Exhibit 99.1

Yahoo! Reports Second Quarter 2008 Financial Results

Revenues - $1,798 Million

Operating Income - $101 Million

Operating Income Before Depreciation, Amortization, and Stock-Based Compensation Expense - $427 Million

SUNNYVALE, Calif.--(BUSINESS WIRE)--Yahoo! Inc. (Nasdaq:YHOO) today reported results for the second quarter ended June 30, 2008.

"Yahoo! is executing against its strategy, and we believe is well positioned for long-term growth and maximizing stockholder value," said Jerry Yang, co-founder and chief executive, Yahoo! Inc. "Yahoo! saw benefits in the second quarter from a number of the strategic initiatives that we have been delivering against, including the roll out of innovations in search and the announcement of a number of important partnerships. We are seeing validation that we have the right strategy as we continue to make transformational investments that position us to take advantage of pivotal trends driving growth on the Internet."

Second Quarter 2008 Financial Results

Revenues were $1,798 million for the second quarter of 2008, a 6 percent increase compared to $1,698 million for the same period of 2007.
Marketing services revenues were $1,587 million for the second quarter of 2008, a 7 percent increase compared to $1,486 million for the same period of 2007.
Marketing services revenues from Owned and Operated sites were $1,016 million for the second quarter of 2008, a 14 percent increase compared to $892 million for the same period of 2007.
Marketing services revenues from Affiliate sites were $571 million for the second quarter of 2008, a 4 percent decrease compared to $594 million for the same period of 2007.
Fees revenues were $211 million for the second quarter of 2008, a less than 1 percent decrease compared to $212 million for the same period of 2007.
Revenues excluding traffic acquisition costs (“TAC”) were $1,346 million for the second quarter of 2008, an 8 percent increase compared to $1,244 million for the same period of 2007.
Operating income for the second quarter of 2008 was $101 million, a 45 percent decrease compared to $185 million for the same period of 2007.
Operating income for the second quarter of 2008 includes incremental costs of $22 million incurred for outside advisors related to Microsoft’s proposals to acquire all or a part of the Company, other strategic alternatives, the proxy contest, and related litigation defense costs.
Operating income before depreciation, amortization, and stock-based compensation expense for the second quarter of 2008 was $427 million, a 10 percent decrease compared to $474 million for the same period of 2007.
Operating income before depreciation, amortization, and stock-based compensation expense for the second quarter of 2008 includes incremental costs of $22 million incurred for outside advisors related to Microsoft’s proposals to acquire all or a part of the Company, other strategic alternatives, the proxy contest, and related litigation defense costs.
Cash flow from operating activities for the second quarter of 2008 was $426 million, a 5 percent increase compared to $406 million for the same period of 2007.
Free cash flow for the second quarter of 2008 was $231 million, a 30 percent decrease compared to $328 million for the same period of 2007.
Net income for the second quarter of 2008 was $131 million or $0.09 per diluted share compared to $161 million or $0.11 per diluted share for the same period of 2007.
Non-GAAP net income for the second quarter of 2008 was $139 million or $0.10 per diluted share compared to non-GAAP net income of $163 million or $0.12 per diluted share for the same period of 2007.

"Yahoo!'s transformation gained momentum in the second quarter as we announced new product initiatives and partnerships along with solid financial results," said Sue Decker, president Yahoo! Inc. "We advanced out position with users by opening up Yahoo! through new innovative offerings like SearchMonkey and BOSS in search and have seen great improvements with Buzz in the freshness of content on our home page. Our commercial agreement with Google is another great example of our open strategy and we expect it will strengthen our competitive position as a leading provider of search and display advertising. On the advertising side, our growing list of major agency partners including Publicis, WPP, Havas and premier publishing partners including walmart.com, and CNET and Turner are great examples of our ability to be the partner of choice across search and display advertising. We remain confident that our efforts will lead to a stronger and more profitable Yahoo!."

Second Quarter 2008 Segment Financial Results

United States segment revenues for the second quarter of 2008 were $1,265 million, a 13 percent increase compared to $1,119 million for the same period of 2007.
International segment revenues for the second quarter of 2008 were $534 million, an 8 percent decrease compared to $579 million for the same period of 2007.
United States segment operating income before depreciation, amortization, and stock-based compensation expense for the second quarter of 2008 was $298 million, an 18 percent decrease compared to $362 million for the same period of 2007.
International segment operating income before depreciation, amortization, and stock-based compensation expense for the second quarter of 2008 was $129 million, a 16 percent increase compared to $111 million for the same period of 2007.

"Despite a difficult economic environment, we posted solid results in line with the ranges we indicated in April," said Blake Jorgensen, chief financial officer, Yahoo! Inc. "GAAP revenue was $1.8 billion, with operating cash flow on a normalized basis coming in at $449 million. Our diverse advertiser base and compelling value proposition for our customers were key factors behind Yahoo!'s strong second quarter performance."

Cash Flow Information

In addition to free cash flow of $231 million for the second quarter of 2008, Yahoo! generated $191 million from the issuance of common stock as a result of the exercise of employee stock options. This was offset by $14 million used for acquisitions and $42 million used to acquire intellectual property rights. Cash, cash equivalents, and investments in marketable debt securities were $3,219 million at June 30, 2008 as compared to $2,848 million at March 31, 2008, an increase of $371 million.

Non-GAAP Financial Measures

Explanations of the Company’s non-GAAP financial measures and the related reconciliations to the GAAP financial measures the Company considers most comparable are included in the accompanying “Note to Unaudited Condensed Consolidated Statements of Income,” “Reconciliations to Unaudited Condensed Consolidated Statements of Income,” and “Reconciliation of GAAP Net Income and GAAP Net Income Per Share to Non-GAAP Net Income and Non-GAAP Net Income Per Share.”

Quarterly Conference Call

Yahoo! will host a conference call to discuss second quarter results at 5:00 p.m. Eastern Time today. A live webcast of the conference call, together with supplemental financial information, can be accessed through the Company's Investor Relations website at http://yhoo.client.shareholder.com/results.cfm. In addition, an archive of the webcast can be accessed through the same link. An audio replay of the call will be available for one week following the conference call by calling (888) 286-8010 or (617) 801-6888, reservation number: 75564274.

About Yahoo!

Yahoo! Inc. is a leading global Internet brand and one of the most trafficked Internet destinations worldwide. Yahoo! is focused on powering its communities of users, advertisers, publishers, and developers by creating indispensable experiences built on trust. Yahoo! is headquartered in Sunnyvale, California. For more information, visit pressroom.yahoo.com or the Company’s blog, Yodel Anecdotal.

Owned and Operated sites refer to Yahoo!’s owned and operated online properties and services.

Affiliate sites refer to Yahoo!'s distribution network of third-party entities who have integrated Yahoo!'s advertising offerings into their websites or their other offerings.

This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (“SEC”): revenues excluding traffic acquisition costs or TAC; operating income before depreciation, amortization, and stock-based compensation expense (also referred to as operating cash flow); free cash flow; and non-GAAP net income and non-GAAP net income per share. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (“GAAP”). See “Note to Unaudited Condensed Consolidated Statements of Income,” “Reconciliations to Unaudited Condensed Consolidated Statements of Income,” and “Reconciliation of GAAP Net Income and GAAP Net Income Per Share to Non-GAAP Net Income and Non-GAAP Net Income Per Share” included in this press release for further information regarding these non-GAAP financial measures.

This press release and its attachments contain forward-looking statements that involve risks and uncertainties concerning Yahoo!'s expected financial performance (including without limitation the statements and information in the Business Outlook section and the quotations from management in this press release), as well as Yahoo!'s strategic and operational plans. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the expected benefits of the commercial agreement with Google may not be realized, including as a result of actions taken by United States or foreign regulatory authorities and the response or acceptance of the agreement by publishers, advertisers, users, and employees; the implementation and results of Yahoo!'s ongoing strategic initiatives; the impact of organizational changes; Yahoo!'s ability to compete with new or existing competitors; reduction in spending by, or loss of, marketing services customers; the demand by customers for Yahoo!'s premium services; acceptance by users of new products and services; risks related to joint ventures and the integration of acquisitions; risks related to Yahoo!'s international operations; failure to manage growth and diversification; adverse results in litigation, including intellectual property infringement claims; Yahoo!'s ability to protect its intellectual property and the value of its brands; dependence on key personnel; dependence on third parties for technology, services, content, and distribution; general economic conditions and changes in economic conditions; potential continuing uncertainty arising in connection with Microsoft's various proposals to acquire all or a part of Yahoo!; the possibility that Microsoft or another person may in the future make other proposals, or take other actions which may create uncertainty for our employees, publishers, advertisers, and other business partners; and the possibility of significant costs of defense, indemnification, and liability resulting from stockholder litigation relating to such proposals. All information set forth in this press release and its attachments is as of July 22, 2008. Yahoo! does not intend, and undertakes no duty, to update this information to reflect future events or circumstances. More information about potential factors that could affect the Company's business and financial results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, as amended, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, which are on file with the SEC and available at the SEC's website at www.sec.gov. Additional information will also be set forth in those sections in Yahoo!’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, which will be filed with the SEC in the third quarter of 2008.

Yahoo! and the Yahoo! logos are trademarks and/or registered trademarks of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.

Yahoo! Inc.

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

Three Months Ended
June 30,

Six Months Ended
June 30,

2007

2008

2007

2008

Revenues

1,697,920

1,798,085

3,369,770

3,615,687

Cost of revenues

683,012

765,911

1,396,649

1,520,994

Gross profit

1,014,908

1,032,174

1,973,121

2,094,693

Operating expenses:

Sales and marketing

390,430

404,899

757,849

829,490

Product development

281,086

314,719

520,586

620,325

General and administrative

133,258

188,811

288,423

359,891

Amortization of intangibles

25,177

23,224

52,279

46,964

Strategic workforce realignment costs, net

16,885

Total operating expenses

829,951

931,653

1,619,137

1,873,555

Income from operations

184,957

100,521

353,984

221,138

Other income, net

30,736

24,674

66,187

48,336

Income before income taxes, earnings in equity interests, and minority interests

215,693

125,195

420,171

269,474

Provision for income taxes

(87,732

)

(47,693

)

(180,090

)

(104,666

)

Earnings in equity interests ⁽¹⁾

32,106

54,927

61,255

509,709

Minority interests in operations of consolidated subsidiaries

500

(1,214

)

1,655

(1,139

)

Net income

160,567

131,215

302,991

673,378

Net income per share - diluted ⁽²⁾

0.11

0.09

0.21

0.46

Shares used in per share calculation - diluted

1,403,819

1,399,277

1,410,779

1,393,821

Stock-based compensation expense was allocated as follows:

Cost of revenues

2,357

3,549

4,364

6,829

Sales and marketing

52,110

56,306

102,378

121,844

Product development

64,451

46,442

112,751

94,524

General and administrative

9,861

16,871

49,292

37,260

Strategic workforce realignment expense reversals

(12,284

)

Total stock-based compensation expense

128,779

123,168

268,785

248,173

Supplemental Financial Data (See Note)

Revenues excluding TAC

1,243,766

1,345,969

2,426,842

2,698,027

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

473,629

427,046

933,664

860,179

Free cash flow ⁽³⁾

328,193

230,999

696,943

877,511

Non-GAAP net income per share

0.12

0.10

0.22

0.21

⁽¹⁾

The six months ended June 30, 2008 includes Yahoo!'s net non-cash gain of $401 million recorded in the first quarter of 2008 related to Alibaba Group's initial public offering of Alibaba.com, net of tax.

⁽²⁾

The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company's diluted earnings per share by $0.02 for the six months ended June 30, 2008.

⁽³⁾

The six months ended June 30, 2008 includes a $350 million one-time payment from AT&T Inc. recorded in the first quarter of 2008.

Yahoo! Inc.

Note to Unaudited Condensed Consolidated Statements of Income

This press release and its attachments include the non-GAAP financial measures of revenues excluding traffic acquisition costs or TAC, operating income before depreciation, amortization, and stock-based compensation expense, free cash flow, non-GAAP net income, and non-GAAP net income per share, which are reconciled to GAAP revenue, income from operations, cash flow from operating activities, net income, and net income per share, respectively, which we believe are the most comparable GAAP measures. We use these non-GAAP financial measures for internal managerial purposes, when publicly providing our business outlook, and to facilitate period-to-period comparisons. We describe limitations specific to each non-GAAP financial measure below. Management generally compensates for limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Further, management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, GAAP revenue, income from operations, cash flow from operating activities, net income, and net income per share calculated in accordance with GAAP.

Revenues excluding TAC is defined as GAAP revenue less TAC. TAC consists of payments made to Affiliate sites and payments made to companies that direct consumer and business traffic to the Yahoo! website. We present revenues excluding TAC: (1) to provide a metric for our investors to analyze and value our Company and (2) to provide investors one of the primary metrics used by the Company for evaluation and decision-making purposes. We provide revenues excluding TAC because we believe it is useful to investors in valuing our Company. One of the ways investors value companies is to apply a multiple to revenues. Since a significant portion of the GAAP revenues associated with our sponsored search offerings is paid to our Affiliate sites, we believe investors find it more meaningful to apply multiples to revenues excluding TAC to assess our value as this avoids “double counting” revenues that are paid to, and being reported by, our Affiliate sites. Further, management uses revenues excluding TAC for evaluating the performance of our business, making operating decisions, budgeting purposes, and as a factor in determining management compensation. A limitation of revenues excluding TAC is that it is a measure which we have defined for internal and investor purposes that may be unique to the Company, and therefore it may not enhance the comparability of our results to other companies in our industry who have similar business arrangements but address the impact of TAC differently. Management compensates for these limitations by also relying on the comparable GAAP financial measures of revenues, cost of revenues, and gross profit, each of which includes the impact of TAC.

Operating income before depreciation, amortization, and stock-based compensation expense (also referred to as operating cash flow) is defined as income from operations before depreciation, amortization of intangible assets, and stock-based compensation expense (including the compensation of Terry Semel, who served as our chief executive officer through June 18, 2007 and whose compensation after June 1, 2006 consisted almost entirely of stock-based compensation). We consider this measure to be an important indicator of the operational strength of the Company. We exclude depreciation and amortization because while tangible and intangible assets support our businesses, we do not believe the related depreciation and amortization costs are directly attributable to the operating performance of our business. This measure is used by some investors when assessing the performance of our Company. In addition, because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation enhances the ability of management and investors to understand the impact of stock-based compensation expense on our operating income. We do not include depreciation, amortization, and stock-based compensation expense in our internal measures or in the measures used by the Company to formulate our business outlook presented with our quarterly financial information to investors. A limitation associated with the non-GAAP measure of operating income before depreciation, amortization, and stock-based compensation expense is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. A further limitation associated with this measure is that it does not include stock-based compensation expense related to the Company’s workforce. Management compensates for these limitations by also relying on the comparable GAAP financial measure of income from operations, which includes depreciation, amortization, and stock-based compensation expense.

Free cash flow is a non-GAAP measure defined as cash flow from operating activities (adjusted to include excess tax benefits from stock-based compensation), less net capital expenditures and dividends received. We consider free cash flow to be a liquidity measure which provides useful information to management and investors about the amount of cash generated by the business after the acquisition of property and equipment, which can then be used for strategic opportunities including, among others, investing in the Company's business, making strategic acquisitions, strengthening the balance sheet, and repurchasing stock. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Management compensates for this limitation by also relying on the net change in cash and cash equivalents as presented in the Company’s unaudited condensed consolidated statements of cash flows prepared in accordance with GAAP which incorporates all cash movements during the period.

Non-GAAP net income is defined as net income excluding certain gains, losses, expenses, and their related tax effects that we do not believe are indicative of our ongoing operating results. Previously, in reporting results for 2006 and 2007, for comparative purposes, stock-based compensation expense calculated in accordance with Statement of Financial Accounting Standard No. 123 (revised 2004), “Share-based Payment,” and its related tax effects were excluded in calculating non-GAAP net income. No such adjustment is made to non-GAAP net income numbers reported in this press release and its attachments since net income amounts reported in 2007 and 2008 in each case include stock-based compensation expense. We consider non-GAAP net income and non-GAAP net income per share to be profitability measures which facilitate the forecasting of our operating results for future periods and allow for the comparison of our results to historical periods. A limitation of non-GAAP net income and non-GAAP net income per share is that they do not include all items that impact our net income and net income per share for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measures of net income and net income per share, both of which include the gains, losses, expenses and related tax effects that are excluded from non-GAAP net income and non-GAAP net income per share.

Yahoo! Inc.

Reconciliations to Unaudited Condensed Consolidated Statements of Income

(in thousands)

Three Months Ended
June 30,

Six Months Ended
June 30,

2007

2008

2007

2008

Revenues for groups of similar services:

Marketing services:

Owned and Operated sites

892,290

1,015,705

1,711,834

1,981,381

Affiliate sites

593,742

571,251

1,242,817

1,178,019

Marketing services

1,486,032

1,586,956

2,954,651

3,159,400

Fees

211,888

211,129

415,119

456,287

Total revenues

1,697,920

1,798,085

3,369,770

3,615,687

Revenues by segment:

United States

1,118,514

1,264,523

2,219,271

2,571,933

International

579,406

533,562

1,150,499

1,043,754

Total revenues

1,697,920

1,798,085

3,369,770

3,615,687

Revenues excluding traffic acquisition costs ("TAC"):

GAAP revenue

1,697,920

1,798,085

3,369,770

3,615,687

TAC

(454,154

)

(452,116

)

(942,928

)

(917,660

)

Revenues excluding TAC

1,243,766

1,345,969

2,426,842

2,698,027

Revenues excluding TAC by segment:

United States:

GAAP revenue

1,118,514

1,264,523

2,219,271

2,571,933

TAC

(182,825

)

(270,875

)

(400,650

)

(548,291

)

Revenues excluding TAC

935,689

993,648

1,818,621

2,023,642

International:

GAAP revenue

579,406

533,562

1,150,499

1,043,754

TAC

(271,329

)

(181,241

)

(542,278

)

(369,369

)

Revenues excluding TAC

308,077

352,321

608,221

674,385

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

Income from operations

184,957

100,521

353,984

221,138

Depreciation and amortization

159,893

203,357

310,895

390,868

Stock-based compensation expense

128,779

123,168

268,785

248,173

Operating income before depreciation, amortization, and stock-based compensation expense

473,629

427,046

933,664

860,179

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

Operating income before depreciation, amortization, and stock-based compensation expense - United States

362,337

297,869

703,855

613,032

Operating income before depreciation, amortization, and stock-based compensation expense - International

111,292

129,177

229,809

247,147

Operating income before depreciation, amortization, and stock-based compensation expense

473,629

427,046

933,664

860,179

United States:

Income from operations

116,895

21,711

209,724

70,876

Depreciation and amortization

129,893

168,458

251,646

321,641

Stock-based compensation expense

115,549

107,700

242,485

220,515

Operating income before depreciation, amortization, and stock-based compensation expense - United States

362,337

297,869

703,855

613,032

International:

Income from operations

68,062

78,810

144,260

150,262

Depreciation and amortization

30,000

34,899

59,249

69,227

Stock-based compensation expense

13,230

15,468

26,300

27,658

Operating income before depreciation, amortization, and stock-based compensation expense - International

111,292

129,177

229,809

247,147

Free cash flow:

Cash flow from operating activities ⁽³⁾

405,603

425,838

840,303

1,212,143

Acquisition of property and equipment, net

(144,676

)

(175,897

)

(262,695

)

(315,690

)

Dividends received

(15,156

)

(18,942

)

(15,156

)

(18,942

)

Excess tax benefits from stock-based awards

82,422

134,491

Free cash flow ⁽³⁾

328,193

230,999

696,943

877,511

⁽³⁾The six months ended June 30, 2008 includes a $350 million one-time payment from AT&T Inc. recorded in the first quarter of 2008.

Yahoo! Inc.
Reconciliation of GAAP Net Income and GAAP Net Income Per Share to Non-GAAP Net Income and Non-GAAP Net Income Per Share
(in thousands, except per share amounts)

		Three Months Ended June 30,
		2007		2008

GAAP Net income		$	160,567	$	131,215

(a)	Incremental costs incurred for outside advisors related to Microsoft’s proposals to acquire all or a part of the Company, other strategic alternatives, the proxy contest, and related litigation defense costs		-		22,300

(b)	To adjust the provision for income taxes to reflect the tax impact of item (a) above for the three months ended June 30, 2008		-		(8,854	)

(c)	To adjust the provision for income taxes to reflect an effective tax rate of 39.7% and 42.5% for the three months ended June 30, 2007 and 2008, respectively		2,102		(6,138	)

Non-GAAP Net income		$	162,669	$	138,523

GAAP Net income per share - diluted		$	0.11	$	0.09

Non-GAAP Net income per share - diluted		$	0.12	$	0.10

Shares used in per share calculations - diluted			1,403,819		1,399,277


		Six Months Ended June 30,
		2007		2008

GAAP Net income		$	302,991	$	673,378

(a)	Incremental costs incurred for outside advisors related to Microsoft’s proposals to acquire all or a part of the Company, other strategic alternatives, the proxy contest, and related litigation defense costs		-		36,156

(b)	Strategic workforce realignment costs, net (comprised of $29 million in pre-tax cash charges, offset by $12 million in related stock-based compensation expense reversals) ⁽⁴⁾		-		16,885

(c)	To adjust the provision for income taxes to reflect the tax impact of items (a) and (b) above for the six months ended June 30, 2008		-		(20,350	)

(d)	To adjust the provision for income taxes to reflect an effective tax rate of 39.7% and 42.5% for the six months ended June 30, 2007 and 2008, respectively		13,282		(12,053	)

(e)	Yahoo!'s net non-cash gain related to Alibaba Group's initial public offering of Alibaba.com, net of tax, which is included in earnings in equity interests ⁽⁴⁾		-		(401,090	)

Non-GAAP Net income		$	316,273	$	292,926

GAAP Net income per share - diluted ⁽²⁾		$	0.21	$	0.46

Non-GAAP Net income per share - diluted		$	0.22	$	0.21

Shares used in per share calculations - diluted			1,410,779		1,393,821

⁽²⁾	The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company's diluted earnings per share by $0.02 for the six months ended June 30, 2008.

⁽⁴⁾	The event occurred in the first quarter of 2008.

Yahoo! Inc.

Business Outlook

The following business outlook is based on current information and expectations as of July 22, 2008. Yahoo!'s business outlook as of today is expected to be available on the Company's Investor Relations website throughout the current quarter. Yahoo! does not expect, and undertakes no obligation, to update the business outlook prior to the release of the Company's next quarterly earnings announcement, notwithstanding subsequent developments; however, Yahoo! may update the business outlook or any portion thereof at any time at its discretion.

Three Months
Ending
September 30,
2008 ⁽⁶⁾

Year
Ending
December 31,
2008 ⁽⁷⁾

Revenues (in millions):

$1,780 - $1,980

$7,350 - $7,850

Operating income before depreciation, amortization, and stock-based compensation expense (or operating cash flow) ⁽⁵⁾ outlook (in millions):

Income from operations

$65 - $85

$525 - $595

Depreciation and amortization

200 - 220

800 - 840

Stock-based compensation expense

140 - 160

500 - 540

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

$405 - $465

$1,825 - $1,975

⁽⁵⁾

Refer to Note to Unaudited Condensed Consolidated Statements of Income.

⁽⁶⁾

This outlook for the three months ending September 30, 2008 excludes any incremental costs incurred for outside advisors related to Microsoft's proposals to acquire all or a part of the Company, other strategic alternatives, the proxy contest, and related litigation defense costs.

⁽⁷⁾

This outlook for the year ending December 31, 2008 excludes any impact of the Company’s strategic workforce realignment, including $29 million of such costs incurred through June 30, 2008, and incremental costs incurred for outside advisors related to Microsoft’s proposals to acquire all or a part of the Company, other strategic alternatives, the proxy contest, and related litigation defense costs, including $36 million of such costs incurred through June 30, 2008.

Yahoo! Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended
June 30,

Six Months Ended
June 30,

2007

2008

2007

2008

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

160,567

131,215

302,991

673,378

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

103,002

125,913

197,511

243,470

Amortization of intangible assets

56,891

77,444

113,384

147,398

Stock-based compensation expense

128,779

123,168

268,785

260,457

Stock-based strategic workforce realignment expense reversals

(12,284

)

Tax benefits from stock-based awards

96,964

31,133

164,655

31,133

Excess tax benefits from stock-based awards

(82,422

)

(134,491

)

Deferred income taxes

(48,539

)

7,891

(90,839

)

37,527

Earnings in equity interests

(32,106

)

(54,927

)

(61,255

)

(509,709

)

Dividends received

15,156

18,942

15,156

18,942

Minority interests in operations of consolidated subsidiaries

(500

)

1,214

(1,655

)

1,139

(Gains)/losses from sale of investments, assets, and other, net

4,379

(603

)

1,522

(3,910

)

Changes in assets and liabilities, net of effects of acquisitions:

Accounts receivable, net

3,151

(3,544

)

43,365

23,636

Prepaid expenses and other

(25,877

)

2,697

(12,519

)

(1,749

)

Accounts payable

4,891

31,078

(39,452

)

Accrued expenses and other liabilities

18,883

8,381

(15,839

)

54,616

Deferred revenue

7,177

(47,977

)

18,454

287,551

Net cash provided by operating activities

405,603

425,838

840,303

1,212,143

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment, net

(144,676

)

(175,897

)

(262,695

)

(315,690

)

Purchases of marketable debt securities

(422,752

)

(856,710

)

(993,039

)

(889,467

)

Proceeds from sales and maturities of marketable debt securities

616,756

193,736

1,344,752

570,278

Acquisitions, net of cash acquired

(24,432

)

(13,558

)

(36,011

)

(179,847

)

Purchase of intangible assets

(13,344

)

(42,302

)

(19,914

)

(51,160

)

Other investing activities, net

2,796

(7,639

)

Net cash provided by (used in) investing activities

11,552

(891,935

)

33,093

(873,525

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock, net

131,803

190,875

203,725

317,445

Repurchases of common stock

(418,175

)

(1,013,181

)

(79,236

)

Structured stock repurchases, net

(250,000

)

Excess tax benefits from stock-based awards

82,422

134,491

Tax withholdings related to net share settlements of restricted stock awards and restricted stock units

(3,708

)

(4,119

)

(3,708

)

(56,612

)

Other financing activities, net

(74

)

(74

)

Net cash (used in) provided by financing activities

(207,658

)

186,682

(928,673

)

181,523

Effect of exchange rate changes on cash and cash equivalents

7,237

(10,420

)

11,218

17,299

Net change in cash and cash equivalents

216,734

(289,835

)

(44,059

)

537,440

Cash and cash equivalents, beginning of period

1,309,078

2,341,205

1,569,871

1,513,930

Cash and cash equivalents, end of period

1,525,812

2,051,370

1,525,812

2,051,370

Supplemental schedule of acquisition-related activities:

Cash paid for acquisitions

25,894

13,796

41,767

180,342

Cash acquired in acquisitions

(1,462

)

(238

)

(5,756

)

(495

)

24,432

13,558

36,011

179,847

Fair value of common stock and vested stock-based awards issued in connection with acquisitions

35,004

Yahoo! Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)


	December 31, 2007		June 30, 2008

ASSETS
Current assets:
Cash and cash equivalents	$	1,513,930	$	2,051,370
Short-term marketable debt securities		487,544		1,019,641
Accounts receivable, net		1,055,532		1,041,874
Prepaid expenses and other current assets		180,716		191,445
Total current assets		3,237,722		4,304,330

Long-term marketable debt securities		361,998		148,313
Property and equipment, net		1,331,632		1,415,801
Goodwill		4,002,030		4,150,966
Intangible assets, net		611,497		615,597
Other long-term assets		503,945		216,042
Investments in equity interests		2,180,917		3,138,598

Total assets	$	12,229,741	$	13,989,647


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	176,162	$	136,754
Accrued expenses and other current liabilities		1,006,188		1,062,918
Deferred revenue		368,470		478,352
Short-term debt		749,628		-
Total current liabilities		2,300,448		1,678,024

Long-term deferred revenue		95,129		276,099
Other long-term liabilities		28,086		23,004
Deferred and other long-term tax liabilities, net		260,993		332,428
Minority interests in consolidated subsidiaries		12,254		13,393
Stockholders' equity		9,532,831		11,666,699

Total liabilities and stockholders' equity	$	12,229,741	$	13,989,647

CONTACTS:
Yahoo! Inc.
Diana Wong, 408-349-4391 (Media Relations)
dianaw@yahoo-inc.com
Cathy La Rocca, 408-349-5188 (Investor Relations)
cathy@yahoo-inc.com