Class Project Financial Management Final update

YAHOO! vs GOOGLE(YHOO vs GOOG)

a WCUMBA Class Project – Financial Management

by Erwin Sumargo

Yahoo! Company Profile

Yahoo! Inc. (http://www.yahoo.com), ticker symbol: YHOO701 First Avenue, Sunnyvale, CA 94089, USAPhone: 408-349-3300, Fax: 408-349-3301, Employees: 14.300Direct Investment: YesDivident Reinvestment: YesIndex Membership:

S&P 500 S&P 1500 Super Comp Nasdaq 100

Sector: TechnologyIndustry: Internet Information Provider

Yahoo! Company Profile (contd.)

Yahoo! Inc. was founded in 1994 and is headquartered in Sunnyvale, California.

It provides Internet services to users, advertisers, publishers, and developers worldwide.

It offers online properties and services to users; and marketing solutions and tools to advertisers and publishers.

With operations in more than 30 countries, including 34% ownership of Yahoo Japan, Yahoo is one of the most popular Internet destinations in the world.

Advertising accounts for about 85% of sales. The remaining 15% comes from fees on premium services.

It has strategic partnerships with AT&T, Inc.; Verizon Communications, Inc.; BT Telecommunications PLC; Rogers Cable, Inc.; and Newspaper Consortium

Yahoo! Company Profile (contd.)

Key Executives Mr. Jerry Yang (39),

Co-Founder, CEO, Chief Yahoo! and Exec. Director Ms. Susan Decker (45),

President Mr. Blake Jorgensen, (48)

Chief Financial Officer Mr. Michael J. Callahan, (39)

Exec. VP, General Counsel and Secretary Mr. Michael A. Murray, (52)

Chief Accounting Officer and Sr. VP of Financial

Yahoo! Income Statement

Yahoo! Cash Flow

Yahoo! Balance Sheet

Yahoo! Growth

Yahoo! Profitability

Yahoo! Financial Health

Yahoo! Stock Chart

Google Company Profile

Google Inc. (http://www.google.com), ticker symbol: GOOG1600 Amphitheatre Parkway, Mountain View, CA 94043, USAPhone: 650-253-0000, Fax: 650-253-0001Employees: 19.604Direct Investment: NoDivident Reinvestment: NoIndex Membership:

S&P 100 S&P 500 S&P 1500 Super Comp Nasdaq 100

Sector: TechnologyIndustry: Internet Information Provider

Google Company Profile (contd.)

Google, Inc. was founded in 1998 and is headquartered in Mountain View, California.

Google, Inc., a technology company, maintains index of Web sites and other online content for users, advertisers, Google network members, and other content providers.

Its automated search technology helps users to obtain instant access to relevant information from its online index.

The company’s solutions provide targeted advertising and Internet search solutions, as well as intranet solutions via an enterprise search appliance.

Google Company Profile (contd.)

Google provides a free search engine for users around the world and generates revenue whenever a user clicks on a text ad displayed alongside the search results. This represents 90% of the company's net revenue.

The remaining 10% of net revenue is derived from text ads sold on content providers' Web sites. Google is also investing in new business lines including traditional media advertising, the mobile industry, and online software.

Google Company Profile (contd.)

KEY EXECUTIVES Dr. Eric E. Schmidt Ph.D., 53

Chairman, Chief Exec. Officer, Chairman of Exec. Committee, Chairman of Acquisition Committee and Chairman of Real Estate Committee

Dr. Larry Page , 35Co-Founder, Pres of Products, Assistant Sec., Director, Member of Exec. Committee, Member of Acquisition Committee and Member of Real Estate Committee

Dr. Sergey Brin , 34Co-Founder, Pres of Technology, Assistant Sec., Director, Member of Exec. Committee, Member of Acquisition Committee and Member of Real Estate Committee

Mr. Jonathan J. Rosenberg , 46Sr. VP of Product Management

Dr. Robert Alan Eustace , 51Sr. VP of Engineering & Research

Google Income Statement

Google Cash Flow Report

Google Balance Sheet

Google Growth

Google Profitability

Google Financial Health

Google Stock Chart

YHOO vs. GOOG Stock Prices Chart from est. 2004 – Sept. 2008

Profitability Ratios

YHOO YHO YHOO GOOG GOOG GOOG

2005 2006 2007 2005 2006 2007

Return on Equity 24.21 8.48 7.06 23.73 23.26 21.16

Return on Assets 18.95 6.73 5.56 21.57 21.41 19.19

Net Margin 36.07 11.69 9.47 23.87 29.02 25.33

Operating Margin 21.1 14.6 10 32.9 33.5 30.6

Gross Margin 60.1 58.4 59.3 58.1 60.2 59.9

Leverage Ratios

YHOO YHO YHOO GOOG GOOG GOOG

2005 2006 2007 2005 2006 2007

Common Equity Leverage - - - - - -

Capital Structure Leverage - - - - - -

Financial Leverage 1.29 1.26 1.26 1.09 1.08 1.12

Solvency Ratios

YHOO YHO YHOO GOOG GOOG GOOG

2005 2006 2007 2005 2006 2007

Current Ratio 1.8 1.7 1.6 12.1 10 8.5

Interest Coverage - - - - - -

Tax Rate 30.2 41.7 39.7 31.6 23.3 25.9

Asset Turnover Ratios

YHOO YHO YHOO GOOG GOOG GOOG

2005 2006 2007 2005 2006 2007

Receivables Turnover 8.8 7.8 7 11.5 10.5 9.1

Inventory Turnover - - - - - -

Fixed Asset Turnover 8.6 7.1 5.7 9.2 6.3 5.2

Asset Turnover 0.5 0.6 0.6 0.9 0.74 0.76

Earnings Ratios

YHOO YHO YHOO GOOG GOOG GOOG

2005 2006 2007 2005 2006 2007

Earning per share 1.28 0.52 0.47 243.8 98 33.7

Price / Earning Ratio 36.2 32.4 45.7 82.6 46.3 52.1

Conclusion…

Yahoo! & Google are two pillars that support the Internet industry, can’t imagine if one of them collapsed…

Even Yahoo! pioneered the industry, but Google, with it’s ingeniousity make higher profits, thereby increase it’s stock price marvelously

Yahoo!’s stock price is almost unchaged / maintain stability of almost 4 years…

Both of them are innovative, can be seen by various feature & facility they provide.

What about Microsoft? Will they ever buy Yahoo! ???