Yahoo! Mails Letter to Stockholders

SUNNYVALE, Calif.--(Business Wire)--
Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company,
today announced that it has sent a letter to its stockholders,
outlining the reasons the Board believes that Microsoft's proposal
significantly undervalues Yahoo! and is not in the best interests of
Yahoo! stockholders.

In the letter Yahoo! says:

"(Yahoo!'s) assets - our brand and its audience, our relationships
with marketers, our financial strength, our technology, and our
strategic investments--are the core of our value and our leadership
position in the industry.

"We have a huge market opportunity - and are uniquely positioned
to capitalize on it. The global online advertising market is projected
to grow from $45 billion in 2007 to $75 billion in 2010. And we are
moving quickly to take advantage of what we see as a unique window of
time in the growth - and evolution - of this market to build market
share and to create value for stockholders.

"Today, Yahoo! is a faster-moving, better-organized, more nimble
company than it was just a few months ago. We have redeployed our
resources to drive Yahoo!'s key strategic priorities - taking
important steps to streamline our organization and close down or scale
back businesses that don't support these critical growth initiatives.
We are well on our way to transforming the experiences of Yahoo!'s
users, advertisers, publishers and developers - an important shift
that is at the heart of our plan to create stockholder value."

A copy of the letter follows:

Dear Stockholders,

On February 1, 2008, Microsoft made an unsolicited proposal to
acquire your company. As much has been reported in the press recently,
I wanted to reach out to you personally to let you know why your Board
of Directors, after a careful review by Yahoo!'s management along with
our financial and legal advisors, believes that Microsoft's proposal
substantially undervalues Yahoo! and is not in the best interests of
our stockholders.

Most importantly, I want you to know that your Board is
continuously evaluating all of Yahoo!'s strategic options in the
context of the rapidly evolving industry environment, and we remain
committed to pursuing initiatives that maximize value for all our
stockholders.

We have a unique combination of strengths

-- Yahoo! is one of the most recognizable and admired brands in
the world. We have over 500 million users (nearly 1 out of
every 2 internet users worldwide). In the U.S., we are # 1 in
many of the most used online services including personalized
home pages, mail, news, music, shopping and travel. Because we
have leadership positions in so many indispensable online
services, users spend more time on Yahoo! sites than anywhere
else online.

-- Yahoo! is an attractive partner for marketers. Yahoo! is #1 in
online display advertising, which represents 90% of the
advertising inventory on the web, and we are also a leader in
search marketing and a pioneer in the growing fields of mobile
advertising and online video advertising. Through Yahoo!,
advertisers can now connect with consumers on our owned sites
as well as those of our growing network of partners including
eBay, Comcast, AT&T, a consortium of over 600 newspapers,
Forbes.com, Cars.com, WebMD and more.

-- Yahoo! has the financial flexibility to execute our plans,
thanks to our healthy cash balance, which exceeded $2 billion
as of December 31, 2007, and our substantial operating cash
flow, which we expect to grow double digits in 2009.

-- Yahoo! has made important investments in our core computing
infrastructure enabling us to dramatically increase the speed
of our search engine updates even while handling vast and
growing quantities of data.

-- In addition, we have the added value of our substantial,
unconsolidated investments in Japan and China. We have
substantial positions in Yahoo! Japan, the leader in its
market, and Alibaba, which is strongly positioned in China, a
market with enormous growth potential.

These assets--our brand and its audience, our relationships with
marketers, our financial strength, our technology, and our strategic
investments--are the core of our value and our leadership position in
the industry.

We have a huge market opportunity - and are uniquely positioned to
capitalize on it

The global online advertising market is projected to grow from $45
billion in 2007 to $75 billion in 2010. And we are moving quickly to
take advantage of what we see as a unique window of time in the growth
- and evolution - of this market to build market share and to create
value for stockholders.

We are executing our strategy - and making headway

We have taken significant but disciplined steps to refocus our
business on our objectives to become the starting point for the most
consumers and the must buy for the most advertisers and enhance
Yahoo!'s long-term performance.

Starting Point Objective: Our goal is to grow visits to key Yahoo!
starting points and properties, where users enter the Internet, by 15%
per year over the next several years. We are the most visited site in
the U.S., and we continue to grow - we experienced double-digit growth
in U.S. users in 2007 on our Yahoo.com home page.

In addition to traditional starting points on the PC - including
our home pages, mail, My Yahoo! and search, we are particularly
excited about our growth prospects in mobile, the biggest emerging
starting point in the world. Globally, there are twice as many users
of mobile devices as users of personal computers, and mobile
advertising is projected to grow substantially in the coming years. We
have an important competitive edge as the number one mobile
destination in the U.S., and we are building a superior mobile
experience for Yahoo! users globally so we can further capitalize on
this opportunity.

Must Buy Objective: We are working to make online advertising
easier and more effective for marketers, opening up new ways for them
to connect with consumers. We've successfully completed the global
roll-out of our search marketing system, Panama, which improved the
search experience for our users, boosted returns for our advertisers,
and increased revenue for Yahoo!. Last year, we bought Right Media, an
exchange that enables buyers and sellers of online advertising to come
together. Another 2007 acquisition, Blue Lithium, brings us
best-in-class performance marketing capabilities, complementing
Yahoo!'s existing offerings for advertisers. We also integrated our
search advertising and display advertising sales forces, creating a
one-stop shop for all of advertisers' online marketing needs. All of
these - Panama, Right Media, Blue Lithium, and our combined sales
efforts - complement and enhance Yahoo!'s existing capabilities and
will make it easier for advertisers and online publishers to buy and
sell advertising online.

We are also creating a unique and valuable network of premium
websites to serve our advertisers. We are making it easier for our
advertisers to provide interesting and relevant offers to our users by
combining advertising space on Yahoo!'s owned sites with that from a
growing group of premium partners including eBay, Comcast, AT&T, a
consortium of over 600 newspapers and many others.

As we reach more users both on our own websites and on the sites
of our premium partners, and better monetize the ad space on Yahoo!'s
owned and operated sites, we are striving to increase the percentage
of total online advertising demand we touch from an estimated 15% in
2007 to 20% over the next several years.

These key strategies will be enhanced by our adoption of new, more
open technology platforms that will encourage the development of new
applications and the involvement of third-party developers - and help
enrich the user experience.

We have accomplished a great deal in a very short time - and we
are focused on building this momentum

Today, Yahoo! is a faster-moving, better-organized, more nimble
company than it was just a few months ago. We have redeployed our
resources to drive Yahoo!'s key strategic priorities - taking
important steps to streamline our organization and close down or scale
back businesses that don't support these critical growth initiatives.
The fact is that we are well on our way to transforming the
experiences of Yahoo!'s users, advertisers, publishers and developers
- an important shift that is at the heart of our plan to create
stockholder value.

I want you to know that the Yahoo! Board of Directors and
management team remain committed to pursuing initiatives that maximize
value for all our Yahoo! stockholders. This is a great company and we
are moving quickly to make it even better.

Jerry Yang

About Yahoo! Inc.

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.

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.

Forward-Looking Statements

This letter contains forward-looking statements that involve risks
and uncertainties concerning the expected financial performance of
Yahoo! Inc. (the "Company") as well as the Company's strategic and
operational plans. Actual events or results may differ materially from
those described in this letter due to a number of risks and
uncertainties. The potential risks and uncertainties include, among
others, the implementation and results of the Company's ongoing
strategic initiatives; the Company's ability to compete with new or
existing competitors; reduction in spending by, or loss of, marketing
services customers; the demand by customers for the Company's premium
services; acceptance by users of new products and services; risks
related to joint ventures and the integration of acquisitions; risks
related to the Company's international operations; failure to manage
growth and diversification; adverse results in litigation, including
intellectual property infringement claims; the Company'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; and general economic
conditions. 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, 2006 and the
Quarterly Report on Form 10-Q for the quarter ended September 30,
2007, which are on file with the SEC and available at the SEC's
website at www.sec.gov. Further risks and uncertainties associated
with Microsoft's unsolicited proposal to acquire the Company include:
the risk that key employees may pursue other employment opportunities
due to concerns as to their employment security with the Company; the
risk that the acquisition proposal will make it more difficult for the
Company to execute its strategic plan and pursue other strategic
opportunities; and the risk that stockholder litigation in connection
with Microsoft's unsolicited proposal may result in significant costs
of defense, indemnification and liability. All forward-looking
statements are qualified by these cautionary statements and are made
only as of the date they are made. The Company is under no obligation
(and expressly disclaims any such obligation) to update or alter any
forward-looking statements, whether as a result of new information,
future events or otherwise.

Media Contacts:
Yahoo! Inc.
Tracy Schmaler, 202-631-9463
schmaler@yahoo-inc.com
or
The Abernathy MacGregor Group for Yahoo! Inc.
Adam Miller, 212-371-5999
alm@abmac.com
or
Robinson Lerer & Montgomery for Yahoo! Inc.
Michael Gross, 646-805-2003
mgross@rlmnet.com
or
Investor Contact:
Yahoo! Inc.
Marta Nichols, 408-349-3527
mnichols@yahoo-inc.com

Copyright Business Wire 2008