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Liz McMillan

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News Item

Microsoft, Yahoo! Change Search Landscape

Yahoo! and Microsoft announced an agreement that will improve the Web search experience for users and advertisers

Yahoo! Inc.

Supplemental Information Regarding Projected Incremental Impact of Microsoft Search Agreement

(in thousands)

Gross profit1   ($150,000 )
Operating expenses2



Income from operations



Depreciation, amortization and stock based compensation expense



Operating income before depreciation, amortization, and stock-based compensation expense (or operating cash flow)




1Gross profit impact consists of increased revenue net of Microsoft’s share of Yahoo!’s search revenue. The increased revenue is attributable to the scale resulting from the combination of the Yahoo! and Microsoft search marketplaces.

2Operating expenses impact represents savings from reductions in spending on Yahoo!’s search technology.

Note: All estimates represent the projected annual financial impact of the agreement following its full implementation, which is expected to occur within 24 months of regulatory approval, and are based on Yahoo!’s current levels of revenues and operating expenses. In addition, all projections exclude anticipated reinvestment by Yahoo! in its non-search business. The projections are necessarily based upon a variety of estimates and assumptions which may not be realized and are inherently subject, in addition to the risks identified in the forward-looking statement disclaimer, to business, economic, competitive, industry, regulatory, market and financial uncertainties, many of which are beyond Yahoo!’s control. There can be no assurance that the assumptions made in preparing the projected financial impact will prove accurate. Accordingly, actual results may differ materially from the projected financial impact.


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