portion of their advertising
expenditures to Web-based advertising and may not find such advertising to be
effective for promoting their products and services relative to traditional
print and broadcast media. The Company's ability to generate significant
advertising revenues will depend upon, among other things, advertisers'
acceptance of the Web as an effective and sustainable advertising medium, the
development of a large base of users of the Company's services possessing
demographic characteristics attractive to advertisers, and the ability of the
Company to continue to develop and update effective advertising delivery and
measurement systems. No standards have yet been widely accepted for the
measurement of the effectiveness of Web-based advertising, and there can be no
assurance that such standards will develop sufficiently to support Web-based
advertising as a significant advertising medium. In addition, there can be no
assurance that the advertisers will determine that banner advertising, which
comprises the majority of the Company's revenues, is an effective advertising
medium, and there can be no assurance that the Company will effectively
transition to any other forms of Web-based advertising, should they develop.
Certain advertising filter software programs are available that limit or remove
advertising from an Internet user's desktop. Such software, if generally adopted
by users, may have a materially adverse effect upon the viability of advertising
on the Internet. There also can be no assurance that the Company's advertising
customers will accept the internal and third-party measurements of impressions
received by advertisements on Yahoo! and the Company's online media properties,
or that such measurements will not contain errors. The Company relies primarily
on its internal advertising sales force for domestic advertising sales, which
involves additional risks and uncertainties, including (among others) risks
associated with the recruitment, retention, management, training, and motivation
of sales personnel. As a result of these factors, there can be no assurance that
the Company will sustain or increase current advertising sales levels. Failure
to do so will have a material adverse effect on the Company's business,
operating results, and financial position.
 
SUBSTANTIAL DEPENDENCE UPON THIRD PARTIES
 
    The Company depends substantially upon third parties for several critical
elements of its business including, among others, technology and infrastructure,
content development, and distribution activities.
 
    TECHNOLOGY AND INFRASTRUCTURE.  The Company supplements its Internet
directory listings with full-text Web search results provided by AltaVista, a
division of Digital Equipment Corporation ("Digital"), under a non-exclusive
agreement. The Company depends substantially upon ongoing maintenance and
technical support from Digital to ensure accurate and rapid presentation of such
search results to the Company's customers. In addition, any termination of the
agreement with Digital or Digital's failure to renew such agreement upon
expiration could result in substantial additional costs to the Company in
developing or
 
                                       14

<PAGE>
licensing replacement technology, and could result in a loss of levels of use of
the Company's navigational services. The Company also relies principally on a
private third-party provider, GlobalCenter, Inc. ("GlobalCenter"), for the
Company's principal Internet connections. Additionally, email service Internet
connections are provided by GTE. Any disruption in the Internet access provided
by these third-party providers or any failure of these third-party providers to
handle current or higher volumes of use could have a material adverse effect on
the Company's business, operating results, and financial condition. The Company
also licenses technology and related databases from third parties for certain
elements of Yahoo! properties, including, among others, technology underlying
news, stock quotes and current financial information, chat services, street
mapping, telephone listings, and similar services. The Company has experienced
and expects to continue to experience interruptions and delays in service and
availability for such elements, such as recent interruptions in the Company's
stock quote services. Any errors, failures, or delays experienced in connection
with these third party technologies and information services could negatively
impact the Company's relationship with users and adversely affect the Company's
brand and its business, and could expose the Company to liabilities to third
parties.
 
    CONTENT DEVELOPMENT.  A key element of the Company's strategy involves the
implementation of Yahoo!-branded media properties targeted for interest areas,
demographic groups, and geographic areas. In these efforts, the Company has
relied and will continue to rely substantially on content development and
localization efforts of third parties. For example, the Company has entered into
an agreement with Ziff-Davis pursuant to which Ziff-Davis publishes an online
publication and a print magazine under the Yahoo! brand. The Company also
expects to rely substantially on third party affiliates, including SOFTBANK in
Japan and Korea, and Rogers Communications ("Rogers") in Canada, to localize,
maintain, and promote these services and to sell advertising in local markets.
There can be no assurance that the Company's current or future third-party
affiliates will effectively implement these properties, or that their efforts
will result in significant revenue to the Company. Any failure of these parties
to develop and maintain high-quality and successful media properties also could
result in unfavorable dilution to the Yahoo! brand.
 
    DISTRIBUTION RELATIONSHIPS.  In order to create traffic for the Company's
online properties and make them more attractive to advertisers and consumers,
the Company has entered into certain distribution agreements and informal
relationships with leading Web browser providers (Microsoft and Netscape),
operators of online networks and leading Web sites, and computer manufacturers,
such as Compaq Computer and Gateway 2000. The Company believes these
arrangements are important to the promotion of the Company's online media
properties, particularly among new Web users who may first access the Web
through these browsers, services, Web sites, or computers. The Company's
business relationships with these companies consist of arrangements for the
positioning of access to Yahoo! properties on Web browsers and cooperative
marketing programs and licenses to include Yahoo! in online networks or services
offered by these parties, which are intended to increase the use and visibility
of Yahoo!. These distribution arrangements typically are not exclusive, and may
be terminated upon little or no notice. Third parties that provide distribution
channels for the Company may also assess fees or otherwise impose additional
conditions on the listing of Yahoo! or other online properties of the Company,
such as Netscape's requirement of substantial payments for placement of Yahoo!
on the "Net Search" Web page accessible from a button on the Netscape Web
browser. In addition, these companies may terminate or reduce their joint
marketing activities with the Company. Any such event could have a material
adverse effect on the Company's business, results of operations, and financial
condition.
 
    The Company recently announced a co-branding and distribution arrangement
with MCI under which the Company will provide a Web-based online service in
conjunction with dial-up Internet access provided by MCI. In this arrangement,
the Company will depend substantially upon MCI for, among other things,
effective marketing and promotion efforts and the provision of competitive
Internet access service to customers. Any failure by MCI in these respects could
materially impair the benefits received by the Company from this arrangement,
and could negatively affect the Yahoo! brand.
 
                                       15

<PAGE>
ENHANCEMENT OF YAHOO! PROPERTIES AND DEVELOPMENT OF NEW PROPERTIES
 
    To remain competitive, the Company must continue to enhance and improve the
functionality, features, and content of the Yahoo! main site, as well as the
Company's other branded media properties. There can be no assurance that the
Company will be able to successfully maintain competitive user response times or
implement new features and functions, such as new search capabilities, greater
levels of user personalization, localized content filter and information
delivery through "push" or other methods, which will involve the development of
increasingly complex technologies. The Company also expects that personalized
information services, such as the Company's recently launched Web-based email
service, will require significantly greater expenses associated with, among
other things, increased server capacity and equipment and requirements for
additional customer support personnel and systems. To the extent such additional
expenses are not offset by additional revenues from such personalized services,
the Company's financial results will be adversely affected.
 
    The Company's future success also depends in part upon the timely processing
of Web site listings submitted by users and Web content providers, which have
increased substantially in recent periods. The Company has from time to time
experienced significant delays in the processing of submissions, and further
delays could have a material adverse effect on the Company's goodwill among Web
users and content providers, and on the Company's business.
 
    A key element of the Company's business strategy is the development and
introduction of new Yahoo!-branded online properties targeted for specific
interest areas, user groups with particular demographic characteristics, and
geographic areas. There can be no assurance that the Company will be successful
in developing, introducing, and marketing such products or media properties or
that such products and media properties will achieve market acceptance, enhance
the Company's brand name recognition, or increase traffic on Yahoo!'s online
properties. Furthermore, enhancements of or improvements to Yahoo! or new media
properties may contain undetected errors that require significant design
modifications, resulting in a loss of customer confidence and user support and a
decrease in the value of the Company's brand name recognition. The Company's
ability to successfully develop additional targeted media properties depends
substantially on use of Yahoo! to promote such properties. If use of Yahoo!
fails to continue to grow, the Company's ability to establish other targeted
properties would be adversely affected. Any failure of the Company to
effectively develop and introduce these properties, or failure of such
properties to achieve market acceptance, could adversely affect the Company's
business, results of operations, and financial condition.
 
INVESTMENTS IN AFFILIATES
 
    The Company has made equity investments in affiliated companies that are
involved in the commercialization of Yahoo!-branded online properties, such as
versions of Yahoo! localized for foreign markets. The Company currently intends
to continue to make significant additional investments in such companies from
time to time in the future, as well as other companies involved in the
development of technologies or services that are complementary or related to the
Company's business, such as the December 1997 investments in GeoCities and
AudioNet. These affiliated companies typically are in an early stage of
development and may be expected to incur substantial losses. As a result, the
Company has recorded and expects to continue to record a share of the losses in
such affiliates attributable to the Company's ownership, which losses have had
and will continue to have an adverse effect on the Company's results of
operations. Furthermore, there can be no assurance that any investments in such
companies will result in any return, nor can there be any assurance as to the
timing of any such return, or that the Company will not lose its entire
investment.
 
                                       16

<PAGE>
MANAGEMENT OF POTENTIAL GROWTH
 
    The Company's recent growth has placed, and is expected to continue to
place, a significant strain on its managerial, operational, and financial
resources. To manage its potential growth, the Company must continue to
implement and improve its operational and financial systems and to expand,
train, and manage its employee base. The Company also expects that its
operational and management systems will face additional strain as a result of
the Company's recent acquisition of Four11 Corporation. The process of managing
advertising within large, high traffic Web sites such as those in the Yahoo!
network is an increasingly important and complex task. The Company relies on
both internal and licensed third party advertising inventory management and
analysis systems. To the extent that any extended failure of the Company's
advertising management system results in incorrect advertising insertions, the
Company may be exposed to "make good" obligations with its advertising
customers, which, by displacing advertising inventory, could defer advertising
revenues and thereby have a material adverse effect on the Company's business,
operating results, and financial condition. Failure of the Company's advertising
management systems to effectively track and provide accurate and timely reports
on advertising results also could negatively affect the Company's relationships
with advertisers and thereby have an adverse effect on the Company's business.
There can be no assurance that the Company's systems, procedures, or controls
will be adequate to support the Company's operations or that Company management
will be able to achieve the rapid execution necessary to fully exploit the
Company's market opportunity. Any inability to effectively manage growth, if
any, could have a material adverse effect on the Company's business, operating
results, and financial condition.
 
RISK OF CAPACITY CONSTRAINTS AND SYSTEMS FAILURES
 
    The Company is dependent on its ability to effectively serve a high volume
of use of its online media properties. Accordingly, the performance of the
Company's online media properties is critical to the Company's reputation, its
ability to attract advertisers to the Company's Web sites, and to achieve market
acceptance of these products and media properties. Any system failure that
causes an interruption or an increase in response time of the Company's products
and media properties could result in less traffic to the Company's Web sites
and, if sustained or repeated, could reduce the attractiveness of the Company's
products and media properties to advertisers and licensees. An increase in the
volume of queries conducted through the Company's products and media properties
could strain the capacity of the software or hardware deployed by the Company,
which could lead to slower response time or system failures, and adversely
affect the number of impressions received by advertisers and thus the Company's
advertising revenues. In addition, as the number of Web pages and users
increase, there can be no assurance that the Company's products and media
properties and infrastructure will be able to scale accordingly. The Company
also faces technical challenges associated with higher levels of personalization
and localization of content delivered to users of its services, which adds
strain to the Company's development and operational resources. For example,
personalized information services, such as Web-based email services, involve
increasingly complex technical and operational challenges, and there can be no
assurance that the Company will successfully implement and scale such services
to the extent required by any growth in the number of users of such services, or
that the failure to do so will not materially and adversely affect the goodwill
of users of these services, or negatively affect the Company's brand and
reputation. The Company is also dependent upon Web browsers and Internet and
online service providers for access to its products and media properties. In
particular, a private third party provider, GlobalCenter, provides the Company's
principal Internet connections. In the past, users have occasionally experienced
difficulties due to system failures, including failures unrelated to the
Company's systems. Additionally, Internet connections for the Company's
Web-based email services are provided by GTE. Any disruption in the Internet
access provided by these third-party providers or any failure of these
third-party providers to handle higher volumes of user traffic could have a
material adverse effect on the Company's business, operating results, and
financial condition. Furthermore, the Company is dependent on hardware suppliers
for prompt delivery, installation, and service of servers and other equipment
used to deliver the Company's products and services.
 
                                       17

<PAGE>
    The Company's operations are susceptible to outages due to fire, floods,
power loss, telecommunications failures, break-ins, and similar events. In
addition, substantially all of the Company's network infrastructure is located
in Northern California, an area susceptible to earthquakes, which also could
cause system outages or failures. The Company does not presently have multiple
site capacity in the event of any such occurrence. Despite the implementation of
network security measures by the Company, its servers are vulnerable to computer
viruses, break-ins, and similar disruptions from unauthorized tampering with the
Company's computer systems. The occurrence of any of these events could result
in interruptions, delays, or cessations in service to Yahoo! users, which could
have a material adverse effect on the Company's business, operating results, and
financial condition.
 
INTEGRATION OF ACQUISITIONS
 
    As part of its business strategy, the Company expects to enter into business
combinations. For example, during October 1997, the Company acquired Four11
Corporation, a privately-held online communications and directory company.
Acquisition transactions are accompanied by a number of risks, including, among
other things, the difficulty of assimilating the operations and personnel of the
acquired companies, the potential disruption of the Company's ongoing business,
the inability of management to maximize the financial and strategic position of
the Company through the successful incorporation of acquired technology or
content and rights into the Company's products and media properties, expenses
associated with the transactions (such as expenses of $3,850,000 that the
Company incurred in the fourth quarter of 1997 in connection with the
acquisition of Four11 Corporation), additional expenses associated with
amortization of acquired intangible assets, the maintenance of uniform
standards, controls, procedures and policies, the impairment of relationships
with employees and customers as a result of any integration of new management
personnel, and the potential unknown liabilities associated with acquired
businesses. There can be no assurance that the Company would be successful in
addressing these risks or any other problems encountered in connection with such
acquisitions.
 
TRADEMARKS AND PROPRIETARY RIGHTS
 
    The Company regards its copyrights, trademarks, trade dress, trade secrets,
and similar intellectual property as critical to its success, and the Company
relies upon trademark and copyright law, trade secret protection and
confidentiality and/or license agreements with its employees, customers,
partners and others to protect its proprietary rights. The Company pursues the
registration of its trademarks in the United States and internationally, and has
applied for and obtained the registration for certain of its trademarks,
including "Yahoo!" and "Yahooligans!". Effective trademark, copyright, and trade
secret protection may not be available in every country in which the Company's
products and media properties are distributed or made available through the
Internet. The Company has licensed in the past, and it expects that it may
license in the future, elements of its distinctive trademarks, trade dress, and
similar proprietary rights to third parties, including in connection with
branded mirror sites of Yahoo!, and other media properties and merchandise that
may be controlled operationally by third parties. While the Company attempts to
ensure that the quality of its brand is maintained by such licensees, no
assurances can be given that such licensees will not take actions that could
materially and adversely affect the value of the Company's proprietary rights or
the reputation of its products and media properties, either of which could have
a material adverse effect on the Company's business. Also, the Company is aware
that third parties have from time to time copied significant portions of Yahoo!
directory listings for use in competitive Internet navigational tools and
services, and there can be no assurance that the distinctive elements of Yahoo!
will be protectible under copyright law. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be adequate or
that third parties will not infringe or misappropriate the Company's copyrights,
trademarks, trade dress, and similar proprietary rights. In addition, there can
be no assurance that other parties will not assert infringement claims against
the Company.
 
                                       18

<PAGE>
    Many parties are actively developing search, indexing, and related Web
technologies at the present time. The Company believes that such parties have
taken and will continue to take steps to protect these technologies, including
seeking patent protection. As a result, the Company believes that disputes
regarding the ownership of such technologies are likely to arise in the future.
 
DEPENDENCE ON KEY PERSONNEL
 
    The Company's performance is substantially dependent on the performance of
its senior management and key technical personnel. In particular, the Company's
success depends substantially on the continued efforts of its senior management
team. The Company does not carry key person life insurance on any of its senior
management personnel. The loss of the services of any of its executive officers
or other key employees could have a material adverse effect on the business,
operating results, and financial condition of the Company.
 
    The Company's future success also depends on its continuing ability to
attract and retain highly qualified technical and managerial personnel.
Competition for such personnel is intense and there can be no assurance that the
Company will be able to retain its key managerial and technical employees or
that it will be able to attract and retain additional highly qualified technical
and managerial personnel in the future. The inability to attract and retain the
necessary technical and managerial personnel could have a material and adverse
effect upon the Company's business, operating results, and financial condition.
 
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
 
    There are currently few laws or regulations directly applicable to access to
or commerce on the Internet. Due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be adopted
with respect to the Internet, covering issues such as user privacy, defamation,
pricing, taxation, quality of products and services, and intellectual property
ownership. For example, although the Communications Decency Act was held to be
unconstitutional, there can be no assurance that similar legislation will not be
enacted in the future, and it is possible that such legislation could expose the
Company to substantial liability. Such legislation could also dampen the growth
in use of the Web generally, and decrease the acceptance of the Web as a
communications and commercial medium, and could, thereby, have a material
adverse effect on the Company's business, results of operations, and financial
condition. Other nations, including Germany, have taken actions to restrict the
free flow of material deemed to be objectionable on the Web. In addition,
several telecommunications carriers are seeking to have telecommunications over
the Web regulated by the Federal Communications Commission (the "FCC") in the
same manner as other telecommunications services. For example, America's
Carriers Telecommunications Association ("ACTA") has filed a petition with the
FCC for this purpose. In addition, because the growing popularity and use of the
Web has burdened the existing telecommunications infrastructure and many areas
with high Web use have begun to experience interruptions in phone service, local
telephone carriers, such as Pacific Bell, have petitioned the FCC to regulate
ISPs and OSPs in a manner similar to long distance telephone carriers and to
impose access fees on the ISPs and OSPs. If either of these petitions is
granted, or the relief sought therein is otherwise granted, the costs of
communicating on the Web could increase substantially, potentially slowing the
growth in use of the Web, which could in turn decrease the demand for the
Company's products and media properties. A number of proposals have been made at
the federal, state and local level that would impose additional taxes on the
sale of goods and services through the Internet. Such proposals, if adopted,
could substantially impair the growth of electronic commerce, and could
adversely affect the Company's opportunity to derive financial benefit from such
activities. Also, legislation is pending in Congress that would impose liability
on online service providers such as the Company for listing or linking to
third-party Web sites that include materials that infringe copyrights or other
rights of others. Such laws and regulations if enacted could fundamentally
impair the Company's ability to provide Internet navigation services, or
substantially increase the cost of doing so, which would have an adverse effect
on the Company's business, operating results, and financial
 
                                       19

<PAGE>
condition. Moreover, the applicability to the Internet of the existing laws
governing issues such as property ownership, copyright, defamation, obscenity,
and personal privacy is uncertain, and the Company may be subject to claims that
its services violate such laws. Any such new legislation or regulation or the
application of existing laws and regulations to the Internet could have a
material adverse effect on the Company's business, operating results, and
financial condition.
 
    Due to the global nature of the Web, it is possible that, although
transmissions by the Company over the Internet originate primarily in the State
of California, the governments of other states and foreign countries might
attempt to regulate the Company's transmissions or prosecute the Company for
violations of their laws. There can be no assurance that violations of local
laws will not be alleged or charged by state or foreign governments, that the
Company might not unintentionally violate such law or that such laws will not be
modified, or new laws enacted, in the future. Any of the foregoing developments
could have a material adverse effect on the Company's business, results of
operations, and financial condition.
 
LIABILITY FOR INFORMATION SERVICES AND COMMERCE-RELATED ACTIVITIES
 
    Because materials may be downloaded by the online or Internet services
operated or facilitated by the Company and may be subsequently distributed to
others, there is a potential that claims will be made against the Company for
defamation, negligence, copyright or trademark infringement, personal injury or
other theories based on the nature and content of such materials. Such claims
have been brought, and sometimes successfully pressed, against online service
providers in the past. In addition, the Company could be exposed to liability
with respect to the selection of listings that may be accessible through the
Company's Yahoo!-branded products and media properties, or through content and
materials that may be posted by users in classifieds, bulletin board and chat
room services offered by the Company. Such claims might include, among others,
that by providing hypertext links to Web sites operated by third parties, the
Company is liable for copyright or trademark infringement or other wrongful
actions by such third parties through such Web sites. It is also possible that
if any information provided through the Company's services, such as stock
quotes, analyst estimates or other trading information, contains errors, third
parties could make claims against the Company for losses incurred in reliance on
such information. In connection with the acquisition of Four11 Corporation, the
Company recently began offering Web-based email services, which expose the
Company to potential risks, such as liabilities or claims resulting from
unsolicited email (spamming), lost or misdirected messages, illegal or
fraudulent use of email or interruptions or delays in email service. Even to the
extent such claims do not result in liability to the Company, the Company
expects to incur significant costs in investigating and defending such claims.
 
    The Company also from time to time enters into arrangements to offer third
party products and services under the Yahoo! brand or via distribution on Yahoo!
properties. For example, the Company recently announced an agreement with
GeoCities under which GeoCities will offer free home page services and certain
related products to Yahoo! users. The Company also recently announced an
arrangement with AudioNet, an Internet-based broadcast network, whereby links to
AudioNet's site and content will be distributed via Yahoo! properties. These
business arrangements involve additional legal risks, such as potential
liabilities for content posted by free home page users or made available by
other third party providers. The Company may be subject to claims concerning
such services or content by virtue of the Company's involvement in marketing,
branding or providing access to such services, even if the Company does not
itself host, operate, or provide such services. While the Company's agreements
with these parties often provide that the Company will be indemnified against
such liabilities, there can be no assurance that such indemnification, if
available, will be adequate.
 
    The Company recently began offering a Yahoo!-branded VISA credit card, which
includes a "rewards" program entitling card users to receive points that may be
redeemed for merchandise, such as books or music. This arrangement exposes the
Company to certain additional risks and expenses, including, without limitation,
those relating to compliance with consumer protection laws, loss of customer
 
                                       20

<PAGE>
data, disputes over redemption procedures and rules, products liability, sales
taxation and liabilities associated with any failure in performance by
participating merchants.
 
    From time to time, the Company enters into agreements with sponsors, content
providers, service providers, and merchants under which the Company is entitled
to receive a share of revenue from the purchase of goods and services by users
of the Company's online properties. Such arrangements may expose the Company to
additional legal risks and uncertainties, including (without limitation)
potential liabilities to consumers of such products and services. Although the
Company carries general liability insurance, the Company's insurance may not
cover potential claims of this type or may not be adequate to indemnify the
Company for all liability that may be imposed.
 
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND EXPANSION
 
    A key part of the Company's strategy is to develop Yahoo!-branded online
properties in international markets. The Company has developed and operates,
through joint ventures with SOFTBANK and related entities, versions of Yahoo!
localized for Japan, Germany, France, the United Kingdom, and Korea. The Company
offers a version of Yahoo! localized for Canada under an agreement with Rogers
Communications, and the Company operates localized or mirror versions of Yahoo!
through wholly-owned subsidiaries in Australia, Denmark, Norway, Sweden, and
Singapore.
 
    To date, the Company has only limited experience in developing localized
versions of its products and marketing and operating its products and services
internationally, and the Company relies substantially on the efforts and
abilities of its foreign business partners in such activities. The Company has
experienced and expects to continue to experience higher costs as a percentage
of revenues in connection with international online properties than domestic
online properties. If the international revenues are not adequate to offset
investments in such activities, the Company's business, operating results, and
financial condition could be materially adversely affected. The Company may
experience difficulty in managing international operations as a result of
distance as well as language and cultural differences, and there can be no
assurance that the Company or its partners will be able to successfully market
and operate its products and services in foreign markets. The Company also
believes that in light of substantial anticipated competition, it will be
necessary to move quickly into international markets in order to effectively
obtain market share, and there can be no assurance that the Company will be able
to do so. In addition to the uncertainty as to the Company's ability to continue
to generate revenues from its foreign operations and expand its international
presence, there are certain risks inherent in doing business on an international
level, such as unexpected changes in regulatory requirements, trade barriers,
difficulties in staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, political instability, fluctuations
in currency exchange rates, seasonal reductions in business activity in certain
other parts of the world, and potentially adverse tax consequences. There can be
no assurance that one or more of such factors will not have a material adverse
effect on the Company's future international operations and, consequently, on
the Company's business, operating results, and financial condition.
 
CONCENTRATION OF STOCK OWNERSHIP
 
    As of February 27, 1998, the present directors, executive officers, greater
than 5% shareholders and their respective affiliates beneficially owned
approximately 55% of the outstanding Common Stock of the Company. As of February
27, 1998, SOFTBANK beneficially owned approximately 29% of the outstanding
Common Stock of the Company. As a result of their ownership, the directors,
executive officers, greater than 5% shareholders (including SOFTBANK) and their
respective affiliates collectively are able to control all matters requiring
shareholder approval, including the election of directors and approval of
significant corporate transactions. Such concentration of ownership may also
have the effect of delaying or preventing a change in control of the Company.
 
                                       21

<PAGE>
VOLATILITY OF STOCK PRICE
 
    The trading price of the Company's Common Stock has been and may continue to
be subject to wide fluctuations in response to a number of events and factors,
such as quarterly variations in operating results, announcements of
technological innovations or new products and media properties by the Company or
its competitors, changes in financial estimates and recommendations by
securities analysts, the operating and stock price performance of other
companies that investors may deem comparable to the Company, and news reports
relating to trends in the Company's markets. In addition, the stock market in
general, and the market prices for Internet-related companies in particular,
have experienced extreme volatility that often has been unrelated to the
operating performance of such companies. These broad market and industry
fluctuations may adversely affect the trading price of the Company's Common
Stock, regardless of the Company's operating performance.
 
ANTITAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS
 
    The Board of Directors has the authority to issue up to 10,000,000 shares of
Preferred Stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further vote
or action by the shareholders. The rights of the holders of Common Stock may be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be issued in the future. The issuance of Preferred
Stock may have the effect of delaying, deferring or preventing a change of
control of the Company without further action by the shareholders and may
adversely affect the voting and other rights of the holders of Common Stock. The
Company has no present plans to issue shares of Preferred Stock. Further,
certain provisions of the Company's charter documents, including provisions
eliminating the ability of shareholders to take action by written consent and
limiting the ability of shareholders to raise matters at a meeting of
shareholders without giving advance notice, may have the effect of delaying or
preventing changes in control or management of the Company, which could have an
adverse effect on the market price of the Company's Common Stock. In addition,
effective with the Company's 1998 Annual Meeting of Shareholders, the Company's
charter documents will not permit cumulative voting and will provide that, at
such time as the Company has at least six directors, the Company's Board of
Directors will be divided into two classes, each of which serves for a staggered
two-year term, which may make it more difficult for a third party to gain
control of the Company's Board of Directors.
 

I
TEM 2. PROPERTIES
 
    Yahoo!'s headquarters facility is located in two offices in Santa Clara,
California. The Company occupies these leased facilities which aggregate
approximately 88,000 square feet and has contracted for an additional 55,000
square feet beginning January 1, 1999. Office space for the Company's
international subsidiaries is leased in London, Milan, Munich, Paris, Seoul,
Stockholm, and Sydney. The Company also leases sales offices in Atlanta, Boston,
Chicago, Dallas, Detroit, Los Angeles, New York, and San Francisco. The
Company's principal Web server equipment and operations are maintained by
GlobalCenter in Mountain View, California.
 
    The Company believes that its existing facilities are adequate to meet
current requirements, and that suitable additional or substitute space will be
available as needed to accommodate any further physical expansion of corporate
operations and for any additional sales offices.
 

ITEM 3. LEGAL PROCEEDINGS
 
    In July 1997, GTE New Media Services Incorporated ("GTE New Media"), an
affiliate of GTE, filed suit in Dallas, Texas against Netscape and the Company,
in which GTE New Media made a number of claims relating to the inclusion of
certain Yellow Pages hypertext links in the Netscape Guide by Yahoo!, an online
navigational property operated by the Company under an agreement with Netscape.
In this
 
                                       22

<PAGE>
lawsuit, GTE New Media has alleged, among other things, that by including such
links to the Yellow Pages service operated by several Regional Bell Operating
Companies (the "RBOCs") within the Guide, the Company has tortiously interfered
with an alleged contractual relationship between GTE New Media and Netscape
relating to placement of links by Netscape for a Yellow Pages service operated
by GTE New Media. GTE New Media seeks injunctive relief as well as actual and
punitive damages. In October 1997, GTE New Media brought suit in the U.S.
District Court for the District of Columbia, against the RBOCs, Netscape, and
the Company, in which GTE New Media has alleged, among other things, that the
alleged exclusion of the GTE New Media Yellow Pages from the Netscape Guide
Yellow Pages service violates federal antitrust laws, and GTE New Media seeks
injunctive relief and damages (trebled under federal antitrust laws) from such
alleged actions. The Company believes that the claims against the Company in
these lawsuits are without merit and intends to contest them vigorously.
Although the Company cannot predict with certainty the outcome of these lawsuits
or the expenses that may be incurred in defending the lawsuits, the Company does
not believe that the result in the lawsuits will have a material adverse effect
on the Company's financial position or results of operations. From time to time
the Company is subject to other legal proceedings and claims in the ordinary
course of business, including claims of alleged infringement of trademarks and
other intellectual property rights, and a variety of claims arising in
connection with the Company's email, message boards, and other communications
and community features, such as claims alleging defamation and invasion of
privacy. The Company is not currently aware of any legal proceedings or claims
that the Company believes will have, individually or in the aggregate, a
material adverse effect on the Company's financial position or results of
operations.
 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1997.
 

                                    PART II
 

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
  MATTERS
 
    Incorporated by reference from the information under the caption "Stock
Information" on page 43 of the Registrant's 1997 Annual Report to Shareholders.
 

ITEM 6. SELECTED FINANCIAL DATA
 
    Incorporated by reference from the information under the caption "Selected
Financial Data" on page 12 of the Registrant's 1997 Annual Report to
Shareholders.
 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS
 
    Incorporated by reference from the information under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 13-22 of the Registrant's 1997 Annual Report to
Shareholders.
 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    Refer to Item 14.
 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE
 
    None.
 
                                       23

<PAGE>

                                    PART III
 

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Incorporated by reference from the information under the caption "Proposal
No. 1 -- Election of Directors" in the Registrant's Proxy Statement for its 1998
Annual Meeting of Shareholders. The following sets forth certain information
with respect to the other executive officers of Yahoo!:
 
    David Filo (age 31), Chief Yahoo and a founder of the Company, has served as
an officer of the Company since March 1995, and served as a director of the
Company from its founding through February 1996. Mr. Filo co-developed Yahoo! in
1994 while working towards his Ph.D. in electrical engineering at Stanford
University, and co-founded the Company in 1995. Mr. Filo holds a B.S. degree in
computer engineering from Tulane University and a M.S. degree in electrical
engineering from Stanford University.
 
    Jeff Mallett (age 33) was promoted to Chief Operating Officer in January
1998. Prior to that, he served as the Company's Senior Vice President, Business
Operations since October 1995. Prior to joining the Company, Mr. Mallett was
Vice President and General Manager of the WordPerfect consumer division of
Novell, Inc., a network operating system software company, from 1993 to 1995 and
a member of Novell's Corporate Executive Marketing Group. Prior to that, Mr.
Mallett was a member of the founding team of Reference Software International
where he held various positions from 1988 to 1992, including Vice President,
Sales and Marketing. From 1985 to 1987, Mr. Mallett held the position of
Director, Sales and Marketing at IPT Corp., a privately held telecommunications
company. Mr. Mallett holds a degree in Business Administration from Santa Rosa
College.
 
    Anil Singh (age 39) was promoted to Vice President, Advertising Sales in
December 1996. Prior to that, Mr. Singh served as the Company's Director of
Sales since November 1995. Prior to joining the Company, Mr. Singh was Vice
President of Sales for Socket Communications from 1994 to 1995. From 1992 to
1994, Mr. Singh was Vice President of Sales for Mountain Inc. From 1991 to 1992,
Mr. Singh was Director of Sales for Novell Inc. Mr. Singh holds a B.S. degree in
computer science from Imperial College at the University of London, England.
 
    Gary Valenzuela (age 41) has served as the Company's Senior Vice President,
Finance and Administration, and Chief Financial Officer since February 1996.
From 1994 to 1996, Mr. Valenzuela served as Senior Vice President, Finance and
Administration, and Chief Financial Officer of TGV Software, Inc., a publicly
held developer of TCP/IP software products. Prior to joining TGV, Mr. Valenzuela
was employed by Pyramid Technology Corporation, a then-publicly held
manufacturer of UNIX minicomputers, where he last served as Senior Vice
President, Finance and Chief Financial Officer. Mr Valenzuela holds a B.S.
degree in Business Administration from San Jose State University, and is a
Certified Public Accountant in the State of California.
 
    Farzad Nazem (age 36) was promoted to Chief Technology Officer in January
1998. Prior to that, he served as the Company's Senior Vice President, Product
Development and Site Operations since March 1996. From 1985 to 1996, Mr. Nazem
held a number of technical and executive management positions at Oracle
Corporation, including, most recently, Vice President of Oracle's Media and Web
Server Division and member of the Product Division Management Committee. Prior
to that, Mr. Nazem was a member of the technical staff at SYDIS, Inc. and Rolm
Corporation. Mr. Nazem holds a B.S. in Computer Science from California
Polytechnic State University.
 

ITEM 11. EXECUTIVE COMPENSATION
 
    Incorporated by reference from the information under the captions "Executive
Officer Compensation and Other Matters," "Report of the Compensation Committee
of the Board of Directors on Executive Compensation," "Compensation Committee
Interlocks and Insider Participation," and "Performance Graph" in the
Registrant's Proxy Statement for its 1998 Annual Meeting of Shareholders.
 
                                       24

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    Incorporated by reference from the information under the captions "Record
Date; Voting Securities" and "Information Regarding Beneficial Ownership of
Principal Shareholders and Management" in the Registrant's Proxy Statement for
its 1998 Annual Meeting of Shareholders.
 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    Incorporated by reference from the information under the captions "Certain
Transactions" and "Compensation Committee Interlocks and Insider Participation"
in the Registrant's Proxy Statement for its 1998 Annual Meeting of Shareholders.
 

                                    PART IV
 

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
    (a) The following documents are filed as part of this report:
 
       (1) Consolidated Financial Statements:
 
           The following consolidated financial statements of Yahoo! Inc. and
       the Report of Independent Accountants are incorporated herein by
       reference to the Registrant's 1997 Annual Report to Shareholders:
 

<TABLE>
<CAPTION>
                                                                          PAGE IN
                                                                       ANNUAL REPORT
                                                                       -------------
<S>                                                                    <C>
Consolidated Balance Sheets at December 31, 1997
  and 1996...........................................................       23
 
Consolidated Statements of Operations for the years ended December
  31, 1997, 1996, and 1995...........................................       24
 
Consolidated Statements of Shareholders' Equity for the years ended
  December 31, 1997, 1996, and 1995..................................       25
 
Consolidated Statements of Cash Flows for the years ended December
  31, 1997, 1996, and 1995...........................................       26
 
Notes to Consolidated Financial Statements...........................     27 - 39
 
Report of Independent Accountants....................................       40
</TABLE>

 
       (2) Financial Statement Schedule:
 
               The following financial statement schedule of Yahoo! Inc. is
           submitted herewith and should be read in conjunction with the
           consolidated financial statements:
 

<TABLE>
<CAPTION>
                                                                          PAGE IN
                                                                         FORM 10-K
                                                                       -------------
<S>                                                                    <C>
Report of Independent Accountants on Financial Statement Schedule....       30
 
Schedule II -- Valuation and Qualifying Accounts for the years ended
  December 31, 1997, 1996, and 1995..................................       31
</TABLE>

 
               All other financial statement schedules required by Item 14(a)(2)
           have been omitted because they are inapplicable or the required
           information has been included in the consolidated financial
           statements or notes thereto.
 
                                       25

<PAGE>
       (3) Exhibits are incorporated herein by reference or are filed with this
           report as indicated below (numbered in accordance with Item 601 of
           Regulation S-K):
 

<TABLE>
<CAPTION>
EXHIBIT
NUMBER     DESCRIPTION
- - ---------  --------------------------------------------------------------------------------------------------------
<S>        <C>
3.1        Amended and Restated Articles of Incorporation of Registrant (Filed as Exhibit 3.1 to the Company's
           Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, and incorporated herein by
           reference.)
3.2        Amended and Restated Bylaws of Registrant (Filed as Exhibit 3.3 to the Company's Registration Statement
           on the Form SB-2, Registration No. 333-2142-LA, declared effective on April 11, 1996 [the "SB-2
           Registration Statement"], and incorporated herein by reference.)
10.1       Form of Indemnification Agreement with the Registrant's officers and directors (Filed as Exhibit 10.1 to
           the SB-2 Registration Statement and incorporated herein by reference.)
10.2       1995 Stock Plan, as amended, and form of stock option agreement (Filed as Exhibit 10.2 to the Company's
           Annual Report on Form 10-K for the year ended December 31, 1996 [the "December 31, 1996 10-K"] and
           incorporated herein by reference.)
10.3       Form of Management Continuity Agreement with the Registrant's Executive Officers (Filed as Exhibit 10.3
           to the SB-2 Registration Statement and incorporated herein by reference.)
10.4       Stock Purchase Agreement dated March 3, 1995 with each of David Filo and Jerry Yang (Filed as Exhibit
           10.4 to SB-2 Registration Statement and incorporated herein by reference.)
10.5       Series A Preferred Stock Agreement dated April 7, 1995 between the Registrant and Purchasers of Series A
           Preferred Stock (Filed as Exhibit 10.5 to the SB-2 Registration Statement and incorporated herein by
           reference.)
10.6       Form of Stock Restriction Agreements dated April 7, 1995 between the Registrant and Jerry Yang and David
           Filo (Filed as Exhibit 10.6 to the SB-2 Registration Statement and incorporated herein by reference.)
10.7       Series B Preferred Stock Agreement dated November 22, 1995 between the Registrant and Purchasers of
           Series B Preferred Stock (Filed as Exhibit 10.7 to the SB-2 Registration Statement and incorporated
           herein by reference.)
10.8       Series C Preferred Stock Agreement dated March 12, 1996 between the Registrant and SOFTBANK Holdings
           Inc. (Filed as Exhibit 10.8 to the SB-2 Registration Statement and incorporated herein by reference.)
10.9       Second Amended and Restated Investor Rights Agreement dated March 12, 1996 between the Registrant and
           certain shareholders (Filed as Exhibit 10.9 to the SB-2 Registration Statement and incorporated herein
           by reference.)
10.10      Second Amended and Restated Co-Sale Agreement dated March 12, 1996 between the Registrant and certain
           shareholders (Filed as Exhibit 10.10 to the SB-2 Registration Statement and incorporated herein by
           reference.)
10.11      Second Amended and Restated Voting Agreement dated March 12, 1996 between the Registrant and certain
           shareholders (Filed as Exhibit 10.11 to the SB-2 Registration Statement and incorporated herein by
           reference.)
10.12+     Publishing Agreement dated June 2, 1995 between the Registrant and IDG Books Worldwide, Inc. (Filed as
           Exhibit 10.12 to the SB-2 Registration Statement and incorporated herein by reference.)
10.13      Sublease Agreement dated June 6, 1996 relating to the Registrant's office at 3400 Central Expressway,
           Suite 201, Santa Clara, California (Filed as Exhibit 10.15 to the December 31, 1996 10-K and
           incorporated herein by reference.)
10.14+     Agreement dated January 15, 1996 between the Registrant and Ziff-Davis Publishing Company (Filed as
           Exhibit 10.19 to the SB-2 Registration Statement and incorporated herein by reference.)
10.15      1996 Employee Stock Purchase Plan and form of subscription agreement (Filed as Exhibit 10.20 to the SB-2
           Registration Statement and incorporated herein by reference.)
</TABLE>

 
                                       26

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER     DESCRIPTION
- - ---------  --------------------------------------------------------------------------------------------------------
<S>        <C>
10.16      1996 Directors' Stock Option Plan and form of option agreement (Filed as Exhibit 10.21 to the SB-2
           Registration Statement and incorporated herein by reference.)
10.17+     Yahoo! Canada Affiliation Agreement dated February 29, 1996 between the Registrant and Rogers
           Multi-Media Inc. (Filed as Exhibit 10.23 to the SB-2 Registration Statement and incorporated herein by
           reference.)
10.18      Standstill and Voting Agreement dated March 12, 1996 between the Registrant and SOFTBANK Holdings Inc.
           (Filed as Exhibit 10.26 to the SB-2 Registration Statement and incorporated herein by reference.)
10.19+     Joint Venture Agreement dated April 1, 1996 by and between Yahoo! Inc. and SOFTBANK Corporation (Filed
           as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1996
           [the "June 30, 1996 10-Q"] and incorporated herein by reference.)
10.20+     Yahoo! Japan License Agreement dated April 1, 1996 by and between Yahoo! Inc. and Yahoo! Japan
           Corporation (Filed as Exhibit 10.3 to the June 30, 1996 10-Q and incorporated herein by reference.)
10.21+     SOFTBANK Letter Agreement dated April 1, 1996 by and between Yahoo! Inc. and SOFTBANK Group (Filed as
           Exhibit 10.4 to the June 30, 1996 10-Q and incorporated herein by reference.)
10.22+     Joint Venture Agreement dated November 1, 1996 by and between Yahoo! Inc. and SB Holdings (Europe) Ltd.
           (Filed as Exhibit 10.30 to the December 31, 1996 10-K and incorporated herein by reference.)
10.23+     Yahoo! UK License Agreement dated November 1, 1996 by and between Yahoo! Inc. and Yahoo! UK (Filed as
           Exhibit 10.31 to the December 31, 1996 10-K and incorporated herein by reference.)
10.24+     Yahoo! Deutschland License Agreement dated November 1, 1996 by and between Yahoo! Inc. and Yahoo!
           Deutschland (Filed as Exhibit 10.32 to the December 31, 1996 10-K and incorporated herein by reference.)
10.25+     Yahoo! France License Agreement dated November 1, 1996 by and between Yahoo! Inc. and Yahoo! France
           (Filed as Exhibit 10.33 to the December 31, 1996 10-K and incorporated herein by reference.)
10.26+     Services Agreement dated November 1, 1996 by and between Yahoo! UK Ltd. and Ziff-Davis UK, Ltd. (Filed
           as Exhibit 10.34 to the December 31, 1996 10-K and incorporated herein by reference.)
10.27+     Services Agreement dated November 1, 1996 by and between Yahoo! GmbH and Ziff-Davis Verlag, GmbH (Filed
           as Exhibit 10.35 to the December 31, 1996 10-K and incorporated herein by reference.)
10.28+     Services Agreement dated November 1, 1996 by and between Yahoo! France, SARL and Ziff-Davis France, S.A.
           (Filed as Exhibit 10.36 to the December 31, 1996 10-K and incorporated herein by reference.)
10.29+     Netscape Communications Corporation Co-Marketing Agreement dated March 17, 1997 by and between Netscape
           Communications Corporation and Yahoo! Inc. (Filed as Exhibit 10.37 to the December 31, 1996 10-K and
           incorporated herein by reference.)
10.30+     Trademark License Agreement dated March 17, 1997 by and between Netscape Communications Corporation and
           Yahoo! Inc. (Filed as Exhibit 10.38 to the December 31, 1996 10-K and incorporated herein by reference.)
10.31+     Netscape Communications Corporation U.S. English-Language Net Search Program Premier Provider Services
           Agreement dated March 17, 1997 by and between Netscape Communications Corporation and Yahoo! Inc. (Filed
           as Exhibit 10.39 to the December 31, 1996 10-K and incorporated herein by reference.)
</TABLE>

 
                                       27

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER     DESCRIPTION
- - ---------  --------------------------------------------------------------------------------------------------------
<S>        <C>
10.32+     Amendment One to the Co-Marketing Agreement, dated June 30, 1997 between Yahoo! Inc. and Netscape
           Communications Corporation (Filed as Exhibit 10.1 to the June 30, 1997 10-Q and incorporated herein by
           reference.)
10.33+     International Net Search Program Services Agreement, dated June 30, 1997 between Yahoo! Inc. and
           Netscape Communications Corporation (Filed as Exhibit 10.2 to the June 30, 1997 10-Q and incorporated
           herein by reference.)
10.34      Trademark License Agreement, dated June 30, 1997 between Yahoo! Inc. and Netscape Communications
           Corporation (Filed as Exhibit 10.3 to the June 30, 1997 10-Q and incorporated herein by reference.)
10.35      Restructuring Agreement dated as of July 29, 1997 among the Registrant, Visa International Service
           Association, Visa Marketplace, Inc., Sterling Payot Company, and Sterling Payot Capital, L.P. (Filed as
           Exhibit 4.1 to the Company's Current Report on Form 8-K, dated July 29, 1997 and incorporated herein by
           reference.)
10.36      Joint Venture Agreement, dated August 31, 1997 between Yahoo! Inc., SOFTBANK Korea Corporation, SOFTBANK
           Corporation, and Yahoo! Japan Corporation (Filed as Exhibit 10.1 to the Company's Quarterly Report on
           Form 10-Q for the quarter ended September 30, 1997 [the "September 30, 1997 10-Q"] and incorporated
           herein by reference.)
10.37      Sublease Agreement, dated September 11, 1997 between Yahoo! Inc. and Amdahl Corporation (Filed as
           Exhibit 10.2 to the September 30, 1997 10-Q and incorporated herein by reference.)
10.38      Four11 Corporation 1995 Stock Option Plan Registrant (Filed as Exhibit 4.2 to the Company's Registration
           Statement on Form S-8, Registration No. 333-39105, dated October 30, 1997, and incorporated herein by
           reference.)
10.39*     Amendment Agreement dated September 17, 1997 by and between Yahoo! Inc. and SOFTBANK Corporation
10.40*     Amendment to Yahoo! Japan License Agreement dated September 17, 1997 by and between Yahoo! Inc. and
           Yahoo! Japan Corporation
10.41*     Services Agreement dated November 30, 1997 by and between Yahoo! Korea Corporation and SOFTBANK Korea
           Corporation
10.42*     Yahoo! Korea License Agreement dated November 30, 1997 by and between Yahoo! Inc., Yahoo! Korea
           Corporation, and Yahoo! Japan Corporation
13.1       Portions of the 1997 Annual Report to Shareholders
16.1       Letter dated March 6, 1996 from Coopers & Lybrand L.L.P., prior accountant of the Registrant (Filed as
           Exhibit 10.25 to the SB-2 Registration Statement and incorporated herein by reference.)
21.1       List of Subsidiaries
23.1       Consent of Independent Accountants
27.1       Financial Data Schedule
</TABLE>

 
- - ------------------------
+   Confidential treatment granted.
 
*   Confidential treatment requested.
 
    (b) Reports on Form 8-K
 
        On October 14, 1997, the Company filed a report on Form 8-K in
    conjunction with the signing of an Agreement and Plan of Reorganization
    whereby the Company would acquire Four11 Corporation.
 
        On October 30, 1997, the Company filed an amended report on Form 8-K
    which included certain financial statements of Four11 Corporation and the
    supplementary consolidated financial statements of Yahoo! Inc.
 
                                       28

<PAGE>

                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused the report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 12th day of
March, 1998.
 
                                YAHOO! INC.
 
                                By:              /s/ TIMOTHY KOOGLE
                                     -----------------------------------------
                                                   Timothy Koogle
                                       PRESIDENT AND CHIEF EXECUTIVE OFFICER
 
                               POWER OF ATTORNEY
 
    KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Timothy Koogle and Gary Valenzuela, his
attorneys-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any amendments to this Report on Form 10-K, and to file the
same, with Exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or substitute or substitutes may do or cause to
be done by virtue hereof.
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
 

<TABLE>
<CAPTION>
                SIGNATURE                                       TITLE                               DATE
- - ------------------------------------------  ---------------------------------------------  ----------------------
<C>                                         <S>                                            <C>
            /s/ TIMOTHY KOOGLE
    ---------------------------------       President and Chief Executive Officer              March 12, 1998
              Timothy Koogle                  (Principal Executive Officer)
 
           /s/ GARY VALENZUELA              Senior Vice President, Finance and
    ---------------------------------         Administration, and Chief Financial Officer      March 12, 1998
             Gary Valenzuela                  (Principal Financial Officer)
 
           /s/ JAMES J. NELSON
    ---------------------------------       Vice President, Finance (Principal Accounting      March 12, 1998
             James J. Nelson                  Officer)
 
             /s/ ERIC HIPPEAU
    ---------------------------------       Director                                           March 12, 1998
               Eric Hippeau
 
            /s/ ARTHUR H. KERN
    ---------------------------------       Director                                           March 12, 1998
              Arthur H. Kern
 
            /s/ MICHAEL MORITZ
    ---------------------------------       Director                                           March 12, 1998
              Michael Moritz
 
              /s/ JERRY YANG
    ---------------------------------       Director                                           March 12, 1998
                Jerry Yang
</TABLE>

 
                                       29

<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULE
 
To the Board of Directors of Yahoo! Inc.
 
    Our audits of the consolidated financial statements referred to in our
report dated January 9, 1998 which appears in the 1997 Annual Report to
Shareholders of Yahoo! Inc. (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item 14(a) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
 
/s/ PRICE WATERHOUSE LLP
San Jose, California
January 9, 1998

 
                                       30

<PAGE>
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                 YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                                                ADDITIONS
                                                                        --------------------------
                                                          BALANCE AT    CHARGED TO    CHARGED TO     WRITE-OFFS     BALANCE
                                                         BEGINNING OF    COSTS AND       OTHER         NET OF      AT END OF
ALLOWANCE FOR DOUBTFUL ACCOUNTS                              YEAR        EXPENSES      ACCOUNTS      RECOVERIES      YEAR
- - -------------------------------------------------------  -------------  -----------  -------------  -------------  ---------
<S>                                                      <C>            <C>          <C>            <C>            <C>
1997...................................................    $     665     $   2,812     $      --      $     879    $   2,598
1996...................................................    $      84     $     611     $      --      $      30    $     665
1995...................................................    $      --     $      84     $      --      $      --    $      84
</TABLE>

 
                                       31

<PAGE>

                               INDEX TO EXHIBITS
 

<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                                   DESCRIPTION
- - -----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
     10.39*  Amendment Agreement dated September 17, 1997 by and between Yahoo! Inc. and SOFTBANK Corporation
 
     10.40*  Amendment to Yahoo! Japan License Agreement dated September 17, 1997 by and between Yahoo! Inc. and
             Yahoo! Japan Corporation
 
     10.41*  Services Agreement dated November 30, 1997 by and between Yahoo! Korea Corporation and SOFTBANK Korea
             Corporation
 
     10.42*  Yahoo! Korea License Agreement dated November 30, 1997 by and between Yahoo! Inc., Yahoo! Korea
             Corporation, and Yahoo! Japan Corporation
 
     13.1    Portions of the 1997 Annual Report to Shareholders
 
     21.1    List of Subsidiaries
 
     23.1    Consent of Independent Accountants
 
     27.1    Financial Data Schedule
</TABLE>

 
- - ------------------------
 
* Confidential treatment requested
 
                                       32





<PAGE>

                              AMENDMENT AGREEMENT

This Agreement is made and entered into this 17th day of September, 1997, by 
and between Softbank Corporation, a Japanese corporation ("Softbank"), and 
Yahoo! Inc., a California corporation ("Yahoo!"), for the purpose of 
proposing the following amendments to the Joint Venture Agreement, dated 
April 1, 1996, and entered into between Softbank and Yahoo!.

The parties hereby agree as follows:

1.  Amendment of Joint Venture Agreement

(a) Board of Directors and Statutory Auditors: 
All of Section 6 of the Joint Venture Agreement shall be deleted and the 
parties shall agree that the Directors, Statutory Auditor, Representative 
Director and President of Yahoo! Japan Corporation, a Japanese corporation 
("Yahoo! Japan"), shall be elected pursuant to the Articles of Incorporation 
of Yahoo! Japan and applicable laws of Japan.  The parties shall agree to 
vote their shares so as to elect XX Softbank representative and XX Yahoo! 
representative to the Board, so long as the party so represented continues to 
hold at least X% of Yahoo! Japan's issued and outstanding shares.  The 
parties shall further agree that the number of directors shall initially be 
set at 5, and that they will not vote to increase or decrease the authorized
 
number of directors without each other's consent.

(b) Management of Yahoo! Japan:
All of Section 7 of the Joint Venture Agreement shall be deleted and the 
parties shall agree that Yahoo! Japan shall be managed pursuant to the 
Articles of Incorporation of Yahoo! Japan and applicable laws of Japan.  The 
parties shall agree to only vote with Yahoo!'s consent with respect to a 
merger or consolidation of Yahoo! Japan in which its shareholders do not 
retain a majority of the voting power in the surviving corporation, or a sale 
of all or substantially all of Yahoo! Japan's assets.  Each such event is 
referred to as an "Acquisition."

(c) Additional Capital:
All of Section 8 of the Joint Venture Agreement shall be deleted and the 
parties shall agree that the issuance of any additional shares of capital 
stock of Yahoo! Japan and loan guarantees and loans to Yahoo! Japan by any of 
its shareholders shall be made pursuant to the Articles of Incorporation of 
Yahoo! Japan and applicable laws of Japan.  The parties shall agree to not 
vote in favor of any future issuances of Yahoo! Japan's stock without 
Yahoo!'s consent, excepting issuances to employees pursuant to an employee 
stock option plan and other similar issuances.  Yahoo! and Softbank will 
agree on the size of the employee pool prior to the effectiveness of this 
Agreement pursuant to Section 3 below.

(d) Accounting and Access to Information: 
All of Section 10 of the Joint Venture Agreement shall be deleted and the 
parties shall agree that the accounting of and the shareholders' access to 
information of Yahoo! Japan shall be made pursuant to the Articles of 
Incorporation of Yahoo! Japan and applicable laws of Japan. 

(e) Provisions to be added:
The parties shall agree that the following provisions shall be added to the 
Joint Venture Agreement;

     i) The parties shall agree to not vote on any amendments to the Articles 
  of Incorporation of Yahoo! Japan that adversely affects either party without 
  each other's consent,

    ii) Each party shall give the other party a 20 day prior written notice 
  of its intention to sell Yahoo! Japan's shares,

                                1

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.


<PAGE>

   iii) Before either party can purchase additional shares of Yahoo! Japan's 
  stock on the open market from any third party, such purchasing party must 
  obtain prior written consent of the other party,

    iv) Before either party can sell its shares to a third party (including 
  open-market sales), it must provide the non-selling party with a right of 
  first refusal to purchase such shares on the same terms and conditions being
  offered to the third party (including any underwritten or other offering into
  the public market), and

    v) If the non-selling party declines to purchase the selling party's 
  shares in Yahoo! Japan, the non-selling party shall have the right to 
  participate in the sale of such shares by the selling party to the third 
  party on a pro rata basis.

3.  Effectiveness of Amendments 

All of the amendments described herein shall become effective only upon and 
after the effectiveness of the firmly underwritten initial offering of Yahoo! 
Japan's Common Stock on a principal securities exchange in Japan (a 
"Qualified IPO") that results in Yahoo! owning no less than XX of the voting 
power of Yahoo! Japan (assuming issuances of all of the shares reserved for 
the employee pool). 

4. Remains of the Joint Venture

Except as expressly amended hereunder, any and all terms of the Joint Venture 
Agreement shall remain in full force and effect.

5. Governing Law

This Agreement shall be governed and construed in accordance with the laws of 
Japan.


                                     2

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.


<PAGE>

In witness whereof, the parties hereto have caused this Agreement to be 
executed by their duly authorized representatives as of the date first above 
written.

YAHOO! INC.                            SOFTBANK CORPORATION



By: /s/ JERRY CHIH-YUAN YANG           By: /s/ MASAYOSHI SON  
    -----------------------------          -----------------------------
    Name: Jerry Chih-Yuan Yang             Name: Masayoshi Son 
    Title: Chief Yahoo                     Title: President



                                    3

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.




<PAGE>


                AMENDMENT TO YAHOO! JAPAN LICENSE AGREEMENT
               ---------------------------------------------

This AMENDMENT TO YAHOO! JAPAN LICENSE AGREEMENT (the "AMENDMENT AGREEMENT") 
is entered into as of this 17th day of September, 1997 by and between:

     YAHOO! INC. ("YAHOO"), a California corporation with its principal 
offices at 625 Vaqueros Avenue, Sunnyvale, California  94086; and 

     YAHOO JAPAN CORPORATION, ("YJC"), a Japanese corporation with its 
principal offices at 3-42-3, Nihonbashi-Hamcho, Chuo-ku, Tokyo 103 Japan, 
with reference to the following:

                              RECITALS

     The following provisions form the basis for, and are hereby made a part 
of, this Agreement:

     A. Yahoo and YJC have entered into a License Agreement dated April 1, 
1996 (the "AGREEMENT") pursuant to which terms Yahoo granted YJC licenses to 
certain Yahoo intellectual property rights.

     B. Yahoo and YJC now wish to amend certain terms of the Agreement in 
connection with a proposed initial public offering of common stock of YJC as 
set forth herein. 

                             AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and conditions 
set forth herein and other good and valuable consideration, the receipt and 
sufficiency of which are hereby acknowledged, the parties hereto do hereby 
agree as follows:

1.   For purposes of this Amendment
 Agreement, any capitalized terms not 
otherwise defined herein shall have the meanings ascribed to them in the 
Agreement.

2.   Section 2.1 of the Agreement is deleted and restated in its entirety as 
follows:

     "2.1 LICENSE GRANT TO YJC.  Subject to all of the terms and conditions 
of this Agreement, Yahoo hereby grants to YJC the following:

     (i) an exclusive right and license to use, reproduce, display, perform, 
transmit, distribute, market, promote, and permit YJC Users to use, in 
on-line form and in the manner described in this Agreement, Yahoo Japan 
solely under a title that indicates the word "Yahoo!" (such as "Yahoo! 
Japan");

     (ii) a non-exclusive (except as provided in Section 2.7) right to use, 
reproduce, display, perform, distribute and transmit the Yahoo Brand Features 
in Japan solely as a part of 

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.


<PAGE>

the mark "Yahoo! Japan" in full form and solely in connection with 
advertising, marketing, and promoting Yahoo Japan; 

     (iii) an exclusive right to use, reproduce, and display the Yahoo Brand 
Features in Japan solely in connection with Related Print Publications; 
PROVIDED, HOWEVER, that Yahoo obtains written consent from Ziff-Davis 
Publishing Company to grant such rights, which consent Yahoo shall use best 
efforts to obtain; and PROVIDED, FURTHER, that YJC shall obtain the prior 
written consent of Yahoo to use the Yahoo Brand Features on each such print 
material, which consent Yahoo shall not unreasonably withhold;

     (iv) a non-exclusive (except as provided in Section 2.7) right and 
license to use and reproduce for internal purposes any and all Yahoo-owned 
software (in object code and source code forms) associated with the Yahoo 
Properties solely to facilitate the exploitation of the Yahoo Properties and 
YJC's internal use in furtherance of YJC's rights, as anticipated and 
described in this Agreement; and

     (v) subject to the terms and limitations set forth in Section 2.3 of  
this Agreement, a non-exclusive right (except as provided in Section 2.7) to 
make Yahoo Japan Derivative Works, solely for use, incorporation, and 
integration in Yahoo Japan and solely as necessary for the Japanese consumer 
market in Japan;

     (vi) the exclusive worldwide right to develop, create, maintain, 
operate, commercially exploit, market, promote and otherwise distribute Yahoo 
Japan through any electronic means, subject to the exceptions set forth in 
Section 2.7 hereto.

PROVIDED, HOWEVER, that YJC Users' right to access and use the Yahoo 
Properties shall be subject to such customary limitations and restrictions on 
use and reproduction as Yahoo may impose with respect to the Yahoo 
Properties.  No rights or licenses are granted by Yahoo to YJC except for 
those expressly granted in this Section 2.1."

3.   Section 2.7 of the Agreement is deleted and restated in its entirety as 
follows:

    "2.7 EXCLUSIVITY.   XXXXXXXXXXXXXXXXXXXX 
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

4.   Section 9.1 of the Agreement is deleted and restated in its entirety as 
follows:

     "9.1 TERM.  Unless earlier terminated as provided herein or unless 
otherwise provided in the Joint Venture Agreement, this Agreement shall be 
effective during the period 

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.


<PAGE>

(the "TERM") from the date of this Agreement until the sooner of: (i) the 
date on which the parties hereto mutually agree to terminate this Agreement; 
(ii) the date on which this Agreement is terminated under Section 9.2; (iii) 
upon a sale or series of sales of YJC's stock to a competitor or a group of 
competitors of Yahoo as determined by Yahoo in its reasonable discretion, 
which results in such competitor or a group of competitors having beneficial 
ownership of at least XXXXXXXXXXXXXXXX of the total outstanding stock of YJC; 
(iv) upon a merger, consolidation or acquisition of YJC, in which transaction 
its shareholders do not retain a majority of the voting power in the 
surviving corporation, or a purchase of all or substantially all of YJC's 
assets (an "ACQUISITION"), provided, however, that any Acquisition which has 
occurred with Yahoo's consent shall not result in termination of this 
Agreement.

5.   This Amendment Agreement shall become effective only upon and after the 
effectiveness of the Amendment Agreement to Joint Venture Agreement by and 
between Yahoo and SOFTBANK Corporation dated the even date hereof in 
accordance with the terms of Section 3 of such Amendment Agreement to Joint 
Venture Agreement.

6.   Except as expressly provided herein, the Agreement shall remain in full 
force and effect.

7.   This Amendment Agreement shall be interpreted and construed in 
accordance with the laws of the State of California, with the same force and 
effect as if fully executed and performed therein, and the laws of the United 
States of America.  Each of YJC and Yahoo hereby consents and submits to the 
personal jurisdiction of the United States and state courts of the State of 
California, and expressly agrees that the venue for any action arising under 
this Amendment Agreement shall be the appropriate court sitting within the 
Northern District of California.

8.   This Amendment Agreement may be executed with counterpart signatures, 
which may be effectively delivered by telecopy.  The miscellaneous provisions 
of Article 10 of the Agreement shall apply to this Amendment Agreement.

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.



<PAGE>

IN WITNESS WHEREOF, the parties to this Amendment Agreement by their duly 
authorized representatives have executed this Amendment Agreement as of the 
date first above written.

YAHOO JAPAN CORPORATION              YAHOO! INC.

By:  /s/ MASAYOSHI SON               By:  /s/ TIMOTHY KOOGLE 
    ----------------------                ----------------------
    Name:  Masayoshi Son                  Name:  Timothy Koogle
    Title:  President & CEO               Title:  President




          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.





<PAGE>

                              SERVICES AGREEMENT

     This Services Agreement (the "AGREEMENT") is made as of November 30, 1997 
(the "EFFECTIVE DATE") by and between Yahoo! Korea Corporation, a corporation 
organized under the laws of the Republic of Korea (the "COMPANY") having its 
principal office at 502 Kyungki Bldg., 184-4, Chungjeong-Ro 2-Ka, Seodaemun-Ku, 
Seoul Korea 120-012, and SOFTBANK Korea Corporation, a corporation organized 
under the laws of the Republic of Korea ("SOFTBANK Korea") having its principal 
office at 2 Flr., 4 Naengchen-dong, Seodaemun-ku, Seoul, Korea.

                                  RECITALS

     A. The Company has been organized under the laws of the Republic of 
Korea ("KOREA"), and is XX% owned by Yahoo! Inc., a California corporation 
("YAHOO"), XX% owned by SOFTBANK Korea, a Korean corporation, XX% owned by 
SOFTBANK Corporation, a Japanese corporation, and X% owned by Yahoo! Japan 
Corporation, a Japanese corporation, pursuant to a joint venture agreement 
dated as of the Effective Date (the "JOINT VENTURE AGREEMENT"), in order to 
operate in Korea (the "TERRITORY") a localized version of the Yahoo! Guide 
(such localized guide, products and services to be referred to herein as 
"YAHOO! KOREA"), to develop related products and online services in the 
Territory and to conduct certain other business related
 to such activities; 
and to conduct certain other business related to such activities.

     B. The Company desires that SOFTBANK Korea provide certain services for 
the Company as set forth below (the "SERVICES") and SOFTBANK Korea desires to 
provide such Services for the Company.

                                   AGREEMENT

     The parties hereto agree as follows:

1. OFFICE, PERSONNEL, FINANCIAL AND ADMINISTRATIVE SERVICES.

     1.1 SERVICES.  SOFTBANK Korea shall provide the following office, 
personnel, financial and administrative Services (the "Office Services") to 
the Company:

               (a) SOFTBANK Korea shall use its diligent efforts in procuring 
office space for employees of the Company, along with related office services 
such as utilities, telecommunications equipment, general office supplies, 
mailroom services, cleaning services (including the costs of installment and 
maintenance of lines, office units and the PBX switch as well as an estimated 
amount for actual calls), maintenance services and general office equipment 
(for example, photocopiers and telefax machines); PROVIDED, HOWEVER, that 
SOFTBANK Korea shall obtain the Company's approval prior to signing any 
documents or making any commitments to third parties with respect to such 
office space or related office services.

               (b) SOFTBANK Korea shall provide the Company with such time of 
SOFTBANK Korea's technical support, sales, secretarial, administrative and 
management 

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.



<PAGE>

personnel as is necessary to launch Yahoo! Korea on such date as the parties 
may mutually agree (the "LAUNCH DATE"), and thereafter until the completion 
of the hiring of the Company's initial technical support, sales, secretarial, 
administrative and management personnel.  SOFTBANK Korea shall use all 
reasonable efforts to recruit and hire for the Company those personnel 
specified in the Company's Operating Plan.  In addition, SOFTBANK Korea shall 
use all reasonable efforts to provide the Company with referrals for 
qualified candidates and to allow the Company access to SOFTBANK Korea's 
recruiting channels.

               (c) SOFTBANK Korea shall provide the Company with financial 
management and other administrative support including payroll processing, 
accounting, purchasing, management information, recruiting, human resource 
and facility services.  SOFTBANK Korea shall also provide to the Company all 
other similar administrative and operational services required to carry out 
the Company's Operating Plan.  In addition, SOFTBANK Korea covenants that it 
will provide general management assistance to the Company, including the 
services of a general manager to manage the business of the Company, through 
September of 1998.  Such general manager shall be subject to the Company's 
normal reporting and accounting policies and procedures.

     1.2 REIMBURSEMENT.  As consideration for SOFTBANK Korea's performance of 
the Office Services as set forth in Section 1.1 above, the Company shall 
reimburse SOFTBANK Korea for:

          (a) SOFTBANK Korea's reasonable, documented, out-of-pocket expenses 
to third parties reasonably incurred in connection with the Office Services 
(including those incurred prior to the Effective Date on behalf of the 
Company), which shall include actual charges for telecommunications calls, 
special postage, courier service, and any other similar products or services 
provided by third parties that are individually billed to SOFTBANK Korea and 
that are not included in its general charges contemplated by Section 1.2(a) 
above; and

          (b) any other reasonable, pre-approved, documented, out-of-pocket 
expenses incurred by SOFTBANK Korea or its personnel on behalf of the Company 
in the course of providing the Office Services hereunder including, without 
limitation, travel expenses and employee procurement fees and expenses.

     1.3 INVOICES.  SOFTBANK Korea shall send an itemized monthly invoice to 
the Company for the Office Services provided by SOFTBANK Korea during the 
previous month.  The Company shall pay such amount within thirty (30) days 
following receipt of the invoice.

2. PROMOTIONAL SERVICES.

     2.1 ADVERTISING SERVICES.  SOFTBANK Korea shall provide the Company with 
the right to run advertisements and promotions in any and all publications 
and services owned, operated or otherwise under the direct or indirect 
control of SOFTBANK Korea at the most favorable rate offered by SOFTBANK 
Korea to any third party for similar advertisements and promotions.  In 
addition, SOFTBANK Korea shall use its best efforts to secure for the Company 

                               -2-

          [X] CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS 
                 FILED SEPARATELY WITH THE COMMISSION.



<PAGE>

the right to run advertisements and promotions in any and all publications, 
services, radio stations, television stations and billboards owned, operated 
or otherwise under the direct or indirect control of companies in which 
SOFTBANK Korea has, directly or indirectly, at least 50% equity ownership, 
which companies are listed on SCHEDULE A hereto (the "SOFTBANK KOREA 
SUBSIDIARIES") at the most favorable rate offered by such SOFTBANK Korea 
Subsidiaries to such companies' most favored licensee for similar 
advertisements and promotions.  SOFTBANK Korea shall also use its 
commercially reasonable efforts to secure for the Company the right to run 
advertisements and promotions in any and all publications, services, radio 
stations, television stations and billboards owned, operated or otherwise 
under the direct or indirect control of companies in which SOFTBANK Korea 
has, directly or indirectly, at least 10% equity ownership or that control, 
or are under common control with, SOFTBANK Korea, which companies are listed 
on SCHEDULE B hereto (the "SOFTBANK KOREA AFFILIATES") at the most favorable 
rate offered by such SOFTBANK Korea Affiliates to such companies' most 
favored licensee for similar advertisements and promotions.  All advertising 
services provided hereunder shall be subject to the applicable rate card or 
other applicable terms and conditions of the publication or service being 
used.

     2.2 HYPERTEXT LINKS.  Commencing on the Launch Date, SOFTBANK Korea 
shall (i) provide prominent placement of hypertext links to Yahoo! Korea on 
all online services owned, operated or otherwise under its control in a 
manner that is reasonably acceptable to the Company, (ii) use its best 
efforts to ensure prominent placement of hypertext links to Yahoo! Korea on 
all online services owned, operated or otherwise under the control of the 
SOFTBANK Korea Subsidiaries in a manner that is reasonably acceptable to the 
Company, and (iii) use its commercially reasonable efforts to ensure 
prominent placement of hypertext links to Yahoo! Korea on all online services 
owned, operated or otherwise under the control of the SOFTBANK Korea 
Affiliates in a manner that is reasonably acceptable to the Company.  For the 
purposes of this Section 2, "ONLINE SERVICES" shall mean any service that 
provides text, graphics, sound and/or other media to subscribers 
electronically.

     2.3 PARTICIPATION IN MARKETING AND PROMOTIONAL ACTIVITIES.  SOFTBANK 
Korea shall, as soon as reasonably practicable, inform the Company of all 
upcoming advertising, marketing and promotional activities related to the 
online services owned, operate or otherwise under its direct or indirect 
control and allow the Company to participate in such activities, subject to 
the Company's agreement to pay such portion of the costs associated with such 
activities as fairly represents the Company's participation therein.  In 
addition, SOFTBANK Korea shall, as soon as reasonably practicable, inform the 
Company of all upcoming advertising, marketing and promotional activities 
related to the online services owned, operated or otherwise under the direct 
or indirect control of the SOFTBANK Korea Subsidiaries and use its best 
efforts to have the SOFTBANK Korea Subsidiaries allow the Company to 
participate in such activities, subject to the Company's agreement to pay 
such portion of the costs associated with such activities as fairly 
represents the Company's participation therein.  SOFTBANK Korea shall also, 
as soon as reasonably practicable, inform the Company of all upcoming 
advertising, marketing and promotional activities related to the online 
services owned, operate or otherwise under the direct or indirect control of 
the SOFTBANK Korea Affiliates and use its commercially reasonable 

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efforts to have the SOFTBANK Korea Affiliates allow the Company to 
participate in such activities, subject to the Company's agreement to pay 
such portion of the costs associated with such activities as fairly 
represents the Company's participation therein.  Further, SOFTBANK Korea 
shall (i) cooperate with the Company, (ii) use its best efforts to have the 
SOFTBANK Korea Subsidiaries cooperate with the Company and (iii) use its 
commercially reasonable efforts to have the SOFTBANK Korea Affiliates 
cooperate with the Company in connection with other promotional activities in 
the Territory as may be appropriate including, for example, joint 
participation in marketing and promotional events such as trade shows, 
seminars and roundtable discussions.

3. ADVERTISING SALES SERVICES.

     3.1 ADVERTISING SALES SERVICES.  During the term of this Agreement, 
SOFTBANK Korea shall use its best efforts to assist the Company in 
establishing channels for selling advertising sponsorship, linking and 
similar promotional rights (collectively, "ADVERTISING RIGHTS") on Yahoo! 
Korea to advertisers targeting the Territory (the "ADVERTISERS").  
Notwithstanding the foregoing, the Company shall have the right to sell or 
otherwise provide, on its own behalf, Advertising Rights on Yahoo! Korea.  In 
addition, the Board of Directors of the Company may, in its sole discretion, 
permit Yahoo and SOFTBANK Korea to sell advertising space on Yahoo! Korea, 
subject to appropriate restrictions and limitations to be mutually agreed to 
by the parties.  The Board of Directors of the Company shall have the right 
to engage third party sales representatives to sell Advertising Rights on 
Yahoo! Korea.

     3.2 ADVERTISING SALES GUIDELINES.  The parties hereby acknowledge that 
the Company may, from time to time and in its sole discretion, (a) set such 
standards and adopt such policies and guidelines with regard to the 
acceptance of advertisements and advertising clients on Yahoo! Korea and (b) 
determine the pricing applicable to the sale of Advertising Rights on Yahoo! 
Korea.  Any sale of Advertising Rights shall be subject to such Company 
standards, policies, guidelines, price rates and procedures for 
advertisements and Advertising Rights as shall be in effect at the time of 
the proposed sale and the Company may reject any proposed advertisement or 
advertising client that the Company, in its sole discretion, determines does 
not meet the Company's standards, policies and/or guidelines.  Further, any 
sale of Advertising Rights shall be subject to the proposed advertising 
client's agreement to be bound by the Company's standard advertising sales 
agreement as is then in effect.

     3.3 COVENANT OF SOFTBANK KOREA. SOFTBANK Korea shall not quote prices or 
make any other representations regarding Advertising Rights on Yahoo! Korea 
or www.yahoo.com other than as expressly authorized by the Company.

4. MANAGEMENT SUPPORT

     SOFTBANK Korea covenants to ensure that its officers and directors will, 
as requested by the Company's Board, provide reasonable support and 
assistance to the Company in 

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<PAGE>

facilitating discussions between the Company and third party strategic 
partners and other service providers located in Korea.  

5. CONTENT LICENSES

     Upon the Company's request, SOFTBANK Korea will use its best efforts to 
facilitate, with respect to the SOFTBANK Korea Subsidiaries, and use its 
commercially reasonable efforts to facilitate, with respect to the SOFTBANK 
Korea Affiliates, providing license to the Company of any content owned by (or 
licensed, with the right to sublicense, to) the SOFTBANK Korea Subsidiaries or 
the SOFTBANK Korea Affiliates pursuant to an agreement that provides that (a) 
the Company will have the right to use, modify, reproduce, publicly display, 
publicly perform, distribute and transmit such content on terms no less 
favorable than those offered to its most favored licensees and (b) the 
license(s) granted thereunder will survive any termination of this Agreement.  
The parties further agree to ensure that any such third party content licensed 
to the Company may be complemented by content created by the Company (the 
"COMPLEMENTARY CONTENT").  The Company shall maintain ownership and all 
intellectual property rights to the  Complementary Content.  


6. TERM AND TERMINATION.

     6.1 TERM. Unless earlier terminated as provided herein, this Agreement 
shall be effective during the period (the "TERM") from the Effective Date of 
this Agreement until the sooner of: (a) the date on which this Agreement is 
terminated under Sections 6.2, 6.3 or 6.4 hereto; or (c) the date of 
termination of the Joint Venture Agreement. Upon termination, all rights and 
obligations of each party hereto shall cease as of the date of termination 
and any amounts owed hereunder shall be paid in full; PROVIDED, HOWEVER, that 
rights and obligations set forth in Sections 7, 8, 9, 10 and 11 shall survive 
the termination of this Agreement. Notwithstanding the foregoing, the rights 
and obligations set forth in Section 1 shall expire on the first anniversary 
of the Effective Date, subject to earlier termination pursuant to this 
Section 6, provided that, no later than ten (10) months following the 
Effective Date, the parties will enter into good faith negotiations to renew 
the rights and obligations set forth in Section 1 and subsequently, but not 
later than the first anniversary of the Effective Date, execute a written 
addendum to this Agreement specifying the new expiration date for Section 1 
and such other terms and conditions as the parties may agree and, provided 
further that, the parties shall remain liable for any liabilities arising 
from any breach of the Agreement prior to any such termination.

     6.2 SOFTBANK KOREA'S RIGHT TO TERMINATE FOR BREACH.  In the event that 
the Company shall commit any material breach under this Agreement and such 
breach is not cured within thirty (30) days following receipt of written 
notice thereof from SOFTBANK Korea, SOFTBANK Korea shall have the right (but 
not the obligation), in addition to all other legal and equitable remedies 
that may be available to it, to terminate this Agreement.

     6.3 COMPANY'S RIGHT TO TERMINATE FOR BREACH.  In the event that SOFTBANK 
Korea or an SOFTBANK Korea Affiliate shall commit any material breach under 
this Agreement and 

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such breach is not cured within thirty (30) days following receipt of written 
notice thereof from the Company, the Company shall have the right (but not 
the obligation), in addition to all other legal and equitable remedies that 
may be available to it, to terminate this Agreement.

     7. DIRECTION AND CONTROL OF SOFTBANK KOREA'S PERSONNEL; INDEMNIFICATION.

SOFTBANK Korea shall have the right to direct and control its personnel 
and/or any third parties providing the Services hereunder and to determine 
the conditions of employment for all such personnel providing the Services, 
including without limitation, their working hours, employment and vacation 
policies, benefits, seniority, promotions and assignments.  SOFTBANK Korea 
shall also have the exclusive right to hire and fire its personnel.  
Notwithstanding the foregoing, SOFTBANK Korea shall (a) consider, in good 
faith, the Company's suggestions with regard to SOFTBANK Korea's staffing as 
it relates to the provision of the Services and (b) upon the Company's 
reasonable request, prohibit an employee from performing Services if the 
Company has received one or more complaints from a third party regarding such 
employee's provision of Services.  SOFTBANK Korea will be solely responsible 
for compensation of its personnel and for all withholding taxes, unemployment 
insurance, workmen's compensation, and any other insurance and fringe 
benefits with respect to such personnel.  SOFTBANK Korea shall be solely 
responsible for severance or amounts payable upon the termination of 
employment of such personnel or any dispute or claim concerning that 
termination, and SOFTBANK Korea shall indemnify, defend and hold the Company 
and its officers, directors, agents and securityholders harmless from and 
against any and all losses, expenses, damages, or claims incurred by or 
brought against them by SOFTBANK Korea personnel relating to such 
termination, dispute or claims.  In addition, SOFTBANK Korea nor any of their 
employees, directors or officers shall make any representations regarding the 
Company, Yahoo! Korea or Yahoo to Advertisers or other individuals except as 
expressly set forth in this Agreement or as approved in writing by the 
Company and SOFTBANK Korea shall indemnify, defend and hold the Company and 
its officers, directors, agents and securityholders harmless from and against 
any and all losses, expenses, damages, or claims incurred by or brought 
against them as a result of such unauthorized representations.

8. CONFIDENTIALITY.

     8.1 The parties recognize that, in connection with the performance of 
this Agreement, each of them may disclose to the others its Confidential 
Information (as defined below).  The party receiving any Confidential 
Information agrees to maintain the confidential status of such Confidential 
Information and not to use any such Confidential Information for any purpose 
other than the purpose for which it was originally disclosed to the receiving 
party, and not to disclose any of such Confidential Information to any third 
party.  No party shall disclose the others' Confidential Information to its 
employees and agents except on a  "need-to-know" basis.

     8.2 The parties acknowledge and agree that each may disclose 
Confidential Information:  (a) as required by law or the rules of the 
National Association of Securities Dealers, Inc. or any applicable securities 
exchange; (b) to their respective directors, officers, employees, 

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<PAGE>

attorneys, accountants and other advisors, who are under an obligation of 
confidentiality, on a "need-to-know" basis; (c) to investors or joint venture 
partners, who are under an obligation of confidentiality, on a "need-to-know" 
basis; or (d) in connection with disputes or litigation between the parties 
involving such Confidential Information and each party shall endeavor to 
limit disclosure to that purpose and to ensure maximum application of all 
appropriate judicial safeguards (such as placing documents under seal).  In 
the event a party is required to disclose Confidential Information as 
required by law, such party will, to the extent practicable, in advance of 
such disclosure, provide the disclosing party with prompt notice of such 
requirement.  Such party also agrees, to the extent legally permissible, to 
provide the disclosing party, in advance of any such disclosure, with copies 
of any information or documents such party intends to disclose (and, if 
applicable, the text of the disclosure language itself) and to cooperate with 
the disclosing party to the extent the disclosing party may seek to limit 
such disclosure.

     8.3 "CONFIDENTIAL INFORMATION" shall mean any information disclosed in 
the course of this Agreement, which is identified as or should be reasonably 
understood to be confidential or proprietary to the disclosing party, 
including, but not limited to, know-how, trade secrets, log data, technical 
processes and formulas, source codes, product designs, sales, cost and other 
unpublished financial information, product and business plans, projections, 
pricing, advertising and marketing data.  "Confidential Information" shall 
not include information which:  (a) is known by the recipient on, or becomes 
known to the recipient following, the Effective Date directly or indirectly 
from a third party source other than one having an obligation of 
confidentiality to the disclosing party; (b) hereafter becomes known 
(independently of disclosure by the disclosing party) to the recipient 
directly or indirectly from a source other than one having an obligation of 
confidentiality to the disclosing party; (c) becomes publicly known or 
available or otherwise ceases to be secret or confidential, except through a 
breach of this Agreement by the recipient; or (d) is or was independently 
developed by the recipient without use of or reference to the disclosing 
party's Confidential Information, as shown by evidence in the recipient's 
possession.

     9. NOTICES.

     Except as otherwise provided herein, any notice or other communication 
to be given hereunder shall be in writing and shall be (as elected by the 
party giving such notice):  (a) personally delivered; (b) transmitted by 
postage prepaid registered or certified airmail, return receipt requested; 
(c) transmitted by electronic mail via the Internet with receipt being 
acknowledged by the recipient by return electronic mail (with a copy of such 
transmission concurrently transmitted by postage prepaid registered or 
certified airmail, return receipt requested); (d) transmitted by facsimile 
(with a copy of such transmission by postage prepaid registered or certified 
airmail, return receipt requested); or (e) deposited prepaid with a 
nationally recognized overnight courier service.  Unless otherwise provided 
herein, all notices shall be deemed to have been duly given on:  (x) the date 
of receipt (or if delivery is refused, the date of such refusal) if delivered 
personally, by electronic mail, facsimile or by courier; or (y) three (3) 
days after the date of posting if transmitted by mail.  Notice hereunder 
shall be directed to a party 

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<PAGE>

at the address for such party as set forth on Schedule A or in the first 
paragraph of this Agreement.  Any party may change its address for notice 
purposes hereof on not less than three (3) days prior notice to the other 
party pursuant to this Section 9

10. NON-COMPETITION.

     During the term of the Joint Venture Agreement and for a period of 
XXXXXXXXXXXX thereafter, neither SOFTBANK Korea nor any subsidiaries of 
SOFTBANK Korea that may come into existence after the date of this Agreement 
shall engage or otherwise participate, directly, indirectly, by license, 
joint venture, security ownership or otherwise, in a business or service that 
offers, in the Territory, any significant portion of the content or services 
offered, or proposed to be offered, by the Company during the term of the 
Joint Venture Agreement (a "COMPETITIVE SERVICE").  Competitive Services 
shall include, without limitation, the services owned, operated, or offered 
by the companies listed in SCHEDULE C attached hereto, and any other third 
party online navigational service or information aggregator that provides a 
comprehensive hierarchical directory or text-based index of worldwide web 
sites.  SCHEDULE C may be updated on a quarterly basis by Yahoo, subject to 
SOFTBANK Korea's approval which may not be unreasonably withheld.

11. MISCELLANEOUS.

     11.1 COUNTERPARTS.  This Agreement may be executed in any number of 
counterparts with the same effect as if all parties hereto had all signed the 
same document.  All counterparts shall be construed together and shall 
constitute one agreement.

     11.2 NO ASSIGNMENT.  Neither party shall transfer or assign any rights 
or delegate any obligations hereunder, in whole or in part, whether 
voluntarily or by operation of law, without the prior written consent of the 
other party.  Any purported transfer, assignment or delegation by either 
party without the appropriate prior written approval shall be null and void 
and of no force or effect.  Notwithstanding the foregoing, each party shall 
have the right to assign this Agreement to any successor of such party by way 
of merger or consolidation or the acquisition of all or substantially all of 
the business and assets of the assigning party relating to the Agreement.

     11.3 HEADINGS.  Sections, titles or captions in no way define, limit, 
extend or describe the scope of this Agreement nor the intent of any of its 
provisions.

     11.4 SEVERABILITY.  Any provision of this Agreement that is prohibited 
or unenforceable in any jurisdiction shall, as to such jurisdiction, be 
ineffective to the extent of such prohibition or unenforceability without 
invalidating the remaining portions hereof or affecting the validity or 
enforceability of such provision in any other jurisdiction.

     11.5 ENTIRE AGREEMENT.  This Agreement contains the entire agreement of 
the parties with respect to the subject matter hereof, and supersedes all 
prior and/or contemporaneous agreements or understandings, written or oral, 
between the parties with respect to the subject matter hereof.


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     11.6 GOVERNING LAW.  This Agreement shall be governed by and interpreted 
under the laws of Korea, and not under the Convention for the International 
Sale of Goods.

     11.7 AMENDMENT.  This Agreement may not be amended or modified by the 
parties in any manner, except by an instrument in writing signed on behalf of 
each of the parties to which such amendment or modification applies by a duly 
authorized officer or representative.

     11.8 WAIVER.  Any of the provisions of this Agreement may be waived by 
the party entitled to the benefit thereof.  Neither party shall be deemed, by 
any act or omission, to have waived any of its rights or remedies hereunder 
unless such waiver is in writing and signed by the waiving party, and then 
only to the extent specifically set forth in such writing.  A waiver with 
reference to one event shall not be construed as continuing or as a bar to or 
waiver of any right or remedy as to a subsequent event.

     11.9 RECOVERY OF COSTS AND EXPENSES.  If either party to this Agreement 
brings an action against the other party to enforce its rights under this 
Agreement, the prevailing party shall be entitled to recover its costs and 
expenses, including, without limitation, attorneys' fees and costs incurred 
in connection with such action, including any appeal of such action.



                       [Signature page follows]



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 
executed by their respective duly authorized officers or representatives as 
of the Effective Date.

YAHOO! KOREA CORPORATION                       YAHOO! INC.

By:  /s/ JIN YOUM                              By:  /s/ HEATHER KILLEN 
     --------------------------                     --------------------------
Name:   Jin Youm                               Name:    Heather Killen
Title:  President                              Title:   Vice President


SOFTBANK KOREA CORPORATION

By:  /s/ HONG SUNG LEE  
     --------------------------
Name:    Hong-Sun Lee  
Title:   President and 
         Chief Executive Officer



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<PAGE>

                              SCHEDULE A

                List of Softbank Korea Subsidiaries

                                 NONE


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<PAGE>

                               SCHEDULE B

                   List of Softbank Korea Affiliate


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<PAGE>

                              SCHEDULE C

XXXXXXXXX
XXXXXXXXXXX
XXXXXXXX
XXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXX XXXXXXXX XXXXXX XXXXXX
XXXXX XXXXXX
XXXXXXXXX
XXXXXXXXX
XXXXXXXX
XXX-XXXX
XXXXX
XXXXX
XXXXXXXXXXXX
XXXXXXX
XXXXXX

XXXX XXXXX XXXXX
XXXXXX (XXXXXXXXX XXXXXXXXXX, XXXXXXXX)
XXXXXX (XXX)
XXXXXX (XXXXXXX, XXXXXXXX)
XXXXXXXX
XXXXXXX
XXXXX
XXXX XXXX
XXXXXX.XXX (XXXX)
XXXXXX XXXXX
XXXXXXXXX
XXXXXXXX
XXXXXXXXXXX.XXX



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<PAGE>


                  YAHOO! KOREA LICENSE AGREEMENT

                         by and among
 
                        YAHOO! INC.,

                  YAHOO! KOREA CORPORATION

                            AND

                  YAHOO! JAPAN CORPORATION

                     NOVEMBER  30, 1997


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                         YAHOO! KOREA LICENSE AGREEMENT

     This YAHOO! KOREA LICENSE AGREEMENT (the "AGREEMENT") is entered into as 
of  November 30, 1997 (the "EFFECTIVE DATE") by and among: 

     YAHOO! INC., a California corporation ("YAHOO") with its principal 
offices at 3400 Central Expressway, Santa Clara, California  95051;

     YAHOO! KOREA CORPORATION, a corporation organized under the laws of the 
Republic of Korea (the "COMPANY"), with its principal offices at 502 Kyungki 
Bldg., 184-4, Chungjeong-Ro 2-Ka, Seodaemun-Ku, Seoul Korea 120-012; and

     YAHOO! JAPAN CORPORATION, a Japanese corporation ("YAHOO JAPAN"), with 
its principal offices at 24-1, Nihonbashi-Hakozakicho, Chuo-ku, Tokyo 103 
Japan, solely in connection with the rights and obligations set forth in 
Article IV of this Agreement.

                                    RECITALS

     The following provisions form the basis for, and are hereby made a part 
of, this Agreement:

     A.  Yahoo owns, operates and distributes a leading index and directory 
of Internet resources, including a hierarchical index, information indexing 
and retrieval
 software and certain other elements of content and software 
(www.yahoo.com);

     B. The Company has been organized under the laws of the Republic of 
Korea, and is XX% owned by Yahoo, XX% owned by SOFTBANK Korea Corporation, a 
corporation organized under the laws of the Republic of Korea, XX% owned by 
SOFTBANK Corporation, a Japanese corporation, and X% owned by Yahoo Japan 
pursuant to a joint venture agreement dated as of the Effective Date (the 
"JOINT VENTURE AGREEMENT"), in order to operate in the Republic of Korea (the 
"Korea") (the "TERRITORY"), a localized version of the Yahoo! Guide, to 
develop related products and on-line services in the Territory and to conduct 
certain other business related to such activities; and

     C. Upon the terms and conditions set forth below, the Company and Yahoo 
will offer a version of certain Yahoo software and services through the 
Company in the Territory.

                                   AGREEMENT

     The parties hereto agree as follows:


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                                 ARTICLE I

                    DEFINITIONS; RULES OF CONSTRUCTION 

     1.1  DEFINITIONS.  For purposes of this Agreement, in addition to the 
capitalized terms defined elsewhere in this Agreement, the following terms 
shall have the meanings ascribed to them below:

          (a) "AFFILIATE" shall mean a company in which, directly or 
indirectly, more than fifty percent (50%) of the stock entitled to vote for 
the election of directors is owned or controlled by a party, but only so long 
as such ownership or control exists.

          (b) "ANCILLARY PROPERTIES" shall mean any future or present 
products and/or services of Yahoo that are not included in the Yahoo Service 
as of the Effective Date. 

          (c) "COMPANY USERS" shall mean Internet-users to whom the Company 
provides access to Yahoo! Korea.

          (d) "COMPONENTS" shall mean information, materials, products, 
features, services, content, computer software, designs, artistic renderings, 
drawings, sketches, characters, layouts, and the digital implementations 
thereof; PROVIDED, HOWEVER, that "Components" shall not include Local Content.

          (e) "CONFIDENTIAL INFORMATION" shall mean any information disclosed 
in the course of this Agreement, which is identified as or should be 
reasonably understood to be confidential or proprietary to the disclosing 
party, including, but not limited to know-how, trade secrets, log data, 
technical processes and formulas, source codes, product designs, sales, cost 
and other unpublished financial information, product and business plans, 
projections, and marketing data.  "Confidential Information" shall not 
include information which:  (i) is known or becomes known to the recipient on 
the Effective Date directly or indirectly from a third party source other 
than one having an obligation of confidentiality to the providing party; (ii) 
hereafter becomes known (independently of disclosure by the providing party) 
to the recipient directly or indirectly from a source other than one having 
an obligation of confidentiality to the providing party; (iii) becomes 
publicly known or available or otherwise ceases to be secret or confidential, 
except through a breach of this Agreement by the recipient; or (iv) is or was 
independently developed by the recipient without use of or reference to the 
providing party's Confidential Information, as shown by evidence in the 
recipient's possession.

          (f) "DERIVATIVE WORK" shall mean all "derivative works" and 
"compilations" within the meaning of such terms as defined in the U.S. 
Copyright Act (17 U.S.C. Section 101 et seq.).

          (g) "ENHANCEMENTS" shall mean any enhancements, added 
functionalities, additions, extensions or improvements to Yahoo! Korea that 
are created or developed by the Company, its Affiliates or its agents.

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          (h) "ERROR(S)" shall mean any verifiable and reproducible failure 
of the Yahoo! Korea Site to materially conform to the level of operation of 
Yahoo Service.  Notwithstanding anything contained herein to the contrary, 
the term "Error" shall not include any failure of the Yahoo! Korea Site to 
materially conform to level of operation of the Yahoo Service that:  (i) 
results from the Company's misuse or improper use of the Yahoo! Korea Site, 
Yahoo! Korea, or any Yahoo Properties; (ii) results from the Company's 
combination, incorporation, or merger of the Yahoo! Korea Site with any 
software, or content not supplied by Yahoo or not authorized by Yahoo to be 
combined, incorporated, or merged with the Yahoo Client Software; (iii) does 
not materially affect the operation and use of the Yahoo! Korea Site; or (iv) 
results from the modification by the Company of the Yahoo! Korea Site, or any 
Yahoo Properties therein.

          (i) "ERROR CORRECTION(S)" shall mean either a modification or 
addition to or deletion from the Yahoo! Korea Site that, when made to such 
site shall materially conform such site to the then-current functionality of 
the Yahoo Service, or a procedure or routine that, when observed in the 
regular operation of the Yahoo! Korea Site, eliminates the material adverse 
effect on the Company of such Error.

          (j) "GROSS REVENUES" shall mean the total amount of revenues 
recognized by the Company (as reflected in the Company's financial statements 
prepared in accordance with generally accepted accounting principles in 
Korea) without any reductions, including, but not limited to, commissions, 
discounts, billing adjustments and allowance and fees and expenses.

          (k) "INTELLECTUAL PROPERTY RIGHTS" shall mean trade secrets, 
patents, patent rights, copyrights, trademarks, know-how, moral rights and 
similar rights of any type under the laws of any governmental authority, 
domestic or foreign including all applications and registrations relating to 
any of the foregoing.

          (l) "LAUNCH DATE" shall mean the first date on which Yahoo! Korea 
is made generally available to the public in the Territory.

          (m) "LOCAL CONTENT" shall mean content, including URL listings, 
added to Yahoo! Korea by the Company and that is: (i) specific to the market 
of the Territory; and (ii) originates in or arises from activities in the 
Territory.

          (n) "LOG DATA" shall mean all data generated by an Internet server 
that relates to file requests, user identification, session times and similar 
available information.

          (o) "TERRITORY" shall mean the geographic territories of the 
Republic of Korea, excluding any protectorates and territories thereof.

          (p) "THIRD PARTY" shall mean a party other than Yahoo or the 
Company.

          (q) "UPGRADES" shall mean all error corrections, upgrades, 
enhancements, new releases, and new versions of Yahoo! Korea. 

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          (r) "YAHOO BRAND FEATURES" shall mean Yahoo trademarks, trade 
names, service marks, service names, distinct elements of the Yahoo Service 
Look and Feel and all other Components specifically associated with the 
"Yahoo!" brand or as to which Yahoo has established trademark or trade dress 
rights, and any modifications to the foregoing that may be created during the 
Term (as defined in Section 10.1 hereof).

          (s) "YAHOO BRAND GUIDELINES" shall mean the guidelines for use of 
the Yahoo Brand Features in Yahoo! Korea, as specifically set forth in 
EXHIBIT B attached hereto.

          (t) "YAHOO DIRECTORY" shall mean the collection of HTML files and 
certain related scripts and rules comprising of URL listings and related 
descriptions and the related organizational hierarchy.

          (u) "YAHOO DIRECTORY SEARCH ENGINE" shall mean the search tools 
currently available for end users of the Yahoo Service to perform searches 
within the Yahoo Directory.

          (v) "YAHOO! KOREA" shall mean the version of the Yahoo Service that 
is customized and localized specifically for all or any portion of Territory 
in any and all languages specifically relevant to the Territory, in 
accordance with this Agreement.

          (w) "YAHOO PROPERTIES" shall mean collectively:  (i) the Yahoo 
Service and (ii) the Yahoo Tools.

          (x) "YAHOO SERVICE" shall mean, collectively, the following (in 
each case as the same may be modified, upgraded, updated or enhanced during 
the term of this Agreement):

               (i) (A) the Yahoo Brand Features, (B) the Yahoo Service Look 
and Feel, and (C) the Yahoo Directory; and

              (ii) any enhancements, upgrades, improvements or modifications 
of the Yahoo Directory Search Engine, and all written materials, documents 
and manuals used in the operation of the foregoing as the same may be 
modified from time to time;

PROVIDED, HOWEVER, that the Yahoo Service shall not include any content or 
technology licensed to Yahoo from a third party.

          (aa) "YAHOO SERVICE LOOK AND FEEL" shall mean the artistic 
renderings, drawings, animations, sketches, characters, layouts and designs, 
and digital implementations thereof which are embodied within the Yahoo 
Directory.

          (bb) "YAHOO TOOLS" shall mean Yahoo's internal hierarchical index, 
information indexing and retrieval software, tools, and search engine, not 
including the Yahoo Directory Search Engine, as set forth in EXHIBIT A.

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     1.2 RULES OF CONSTRUCTION.  As used in this Agreement, all terms used in 
the singular shall be deemed to include the plural, and vice versa, as the 
context may require.  The words "hereof," "herein" and "hereunder" and other 
words of similar import refer to this Agreement as a whole, including any 
exhibits hereto, as the same may from time to time be amended or 
supplemented.  The word "including" when used herein is not intended to be 
exclusive and means "including, without limitation."  The descriptive 
headings of this Agreement are inserted for convenience of reference only and 
do not constitute a part of and shall not be utilized in interpreting this 
Agreement.  The terms "party" and "parties" shall refer to Yahoo and the 
Company, individually or collectively, and shall not refer to Yahoo Japan 
except as used in Article IV below.  This Agreement has been negotiated by 
the parties hereto and their respective counsel and shall be fairly 
interpreted in accordance with its terms and without any rules of 
construction relating to which party drafted the Agreement being applied in 
favor of or against either party.

                                 ARTICLE II

                                GRANT OF RIGHTS 

     2.1 LICENSE GRANT TO COMPANY.  Subject to all of the terms and 
conditions of this Agreement, Yahoo hereby grants to the Company during the 
Term:

          (a) a non-exclusive (except as provided in Section 2.7) right and 
license to use, reproduce, display, perform, and transmit, the Yahoo Service 
Look and Feel, Yahoo Directory and Yahoo Directory Search Engine solely in 
on-line form solely in connection with Yahoo! Korea, and in the manner 
described in this Agreement;

          (b) a non-exclusive right and license to use and reproduce, and to 
display, perform, and transmit on-line the Yahoo Brand Features in the 
Territory, in tangible and on-line form, solely in connection with Yahoo 
Korea and the advertising, marketing and promotion of Yahoo! Korea in the 
Territory, provided, however, that the license granted under this subsection 
2.1(b) shall not include any right or license with respect to or relating to 
the sale of any product or service other than Yahoo! Korea without Yahoo's 
consent;  

          (c) a non-exclusive right and license to use and reproduce the 
Yahoo Tools, solely for the Company's internal purposes, as necessary to 
establish and operate Yahoo! Korea; and

          (d) subject to the terms and limitations set forth in Section 2.2 
of this Agreement, a non-exclusive right to make, reproduce, and use the 
Enhancements, solely for use, incorporation, or integration with or into 
Yahoo! Korea, and solely as necessary for the advertising, marketing and 
promotion of Yahoo! Korea;

     PROVIDED, HOWEVER, that (i) the license granted to the Company under 
this Section 2.1 shall not include any content or technology, except as 
determined by Yahoo in its sole discretion, without any obligation to do so, 
and (ii) the Company Users' right to access and use the Yahoo 

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Properties shall be subject to such customary limitations and restrictions on 
use and reproduction as Yahoo may impose with respect to the Yahoo 
Properties.  If Yahoo, in its sole discretion, decided to sublicense any 
Third Party content or technology to the Company (and the Company accepts 
such sublicense) and such sublicense requires the payment of royalties or 
other fees to a Third Party, the Company agrees to pay all such necessary 
royalties and/or fees payable to such Third Party in connection with such 
sublicense.  No rights or licenses are granted by Yahoo to the Company except 
for those expressly granted in this Section 2.1.

     2.2 ANCILLARY PROPERTIES. To the extent that Yahoo possesses or develops 
in the future Ancillary Properties, Yahoo agrees that it will in good faith 
consider making such Ancillary Properties available for localization in the 
Korean market through the Company for additional fees to be mutually agreed 
upon by Yahoo and the Company; provided that Yahoo shall not be obligated to 
do so.

     2.3 NO OTHER RIGHTS.  Except as expressly provided in this Agreement, 
the Company shall neither:  (a) distribute or make available the Yahoo 
Service or Yahoo! Korea except in its entirety as a complete work; (b) 
distribute or make available the Yahoo Service or Yahoo! Korea other than in 
on-line electric form; (c) sublicense any rights granted hereunder; (d) 
modify, adapt, translate, or create Derivative Works or Enhancements of the 
Yahoo Service or Yahoo! Korea; nor (e) remove any copyright or other 
proprietary rights notices from the Yahoo Properties.

     2.4 YAHOO! KOREA CONTENT.  Prior to the Launch Date, Yahoo shall provide 
to the Company Yahoo Properties to the extent necessary to launch the Yahoo! 
Korea Site and for the Company to create Enhancements for incorporation into 
Yahoo! Korea.

     2.5 LOCAL CONTENT.  The Company shall solely be responsible for 
collecting and classifying Local Content.  Subject to all of the terms and 
conditions of this Agreement and subject to a license fee to be mutually 
agreed upon by Yahoo and the Company from time to time, the Company hereby 
grants Yahoo an exclusive, perpetual, irrevocable, license to use Local 
Content and Enhancements for the purpose of incorporating such Local Content 
and Enhancements into Yahoo! Korea and into the Yahoo Service and any other 
Yahoo properties.  Subject to the foregoing license grant, the Company 
retains all right, title to and interest in the Local Content and 
Enhancements.

     2.6 OWNERSHIP.  Yahoo shall retain all ownership rights in and to the 
Yahoo Properties.  The Company assigns any interest it may be deemed to 
possess in such Yahoo Properties to Yahoo and will assist Yahoo in every 
reasonable way, at Yahoo's expense, to obtain, secure, perfect, maintain, 
defend and enforce for Yahoo's benefit all Intellectual Property Rights with 
respect to the Yahoo Properties and any enhancements thereto, including, 
without limitation, the procurement of binding and enforceable assignments 
from all Company employees and contractors who assisted in the development 
and creation of any enhancements to the Yahoo Properties.

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     2.7 EXCLUSIVITY.                                    XXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

                         ARTICLE III

         YAHOO! KOREA SITE DEVELOPMENT AND OPERATIONS

     3.1 DEVELOPMENT OF YAHOO! KOREA SITE.  Yahoo shall provide a reasonable 
level of technical and operational assistance in developing Yahoo! Korea.

     3.2 UPGRADES.  If Yahoo creates any Upgrades of Yahoo! Korea which 
materially modify the format or functionality of Yahoo! Korea, Yahoo shall 
provide the Company with the opportunity to review and test each such Upgrade 
prior to its public release. 

                             ARTICLE IV

                       YAHOO! KOREA SUPPORT 

     4.1 SUPPORT SERVICES.  Yahoo Japan agrees to:  (a) provide to the 
Company telephone or confirmed facsimile or telecopy and electronic mail 
consultation during Yahoo Japan's regular business hours (9:00 a.m. to 5:00 
p.m., Korea Time, Monday through Friday, excluding holidays scheduled by 
Yahoo Japan) to allow the Company to report Errors in the Yahoo! Korea Site 
or to allow the Company to inquire on the use or operation of the Yahoo!  
Korea Site and (b) use commercially reasonable efforts to provide Error 
Corrections for Errors in the Yahoo! Korea Site reported to Yahoo Japan by 
the Company.  Yahoo agrees to provide back-up support for the Yahoo! Korea 
Site as Yahoo Japan or the Company reasonably requests in connection with 
Yahoo Japan's obligations set forth in this Section 4.1 to the extent Yahoo 
Japan cannot adequately fulfill such obligations without assistance from 
Yahoo. 

                              ARTICLE V

           PROMOTIONAL MATERIALS, ADVERTISING, AND TRADEMARKS 

     5.1 COMPANY'S EFFORTS.  As a material condition to this Agreement, the 
Company shall use all commercially reasonable efforts during the Term to 
offer Yahoo! Korea to the general public via the Internet, in accordance with 
user performance (as measured by factors such as latency of user response) at 
least equivalent to, on average, that of the main U.S. 

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www.yahoo.com website, to market and promote the commercial exploitation of 
Yahoo! Korea in the Territory, and to sell advertising and promotional 
services in Yahoo! Korea.

     5.2 TRADEMARKS. 

          5.2.1 ACKNOWLEDGMENT OF OWNERSHIP.  The Company acknowledges that:  
(a) as between the Company and Yahoo, Yahoo owns all right, title and 
interest in the Yahoo Brand Features; and (b) neither the Company nor any 
other persons will acquire any ownership interest in the Yahoo Brand Features 
or associated goodwill by virtue of this Agreement or the use of the Yahoo 
Service pursuant to this Agreement.

          5.2.2 USAGE GUIDELINES.  The Company's use of the Yahoo Brand 
Features shall be subject to Yahoo's prior written approval and consent and 
shall adhere to the Yahoo Brand Guidelines set forth in EXHIBIT B attached 
hereto; PROVIDED, HOWEVER, the Company may use the mark "YAHOO! KOREA" and 
the associated logo without any such consent so long as the Company uses such 
Yahoo! Korea marks:  (a) in a manner and form consistent with Yahoo's use of 
its Yahoo Brand Features; (b) without making any modifications or changes 
thereto; (c) in an advertising campaign, promotional or other event that has 
high consumer visibility; (d) without co-branding or other similar 
collaboration with any third party brand features; and (e) in conformance 
with the Yahoo Brand Guidelines.  In any event, the Company's use of the 
Yahoo Brand Features shall be at least of a quality and standard reasonably 
commensurate with the Company's use of its own trademarks.  Throughout the 
Term, Yahoo shall promptly provide the Company with all written details of, 
specifications for and artwork for all Yahoo Brand Features as required by 
the Company for performing its rights and obligations under this Agreement.  
If any use of the Yahoo Brand Features by the Company fails to satisfy such 
quality standards, Yahoo may terminate the Company's right to use such Yahoo 
Brand Features; PROVIDED, HOWEVER, that the Company has failed to cure such 
failure to satisfy within thirty (30) business days from receipt by the 
Company of a notice of such failure to satisfy quality standards sent by 
Yahoo.

          5.2.3 PROMOTIONAL MATERIALS. The Company shall supply Yahoo with 
specimens of each type of promotional materials using the Yahoo Brand 
Features, all of which shall comply with the Yahoo Brand Guidelines and other 
provisions of this Agreement.  The Company shall remedy any violation of the 
Yahoo Brand Guidelines or of this Agreement as soon as practicable following 
receipt of notice from Yahoo of such violation.  The Company shall consider 
in good faith any suggestions or comments of Yahoo in the content and design 
of any and all promotional materials.

          5.2.4 NO ADVERSE CLAIM.  The Company agrees that it will not at any 
time during or after this Agreement assert any claim or interest in or do 
anything which may adversely affect the validity or enforceability of Yahoo's 
right in the Yahoo Brand Features.  Unless otherwise agreed to between the 
parties, the Company will not register, seek to register, or cause to be 
registered any of the Yahoo Brand Features without Yahoo's prior written 
consent, and the Company shall not adopt or use Yahoo Brand Features or any 
confusingly similar word or 

                                 -8-

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symbol as part of the Company's company name, nor allow Yahoo Brand Features 
to be used by others, without Yahoo's prior written consent.  With respect to 
any trademark registrations and pending trademark applications for any Yahoo 
Brand Features in the Territory owned or filed by the Company without Yahoo's 
prior written consent ("YAHOO! KOREA MARKS"), the Company shall promptly 
transfer ownership in such Yahoo! Korea Marks to Yahoo, and Yahoo shall 
promptly reimburse the Company its reasonable costs incurred in obtaining 
such registration and in filing such applications.  Failure of the Company to 
transfer ownership in such Yahoo! Korea Marks within one hundred twenty (120) 
days of the Effective Date of this Agreement shall be considered a material 
breach of this Agreement.  Such Yahoo! Korea Marks shall be considered part 
of and included in the Yahoo Brand Features for purposes of this Agreement.

          5.2.5 NO ADDITIONAL RIGHTS IN TRADEMARKS. Except for the rights 
expressly granted to Company under this Agreement to use the Yahoo Brand 
Features, Yahoo grants no rights in or to any Yahoo trademarks, service marks 
or trade names.  All powers that would otherwise be granted to the Company 
under Section 26 of the Korean Trade Mark Act are hereby excluded.

     5.3 YAHOO! KOREA ADVERTISING. The Company shall have the exclusive right 
to include third party advertising, marketing and promotional information in 
Yahoo! Korea, provided, however, that Yahoo shall have the right to conduct 
worldwide promotions for certain advertisers of  Yahoo, including inclusion 
of advertising, marketing and promotional information in Yahoo! Korea.  The 
parties hereto agree that all revenues and income derived by the Company in 
connection with advertising, marketing and promotional information in Yahoo! 
Korea shall accrue solely to the Company.  The Company shall be solely and 
exclusively responsible for ensuring that all advertising, marketing and 
promotional information conducted and provided by the Company complies with 
all local, federal, and other governmental laws and regulations of the 
Territory that may be applicable thereto.  In connection with any worldwide 
promotion conducted by Yahoo for an advertiser, the Company will receive a 
portion of the aggregate revenue from the sale of such worldwide promotion in 
accordance with the Yahoo International Pricing Policy attached hereto as 
EXHIBIT D.  If the inventory positions for the worldwide promotion are not 
available for the time and period requested  by Yahoo, the Company will 
promptly notify Yahoo of the next time and period when the inventory becomes 
first available and provide Yahoo with the opportunity to utilize such 
inventory.

     5.4 LOG DATA.  The Company will provide Yahoo with access to all Log 
Data generated from use of Yahoo! Korea.  All Log Data shall be maintained as 
Confidential Information by the Company and Yahoo.  

          5.4.1 LIMITED DISCLOSURE TO THIRD PARTIES. Notwithstanding the 
foregoing, no party shall be prohibited by the terms if this Agreement from 
providing Log Data to any third party (on a confidential basis) for 
aggregation or analysis, or otherwise on an aggregated basis to advertisers, 
potential advertisers and other third parties in connection with the sale of 
advertising, or to third parties in connection with market research and 
similar publishing; provided that no 

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party will use such information in a misleading fashion so as to understate 
or overstate to any third party the magnitude of usage of Yahoo! Korea.

          5.4.2 OWNERSHIP OF LOG DATA. Yahoo shall own all rights, title, and 
interest in and to any and all Log Data generated on Yahoo! Korea; PROVIDED, 
HOWEVER, Yahoo shall grant to the Company a non-exclusive, royalty-free 
license to use and reproduce such Log Data for internal, non-commercial 
purposes. Yahoo shall own all rights, title, and interest in and to any and 
all Log Data generated on any Yahoo Service mirror site.

                               ARTICLE VI

                         CONFIDENTIAL INFORMATION

     6.1 PROTECTION OF CONFIDENTIAL INFORMATION.  The parties recognize that, 
in connection with the performance of this Agreement, each of them may 
disclose to the other its Confidential Information.  The party receiving any 
Confidential Information agrees to maintain the confidential status of such 
Confidential Information and not to use any such Confidential Information for 
any purpose other than the purpose for which it was originally disclosed to 
the receiving party, and not to disclose any of such Confidential Information 
to any third party.  No party shall disclose the other's Confidential 
Information to its employees and agents except on a  need-to-know  basis.

     6.2 PERMITTED DISCLOSURE.   The parties acknowledge and agree that each 
may disclose Confidential Information:  (a) as required by law or the rules 
of the National Association of Securities Dealers, Inc. or any applicable 
securities exchange; (b) to their respective directors, officers, employees, 
attorneys, accountants and other advisors, who are under an obligation of 
confidentiality, on a "need-to-know" basis; (c) to investors or joint venture 
partners, who are under an obligation of confidentiality, on a "need-to-know" 
basis; or (d) in connection with disputes or litigation between the parties 
involving such Confidential Information and each party shall endeavor to 
limit disclosure to that purpose and to ensure maximum application of all 
appropriate judicial safeguards (such as placing documents under seal).  In 
the event a party is required to disclose Confidential Information as 
required by law, such party will, to the extent practicable, in advance of 
such disclosure, provide the other party with prompt notice of such 
requirement.  Such party also agrees, to the extent legally permissible, to 
provide the other party, in advance of any such disclosure, with copies of 
any information or documents such party intends to disclose (and, if 
applicable, the text of the disclosure language itself) and to cooperate with 
the other party to the extent the other party may seek to limit such 
disclosure.

     6.3 APPLICABILITY.  The foregoing obligations of confidentiality shall 
apply to directors, officers, employees and representatives of the parties 
and any other person to whom the parties have delivered copies of, or 
permitted access to, such Confidential Information in connection with the 
performance of this Agreement, and each party shall advise each of the above 
of the obligations set forth in this Article VI.

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     6.4 THIRD PARTY CONFIDENTIAL INFORMATION.  Any Confidential Information 
of a third party disclosed to any party shall be treated by such party in 
accordance with the terms under which such third party Confidential 
Information was disclosed; PROVIDED, HOWEVER, that the party disclosing such 
third party Confidential Information shall first notify the other party that 
such information constitutes third party Confidential Information and the 
terms applicable to such third party Confidential Information and provided 
further that any party may decline, in its sole discretion, to accept all or 
any portion of such third party Confidential Information.

     6.5 CONFIDENTIALITY OF AGREEMENT.  Except as required by law or 
generally accepted accounting principles, and except to assert its rights 
hereunder or for disclosures to its own officers, directors, employees and 
professional advisers on a  need-to-know  basis or in confidence to 
investors, investment bankers, financial institutions or other lenders or 
acquirers, each party hereto agrees that neither it nor its directors, 
officers, employees, consultants or agents shall disclose the terms of this 
Agreement or specific matters relating hereto without the prior consent of 
the other party, which consent shall not be unreasonably withheld or delayed.

     6.6 FUTURE BUSINESS ACTIVITIES.  This Agreement shall not limit any 
party's present and future business activities of any nature, including 
business activities which could be competitive with the other party, except: 
(a) to the extent such activities would involve a breach of the 
confidentiality restrictions contained in this Article VI; (b) to the extent 
provided in Section 5.3, or (c) as otherwise expressly provided herein.  
Nothing in this Agreement will be construed as a representation or agreement 
that the recipient of Confidential Information will not develop or have 
developed for it products, concepts, systems or techniques contemplated by or 
embodied in such Confidential Information, provided that such recipient does 
not violate any of its obligations under this Article VI in connection with 
such development.

                                ARTICLE VII

                             FEES AND PAYMENT

     7.1 FEES.  The Company shall pay to Yahoo, as full and complete 
remuneration for the performance of all of Yahoo's obligations hereunder, the 
fees and amounts that are set forth in EXHIBIT E attached hereto (the 
"FEES").  All payments under this Agreement shall be made quarterly by wire 
transfer to an account designated by Yahoo on or prior to the due date.

     7.2 CURRENCY.  In this Agreement, all references to currency shall be 
references to the lawful currency of the United States of America.

     7.3 TAXES.  All Fees paid by the Company to Yahoo hereunder shall be 
made without deducting any sales, goods and services, use and other similar 
taxes imposed by any governmental authority concerning the use of the Yahoo 
Properties in accordance with this Agreement (collectively, the "Taxes"), all 
of which Taxes shall be paid by the Company.  Further, all Fees paid by the 
Company to Yahoo hereunder shall be made after deducting any excise and 
customs duties and other similar taxes imposed by any governmental authority 

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relating to the export of the Yahoo Properties, and all withholding taxes 
that may be required by either the Korean or the United States governments 
under the relevant tax laws and treaties (collectively, the "Other Taxes"), 
all of which Other Taxes shall be paid by Yahoo.

     7.4 WITHHOLDING. If any Korean withholding taxes are imposed on payments 
to Yahoo by the Company under this Article VII, the Company shall withhold 
such amounts, pay the same to the Korean tax authority, and promptly furnish 
Yahoo with appropriate documentation of the amounts so withheld as soon as 
practicable.  The parties shall cooperate to make any necessary filings to 
utilize the lowest withholding rate available under any treaty between Korea 
and the United States.

     7.5 ARMS LENGTH DEALINGS.  The parties acknowledge and agree that, 
although the amount of the Fees is intended to be an arms length 
consideration for the performance of Yahoo's obligations under the Agreement, 
and that the Fees have been agreed in the course of real bargaining between 
the parties, the parties shall review the services actually performed by 
Yahoo under this Agreement at the time of Yahoo's performance thereof and, if 
mutually agreed, will negotiate for the payment to Yahoo of additional fees 
in excess of the Fees set forth in the attached EXHIBIT D.

                               ARTICLE VIII

                      REPRESENTATIONS AND WARRANTIES 

     Each party represents and warrants to the other parties that:  (a) such 
party has been duly incorporated and is validly existing under the laws such 
party is incorporated; (b) such party has the full corporate right, power and 
authority to enter into this Agreement and to perform the acts required of it 
hereunder; (c) the execution of this Agreement by such party, and the 
performance by such party of its obligations and duties hereunder, do not and 
will not violate any agreement to which such party is a party or by which it 
is otherwise bound; (d) when executed and delivered by such party, this 
Agreement will constitute the legal, valid and binding obligation of such 
party, enforceable against such party in accordance with its terms; and (e) 
such party acknowledges that the other party makes no representations, 
warranties or agreements related to the subject matter hereof that are not 
expressly provided for in this Agreement.

                              ARTICLE IX

         LIMITATION OF LIABILITY; DISCLAIMER; INDEMNIFICATION 

     9.1 LIABILITY.  EXCEPT AS PROVIDED IN SECTIONS 9.3 AND 9.4 AND TO THE 
EXTENT PERMITTED UNDER APPLICABLE LAW, UNDER NO CIRCUMSTANCES SHALL ANY PARTY 
BE LIABLE TO THE OTHER PARTIES FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, 
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE 
POSSIBILITY OF SUCH DAMAGES), 

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ARISING FROM ANY PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, 
LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS.

     9.2 NO ADDITIONAL WARRANTIES.  EXCEPT AS SET FORTH IN THIS AGREEMENT AND 
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, NO PARTY MAKES ANY, AND EACH 
PARTY HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, 
EXPRESS OR IMPLIED, REGARDING THE PRODUCTS AND SERVICES CONTEMPLATED BY THIS 
AGREEMENT, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A 
PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR 
COURSE OF PERFORMANCE.

     9.3 YAHOO INDEMNITY AND LIABILITY. 

          9.3.1 YAHOO INDEMNITY.  Subject to the limitations set forth below, 
Yahoo, at its own expense, shall indemnify, defend (or at Yahoo's option and 
expense, settle,) and hold the Company and any Company Affiliates and their 
officers, directors, employees, agents, distributors and licensees (the 
"COMPANY INDEMNIFIED PARTY(IES)") harmless from and against any damages and 
costs (including, without limitation, reasonable attorneys' fees and 
expenses) awarded in a final adjudication or settlement, whether required to 
be paid to a third party or otherwise incurred in connection with or arising 
from any claim, suit, action or proceeding (collectively, a "CLAIM"), against 
a Company Indemnified Party to the extent the basis of such Claim is that:  
(a) the Yahoo Properties infringe any Intellectual Property Rights of a third 
party; or (b) Yahoo does not have the right to license the Yahoo Properties 
as set forth herein.

          9.3.2 NO YAHOO LIABILITY.  Notwithstanding the foregoing, Yahoo 
assumes no liability for infringement claims arising from:  (a) a combination 
of the Yahoo Properties or any part thereof with other Components not 
provided by Yahoo where such infringement would not have arisen from the use 
of the Yahoo Properties or portion thereof absent such combination; (b) 
modification of the Yahoo Properties or portion thereof by anyone other than 
Yahoo or on its behalf where such infringement would not have occurred but 
for such modifications; (c) continued infringing activity after the Company 
has been notified of the infringement or informed of modifications that would 
have avoided the infringement; (d) circumstances where the infringement is 
incidental to an infringement arising primarily from the exercise of rights 
other than those granted under this Agreement.

          9.3.3 YAHOO INFRINGEMENT LIABILITY.  If Yahoo receives notice of an 
alleged infringement of a third party's intellectual property rights relating 
to the Yahoo Properties, Yahoo at its option and expense, shall use all 
reasonable efforts to:  (a) obtain a license at no cost to the Company 
permitting continued use of the Yahoo Properties on terms and conditions 
consistent with the rights granted to the Company hereunder; (b) modify the 
infringing portion of the Yahoo Properties to perform its intended function 
without infringing third party rights; or (c) provide a substitute for such 
infringing portion of the Yahoo Properties.  If none of the foregoing options 
are reasonably available to Yahoo, then upon written notice by Yahoo to the 
Company,

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the Company shall thereupon take the necessary action to discontinue further 
distribution of the infringing material to the extent that and only for so 
long as such use would be infringing.  TO THE EXTENT PERMITTED UNDER 
APPLICABLE LAW, THIS SECTION SETS FORTH THE ENTIRE LIABILITY OF YAHOO WITH 
RESPECT TO ANY CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT ARISING OUT OF 
THIS AGREEMENT.

     9.4 COMPANY INDEMNITY AND LIABILITY. Subject to the limitations set 
forth below, the Company, at its own expense, shall indemnify, defend (or at 
the Company's option and expense, settle, provided that the Company provides 
Yahoo with prior notice of any settlement that will significantly affect 
Yahoo's rights hereunder) and hold Yahoo and any Yahoo Affiliates and their 
officers, directors, employees, agents, distributors and licensees (the 
"YAHOO INDEMNIFIED PARTY(IES)") harmless from and against any damages and 
costs (including, without limitation, reasonable attorneys' fees and 
expenses) awarded in a final adjudication or settlement, whether required to 
be paid to a third party or otherwise incurred in connection with or arising 
from any liabilities related to the operation of Yahoo! Korea (other than 
those liabilities for which Yahoo is responsible pursuant to the terms of 
Section 9.3.1), including, without limitation, any Claim against a Yahoo 
Indemnified Party to the extent the basis of such Claim is that: (a) Yahoo! 
Korea, any Enhancements, or any Local Content infringes any Intellectual 
Property Rights of a third party or contain any material or information that 
is erroneous, obscene, defamatory, libelous, slanderous, violates any law or 
regulation, is negligently performed, or that violates or breaches any duty 
toward, or rights of any person or entity, including, without limitation, 
rights of publicity, privacy or personality; (b) the Company does not have 
the right to license the Local Content as set forth herein (other than as a 
result of infringement by a Yahoo Property licensed to the Company by Yahoo 
hereunder); (c) the Company has materially breached any of its duties, 
representations or warranties under this Agreement; or (d) any products, 
promotions or services of the Company or its Affiliates have resulted in any 
consumer fraud, product liability, tort, breach of contract, injury, damage 
or harm of any kind to any person or entity (other than as a result of 
Content licensed to the Company by Yahoo hereunder). TO THE EXTENT PERMITTED 
UNDER APPLICABLE LAW, THIS SECTION SETS FORTH THE ENTIRE LIABILITY OF THE 
COMPANY WITH RESPECT TO ANY CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT 
ARISING OUT OF THIS AGREEMENT.

     9.5 PROCEDURE.  All indemnification obligations under this Section 9 
shall be subject to the following requirements: (a) the indemnified party 
shall provide the indemnifying party with prompt written notice of any claim; 
(b) the indemnified party shall permit the indemnifying party to assume and 
control the defense of any action upon the indemnifying party's written 
acknowledgment of the obligation to indemnify (unless, in the opinion of 
counsel of the indemnified party, such assumption would result in a material 
conflict of interest); and (c) the indemnifying party shall not enter into 
any settlement or compromise of any claim without the indemnified party's 
prior written consent, which shall not be unreasonably withheld.  In 
addition, the indemnified party may, at its own expense, participate in its 
defense of any claim.  In the event that the indemnifying party assumes the 
defense of any such claim, the indemnifying party shall have no liability for 
attorney's fees and costs incurred by the indemnified party.

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                              ARTICLE X

                                TERM 

     10.1 TERM.  Unless earlier terminated as provided herein, this Agreement 
shall be effective during the period (the "TERM") from the Effective Date of 
this Agreement until the sooner of: (a) the date on which Yahoo and the 
Company mutually agree to terminate this Agreement; (b) the date on which 
this Agreement is terminated under Section 10.2 hereto; or (c) the date of 
termination of the Joint Venture Agreement.

     10.2 EARLY TERMINATION.  Either Yahoo or the Company may terminate this 
Agreement immediately upon written notice in the event of: (a) any material 
breach of any warranty, representation or covenant of this Agreement by the 
other party which remains uncured thirty (30) days after notice of such 
breach; or (b) in the event of any bankruptcy, insolvency, receivership or 
similar proceeding of the other party which continues for twenty (20) days 
from filing.

     10.3 RETURN OF INFORMATION.  No party shall incur any liability 
resulting from the termination of this Agreement, provided, however, that no 
party shall be relieved of any liabilities arising from any obligation 
incurred or any breach by such party prior to the termination of the 
Agreement.

     10.4 RETURN OF INFORMATION.  Within thirty (30) calendar days after the 
termination or expiration of this Agreement, each party hereto shall either 
deliver to the others, or destroy, all copies of any tangible Confidential 
Information of the other parties provided hereunder in its possession or 
under its control, and shall furnish to the other parties an affidavit signed 
by an officer of its company certifying that to the best of its knowledge, 
such delivery or destruction has been fully effected.

     10.5 REMAINING PAYMENT.  Within forty-five (45) calendar days of the 
expiration or termination of this Agreement, each party shall pay to the other 
party all sums, if any, due and owing as of the date of expiration or 
termination.

     10.6 SURVIVAL.  The respective rights and obligations of the parties 
under Sections 2.6, 2.7, 5.2.1, 5.2.4, 10.3, 10.4, 10.5, 10.6 and Articles I, 
VI, VIII, IX, and XI shall survive expiration or termination of this 
Agreement.  No termination or expiration of this Agreement shall relieve any 
party for any liability for any breach of or liability accruing under this 
Agreement prior to termination.

                               ARTICLE XI

                              MISCELLANEOUS

     11.1 GOVERNING LAW.  This Agreement shall be governed by and interpreted 
under the laws of the State of California, without regard to its conflicts of 
law provisions, and not under

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the Convention for the International Sale of Goods. Each of the Company and 
Yahoo hereby consents and submits to the personal jurisdiction of the United 
States and the state courts of the State of California, and expressly agrees 
that the venue for any action arising under this Agreement shall be the 
appropriate court sitting within the Northern District of California.

     11.2 AMENDMENT OR MODIFICATION.  This Agreement may not be amended, 
modified or supplemented by the parties in any manner, except by an 
instrument in writing signed on behalf of each of the parties by a duly 
authorized officer or representative.

     11.3 NO ASSIGNMENT.  No party shall transfer or assign any rights or 
delegate any obligations hereunder, in whole or in part, whether voluntarily 
or by operation of law, without the prior written consent of the other 
parties.  Any purported transfer, assignment or delegation by any party 
without the appropriate prior written approval shall be null and void and of 
no force or effect.  Notwithstanding the foregoing, each party shall have the 
right to assign this Agreement to any successor of such party by way of 
merger or consolidation or the acquisition of all or substantially all of the 
business and assets of the assigning party relating to the Agreement.

     11.4 NOTICES.  Except as otherwise provided herein, any notice or other 
communication to be given hereunder shall be in writing and shall be (as 
elected by the party giving such notice):  (a) personally delivered; (b) 
transmitted by postage prepaid registered or certified airmail, return 
receipt requested; (c) transmitted by electronic mail via the Internet with 
receipt being acknowledged by the recipient by return electronic mail (with a 
copy of such transmission concurrently transmitted by postage prepaid 
registered or certified airmail, return receipt requested); (d) transmitted 
by facsimile (with a copy of such transmission by postage prepaid registered 
or certified airmail, return receipt requested); or (e) deposited prepaid 
with a nationally recognized overnight courier service..  Unless otherwise 
provided herein, all notices shall be deemed to have been duly given on:  (x) 
the date of receipt (or if delivery is refused, the date of such refusal) if 
delivered personally, by electronic mail, facsimile or by courier; or (y) 
three (3) days after the date of posting if transmitted by mail or by 
electronic mail.  Either party may change its address for notice purposes 
hereof on not less than three (3) days prior notice to the other party 
pursuant to this Section 11.4.  Notice hereunder shall be directed to a party 
at the address for such party which is set forth below:

To Yahoo:         Yahoo! Inc.
                  3400 Central Expressway
                  Santa Clara, California  95051 
                  Attention:  Tim Koogle, President
                  Fax:  (408) 731-3301
Copy to:          John Place, General Counsel

To the Company:   Yahoo! Korea Corporation
                  502 Kyungki Bldg., 184-4 Chungjeong-Ro 2-Ka, 
                  Seodaemun-Ku, Seoul Korea 120-012

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                  Seoul, Korea
                  Attn: Jin Youm
                  Fax: 82-2-365-7911

To Yahoo Japan:   24-1 Nihonbashi-Hakozakicho
                  Chuo-ku
                  Tokyo 103 Japan 
                  Attn: Masahiro Inoue
                  Fax:

     11.5 ENTIRE AGREEMENT.  This Agreement contains the entire agreement of 
the parties with respect to the subject matter hereof and supersedes all 
prior and/or contemporaneous agreements and understandings, written or oral 
between the parties with respect to the subject matter hereof.

     11.6 WAIVER.  Any of the provisions of this Agreement may be waived by 
the party entitled to the benefit thereof.  No party shall be deemed, by any 
act or omission, to have waived any of its rights or remedies hereunder 
unless such waiver is in writing and signed by the waiving party, and then 
only to the extent specifically set forth in such writing.  A waiver with 
reference to one event shall not be construed as continuing or as a bar to or 
waiver of any right or remedy as to a subsequent event.

     11.7 RECOVERY OF COSTS AND EXPENSES.  If any party to this Agreement 
brings an action against the other parties to enforce its rights under this 
Agreement, the prevailing party shall be entitled to recover its costs and 
expenses, including, without limitation, attorneys' fees and costs incurred 
in connection with such action, including any appeal of such action.

     11.8 SEVERABILITY.  Any provision of this Agreement that is prohibited 
or unenforceable in any jurisdiction shall, as to such jurisdiction, be 
ineffective to the extent of such prohibition or unenforceability without 
invalidating the remaining portions hereof or affecting the validity or 
enforceability of such provision in any other jurisdiction.

     11.9 OTHER AGREEMENTS.  No party shall agree to any contractual 
provision or term in any agreement with any third party which contains a 
provision or term which cause such party to be in breach of or violates this 
Agreement.

     11.10 NO THIRD PARTY BENEFICIARIES.  Nothing express or implied in this 
Agreement is intended to confer, nor shall anything herein confer, upon any 
person other than the parties and the respective successors or assigns of the 
parties, any rights, remedies, obligations or liabilities whatsoever.

     11.11 WAIVER OF JURY TRIAL.  EACH OF YAHOO, YAHOO JAPAN AND THE COMPANY 
DO HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND 

                              -17-

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IRREVOCABLY WAIVE SUCH RIGHT ANY PARTY MAY HAVE TO A JURY TRIAL IN EVERY 
JURISDICTION IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF 
THE PARTIES HERETO AGAINST ANY OTHER PARTY HERETO OR THEIR RESPECTIVE 
AFFILIATES, SUCCESSORS OR ASSIGNS IN RESPECT OF ANY MATTER ARISING OUT OF OR 
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED AND 
DELIVERED BY ANY PARTY IN CONNECTION THEREWITH (INCLUDING, WITHOUT 
LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIMS OR 
DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR OTHERWISE 
VOID OR VOIDABLE).

     11.12 EXECUTION IN COUNTERPARTS.  This Agreement may be executed in any 
number of counterparts with the same effect as if all parties hereto had all 
signed the same document.  All counterparts shall be construed together and 
shall constitute one agreement.

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     IN WITNESS WHEREOF, the parties to this Agreement by their duly 
authorized representatives have executed this Agreement as of the date first 
above written.

YAHOO! KOREA CORPORATION                 YAHOO! INC.

By:  /s/ JIN YOUM                        By:  /s/ HEATHER KILLEN 
     ------------------------            ------------------------
Name: Jin Youm                           Name:  Heather Killen
Title: President and                     Title:  Vice President
 Chief Executive Officer


YAHOO! JAPAN  CORPORATION  

By:  /s/ MASAHIRO INOUE  
     ------------------------
Name: Masahiro Inoue  
Title: President and 
 Chief Executive Officer



                                   -19-

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                               EXHIBIT A

                YAHOO! KOREA TECHNICAL SPECIFICATIONS

     Yahoo will provide to the Company the following tools for use in 
connection with Yahoo! Korea.  Subject to the terms and conditions of this 
Agreement, Yahoo reserves the right to add, delete and modify from this list 
so long as the service is not degraded or interrupted significantly, and 
Yahoo notifies the Company in advance and works with the Company in good 
faith before making any such changes.

     A. HTTP SERVER:  A C program compiled on the hardware platform provided. 
 The initial version of HTTP software will be proprietary to Yahoo.  Subject 
to the terms and conditions of this Agreement, this software may be replaced 
by third party software in the future.

     B. SEARCH SERVER:  A C program compiled on the hardware provided.  This 
software is proprietary to Yahoo.  Subject to the terms and conditions of 
this Agreement, Yahoo reserves the right to change the search engine to a 
third party software at Yahoo's discretion without notice.

     C. CGI SCRIPTS:  These scripts are either written in C or in Perl.  The 
platforms must have Perl installed.

     D. UTILITY SCRIPTS:  These scripts are written in Perl or similar shell 
languages.  The platform must support cron jobs and have Perl, and other 
required shell environments, installed.

     E. LOG DATA TOOL:  This software tool, which is proprietary to Yahoo, is 
a set of CGI scripts written in Perl that summarize, analyze, and display 
summary information regarding Log Data.  Yahoo will use this tool to remotely 
access Log Data collected by the Company pursuant to this Agreement.

     F. AD SCHEDULING TOOLS (AKA "JFK"):  These proprietary scripts, written 
in C or Perl, are used to schedule and place advertisements throughout the 
Yahoo Guide.

     G. SURFING TOOLS:  These proprietary scripts, written in C, Perl and 
tcl/tk, are used to add/change/delete categories and URL listings into the 
database.

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                           EXHIBIT B

             GUIDELINES FOR USE OF YAHOO TRADEMARKS

1. GENERAL.  The Yahoo Brand Features will be used by the Company only in 
connection with the exercise of the Company's rights pursuant to this 
Agreement, and only with the promotion of the use of Yahoo Properties 
pursuant to the terms of this Agreement and only in a manner consistent with 
proper usage of the trademarks, trade names, service marks, service names and 
other elements that are contained in the Yahoo Brand Features.

2. APPEARANCE OF LOGOS.  Yahoo and the Company will use their best efforts to 
ensure that the presentation of the Yahoo Brand Features shall be consistent 
with Yahoo's use of the Yahoo Brand Features on Yahoo's URL listings.  The 
Company shall use the Yahoo Brand Features in a manner reasonably consistent 
with other key third party content used by the Company in connection with 
Yahoo! Korea.

3. NOTICES.  All trademarks and service marks included in the Yahoo Brand 
Features shall be designated with "SM", "TM", or "REGISTERED TRADEMARK", in 
the manner directed by Yahoo.

4. APPEARANCE.  Promptly following the Effective Date, and from time to time 
during the Term, Yahoo shall provide the Company with written guidelines for 
the size, typeface, colors and other graphic characteristics of the Yahoo 
Brand Features, which upon delivery to the Company shall be deemed to be 
incorporated into the "Yahoo Brand Guidelines" under this Agreement.

5. RESTRICTIONS UPON USE.  Unless otherwise mutually agreed, the Yahoo Brand 
Features shall not be presented or used by the Company:

     A. in a manner that could be reasonably interpreted to suggest that any 
editorial content other than the Yahoo Service has been authored by, or 
represents the views or opinions of, Yahoo or any Yahoo personnel;

     B. in a manner that is misleading, defamatory, libelous, obscene or 
otherwise objectionable, in Yahoo's reasonable opinion;

     C. in a way that infringes, derogates, dilutes or impairs the rights of 
Yahoo in the Yahoo Brand Features;

     D. for the purposes of promoting the sale, license or other transfer for 
value of property or services, other than in connection with the promotion of 
the sale and use of Yahoo! Korea; or

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     E. as part of a name of a product or service of a company other than 
Yahoo, except as expressly provided in this Agreement.

6. REMEDY.  The Company will make any changes to its use of the Yahoo Brand 
Features as are requested by Yahoo.

7. REVISIONS.  These Guidelines may be modified at any time by Yahoo upon 
written notice to the Company.


                                     -iii-

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                            EXHIBIT D

             YAHOO! INC. INTERNATIONAL PRICING POLICY

PURPOSE

The purpose of this policy is to set forth guidelines for insertion orders 
which are placed with Yahoo! or its subsidiaries whereby the contracted 
impressions are to be provided in more than one country.  This policy is 
effective July 1, 1997.

SCOPE

This policy applies to Yahoo! Inc. and its subsidiaries. 

OBJECTIVES

The Company's primary objective is to properly account for customer orders 
which are taken in one country to run in another country or countries.  The 
accounting must be acceptable for local tax requirements, convenient for 
customer billing and receipt of payments, provide equitable compensation to 
sales representatives and sales management, and be mutually beneficial and 
acceptable for Yahoo! and its jointly owned subsidiaries.

POLICY

REVENUE ALLOCATION
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

ORDER ADMINISTRATION, INVOICING, AND COLLECTION
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX

COMMISSIONS
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

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XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

BAD DEBT
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX

PROCEDURES

Due to the nature of these transactions and the constant evolution of 
Yahoo!'s sales administration system and accounting system, procedures may 
change frequently.  The most current set of procedures will be provided by 
Yahoo! upon request. 

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                                  EXHIBIT E

                               FEES AND PAYMENTS


I. LICENSE FEE PER QUARTER

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

II. ANCILLARY PROPERTIES

Additional license fees to be mutually agreed upon by Yahoo and the Company 
in the event that Yahoo provides any Ancillary Properties to the Company 
pursuant to the terms of Section 2.2.

III. PAYMENT TERMS

Payable in full to Yahoo on the Effective Date of the agreement, and on the 
final business day of each three month period thereafter for the term of this 
Agreement.


                                        -vi-


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<PAGE>
                                              EXHIBIT 13.1

PORTIONS OF THE 1997 ANNUAL REPORT TO SHAREHOLDERS


SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                                         --------------------------------------------------
                                                                              1997                1996              1995
                                                                         -------------       -------------     ------------
<S>                                                                      <C>                 <C>               <C>
STATEMENTS OF OPERATIONS DATA:
         Net revenues                                                    $  67,411,000       $  19,697,000     $  1,410,000
         Gross profit                                                       58,039,000          16,381,000        1,212,000
         Sales and marketing expenses                                       43,930,000          15,106,000          815,000
         Product development expenses                                       11,138,000           5,150,000          303,000
         General and administrative expenses                                 6,472,000           4,878,000          972,000
         Other - non-recurring costs                                        25,095,000                   -                -
         Net loss                                                         (22,887,000)         (4,285,000)        (799,000)
         Basic and diluted net loss per share                                  $(0.53)             $(0.11)          $(0.03)
         Shares used in computing basic and diluted net loss per share      43,583,000          39,256,000       27,307,000

         Pro forma net income (unaudited)(1)                                $2,208,000
         Pro forma diluted net income per share (unaudited)(1)                   $0.04

                                                                                               December 31,
                                                                         --------------------------------------------------
                                                                              1997                1996              1995
                                                                         -------------       -------------     ------------

BALANCE SHEETS DATA:

         Cash, cash equivalents, and short and long-term
               investments in marketable securities                      $ 107,012,000       $ 103,984,000     $  5,927,000
         Working capital                                                    83,733,000          91,449,000        5,841,000
         Total assets                                                      141,884,000         112,968,000        7,037,000
         Shareholders' equity                                            $ 117,712,000       $ 104,205,000     $  6,105,000



Note:  The selected financial data for the three years ended December 31, 1997 has been restated to reflect
       the acquisition of Four11 Corporation which was accounted
 for as a pooling of interests.

  (1)  Pro forma net income and diluted net income per share exclude the effects of other non-recurring 
       costs of $21,245,000 related to the Yahoo! Marketplace restructuring incurred during the quarter
       ended June 30, 1997 and $3,850,000 incurred in connection with the acquisition of Four 11 Corporation
       during the quarter ended December 31, 1997.

</TABLE>

                                                                          12

<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

EXCEPT FOR HISTORICAL INFORMATION, THE DISCUSSION IN THIS REPORT (INCLUDING, 
WITHOUT LIMITATION, THE DISCUSSION UNDER THE HEADING "RESULTS OF OPERATIONS") 
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.  THE 
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN.  
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT 
LIMITED TO, THOSE DISCUSSED BELOW, AND THE RISKS DISCUSSED UNDER THE CAPTION, 
"RISK FACTORS" IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED 
DECEMBER 31, 1997 (A COPY OF WHICH IS AVAILABLE AT WWW.SEC.GOV OR UPON REQUEST 
FROM THE COMPANY).

OVERVIEW

Yahoo! Inc. (the "Company") is a global Internet media company that offers a 
network of branded World Wide Web (the "Web") programming that serves 
millions of users daily.  As the first online navigational guide to the Web, 
WWW.YAHOO.COM is the single largest guide in terms of traffic, advertising, 
household and business user reach, and is one of the most recognized brands 
associated with the Internet.  Yahoo! Inc. provides targeted Internet 
resources and communications services for a broad range of audiences, based 
on demographic, key-subject and geographic interests.  The Company was 
incorporated in California on March 5, 1995 and commenced operations on that 
date.  In August 1995, the Company commenced selling advertisements on its 
Web pages and recognized its initial revenues.  In April 1996, the Company 
completed its initial public offering.

     The Company's revenues are derived principally from the sale of banner 
advertisements on short-term contracts.  The Company's standard rates for 
advertising currently range from approximately $0.02 per impression for 
general rotation to approximately $0.08 per impression for highly targeted 
audiences and properties.  To date, the duration of the Company's advertising 
commitments has ranged from one week to two years.  During 1997, the Company 
also began selling a combination of sponsorship and banner advertising 
contracts.  In general, these sponsorship advertising contracts have longer 
terms than standard banner advertising contracts (ranging from three months 
to two years) and also involve more integration with Yahoo! services, such as 
the placement of buttons which provide users with direct links to the 
advertiser's Web site.  Advertising revenues on both banner and sponsorship 
contracts are recognized ratably over the period in which the advertisement 
is displayed, provided that no significant Company obligations remain and 
collection of the resulting receivable is probable.  Company obligations 
typically include guarantees of minimum number of "impressions," or times 
that an advertisement appears in pages viewed by users of the Company's 
online properties.  To the extent minimum guaranteed impressions are not met, 
the Company defers recognition of the corresponding revenues until the 
remaining guaranteed impression levels are achieved.  The Company also earns 
additional revenue on sponsorship contracts for fees relating to the design, 
coordination, and integration of the customer's content and links into Yahoo! 
online properties.  These fees are recognized as revenue once the related 
activities have been performed and the customer's web links are available on 
Yahoo! online properties.  A number of the Company's agreements provide that 
Yahoo! receive revenues from electronic commerce transactions.  These 
revenues are recognized by the Company upon notification from the advertiser 
of revenues earned by Yahoo! and, to date, have not been significant.

                                                                           13

<PAGE>

     During 1997, the Company entered into certain agreements with Netscape 
Communications Corporation ("Netscape") under which the Company has developed 
and operates an Internet information navigation service called "Netscape 
Guide by Yahoo!" (the "Guide"), and was designated as a "Premier Provider" of 
domestic and international search and navigational services within the 
Netscape Web site.  The Co-Marketing agreement provides that revenue from 
advertising on the Guide, which is managed by the Company, is to be shared 
between the Company and Netscape.  Under the terms of the Trademark License 
agreement, the Company made a one-time non-refundable trademark license fee 
payment of $5,000,000 in March 1997, which is being amortized over the 
initial two-year term, which commenced in May 1997.  Under the terms of the 
Co-Marketing agreement as amended in June 1997, the Company also provided 
Netscape with a minimum of up to $4,660,000 in guarantees against shared 
advertising revenues in the first year of the agreement, subject in the first 
year to a minimum level of gross revenue being met, and up to a minimum of 
$15,000,000 in the second year of the agreement, subject in the second year 
to certain minimum levels of impressions being reached on the Guide.  Actual 
payments will relate directly to the overall revenue and impressions 
recognized from the Guide.  Under the terms of the Premier Provider 
agreements, the Company is required to make minimum payments in cash of 
$6,100,000 and is obligated to provide $1,600,000 in the Company's 
advertising services in return for certain minimum guaranteed exposures over 
the course of the one-year term of the agreements.  To the extent that the 
minimum guaranteed exposures are exceeded, the Company is obligated to remit 
to Netscape additional payments.

     In August 1996, the Company entered into agreements with Visa 
International Service Association ("VISA") and another party (together, the 
"Visa Group") to establish a limited liability company, Yahoo! Marketplace 
L.L.C., to develop and operate a navigational service focused on information 
and resources for the purchase of consumer products and services over the 
Internet.  During July 1997, prior to the completion of significant business 
activities and public launch of the property, the Company and VISA entered 
into an agreement under which the Visa Group released the Company from 
certain obligations and claims.  In connection with this agreement, Yahoo! 
issued 699,481 shares of Yahoo! Common Stock to the Visa Group, for which the 
Company recorded a one-time, non-cash, pre-tax charge of $21,245,000 in the 
second quarter ended June 30, 1997.

     During July 1997, GTE New Media Services Incorporated ("GTE New Media"), 
an affiliate of GTE, filed suit in Dallas, Texas against Netscape and the 
Company, in which GTE New Media made a number of claims relating to the 
inclusion of certain Yellow Pages hypertext links in the Netscape Guide by 
Yahoo!, an online navigational property operated by the Company under an 
agreement with Netscape.  In this lawsuit, GTE New Media has alleged, among 
other things, that by including such links to the Yellow Pages service 
operated by several Regional Bell Operating Companies (the "RBOCs") within 
the Guide, the Company has tortiously interfered with an alleged contractual 
relationship between GTE New Media and Netscape relating to placement of 
links by Netscape for a Yellow Pages service operated by GTE New Media.  GTE 
New Media seeks injunctive relief as well as actual and punitive damages.  In 
October 1997, 

                                                                            14

<PAGE>

GTE New Media brought suit in the U.S. District Court for the District of 
Columbia, against the RBOCs, Netscape, and the Company, in which GTE New 
Media has alleged, among other things, that the alleged exclusion of the GTE 
New Media Yellow Pages from the Netscape Guide Yellow Pages service violates 
federal antitrust laws, and GTE New Media seeks injunctive relief and damages 
(trebled under federal antitrust laws) from such alleged actions.  The 
Company believes that the claims against the Company in these lawsuits are 
without merit and intends to contest them vigorously.  Although the Company 
cannot predict with certainty the outcome of these lawsuits or the expenses 
that may be incurred in defending the lawsuits, the Company does not believe 
that the result in the lawsuits will have a material adverse effect on the 
Company's financial position or results of operations.

     On October 20, 1997, the Company completed the acquisition of Four11 
Corporation, a privately-held online communications and Internet directory 
company.  Under the terms of the acquisition, which was accounted for as a 
pooling of interests, the Company exchanged 1,505,720 shares of Yahoo! Common 
Stock for all of Four11's outstanding shares and assumed 148,336 options and 
warrants to purchase Yahoo! Common Stock.  During the quarter ended December 
31, 1997, the Company recorded a one-time charge of $3,850,000 for the 
acquisition.  These costs consisted of investment banking fees, legal and 
accounting fees, redundancy costs, and certain other expenses directly 
related to the acquisition.  The consolidated financial statements for the 
three years ended December 31, 1997 and the accompanying notes reflect the 
Company's financial position and the results of operations as if Four11 was a 
wholly-owned subsidiary of the Company since inception.

CERTAIN RISK FACTORS

Yahoo! has a limited operating history upon which an evaluation of the 
Company can be based, and its prospects are subject to the risks, expenses, 
and uncertainties frequently encountered by companies in the new and rapidly 
evolving markets for Internet products and services, including the Web-based 
advertising market.  Specifically, such risks include, without limitation, 
the failure to continue to develop and extend the "Yahoo!" brand, the failure 
to develop new media properties, the inability of the Company to maintain and 
increase the levels of traffic on Yahoo! properties, the development or 
acquisition of equal or superior services or products by competitors, the 
failure of the market to adopt the Web as an advertising medium, the failure 
to successfully sell Web-based advertising through the Company's recently 
developed internal sales force, potential reductions in market prices for 
Web-based advertising as a result of competition or other factors, the 
failure of the Company to effectively generate commerce-related revenues 
through sponsored services and placements in Yahoo! properties, the inability 
of the Company to effectively integrate the technology and operations or any 
other acquired businesses or technologies with its operations, such as the 
recent acquisition of Four11 Corporation, the failure of the Company to 
successfully develop and offer personalized Web-based services, such as 
e-mail services, to consumers without errors or interruptions in service, and 
the inability to continue to identify, attract, retain and motivate qualified 
personnel.  There can be no assurance that the Company will be successful in 
addressing such risks.

                                                                     15

<PAGE>

     As of December 31, 1997, the Company had an accumulated deficit of 
$27,971,000.  The limited operating history of the Company and the uncertain 
nature of the markets addressed by the Company make the prediction of future 
results of operations difficult or impossible and, therefore, the recent 
revenue growth experienced by the Company should not be taken as indicative 
of the rate of revenue growth, if any, that can be expected in the future.  
The Company believes that period-to-period comparisons of its operating 
results are not meaningful and that the results for any period should not be 
relied upon as an indication of future performance.  The Company currently 
expects to continue to significantly increase its operating expenses to 
expand its sales and marketing operations, to continue to develop and extend 
the "Yahoo!" brand, to fund greater levels of product development, to develop 
and commercialize additional media properties, and to acquire complementary 
businesses and technologies.  The Company derives the majority of its 
revenues from the sale of advertisements under short-term contracts, which 
are difficult to forecast accurately.  The Company's expense levels are based 
in part on its expectations concerning future revenue and, to a large extent, 
are fixed.  The Company also has fixed expenses in the form of advertising 
revenue guarantees of up to $18,500,000 over the next 15 months relating to 
the Netscape Guide By Yahoo!, which subject the Company to additional risk in 
the event that advertising revenues from this property are not sufficient to 
offset guaranteed payments and related operating expenses.  Quarterly 
revenues and operating results depend substantially upon the advertising 
revenues received within the quarter, which are difficult to forecast 
accurately.  Accordingly, the cancellation or deferral of a small number of 
advertising or sponsorship contracts could have a material adverse effect on 
the Company's business, results of operations, and financial condition.  The 
Company may be unable to adjust spending in a timely manner to compensate for 
any unexpected revenue shortfall, and any significant shortfall in revenue in 
relation to the Company's expectations would have an immediate adverse effect 
on the Company's business, operating results, and financial condition.  In 
addition, the Company plans to continue to significantly increase its 
operating expenses to expand its sales and marketing operations, to continue 
to develop and extend the "Yahoo!" brand, to fund greater levels of product 
development, and to develop and commercialize additional media properties.  
To the extent that such expenses precede or are not subsequently followed by 
increased revenues, the Company's business, operating results, and financial 
condition will be materially and adversely affected.  As a result of these 
factors, there can be no assurance that the Company will not incur 
significant losses on a quarterly and annual basis in the future.

     The Company's operating results may fluctuate significantly in the 
future as a result of a variety of factors, many of which are outside the 
Company's control.  These factors include the level of usage of the Internet, 
demand for Internet advertising, the addition or loss of advertisers, the 
level of user traffic on Yahoo! and the Company's other online media 
properties, the advertising budgeting cycles of individual advertisers, the 
amount and timing of capital expenditures and other costs relating to the 
expansion of the Company's operations, the introduction of new products or 
services by the Company or its competitors, pricing changes for Web-based 
advertising, the timing of initial set-up, engineering or development 

                                                                         16

<PAGE>

fees that may be paid in connection with larger advertising and distribution 
arrangements, technical difficulties with respect to the use of Yahoo! or 
other media properties developed by the Company, incurrence of costs relating 
to future acquisitions, general economic conditions, and economic conditions 
specific to the Internet and online media.  As a strategic response to 
changes in the competitive environment, the Company may from time to time 
make certain pricing, service or marketing decisions, or business 
combinations that could have a material adverse effect on the Company's 
business, results of operations, and financial condition.  The Company also 
has experienced, and expects to continue to experience, seasonality in its 
business, with user traffic on Yahoo! and the Company's other online media 
properties being lower during the summer and year-end vacation and holiday 
periods, when usage of the Web and the Company's services typically 
experience slower growth or decline.  Additionally, seasonality may also 
affect the amount of customer advertising dollars placed with the Company in 
the first and third calendar quarters as advertisers historically spend less 
during these quarters.

     A key element of the Company's strategy is to generate additional 
advertising revenues through sponsored services and placements by third 
parties in Yahoo! online properties in addition to banner advertising.  In 
connection with these arrangements, the Company may receive sponsorship fees 
as well as a portion of transaction revenues received by the third-party 
sponsor from users originated through the Yahoo! placement, in return for 
minimum levels of user impressions to be provided by the Company.  To the 
extent implemented, these arrangements expose the Company to potentially 
significant financial risks, including the risk that the Company fails to 
deliver required minimum levels of user impressions and that third party 
sponsors do not renew the agreements at the end of their term.  In addition, 
because the Company has limited experience with these arrangements, the 
Company is unable to determine what effect such arrangements will have on 
gross margins and results of operations.  Although transaction-based fees 
have not to date represented a significant portion of the Company's net 
revenues, if and to the extent such revenues become significant, the 
foregoing factors could result in greater variations in the Company's 
quarterly operating results and could have a material adverse effect on the 
Company's business, results of operations, and financial condition.

     The market for Internet products and services is highly competitive and 
competition is expected to continue to increase significantly.  In addition, 
the Company expects the market for Web-based advertising, to the extent it 
continues to develop, to be intensely competitive.  There are no substantial 
barriers to entry in these markets, and the Company expects that competition 
will continue to intensify.  Although the Company currently believes that the 
diverse segments of the Internet market will provide opportunities for more 
than one supplier of products and services similar to those of the Company, 
it is possible that a single supplier may dominate one or more market 
segments, including well-established companies such as Microsoft.  The 
Company competes with many other providers of online navigation, information 
and community services.  The Company also competes with online services and 
other Web site operators, as well as traditional offline media such as 
television, radio and print for a share of advertisers' total advertising 
budgets.  The Company believes that the number of companies selling Web-based 
advertising 

                                                                           17

<PAGE>

and the available inventory of advertising space have increased substantially 
during recent periods.  Accordingly, the Company may face increased pricing 
pressure for the sale of advertisements.  There can be no assurance that the 
Company will be able to compete successfully against its current or future 
competitors or that competition will not have a material adverse effect on 
the Company's business, operating results, and financial condition.

     Due to all of the foregoing factors, in some future quarter the 
Company's operating results may fall below the expectations of securities 
analysts and investors.  In such an event, the trading price of the Company's 
Common Stock would likely be materially and adversely affected.

RESULTS OF OPERATIONS

NET REVENUES.  Net revenues were $67,411,000, $19,697,000, and $1,410,000 for 
the years ended December 31, 1997, 1996, and 1995, respectively.  The 
increases from year to year are due primarily to the increasing number of 
advertisers purchasing space on Yahoo! and the Company's other online media 
properties.  Approximately 2,600 customers advertised on Yahoo! and the 
Company's other online media properties during 1997 as compared to 
approximately 700 in 1996.  Additionally, the Company began selling 
sponsorship contracts during 1997 which also contributed to the increase in 
net revenues.  International revenues have accounted for less than 10% of net 
revenues in the years ended December 31, 1997, 1996, and 1995.  Barter 
transactions have also accounted for less than 10% of net revenues in the 
years ended December 31, 1997, 1996, and 1995.  There can be no assurance 
that customers will continue to purchase advertising on the Company's Web 
pages or that market prices for Web-based advertising will not decrease due 
to competitive or other factors.

COST OF REVENUES.  Cost of revenues consists of the expenses associated with 
the production and usage of Yahoo! and the Company's other online media 
properties.  These costs primarily consist of fees paid to third parties for 
content included on the Company's properties, Internet connection charges, 
equipment depreciation, and compensation.  Cost of revenues were $9,372,000 
for the year ended December 31, 1997, or 14% of net revenues as compared to 
$3,316,000, or 17% of net revenues and $198,000, or 14% of net revenues for 
the years ended December 31, 1996 and 1995, respectively.  The absolute 
dollar increases in cost of revenues from year to year are primarily 
attributable to an increase in the quantity of content available on Yahoo! 
and the Company's other online media properties, and the increased usage of 
these properties.  The Company anticipates that its content and Internet 
connection expenses will increase with the quantity and quality of content 
available on Yahoo! and the Company's other online media properties, and 
increased usage of these properties.  As measured in page views (defined as 
electronic page displays), the Company delivered an average of approximately 
65 million page views per day in December 1997 compared with an average of 
approximately 20 million page views per day in December 1996 and an average 
of approximately 6 million page views per day in February 1996.  Yahoo! 
Japan, an unconsolidated joint venture of the Company which began operations 
in April 1996, is included in these page views figures and accounted for an 
average of approximately 5 million per day in December 1997 and an average of 
approximately 1.4 

                                                                        18

<PAGE>

million per day in December 1996.  The Company anticipates that its content 
and Internet connection expenses will continue to increase in absolute 
dollars for the foreseeable future.  The Company currently anticipates 1998 
cost of revenues to be in the range of 12% to 16% of revenues.

SALES AND MARKETING.  Sales and marketing expenses were $43,930,000 for the 
year ended December 31, 1997, or 65% of net revenues.  For the years ended 
December 31, 1996 and 1995, sales and marketing expenses were $15,106,000 and 
$815,000, or 77% and 58% of net revenues, respectively.  Sales and marketing 
expenses consist primarily of advertising and other marketing related 
expenses (which include Netscape Premier Provider costs), compensation, sales 
commissions, and travel costs.  The year-to-year increases in absolute 
dollars are primarily attributable to increases in compensation expense 
associated with an increase in sales and marketing personnel related to the 
addition of a direct sales force which the Company began building in the 
fourth quarter of 1996; an increase in advertising costs associated with the 
Company's aggressive brand building strategy; an increase in the total costs 
incurred from the Netscape search programs; the addition of and growth in the 
various international subsidiaries including France, Germany, and the United 
Kingdom during 1996 and Singapore, Australia, Korea, Sweden, Denmark, and 
Norway during 1997; and an increase in sales commissions associated with the 
increase in revenues.  The Company anticipates that sales and marketing 
expenses in absolute dollars will increase in future periods as it continues 
to pursue an aggressive brand building strategy and continues to build its 
direct sales organization.  As a percentage of net revenues, the Company 
currently anticipates that sales and marketing expenses will approximate 60% 
in the first quarter of 1998 and will trend lower over the remainder of 1998.

PRODUCT DEVELOPMENT.  Product development expenses were $11,138,000, or 17% 
of net revenues for the year ended December 31, 1997 compared to $5,150,000 
and $303,000, or 26% and 21% of net revenues for the years ended December 31, 
1996 and 1995, respectively.  Product development expenses consist primarily 
of employee compensation relating to developing and enhancing the features 
and functionality of Yahoo! and the Company's other online media properties.  
The year-to-year increases in absolute dollars are primarily attributable to 
increases in the number of engineers that develop and enhance Yahoo! and the 
Company's other online media properties.  To date, all internal product 
development costs have been expensed as incurred.  Acquired technology for 
which technological feasibility has been established, including the 
technology purchased in the Company's 1997 acquisition of NetControls for 
$1,400,000, is capitalized and amortized over its useful life.  The Company 
believes that significant investments in product development are required to 
remain competitive.  As a consequence, the Company intends to incur increased 
product development expenditures in absolute dollars in future periods.  As a 
percentage of net revenues, the Company currently anticipates that product 
development expenses will approximate current levels during 1998.

GENERAL AND ADMINISTRATIVE.  General and administrative expenses were 
$6,472,000, or 10% of net revenues for the year ended December 31, 1997 
compared to $4,878,000 and $972,000, or 25% and 69% of net revenues for the 
years ended December 31, 1996 and 1995, respectively.  General and 
administrative 

                                                                         19

<PAGE>

expenses consist primarily of compensation and fees for professional 
services.  The year-to-year increases in absolute dollars are primarily 
attributable to increases in staffing and usage of professional services.  
The Company believes that the absolute dollar level of general and 
administrative expenses will increase in future periods, as a result of 
increased staffing and fees for professional services.  As a percentage of 
net revenues, the Company currently anticipates that general and 
administrative expenses will approximate current levels in the first half of 
1998 and may decrease slightly during the second half of 1998.

OTHER -- NON-RECURRING COSTS.  During July 1997, the Company and VISA entered 
into an agreement under which the Visa Group released the Company from 
certain obligations and claims.  In connection with this agreement, Yahoo! 
issued 699,481 shares of Yahoo! Common Stock to the Visa Group, for which the 
Company recorded a one-time, non-cash, pre-tax charge of $21,245,000 in the 
second quarter ended June 30, 1997.  In conjunction with the October 1997 
acquisition of Four11 Corporation, the Company recorded a one-time charge of 
$3,850,000 which consisted of investment banking fees, legal and accounting 
fees, redundancy costs, and certain other expenses directly related to the 
acquisition.

INVESTMENT INCOME, NET.  Investment income, net of investment expense, was 
$4,982,000 for the year ended December 31, 1997 as compared to $3,928,000 for 
the year ended December 31, 1996.  The increase of $1,054,000 from 1996 to 
1997 is primarily attributable to a higher average investment balance as a 
result of private and public offering proceeds received during March and 
April of 1996.  Investment income in future periods may fluctuate as a result 
of fluctuations in average cash balances maintained by the Company and 
changes in the market rates of its investments.

MINORITY INTERESTS IN OPERATIONS OF CONSOLIDATED SUBSIDIARIES.  Minority 
interests in operations of consolidated subsidiaries were $727,000 and 
$540,000 for the years ended December 31, 1997 and 1996, respectively.  The 
increase from 1996 to 1997 is primarily attributable to the staggered launch 
dates of the joint ventures.  Yahoo! Europe operations began during the third 
quarter of 1996 and Yahoo! Korea operations started in the third quarter of 
1997 and both subsidiaries are still in the early stages of development.  The 
Company expects that minority interests in operations of consolidated 
subsidiaries in the aggregate will continue to fluctuate in future periods as 
a function of the results from consolidated subsidiaries.  When, and if, the 
consolidated subsidiaries become profitable, the minority interests 
elimination on the statement of operations will have an adverse effect on the 
Company's net results.

INCOME TAXES.  No provision for federal and state income taxes has been 
recorded as the Company has incurred net operating losses through December 
31, 1997.  At December 31, 1997, the Company had approximately $54,200,000 of 
federal net operating loss carryforwards for tax reporting purposes available 
to offset future taxable income; such carryforwards will expire beginning in 
2010.  Additionally, the Company has approximately $26,200,000 of California 
net operating loss carryforwards for tax reporting purposes which will expire 
beginning in 2003.  Deferred tax assets and related valuation allowances 
totaled $27,198,000 of which approximately $18,600,000 relate to certain U.S. 
operating loss carryforwards resulting from the exercise of employee stock 
options, the tax benefit of which, when recognized, will be 

                                                                            20

<PAGE>

accounted for as a credit to additional paid-in capital rather than a 
reduction of the income tax provision.  The Company currently expects its 
combined federal and state income tax rate to increase to approximately 20% 
for 1998.  This estimate is based on current tax law and current estimate of 
earnings, and is subject to change.

NET LOSS.  The Company recorded net losses of $22,887,000, $4,285,000, and 
$799,000, or $0.53, $0.11, and $0.03 per share for the years ended 
December 31, 1997, 1996, and 1995, respectively.  Excluding the effect of the 
one-time, non-cash, pre-tax charge of $21,245,000 recorded during the second 
quarter of 1997 for the restructuring of the Yahoo! Marketplace agreements 
with the Visa Group and the one-time charge of $3,850,000 recorded during the 
fourth quarter of 1997 for costs incurred for the acquisition of Four11, the 
Company earned $2,208,000.

LIQUIDITY AND CAPITAL RESOURCES

Yahoo! invests predominantly in instruments that are highly liquid, of 
quality investment grade, and predominantly have maturities of less than one 
year with the intent to make such funds readily available for operating 
purposes.  At December 31, 1997, the Company had cash and cash equivalents 
and investments in marketable securities totaling $107,012,000 compared to 
$103,984,000 at December 31, 1996.  For the year ended December 31, 1997, 
cash provided by operating activities was $3,123,000 compared to cash used 
for operating activities of $1,280,000 and $696,000 for the years ended 
December 31, 1996 and 1995, respectively.

     Capital expenditures for the years ended December 31, 1997, 1996, and 
1995 totaled $6,580,000, $3,077,000, and $192,000, respectively, and are 
expected to continue to increase in future periods as a result of the 
Company's growth.  Capital expenditures have generally been comprised of 
purchases of computer hardware and software as well as furniture and 
leasehold improvements related to leased facilities.

     For the year ended December 31, 1997, cash provided by financing 
activities of $8,514,000 was primarily due to proceeds of $6,409,000 from the 
issuance of Common Stock under the Company's stock option and employee stock 
purchase plans.  Additionally, proceeds of $999,000 were received from 
minority investors in consolidated joint ventures.  For the year ended 
December 31, 1996, cash provided by financing activities of $103,206,000 was 
primarily due to the March 1996 issuance of 5,100,000 shares of Mandatorily 
Redeemable Convertible Series C Preferred Stock for aggregate proceeds of 
$63,750,000, the April 1996 initial public offering of 4,485,000 shares of 
Common Stock for net proceeds of $35,106,000, and other issuances of Common 
Stock.  Additionally, proceeds of $1,050,000 were received from minority 
investors in consolidated joint ventures. For the year ended December 31, 
1995, cash provided by financing activities of $6,815,000 was primarily due 
to proceeds of $6,004,000 from the issuance of Convertible Preferred Stock.

     The Company currently has no material commitments other than those under 
the Netscape Co-Marketing agreement, the Netscape Premier Provider 
agreements, and operating lease agreements.  Under the terms of the amended 
Co-Marketing agreement, the Company has remaining fixed expenses in 

                                                                        21

<PAGE>

the form of advertising revenue guarantees of up to $3,500,000 over the next 
three months, subject to a minimum level of gross revenue being met during 
the first year of the agreement, and up to $15,000,000 in the second year, 
subject to certain minimum levels of advertising impressions being reached on 
the Guide. Under the terms of the Premier Provider agreements, the Company 
has minimum expense obligations of $2,917,000 at December 31, 1997, of which 
$550,000 is to be paid for with the Company's advertising services.  The 
Company has experienced a substantial increase in its capital expenditures 
and operating lease arrangements since its inception, which is consistent 
with increased staffing, and anticipates that this will continue in the 
future.  Additionally, the Company will continue to evaluate possible 
acquisitions of, or investments in businesses, products, and technologies 
that are complementary to those of the Company, which may require the use of 
cash.  Management believes existing cash and investments will be sufficient 
to meet the Company's operating requirements for at least the next twelve 
months; however, the Company may sell additional equity or debt securities or 
obtain credit facilities.  The sale of additional securities could result in 
additional dilution to the Company's shareholders.

                                                                         22

<PAGE>

                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                             December 31,        
                                                    -----------------------------
                                                         1997             1996   
                                                    ------------     ------------
<S>                                                 <C>              <C>         
ASSETS                                                                           
Current assets:                                                                  
   Cash and cash equivalents                        $ 62,538,000     $ 33,547,000
   Short-term investments in marketable                                          
     securities                                       27,772,000       60,689,000
   Accounts receivable, net of allowance                                         
     of $2,598,000 and $665,000                       10,986,000        5,082,000
   Prepaid expenses                                    5,893,000          384,000
                                                    ------------     ------------
     Total current assets                            107,189,000       99,702,000
                                                    ------------     ------------
Long-term investments in marketable                                              
   securities                                         16,702,000        9,748,000
Property and equipment, net                            7,035,000        2,789,000
Investment in Yahoo! Japan                             2,828,000          729,000
Other assets                                           8,130,000                -
                                                    ------------     ------------
                                                    $141,884,000     $112,968,000
                                                    ------------     ------------
                                                    ------------     ------------
                                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                                             
Current liabilities:                                                             
   Accounts payable                                 $  4,711,000     $  1,106,000
   Accrued expenses and other current                                            
     liabilities                                      12,481,000        4,718,000
   Deferred revenue                                    4,852,000        1,347,000
   Due to related parties                              1,412,000        1,082,000
                                                    ------------     ------------
     Total current liabilities                        23,456,000        8,253,000
                                                    ------------     ------------
                                                                                 
Commitments and contingencies (Notes 8 and 9)                                    
Minority interests in consolidated subsidiaries          716,000          510,000

Shareholders' equity:
   Preferred Stock, $0.001 par value; 10,000,000 
     shares authorized; none issued                            -                -
   Common Stock, $0.00067 par value; 225,000,000 
     shares authorized; 45,012,624 and 41,298,067 
     issued and outstanding                               20,000           18,000
   Additional paid-in capital                        146,106,000      109,334,000
   Accumulated deficit                               (27,971,000)      (5,084,000)
   Cumulative translation adjustment                    (443,000)         (63,000)
                                                    ------------     ------------
     Total shareholders' equity                      117,712,000      104,205,000
                                                    ------------     ------------
                                                    $141,884,000     $112,968,000
                                                    ------------     ------------
                                                    ------------     ------------
</TABLE>



The accompanying notes are an integral part of these consolidated financial 
statements.


                                                                              23


<PAGE>

                     CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                Year Ended December 31, 
                                                      ---------------------------------------------
                                                          1997             1996            1995
                                                      ------------     ------------     -----------
<S>                                                   <C>              <C>              <C>
Net revenues                                          $ 67,411,000     $ 19,697,000     $ 1,410,000
Cost of revenues                                         9,372,000        3,316,000         198,000
                                                      ------------     ------------     -----------
   Gross profit                                         58,039,000       16,381,000       1,212,000
                                                      ------------     ------------     -----------

Operating expenses:
   Sales and marketing                                  43,930,000       15,106,000         815,000
   Product development                                  11,138,000        5,150,000         303,000
   General and administrative                            6,472,000        4,878,000         972,000
   Other - non-recurring costs                          25,095,000                -               -
                                                      ------------     ------------     -----------
     Total operating expenses                           86,635,000       25,134,000       2,090,000
                                                      ------------     ------------     -----------

Loss from operations                                   (28,596,000)      (8,753,000)       (878,000)
Investment income, net                                   4,982,000        3,928,000          79,000
Minority interests in operations
   of consolidated subsidiaries                            727,000          540,000               -
                                                      ------------     ------------     -----------
Net loss                                              $(22,887,000)    $ (4,285,000)    $  (799,000)
                                                      ------------     ------------     -----------
                                                      ------------     ------------     -----------

Basic and diluted net loss per share                  $      (0.53)    $      (0.11)    $     (0.03)
                                                      ------------     ------------     -----------
                                                      ------------     ------------     -----------
Shares used in computing basic and diluted
   net loss per share                                   43,583,000       39,256,000      27,307,000
                                                      ------------     ------------     -----------
                                                      ------------     ------------     -----------
</TABLE>



The accompanying notes are an integral part of these consolidated financial 
statements.



                                                                              24

<PAGE>

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                 Convertible                              
                                               Preferred Stock               Common Stock
                                             ---------------------        -------------------
                                             Shares         Amount        Shares      Amount
                                             ------------------------------------------------
<S>                                          <C>           <C>          <C>           <C>
Issuance of Common Stock in connection 
   with the formation of the Company                   -   $      -     15,579,530    $ 1,000
Issuance of Series A and B
   Convertible Preferred Stock at
   $0.20 and $1.97 per share, respectively     7,738,072      8,000              -          -
Issuance of Common Stock for
   employee stock plans and other                      -          -        783,866          -
Net loss                                               -          -              -          -
                                             -----------   --------     ----------    -------
Balance at December 31, 1995                   7,738,072      8,000     16,363,396      1,000

Issuance of Mandatorily
   Redeemable Convertible
   Series C Preferred Stock at
   $12.50 per share                            5,100,000      5,000              -          -
Sale of Common Stock, net of
   issuance costs of $1,192,000                        -          -      4,485,000      3,000
Conversion of Convertible Preferred
   Stock to Common Stock                     (12,838,072)   (13,000)    19,257,108     13,000
Issuance of Common Stock,
   net of issuance costs                               -          -        447,997          -
Issuance of Common Stock
   pursuant to exercise of options                     -          -        744,566      1,000
Compensation expense on
   option grants                                       -          -              -          -
Net loss                                               -          -              -          -
Foreign currency translation adjustment                -          -              -          -
                                             -----------   --------     ----------    -------
Balance at December 31, 1996                           -          -     41,298,067     18,000
Issuance of Common Stock pursuant
   to exercise of warrants                             -          -        348,159          -
Issuance of Common Stock for
   acquisitions and investments                        -          -        115,246          -
Issuance of Common Stock pursuant
   to Visa Group Agreement                             -          -        699,481      1,000
Issuance of Common Stock for
   employee stock plans                                -          -      2,551,671      1,000
Write-up of investment in
   Yahoo! Japan                                        -          -              -          -
Compensation expense on
   option grants                                       -          -              -          -
Net loss                                               -          -              -          -
Foreign currency
   translation adjustment                              -          -              -          -
                                             -----------   --------     ----------    -------
Balance at December 31, 1997                           -   $      -     45,012,624    $20,000
                                             -----------   --------     ----------    -------
                                             -----------   --------     ----------    -------


<CAPTION>
                                              Additional                          Cumulative 
                                               Paid-in           Accumulated      Translation           
                                               Capital             Deficit         Adjustment      Total
                                             ---------------------------------------------------------------
<S>                                          <C>                 <C>              <C>           <C>
Issuance of Common Stock in connection       
   with the formation of the Company         $      2,000        $          -     $       -     $      3,000
Issuance of Series A and B                   
   Convertible Preferred Stock at            
   $0.20 and $1.97 per share, respectively      5,996,000                   -             -        6,004,000
Issuance of Common Stock for                 
   employee stock plans and other                 897,000                   -             -          897,000
Net loss                                                -            (799,000)            -         (799,000)
                                             ------------        ------------     ---------     ------------
Balance at December 31, 1995                    6,895,000            (799,000)            -        6,105,000
                                             
Issuance of Mandatorily                      
   Redeemable Convertible                    
   Series C Preferred Stock at               
   $12.50 per share                            63,745,000                   -             -       63,750,000
Sale of Common Stock, net of                 
   issuance costs of $1,192,000                35,103,000                   -             -       35,106,000
Conversion of Convertible Preferred          
   Stock to Common Stock                                -                   -             -                -
Issuance of Common Stock,                    
   net of issuance costs                        3,418,000                   -             -        3,418,000
Issuance of Common Stock                     
   pursuant to exercise of options                  9,000                   -             -           10,000
Compensation expense on                      
   option grants                                  164,000                   -             -          164,000
Net loss                                                -          (4,285,000)            -       (4,285,000)
Foreign currency translation adjustment                 -                   -       (63,000)         (63,000)
                                             ------------        ------------     ---------     ------------
Balance at December 31, 1996                  109,334,000          (5,084,000)      (63,000)     104,205,000
Issuance of Common Stock pursuant            
   to exercise of warrants                              -                   -             -                -
Issuance of Common Stock for                 
   acquisitions and investments                 6,400,000                   -             -        6,400,000
Issuance of Common Stock pursuant            
   to Visa Group Agreement                     21,049,000                   -             -       21,050,000
Issuance of Common Stock for                 
   employee stock plans                         6,408,000                   -             -        6,409,000
Write-up of investment in                    
   Yahoo! Japan                                 1,700,000                   -             -        1,700,000
Compensation expense on                      
   option grants                                1,215,000                   -             -        1,215,000
Net loss                                                -         (22,887,000)            -      (22,887,000)
Foreign currency                             
   translation adjustment                               -                   -      (380,000)        (380,000)
                                             ------------        ------------     ---------     ------------
Balance at December 31, 1997                 $146,106,000        $(27,971,000)    $(443,000)    $117,712,000
                                             ------------        ------------     ---------     ------------
                                             ------------        ------------     ---------     ------------
</TABLE>



The accompanying notes are an integral part of these consolidated financial 
statements.


                                                                              25


<PAGE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                                --------------------------------------------
                                                                    1997             1996            1995
                                                                ------------     ------------     ----------
<S>                                                             <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                     $(22,887,000)    $ (4,285,000)    $ (799,000)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
     Depreciation and amortization                                 2,554,000          552,000        145,000
     Compensation expense on stock option grants                   1,215,000          164,000              -
     Minority interests in operations
       of consolidated subsidiaries                                 (727,000)        (540,000)             -
     Income from investment in Yahoo! Japan                         (100,000)               -              -
     Non-cash charge                                              21,245,000                -              -
     Changes in assets and liabilities:
       Accounts receivable, net                                   (5,904,000)      (4,254,000)      (828,000)
       Prepaid expenses                                           (5,959,000)        (366,000)       (18,000)
       Accounts payable                                            2,499,000        1,043,000         63,000
       Accrued expenses and other current liabilities              7,352,000        4,290,000        428,000
       Deferred revenue                                            3,505,000        1,168,000        179,000
       Due to related parties                                        330,000          948,000        134,000
                                                                ------------     ------------     ----------
Net cash provided by (used in) operating activities                3,123,000       (1,280,000)      (696,000)
                                                                ------------     ------------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property and equipment                          (6,580,000)      (3,077,000)      (192,000)
   Purchases of investments in marketable securities             (58,753,000)    (113,285,000)      (392,000)
   Proceeds from sales and maturities of investments
     in marketable securities                                     84,716,000       43,240,000              -
   Investment in AudioNet                                         (1,350,000)               -              -
   Investment in Yahoo! Japan                                       (299,000)        (729,000)             -
                                                                ------------     ------------     ----------
Net cash provided by (used in) investing activities               17,734,000      (73,851,000)      (584,000)
                                                                ------------     ------------     ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of Common Stock, net                     6,409,000       38,534,000        820,000
   Proceeds from issuance of Convertible Preferred Stock                   -       63,750,000      6,004,000
   Proceeds from minority investors                                  999,000        1,050,000              -
   Other                                                           1,106,000         (128,000)        (9,000)
                                                                ------------     ------------     ----------
Net cash provided by financing activities                          8,514,000      103,206,000      6,815,000
                                                                ------------     ------------     ----------

Effect of exchange rate changes on cash
   and cash equivalents                                             (380,000)         (63,000)             -
                                                                ------------     ------------     ----------
Net change in cash and cash equivalents                           28,991,000       28,012,000      5,535,000
Cash and cash equivalents at beginning of period                  33,547,000        5,535,000              -
                                                                ------------     ------------     ----------
Cash and cash equivalents at end of period                      $ 62,538,000     $ 33,547,000     $5,535,000
                                                                ------------     ------------     ----------
                                                                ------------     ------------     ----------
</TABLE>



The accompanying notes are an integral part of these consolidated financial 
statements.



                                                                              26


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY.  Yahoo! Inc. (the "Company") is a global Internet media company 
that offers a network of branded World Wide Web (the "Web") programming that 
serves millions of users daily.  Yahoo! Inc. provides targeted Internet 
resources and communications services for a broad range of audiences, based 
on demographic, key-subject and geographic interests.  The Company was 
incorporated in California on March 5, 1995 and commenced operations on that 
date.  The Company conducts its business within one industry segment.

PRINCIPLES OF CONSOLIDATION.  The consolidated financial statements include 
the accounts of Yahoo! Inc. and its majority-owned subsidiaries.  All 
significant intercompany accounts and transactions have been eliminated.  The 
equity and net loss attributable to the minority shareholder interests which 
related to the Company's subsidiaries, are shown separately in the 
consolidated balance sheets and consolidated statements of operations, 
respectively.  Losses in excess of the minority interest equity would be 
charged against the Company.  Investments in entities owned 20% or more but 
less than majority owned and not otherwise controlled by the Company are 
accounted for under the equity method.

RECLASSIFICATIONS.  Certain prior years' balances have been reclassified to 
conform with the current year's presentation.

REVENUE RECOGNITION.  The Company's revenues are derived principally from the 
sale of banner advertisements on short-term contracts.  The Company's 
standard rates for advertising currently range from approximately $0.02 per 
impression for general rotation to approximately $0.08 per impression for 
highly targeted audiences and properties.  To date, the duration of the 
Company's advertising commitments has ranged from one week to two years.  
During 1997, the Company also began selling a combination of sponsorship and 
banner advertising contracts.  In general, these sponsorship advertising 
contracts have longer terms than standard banner advertising contracts 
(ranging from three months to two years) and also involve more integration 
with Yahoo! services, such as the placement of buttons which provide users 
with direct links to the advertiser's Web site.  Advertising revenues on both 
banner and sponsorship contracts are recognized ratably in the period in 
which the advertisement is displayed, provided that no significant Company 
obligations remain and collection of the resulting receivable is probable.  
Company obligations typically include guarantees of minimum number of 
"impressions," or times that an advertisement appears in pages viewed by 
users of the Company's online properties.  To the extent minimum guaranteed 
impressions are not met, the Company defers recognition of the corresponding 
revenues until the remaining guaranteed impression levels are achieved.  The 
Company also earns additional revenue on sponsorship contracts for fees 
relating to the design, coordination, and integration of the customer's 
content and links into Yahoo! online properties.  These fees are recognized 
as revenue once the related activities have been performed and the customer's 
web links are available on Yahoo! online properties.  A number of the 
Company's agreements provide that Yahoo! receive revenues from electronic 
commerce transactions.  These revenues are recognized by the Company upon 
notification from the advertiser of revenues earned by Yahoo! and, to date, 
have not been significant.  


                                                                              27


<PAGE>

Revenues from barter transactions are recognized during the period in which 
the advertisements are displayed in Yahoo! properties.  Barter transactions 
are recorded at the lower of estimated fair value of the goods or services 
received or the estimated fair value of the advertisements given.  To date, 
barter transactions have been less than 10% of net revenues.  During 1997, no 
one customer accounted for more than 10% of net revenues.  During 1996, 
SOFTBANK, a 31% shareholder of the Company at December 31, 1997, and its 
related companies accounted for approximately 12% of net revenues.  During 
1995, another company accounted for approximately 11% of net revenues.  
Deferred revenue is primarily comprised of billings in excess of recognized 
revenue relating to advertising contracts and payments received pursuant to 
sponsorship advertising agreements in advance of revenue recognition.  

PRODUCT DEVELOPMENT.  Costs incurred in the classification and organization of 
listings within Yahoo! properties and the development of new products and 
enhancements to existing products are charged to expense as incurred.  
Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for 
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed," 
requires capitalization of certain software development costs subsequent to 
the establishment of technological feasibility.  Based upon the Company's 
product development process, technological feasibility is established upon 
completion of a working model.  Costs incurred by the Company between 
completion of the working model and the point at which the product is ready 
for general release have been insignificant.

ADVERTISING COSTS.  Advertising production costs are recorded as expense the 
first time an advertisement appears.  All other advertising costs are expensed 
as incurred.  The Company does not incur any direct-response advertising 
costs.  Advertising expense totaled $10,168,000 for 1997, $3,939,000 for 1996, 
and $130,000 for 1995. 

ACQUISITION OF FOUR11 CORPORATION.  On October 20, 1997, the Company 
consummated an Agreement and Plan of Reorganization with Four11 Corporation 
("Four11"), a privately-held company, upon which Four11's shareholders 
exchanged all of their shares on an as-if-converted basis for shares of the 
Company's Common Stock in a business combination which was accounted for as a 
pooling of interests.  The consolidated financial statements for the three 
years ended December 31, 1997 and the accompanying notes reflect the 
Company's financial position and the results of operations as if Four11 was a 
wholly-owned subsidiary of the Company since inception.  As separate 
companies, Yahoo! accounted for net revenues of $40,355,000 for the nine 
months ended September 30, 1997, and $19,073,000 and $1,363,000 for the years 
ended December 31, 1996 and 1995, respectively, and Four11 accounted for net 
revenues of $1,951,000 for the nine months ended September 30, 1997, and 
$624,000 and $47,000 for the years ended December 31, 1996 and 1995, 
respectively.  During the fourth quarter of 1997, combined Yahoo!-Four11 net 
revenues were $25,105,000.  Yahoo! accounted for net losses of $18,697,000 
for the nine months ended September 30, 1997, and $2,334,000 and $634,000 for 
the years ended December 31, 1996 and 1995, respectively, and Four11 
accounted for net losses of $2,914,000 for the nine months ended September 
30, 1997, and $1,951,000 and $165,000 for the years ended December 31, 1996 
and 1995, respectively.  During the fourth quarter of 1997, the combined 
Yahoo!-Four11 net loss was $1,276,000. 

                                                                              28



<PAGE>

BENEFIT PLAN.  The Company maintains a 401(k) Profit Sharing Plan (the 
"Plan") for its full-time employees.  Each participant in the Plan may elect 
to contribute from 1% to 17% of his or her annual compensation to the Plan.  
The Company matches employee contributions at a rate of 25%.  Employee 
contributions are fully vested, whereas vesting in matching Company 
contributions occurs at a rate of 33.3% per year of employment.  During 1997 
and 1996, the Company's contributions amounted to $263,000 and $81,000, 
respectively, all of which was expensed.

CASH, CASH EQUIVALENTS, SHORT AND LONG-TERM INVESTMENTS.  The Company invests 
its excess cash in debt instruments of the U.S. Government and its agencies, 
and in high-quality corporate issuers.  All highly liquid instruments with an 
original maturity of three months or less are considered cash equivalents, 
those with original maturities greater than three months and current 
maturities less than twelve months from the balance sheet date are considered 
short-term investments, and those with maturities greater than twelve months 
from the balance sheet date are considered long-term investments.  

     At December 31, 1997 and 1996, short and long-term investments in 
marketable securities were classified as available-for-sale and consisted of 
81% and 64% corporate debt securities, 8% and 26% debt securities of the U.S. 
Government and its agencies, 4% and 0% municipal debt securities, and 7% and 
10% foreign debt securities, respectively.  All long-term investments in 
marketable securities mature within two years.  At December 31, 1997, the 
fair value of the investments approximated cost.  Fair value is determined 
based upon the quoted market prices of the securities as of the balance sheet 
date.

     At December 31, 1997, the Company had equity interests in 
privately-held, information technology companies totaling $6,450,000.  These 
investments are included in other long-term assets and are accounted for 
under the cost method.  The Company purchased these investments at or near 
December 31, 1997, therefore, their carrying values approximate fair values.  
For these non-quoted investments, the Company's policy is to regularly review 
the assumptions underlying the operating performance and cash flow forecasts 
in assessing the carrying values.  The Company identifies and records 
impairment losses on long-lived assets when events and circumstances indicate 
that such assets might be impaired.  To date, no such impairment has been 
recorded.

CONCENTRATION OF CREDIT RISK.  Financial instruments that potentially subject 
the Company to significant concentration of credit risk consist primarily of 
cash, cash equivalents, short and long-term investments, and accounts 
receivable.  Substantially all of the Company's cash, cash equivalents, short 
and long-term investments are managed by three financial institutions.  
Accounts receivable are typically unsecured and are derived from revenues 
earned from customers primarily located in the United States.  The Company 
performs ongoing credit evaluations of its customers and maintains reserves 
for potential credit losses; historically, such losses have been immaterial 
and within management's expectations.  At December 31, 1997 and 1996, no one 
customer accounted for 10% or more of the accounts receivable balance.  At 
December 31, 1995, two customers accounted for a total of 21% of the accounts 
receivable balance.

PROPERTY AND EQUIPMENT.  Property and equipment, including leasehold 
improvements, are stated at cost.  Depreciation is computed using the 
straight-line method over the estimated useful lives of the assets, generally 
two to five years.

                                                                              29



<PAGE>

INCOME TAXES.  Income taxes are computed using the asset and liability 
method. Under the asset and liability method, deferred income tax assets and 
liabilities are determined based on the differences between the financial 
reporting and tax bases of assets and liabilities and are measured using the 
currently enacted tax rates and laws.

STOCK-BASED COMPENSATION.  The Company accounts for stock-based employee 
compensation arrangements in accordance with the provisions of Accounting 
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to 
Employees," and complies with the disclosure provisions of SFAS 123, 
"Accounting for Stock-Based Compensation."  Under APB 25, compensation cost 
is recognized over the vesting period based on the difference, if any, on the 
date of grant between the fair value of the Company's stock and the amount an 
employee must pay to acquire the stock.

FOREIGN CURRENCY AND INTERNATIONAL OPERATIONS.  The functional currency of 
the Company's subsidiaries in the United Kingdom, Germany, France, Sweden, 
Denmark, Norway, Australia, Singapore, and Korea is the local currency.  The 
financial statements of these subsidiaries are translated to United States 
dollars using year-end rates of exchange for assets and liabilities, and 
average rates for the year for revenues, costs, and expenses.  Translation 
losses, which are deferred and accumulated as a component of shareholders' 
equity, were $380,000 and $63,000 for the years ended December 31, 1997 and 
1996, respectively.  Net gains and losses resulting from foreign exchange 
transactions are included in the consolidated statements of operations and 
were not significant during the periods presented.  International revenues 
have accounted for less than 10% of net revenues in the years ended December 
31, 1997, 1996, and 1995.  International assets were not significant at 
December 31, 1997 or 1996.

BASIC AND DILUTED NET LOSS PER SHARE.  The Company adopted SFAS 128, 
"Earnings per Share" during the year ended December 31, 1997 and 
retroactively restated all prior periods.  As a result of adopting SFAS 128, 
the net loss per share of $0.02 reported for the year ended December 31, 1995 
increased to a basic and diluted net loss of $0.03.  Basic earnings per share 
is computed using the weighted average number of common shares outstanding 
during the period.  Diluted earnings per share is computed using the weighted 
average number of common and common equivalent shares outstanding during the 
period.  Common equivalent shares consist of the incremental common shares 
issuable upon conversion of the convertible preferred stock (using the 
if-converted method) and shares issuable upon the exercise of stock options 
and warrants (using the treasury stock method).  Common equivalent shares are 
excluded from the computation if their effect is anti-dilutive.

USE OF ESTIMATES.   The preparation of financial statements in conformity 
with generally accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of assets and 
liabilities, disclosure of contingent assets and liabilities at the date of 
the financial statements, and the reported amounts of revenues and expenses 
during the reported period.  Actual results could differ from those estimates.

RECENT ACCOUNTING PRONOUNCEMENTS.  In June 1997, the Financial Accounting 
Standards Board ("FASB") issued SFAS 130, "Reporting Comprehensive Income."  
SFAS 130 establishes standards for reporting comprehensive


                                                                              30


<PAGE>

income and its components in a financial statement.  Comprehensive income as 
defined includes all changes in equity (net assets) during a period from 
non-owner sources.  Examples of items to be included in comprehensive income, 
which are excluded from net income, include foreign currency translation 
adjustments and unrealized gains/losses on available-for-sale securities.  
The disclosure prescribed by SFAS 130 must be made beginning with the first 
quarter of 1998.  Additionally in June 1997, the FASB issued SFAS 131, 
"Disclosures about Segments of an Enterprise and Related Information."  This 
statement establishes standards for the way companies report information 
about operating segments in annual financial statements.  It also establishes 
standards for related disclosures about products and services, geographic 
areas, and major customers.  The Company has not yet determined the impact, 
if any, of adopting this new standard.  The disclosures prescribed by 
SFAS 131 will be effective for the year ending December 31, 1998 consolidated 
financial statements.

NOTE 2  BALANCE SHEET COMPONENTS

<TABLE>
<CAPTION>

                                                                          December 31,
                                                              ---------------------------------
                                                                    1997                1996
                                                              ---------------------------------
<S>                                                          <C>                  <C>
Property and equipment:
   Computers and equipment                                   $    6,815,000       $   2,228,000
   Furniture and fixtures                                         2,316,000             888,000
   Leasehold improvements                                           855,000             290,000
                                                              -------------        ------------
                                                                  9,986,000           3,406,000

   Less: accumulated depreciation                               (2,951,000)           (617,000)
                                                              -------------        ------------
                                                             $    7,035,000       $   2,789,000
                                                              -------------        ------------
                                                              -------------        ------------
Other Assets:

   Investment in Geocities                                   $    5,100,000       $           -
   Investment in AudioNet                                         1,350,000                   -
   Other                                                          1,680,000                   -
                                                              -------------        ------------
                                                             $    8,130,000       $           -
                                                              -------------        ------------
                                                              -------------        ------------
Accrued expenses and other current liabilities:
   Accrued vacation, wages, and other employee benefits      $    2,838,000       $   1,069,000
   Accrued content and connect costs                              2,909,000             754,000
   Accrued sales and marketing related                            2,144,000             250,000
   Accrued professional service expenses                          1,730,000             801,000
   Other                                                          2,860,000           1,844,000
                                                              -------------        ------------
                                                             $   12,481,000       $   4,718,000
                                                              -------------        ------------
                                                              -------------        ------------

</TABLE>

                                                                            31

<PAGE>

NOTE 3  RELATED PARTY TRANSACTIONS

During 1997 and 1996, the Company recognized net revenues of approximately 
$3,120,000 and $2,381,000, respectively, on advertising contracts and 
publication, development, and licensing arrangements with SOFTBANK and its 
related companies, a holder of approximately 31% of the Company's Common 
Stock at December 31, 1997.  Prices on these contracts were comparable to 
those given to other major customers of the Company.  Additionally, three 
SOFTBANK-related companies provided Internet access and sales and 
marketing-related services for fees of approximately $3,190,000, $2,300,000, 
and $177,000 during 1997, 1996, and 1995, respectively.  Sequoia Capital, a 
holder of approximately 9% of the Company's Common Stock at December 31, 
1997, was also an investor in one of these SOFTBANK-related companies.  The 
amount due for these services totaled approximately $1,046,000 and $896,000 
at December 31, 1997 and 1996, respectively.

NOTE 4  ACQUISITIONS AND INVESTMENTS

ACQUISITION OF NETCONTROLS.  On July 31, 1997, the Company entered into a 
stock purchase agreement to acquire all of the outstanding capital stock of 
NetControls, Inc. for 37,167 shares of the Company's Common Stock.  The 
acquisition was recorded as a purchase for accounting purposes and the 
majority of the purchase price of approximately $1,400,000 will be amortized 
over the three year estimated useful life of the technology acquired.  Upon 
acquisition, the historical financial results of NetControls, Inc. were de 
minimis.

ACQUISITION OF FOUR11.  On October 20, 1997, the Company completed the 
acquisition of Four11 Corporation, a privately-held online communications and 
Internet directory company.  Under the terms of the acquisition, which was 
accounted for as a pooling of interests, the Company exchanged 1,505,720 
shares of Yahoo! Common Stock for all of Four11's outstanding shares and 
assumed 148,336 options and warrants to purchase Yahoo! Common Stock.  All 
outstanding Four11 preferred shares were converted into Four11 common stock 
immediately prior to the acquisition.  During the quarter ended December 31, 
1997, the Company recorded a one-time charge of $3,850,000 for 
acquisition-related costs.  These costs consisted of investment banking fees, 
legal and accounting fees, redundancy costs, and certain other expenses 
directly related to the acquisition.  

INVESTMENT IN AUDIONET.  On December 30, 1997, the Company invested 
$1,350,000 in cash for a less than 20% equity position in AudioNet, Inc., a 
provider of Internet broadcasting services.  The Company purchased 79,618 
shares of AudioNet common stock for a total of $750,000 and a warrant to 
purchase 159,236 shares of AudioNet common stock at an exercise price of 
$9.42 per share for $600,000.  The investment is being accounted for under 
the cost method. 

INVESTMENT IN GEOCITIES.  On December 31, 1997, the Company issued 78,079 
shares of Yahoo! Common Stock for a less than 20% equity position in 
GeoCities, a provider of free personal Web pages.  In return, the Company 
received 336,684 shares of GeoCities Series E preferred stock.  The 
investment, aggregating $5,100,000, is being accounted for under the cost 
method.

                                                                       32

<PAGE>

NOTE 5  JOINT VENTURES

YAHOO! JAPAN.  During April 1996, the Company signed a joint venture 
agreement with SOFTBANK, a holder of approximately 31% of the Company's 
Common Stock at December 31, 1997, whereby Yahoo! Japan Corporation was 
formed to establish and manage in Japan a Japanese version of the Yahoo! 
Internet Guide, develop related Japanese online navigational services, and 
conduct other related business.  The Company's ownership interest in the 
joint venture upon inception was 40%.  At December 31, 1996, the Company's 
investment in the joint venture was $729,000.  In September 1997, the Company 
invested an additional $299,000 in the joint venture.  During November 1997, 
Yahoo! Japan Corporation completed its initial public offering, issuing 975 
previously unissued shares and raising total proceeds of approximately 
$5,500,000.  Accordingly, the Company increased its investment by $1,700,000, 
recorded as additional paid-in capital, to reflect the increase in the 
Company's share of Yahoo! Japan Corporation's net assets.  The investment is 
being accounted for using the equity method.  At December 31, 1997, the fair 
value of the Company's 34% ownership in Yahoo! Japan, based on the quoted 
trading price, was approximately $53,000,000.

YAHOO! EUROPE.  On November 1, 1996, the Company signed a joint venture 
agreement with a subsidiary of SOFTBANK, a holder of approximately 31% of the 
Company's Common Stock at December 31, 1997, whereby separate companies were 
formed in Germany, the United Kingdom, and France ("Yahoo! Europe") to 
establish and manage versions of the Yahoo! Internet Guide for Germany, the 
United Kingdom, and France, develop related online navigational services, and 
conduct other related business.  The parties agreed to invest a total of up 
to $4,000,000 in proportion to their respective equity interests, and had 
invested $2,000,000 as of December 31, 1996 and the entire $4,000,000 as of 
December 31, 1997.  The Company has a majority share of approximately 70% in 
each of the Yahoo! Europe entities, and therefore, has consolidated their 
financial results.  During 1997 and 1996, Yahoo! Europe incurred losses from 
operations of $1,807,000 and $842,000, respectively.  SOFTBANK's interest in 
the net assets of Yahoo! Europe at December 31, 1997 and 1996, as represented 
by the minority interest on the balance sheet, was $405,000 and $347,000, 
respectively.

YAHOO! KOREA.  During August 1997, the Company signed a joint venture 
agreement with SOFTBANK and other SOFTBANK affiliate companies whereby Yahoo! 
Korea was formed to develop and operate a Korean version of the Yahoo! 
Internet Guide, develop related Korean online navigational services, and 
conduct other related business.  The parties have invested a total of 
$999,000 in proportion to their respective equity interests.  The Company has 
a majority share of approximately 60% in the joint venture, and therefore, 
has consolidated the financial results, which were insignificant for the year 
ended December 31, 1997.

YAHOO! MARKETPLACE.  On August 26, 1996, the Company entered into agreements 
with Visa International Service Association ("VISA") and another party 
(together, the "Visa Group") to establish a limited liability company, Yahoo! 
Marketplace L.L.C., to develop and operate a navigational service focused on 
information and resources for the purchase of consumer products and services 
over the Internet.  As of December 31, 1996, the parties had invested a total 
of $1,000,000.  At December 31, 1996, the Company owned approximately 55% of 
the equity interest in Yahoo! Marketplace.  Yahoo! Marketplace incurred 
start-up losses of $246,000 

                                                                          33

<PAGE>

in 1997 and $637,000 in 1996.  In connection with this agreement, the Company 
issued to the Visa Group for a purchase price of $50,000, a warrant to 
purchase 525,000 shares of the Company's Common Stock at an exercise price of 
$8.33 per share, which warrant was exercisable during a two year period 
commencing in March 1997.  In April 1997, the Visa Group net exercised the 
warrant.  During July 1997, prior to the completion of significant business 
activities and public launch of the property, the Company and VISA entered 
into an agreement under which the Visa Group released the Company from 
certain obligations and claims.  In connection with this agreement, the 
Company issued 699,481 shares of Yahoo! Common Stock to the Visa Group, for 
which the Company recorded a one-time, non-cash, pre-tax charge of 
$21,245,000 in the second quarter ended June 30, 1997.

NOTE 6  SHAREHOLDERS' EQUITY

STOCK SPLIT.  During July 1997, the Company's Board of Directors approved a 
three-for-two Common Stock split.  Shareholders of record on August 11, 1997 
(the record date) received one additional share for every two shares held on 
that date.  All references to the number of shares of Common Stock, weighted 
average common shares, and per share amounts have been retroactively restated 
in the accompanying consolidated financial statements to reflect the effect 
of the three-for-two split.

COMMON STOCK.  On April 11, 1996, the Company completed its initial public 
offering of 4,485,000 shares of its Common Stock.  Net proceeds to the 
Company aggregated approximately $35,106,000.  As of the closing date of the 
offering, all of the Convertible Preferred Stock and Mandatorily Redeemable 
Convertible Preferred Stock outstanding was converted into an aggregate of 
19,257,108 shares of Common Stock.  The Company has the right to repurchase, 
at the original issue price, a declining percentage of certain of the common 
shares issued to employees under restricted stock agreements.  The Company's 
repurchase right lapses over four years based on the length of the employees' 
continual employment with the Company.  At December 31, 1997, 3,125,000 
shares of Common Stock were subject to repurchase by the Company. 

STOCK OPTION PLANS.  As of December 31, 1997, the Company had four 
stock-based compensation plans which are described below.  The Company 
applies APB Opinion 25 and related interpretations in accounting for its 
plans and complies with the disclosure provisions of SFAS 123, "Accounting 
for Stock-Based Compensation."  

     The 1995 Stock Plan (the "Stock Plan") and the 1995 Four11 Stock Option 
Plan (the "Four11 Plan") allow for the issuance of incentive stock options, 
non-qualified stock options and stock purchase rights to purchase a maximum 
of 19,830,332 shares of the Company's Common Stock.  Under the Stock Plan and 
the Four11 Plan, incentive stock options may be granted to employees, 
directors, and officers of the Company and non-qualified stock options and 
stock purchase rights may be granted to consultants, employees, directors, 
and officers of the Company.  Options granted under the Stock Plan and the 
Four11 Plan are for periods not to exceed ten years, and must be issued at 
prices not less than 100% and 85%, for incentive and nonqualified stock 
options, respectively, of the fair market value of the stock on the date of 
grant as determined by the Board of 

                                                                      34

<PAGE>

DIRECTORS.  Options granted to shareholders who own greater than 10% of the 
outstanding stock are for periods not to exceed five years and must be issued 
at prices not less than 110% of the fair market value of the stock on the 
date of grant as determined by the Board of Directors.  Options granted under 
the Stock Plan and the Four11 Plan generally vest 25% after the first year of 
service and ratably each month over the remaining thirty-six month period.  
Options issued under the Four11 Plan may be exercised prior to vesting and 
are subject to repurchase in the event of a voluntary termination, at the 
original purchase price.  At December 31, 1997, 30,749 shares were subject to 
repurchase under the provisions of the Four11 Plan

    The 1996 Directors' Stock Option Plan (the "Directors' Plan") provides 
for the issuance of up to 300,000 non-statutory stock options to non-employee 
directors of the Company.  Each person who becomes a non-employee director of 
the Company after the date of the Company's initial public offering will 
automatically be granted a non-statutory option (the "First Option") to 
purchase 60,000 shares of Common Stock upon the date on which such person 
first becomes a director.  Thereafter, each director of the Company will be 
granted an annual option (the "Annual Option") to purchase 7,500 shares of 
Common Stock.  Options under the Directors' Plan will be granted at the fair 
market value of the stock on the date of grant as determined by the Board of 
Directors and will vest in equal monthly installments over four years, in the 
case of the First Option, or at the end of four years in the case of the 
Annual Option.

Activity under the Company's stock option plans is summarized as follows: 

<TABLE>
<CAPTION>

                                             Available               Options          Weighted Average
                                             for Grant              Outstanding        Price per Share
                                           --------------          -------------     -----------------
<S>                                        <C>                     <C>               <C>
Shares reserved                                 7,830,332
Options granted                               (5,260,626)              5,260,626       $          0.02
Options exercised                                       -              (284,100)                  0.01
                                           --------------          -------------     -----------------
Balance at December 31, 1995                   2,569,706              4,976,526                   0.02

Additional shares reserved                     4,800,000
Options granted                               (5,707,385)             5,707,385                   6.71
Options canceled                                 461,328              (461,328)                   6.64
Options exercised                                      -              (744,566)                   0.01
                                           --------------          -------------     -----------------
Balance at December 31, 1996                   2,123,649              9,478,017                   3.73

Additional shares reserved                     7,500,000
Options granted                              (4,604,075)              4,604,075                  37.45
Options canceled                                  88,913               (88,913)                   9.18
Options exercised                                      -            (2,417,456)                   2.09
                                           --------------          -------------     -----------------
Balance at December 31, 1997                   5,108,487            11,575,723         $         17.38
                                           --------------          -------------     -----------------
                                           --------------          -------------     -----------------
</TABLE>


                                                                             35

<PAGE>


    The following table summarizes information about fixed stock options 
outstanding as of December 31, 1997:

<TABLE>
<CAPTION>

                        Options Outstanding                                   Options Exercisable
- - ------------------------------------------------------------------        ---------------------------
                                          Weighted                                            
                                           Average       Weighted                            Weighted
   Range of                               Remaining      Average                             Average
   Exercise          Number              Contractual     Exercise            Number          Exercise
    Prices         Outstanding          Life in Years     Price            Exercisable        Price
- - --------------   -------------         --------------   ----------         -----------      ---------
<S>              <C>                    <C>              <C>                <C>              <C>
$0.01 - $0.01       2,496,770                7.6         $    0.01             744,314       $   0.01
$0.13 - $0.22         361,352                8.0         $    0.14              98,561       $   0.16
$0.67 - $1.00         954,757                8.2         $    0.79             284,718       $   0.78
$2.33 - $4.00         313,424                8.2         $    3.43              77,753       $   3.57
$4.67 - $6.67       1,229,040                8.2         $    5.56             326,156       $   5.18
$11.33 - $13.92     2,151,934                8.8         $   12.46             442,289       $  12.35
$17.75 - $26.50     1,335,751                9.4         $   22.61                   -       $      -
$32.33 - $43.13       628,375                9.7         $   38.82                   -       $      -
$46.00 - $55.75     2,104,320                9.9         $   52.75                   -       $      -
                -------------                                              -----------     
                   11,575,723                                                1,973,791
                -------------                                              -----------     
                -------------                                              -----------     
</TABLE>


    Options to purchase 830,040 and 101,250 shares were vested at 
December 31, 1996 and 1995, respectively.

    During the period from January 1996 through April 1996, the Company 
granted options to purchase an aggregate of 3,450,702 shares of Common Stock 
at exercise prices ranging from $0.13 to $6.67 per share.  Based in part on 
an independent appraisal obtained by the Company's Board of Directors, 
$625,000 of compensation expense relating to certain options is to be 
recognized over the four-year vesting periods of the options, of which, 
$156,000 was recognized in both 1997 and 1996.  During 1995, the Company 
granted options to purchase 441,600 shares of Common Stock to consultants in 
exchange for services at an exercise price of $0.01 per share.  The Company 
recorded expense totaling $75,000 related to these options based on the 
estimated fair value of the services received.  Pursuant to the acquisition 
of Four11, the Company will record $2,168,000 of compensation expense related 
to certain stock options issued below fair market value between August 1996 
and September 1997, of which the Company recorded $1,059,000 and $8,000 
during the years ended December 31, 1997 and 1996, respectively.  The 
remaining $1,101,000 will be recognized over the remainder of the four-year 
vesting periods of the options.

EMPLOYEE STOCK PURCHASE PLAN.  Effective March 6, 1996, the Company's Board 
of Directors adopted the Employee Stock Purchase Plan (the "Purchase Plan"), 
which provides for the issuance of a maximum of 450,000 shares of Common 
Stock.  Eligible employees can have up to 15% of their earnings withheld, up 
to certain maximums, to be used to purchase shares of the Company's Common 
Stock on every December 31st 


                                                                    36

<PAGE>

and June 30th.  The price of the Common Stock purchased under the Purchase 
Plan will be equal to 85% of the lower of the fair market value of the Common 
Stock on the commencement date of each six month offering period or the 
specified purchase date.  During 1997, 134,215 shares were purchased at 
prices of $7.37 to $19.30 per share.  There were no shares issued under the 
Purchase Plan during 1996.  At December 31, 1997, 315,785 shares were 
available under the Purchase Plan for future issuance.

STOCK COMPENSATION.  The Company accounts for stock-based compensation in 
accordance with the provisions of APB 25.  Had compensation expense been 
determined based on the fair value at the grant dates, as prescribed in SFAS 
123, the Company's net loss would have been $29,268,000, $5,131,000, and 
$801,000, and basic and diluted loss per share would have been $0.67, $0.13, 
and $0.03 for the years ended December 31, 1997, 1996, and 1995, 
respectively.  Prior to the Company's initial public offering, the fair value 
of each option grant was determined on the date of grant using the minimum 
value method.  Subsequent to the offering, the fair value was determined 
using the Black-Scholes model.  The weighted average fair market value of an 
option granted during 1997, 1996, and 1995 was $17.34, $3.16, and $0.01, 
respectively.  Except for the volatility assumption which was only used under 
the Black-Scholes model, the following range of assumptions was used to 
perform the calculations: expected life of 36 months in 1997 and 30 months in 
1996 and 1995; interest rate ranges of 5.6% to 6.6% during 1997, 5.1% to 6.5% 
during 1996, and 5.3% to 6.0% during 1995; volatility of 59% in 1997, 53% in 
1996, and it was not applicable in 1995; and no dividend yield for the three 
years ended December 31, 1997.  Because additional stock options are expected 
to be granted each year, the above pro forma disclosures are not 
representative of pro forma effects on reported financial results for future 
years.

NOTE 7  INCOME TAXES

No provision for federal and state income taxes has been recorded as the 
Company has incurred net operating losses through December 31, 1997.  The 
following table sets forth the primary components of deferred tax assets:     

<TABLE>
<CAPTION>

                                                         December 31,
                                               ---------------------------------
                                                  1997        1996        1995
                                               -----------  ----------  --------
<S>                                            <C>          <C>         <C>
Net operating loss and credit carryforwards    $23,966,000  $3,421,000  $144,000
Nondeductible reserves and expenses              3,232,000   1,382,000   134,000
Other                                                    -      86,000         -
                                              ------------ ----------- ---------
Gross deferred tax assets                       27,198,000   4,889,000   278,000
Valuation allowance                           (27,198,000) (4,889,000) (278,000)
                                              ------------ ----------- ---------
                                               $        -   $       -   $      -
                                              ------------ ----------- ---------
                                              ------------ ----------- ---------
</TABLE>


At December 31, 1997, 1996, and 1995, the Company fully reserved its 
deferred tax assets.  The Company believes sufficient uncertainty exists 
regarding the realizability of the deferred tax assets such that a full 

                                                                             37

<PAGE>

valuation allowance is required.  Deferred tax assets and related valuation 
allowances of approximately $18,600,000 relate to certain U.S. operating loss 
carryforwards resulting from the exercise of employee stock options, the tax 
benefit of which, when recognized, will be accounted for as a credit to 
additional paid-in capital rather than a reduction of the income tax 
provision. Additionally, deferred tax assets of $900,000 relate to operating 
loss carryforwards in various foreign jurisdictions.  Certain of these 
carryforwards will expire if not utilized.  At December 31, 1997, the Company 
had approximately $54,200,000 of federal net operating loss carryforwards for 
tax reporting purposes available to offset future taxable income; such 
carryforwards will expire beginning in 2010.  Additionally, the Company has 
approximately $26,200,000 of California net operating loss carryforwards for 
tax reporting purposes which will expire beginning in 2003. 

NOTE 8  COMMITMENTS AND CONTINGENCIES

OPERATING LEASES.  During September 1997, the Company entered into a 
non-cancelable operating sublease agreement which will provide the Company 
with additional office space at its existing Santa Clara, California 
location.  Additionally during 1997, the Company entered into various other 
non-cancelable operating lease agreements for its sales offices throughout 
the U.S. and its international subsidiaries.  Future minimum lease payments 
under non-cancelable operating leases with initial terms of one year or more 
are $1,659,000 in 1998, $2,155,000 in 1999, $2,187,000 in 2000, $2,151,000 in 
2001, $2,136,000 in 2002, and $2,463,000 thereafter.  Total minimum rental 
payments aggregate $12,751,000.  Rent expense under operating leases totaled 
$1,225,000, $436,000, and $32,000 during 1997, 1996, and 1995, respectively. 

NETSCAPE GUIDE BY YAHOO!.  During March 1997, the Company entered into 
certain agreements with Netscape Communications Corporation ("Netscape") 
under which the Company has developed and operates an Internet information 
navigation service called "Netscape Guide by Yahoo!" (the "Guide").  The 
Co-Marketing agreement provides that revenue from advertising on the Guide, 
which is managed by the Company, is to be shared between the Company and 
Netscape.  Under the terms of the Trademark License agreement, the Company 
made a one-time non-refundable trademark license fee payment of $5,000,000 in 
March 1997 which is being amortized over the initial two-year term, which 
commenced in May 1997.  Under the terms of the Co-Marketing agreement as 
amended in June 1997, the Company also provided Netscape with a minimum of up 
to $4,660,000 in guarantees against shared advertising revenues in the first 
year of the agreement, subject in the first year to a minimum level of gross 
revenue being met, and up to a minimum of $15,000,000 in the second year of 
the agreement, subject in the second year to certain minimum levels of 
impressions being reached on the Guide.  Actual payments will relate directly 
to the overall revenue and impressions recognized from the Guide.  As of 
December 31, 1997, $1,160,000 of shared advertising revenues had been paid to 
Netscape under this agreement.

NETSCAPE PREMIER PROVIDER.  Also during March 1997, the Company entered into 
an agreement with Netscape whereby it was designated as one of four "Premier 
Providers" of domestic navigational services within the Netscape Web site.  
Under the terms of the agreement, the Company is required to make minimum 
payments of $3,200,000 in cash and is obligated to provide $1,500,000 in the 
Company's advertising services in return 

                                                                      38

<PAGE>

for certain minimum guaranteed exposures over the course of the one-year term 
of the agreement, which commenced in May 1997.  The minimum payments are 
amortized over the term of the agreement.  As of December 31, 1997, the 
Company had paid $2,456,000 in cash under the terms of the agreement.  
Expenses incurred to date as of December 31, 1997 under the agreement were 
approximately $4,600,000.  To the extent that the minimum guaranteed 
exposures are exceeded, the Company is obligated to remit to Netscape 
additional payments.

    During June 1997, the Company entered into certain agreements with 
Netscape whereby it was designated as a Premier Provider of international 
search and navigational guide services for the Netscape Net Search program.  
Under the terms of the agreements, the Company will provide services in 12 
countries, including Australia, Denmark, France, Germany, Italy, Japan, 
Korea, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom.  
Under the terms of the agreements, the Company made a cash payment of 
$2,900,000 in July 1997 and is obligated to provide $100,000 in the Company's 
advertising services in return for certain minimum guaranteed exposures over 
the course of the one-year term of the agreements, which commenced in July 
1997.  The Company amortizes the total cost of these agreements over their 
one-year term.

NOTE 9  LITIGATION

In July 1997, GTE New Media Services Incorporated ("GTE New Media"), an 
affiliate of GTE, filed suit in Dallas, Texas against Netscape and the 
Company, in which GTE New Media made a number of claims relating to the 
inclusion of certain Yellow Pages hypertext links in the Netscape Guide by 
Yahoo!, an online navigational property operated by the Company under an 
agreement with Netscape.  In this lawsuit, GTE New Media has alleged, among 
other things, that by including such links to the Yellow Pages service 
operated by several Regional Bell Operating Companies (the "RBOCs") within 
the Guide, the Company has tortiously interfered with an alleged contractual 
relationship between GTE New Media and Netscape relating to placement of 
links by Netscape for a Yellow Pages service operated by GTE New Media.  GTE 
New Media seeks injunctive relief as well as actual and punitive damages.  In 
October 1997, GTE New Media brought suit in the U.S. District Court for the 
District of Columbia, against the RBOCs, Netscape, and the Company, in which 
GTE New Media has alleged, among other things, that the alleged exclusion of 
the GTE New Media Yellow Pages from the Netscape Guide Yellow Pages service 
violates federal antitrust laws, and GTE New Media seeks injunctive relief 
and damages (trebled under federal antitrust laws) from such alleged actions. 
 The Company believes that the claims against the Company in these lawsuits 
are without merit and intends to contest them vigorously.  Although the 
Company cannot predict with certainty the outcome of these lawsuits or the 
expenses that may be incurred in defending the lawsuits, the Company does not 
believe that the result in the lawsuits will have a material adverse effect 
on the Company's financial position or results of operations.  From time to 
time the Company is subject to other legal proceedings and claims in the 
ordinary course of business, including claims of alleged infringement of 
trademarks and other intellectual property rights.  The Company is not 
currently aware of any legal proceedings or claims that the Company believes 
will have, individually or in the aggregate, a material adverse effect on the 
Company's financial position or results of operations.

                                                                           39

<PAGE>

R
EPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF YAHOO! INC.

In our opinion, the accompanying consolidated balance sheets and the related 
consolidated statements of operations, of shareholders' equity and of cash 
flows present fairly, in all material respects, the financial position of 
Yahoo! Inc. and its subsidiaries at December 31, 1997 and 1996, and the 
results of their operations and their cash flows for the years ended December 
31, 1997, 1996, and 1995, in conformity with generally accepted accounting 
principles.  These financial statements are the responsibility of the 
Company's management; our responsibility is to express an opinion on these 
financial statements based on our audits.  We conducted our audits of these 
statements in accordance with generally accepted auditing standards which 
require that we plan and perform the audit to obtain reasonable assurance 
about whether the financial statements are free of material misstatement.  An 
audit includes examining, on a test basis, evidence supporting the amounts 
and disclosures in the financial statements, assessing the accounting 
principles used and significant estimates made by management, and evaluating 
the overall financial statement presentation.  We believe that our audits 
provide a reasonable basis for the opinion expressed above.

/s/ Price Waterhouse LLP

San Jose, California
January 9, 1998


                                                                    40

<PAGE>

QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         QUARTER ENDED
                                                     -------------------------------------------------------------------------
                                                         MARCH 31            JUNE 30          SEPTEMBER 30        DECEMBER 31
                                                     ---------------     ---------------    ---------------     --------------
<S>                                                  <C>                 <C>                <C>                 <C>
1997
Net revenues                                         $    10,065,000     $    14,107,000    $    18,134,000     $   25,105,000
Gross profit                                               8,628,000          11,789,000         15,746,000         21,876,000
Net income (loss)                                          (740,000)        (21,552,000)            681,000        (1,276,000)
Basic and diluted net income (loss) per share        $        (0.02)     $        (0.50)    $          0.01     $       (0.03)
Pro forma net income (loss)(1)                                                 (307,000)                             2,574,000
Pro forma diluted net income (loss) per share (1)                        $        (0.01)                        $         0.05

1996
Net revenues                                         $    1,770,000      $    3,358,000     $    5,626,000      $    8,943,000
Gross profit                                              1,584,000           2,806,000          4,539,000           7,452,000
Net loss                                                  (181,000)         (1,720,000)        (1,718,000)           (666,000)
Basic and diluted net loss per share                        $(0.01)      $       (0.04)     $       (0.04)      $       (0.02)
</TABLE>


Note: The quarterly financial data for the quarters presented above has been 
      restated to reflect the acquisition of Four11 Corporation which was 
      accounted for as a pooling of interests.

 (1)  Pro forma net income and diluted net income per share exclude the 
      effects of other non-recurring costs of $21,245,000 related to the 
      Yahoo! Marketplace restructuring incurred during the quarter 
      ended June 30, 1997 and $3,850,000 incurred in connection with the 
      acquisition of Four11 Corporation during the quarter ended 
      December 31, 1997.

                                                                          41

<PAGE>

                          CORPORATE INFORMATION

CORPORATE EXECUTIVE 
OFFICERS AND DIRECTORS

TIMOTHY KOOGLE
President and Chief
Executive Officer and Director

JERRY YANG
Chief Yahoo and Director

DAVID FILO
Chief Yahoo 

JEFF MALLETT
Chief Operating Officer

GARY VALENZUELA
Sr. Vice President,
Finance and Administration,
Chief Financial Officer

FARZAD NAZEM
Sr. Vice President,
Product Development,                            EXECUTIVE OFFICERS
Chief Technology Officer
                                                Timothy Brady
JAMES NELSON                                    Vice President, Production
Vice President, Finance
                                                KAREN EDWARDS
JOHN PLACE                                      Vice President, Brand Marketing
General Counsel and Secretary
                                                Heather Killen
ANIL SINGH                                      Vice President, International
Vice President, Advertising Sales
                                                GEOFF RALSTON
ERIC HIPPEAU                                    Vice President, Development
Director (1)                                    and Communications

ARTHUR KERN                                     ELLEN SIMINOFF
Director (1)(2)                                 Vice President, Strategic
                                                Development
MICHAEL MORITZ
Director (1)(2)                                 SRINIJA SRINIVASAN
                                                Vice President, Editor-in-Chief

                                                WENDY YANOWITCH
                                                Vice President, Operations
(1) Member of the Compensation Committee
(2) Member of the Audit Committee

                                                                        42

<PAGE>

<TABLE>
<CAPTION>
CORPORATE HEADQUARTERS                                                                  ANNUAL SHAREHOLDERS MEETING
<S>                                                 <C>                                 <C>
Yahoo! Inc.                                         Yahoo! Korea                        The annual meeting of shareholders
3420 Central Expressway                             4 Naengchun-dong, Seodaemun-ku,     will be April 17, 1998 at 10am at Yahoo!
Santa Clara, CA  95051-0703                         Seoul, Korea                        Corporate Headquarters.

WORLD YAHOO!S                                       YAHOO! UK & IRELAND                 STOCK INFORMATION
                                                    80/81 St. Martin's Lane
YAHOO! AUSTRALIA & NEW ZEALAND                      London WC2N 4AA                     Yahoo! Inc. Common Stock is quoted on 
Suite 10, 177-199 Pacific Highway,                                                      the NASDAQ National Market System
North Sydney, NSW 2060, Australia                   INDEPENDENT ACCOUNTANTS             under the symbol YHOO.  The table
                                                    Price Waterhouse LLP                below sets forth the range of high and
YAHOO! CANADA                                       San Jose, California                low closing sales prices for the quarters
Suite 400,                                                                              indicated. *
156 Front St. West
Toronto M5J 2L6 Canada                              LEGAL COUNSEL                       All stock prices have been adjusted for
                                                    Venture Law Group                   the 3-for-2 stock split which was com-
YAHOO! DANMARK                                      Menlo Park, California              pleted on September 2, 1997.
YAHOO! NORGE
YAHOO! SVERIGE                                                                          The Company had approximately 750
Artillerigatan 36 114 45,                           TRANSFER AGENT                      shareholders of record as of December
Stockholm, Sweden                                                                       31, 1997.  The Company has not declared
                                                    Boston EquiServe                    or paid any cash dividends on its Common
YAHOO! DEUTSCHLAND                                  P.O. Box 8040                       Stock and presently intends to retain its
Riesstrasse 25, Haus C, 80992                       Boston, MA  02266-8040              future earnings, if any, to fund the devel-
Munchen, Germany                                                                        opment and growth of its business and,
                                                    FORM 10-K                           therefore, does not anticipate paying any
YAHOO! FRANCE                                                                           cash dividends in the foreseeable future. 
14 Place Marie-Jeanne Bassot, 92593                 A copy of the Yahoo! Inc. Form 10-K
Levallois-Perret Cedex, France                      as filed with the Securities and
                                                    Exchange Commission is available       *COMMON STOCK
YAHOO! IN ASIA                                      without charge at WWW.SEC.GOV or by                        1996
703 Winning House                                   request by contacting:                                  High    Low
10-16 Cochrane Street                                                                                      --------------
Central                                                                                    First Quarter
Hong Kong                                           Yahoo! Investor Relations              Second Quarter  $22.00  $12.17
                                                    3420 Central Expressway                Third Quarter   $16.00  $10.50
                                                    Santa Clara, California 95051-0703     Fourth Quarter  $15.08  $11.33
YAHOO! JAPAN
24-1 Nihonbashi-Hakozaki Cho                        A copy of this annual report can be
Chuo-Ku, Tokyo 103                                  found online at:                                           1997
Japan                                               HTTP://WWW.YAHOO.COM/INFO/INVESTOR/                     High    Low
                                                                                                           --------------
                                                                                           First Quarter   $24.29  $11.67
                                                                                           Second Quarter  $26.17  $18.29
                                                                                           Third Quarter   $55.38  $22.33
                                                                                           Fourth Quarter  $71.00  $38.00
</TABLE>


- - -C- 1998 Yahoo! Inc.  All rights reserved.  Yahoo! and the Yahoo! logo are 
registered trademarks of Yahoo! Inc.  All other names are trademarks and/or 
registered trademarks of their respective owners.


                                                                           43



<PAGE>
                                                                    EXHIBIT 21.1
 
SUBSIDIARIES OF YAHOO! INC.
 
NAME                            JURISDICTION OF INCORPORATION
- - ------------------------------  ------------------------------
Four11 Corporation              California
Yahoo! Marketplace, L.L.C.      Delaware
NetControls, Inc.               Washington
Yahoo! UK Ltd.                  United Kingdom
Yahoo! Holdings Limited         United Kingdom
Yahoo! France, SARL             France
Yahoo! GmbH                     Germany
Yahoo! Pte Ltd                  Singapore
Yahoo! Sweden                   Sweden
Yahoo! Norway AS                Norway
Yahoo! Denmark                  Denmark
Yahoo! Korea                    Korea
 
BRANCHES OF YAHOO! INC.
 
NAME                            JURISDICTION OF REGISTRATION
- - ------------------------------  ------------------------------
Yahoo! Australia                Australia





<PAGE>
                                                                    EXHIBIT 23.1
 
                       CONSENT OF INDEPENDENT ACCOUNTANTS
 
    We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-3 (No. 333-43887, No.
333-39539, No. 333-32783) and in the Registration Statements on Form S-8 (No.
333-3694, No. 333-39105) of Yahoo! Inc. of our report dated January 9, 1998
appearing in the 1997 Annual Report to Shareholders which is incorporated in
this Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule, which appears in
this Form 10-K.
 
/s/ PRICE WATERHOUSE LLP
San Jose, California
March 11, 1998





<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE YAHOO!
INC. ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               DEC-31-1997
<CASH>                                      62,538,000
<SECURITIES>                                27,772,000
<RECEIVABLES>                               13,584,000
<ALLOWANCES>                                 2,598,000
<INVENTORY>                                          0
<CURRENT-ASSETS>                           107,189,000
<PP&E>                                       9,986,000
<DEPRECIATION>                               2,951,000
<TOTAL-ASSETS>                             141,884,000
<CURRENT-LIABILITIES>                       23,456,000
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        20,000
<OTHER-SE>                                 117,692,000
<TOTAL-LIABILITY-AND-EQUITY>               141,884,000
<SALES>                                              0
<TOTAL-REVENUES>                            67,411,000
<CGS>                                                0
<TOTAL-COSTS>                                9,372,000
<OTHER-EXPENSES>                            86,635,000
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                           (22,887,000)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                       (22,887,000)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                              (22,887,000)
<EPS-PRIMARY>                                   (0.53)
<EPS-DILUTED>                                   (0.53)
        

</TABLE>