UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

July 20, 2010
Date of Report (Date of earliest event reported)


Yahoo! Inc.
(Exact name of registrant as specified in its charter)

701 First Ave.
Sunnyvale, California 94089
(Address of principal executive offices, including zip code)

(408) 349-3300
(Registrant’s telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On July 20, 2010, Yahoo! Inc., a Delaware corporation (“Yahoo!”), announced its financial results for the quarter ended June 30, 2010.  A copy of Yahoo!'s press release announcing these financial results and other information regarding its financial condition is attached hereto as Exhibit 99.1.   

The information in this report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Yahoo! under the Securities Act of 1933, as amended, or the Exchange Act.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

YAHOO!  INC.

INDEX TO EXHIBITS

Exhibit 99.1

Yahoo! Reports Second Quarter 2010 Results

Owned and Operated Display Advertising Grows 19% Year Over Year

Company Continues Strong Operating Income and Margin Expansion

SUNNYVALE, Calif.--(BUSINESS WIRE)--July 20, 2010--Yahoo! Inc. (NASDAQ:YHOO) today reported results for the quarter ended June 30, 2010.

Revenue was $1,601 million for the second quarter of 2010, a two percent increase from the second quarter of 2009. Income from operations for the second quarter of 2010 was $175 million, compared to $76 million in the second quarter of 2009. Excluding restructuring charges of $65 million in the second quarter of 2009 and $10 million in the second quarter of 2010, income from operations grew 32 percent in the second quarter.

Net income per diluted share for the second quarter of 2010 was $0.15, compared to $0.10 in the second quarter of 2009.

“We’re pleased that we continued to deliver strong operating income and margin expansion,” said Yahoo! Chief Executive Officer Carol Bartz. “Our search fundamentals are improving and we posted another quarter of healthy display advertising growth.”

Financials at a Glance

Business Highlights

• Display advertising on Owned and Operated sites continued to perform well, growing 19 percent in the quarter compared to the second quarter of 2009.
• Operating margin expanded from 4.8 percent in the second quarter of 2009 to 11.0 percent in the second quarter of 2010. Excluding restructuring charges of $65 million in the second quarter of 2009 and $10 million in the second quarter of 2010, operating margin expanded from 8.9 percent to 11.6 percent.
• Yahoo! deepened its integration with Facebook through Yahoo! Pulse – now users can link their Yahoo! and Facebook accounts and view and share updates with friends across both networks.
• Yahoo! launched new Mail and Messenger apps for the Android platform, as well as HTML-5-based Mail and News sites for the iPhone.
• Samsung and Yahoo! extended their strategic global partnership to distribute Yahoo!'s industry-leading services on millions of Samsung mobile devices - including those running Samsung bada and Android platforms.
• Yahoo! acquired Associated Content Inc., extending Yahoo's ability to provide high quality, personally relevant content for the benefit of its users and advertisers.
• Nokia and Yahoo! announced a worldwide strategic alliance, extending the reach of Yahoo!’s industry-leading online services.
• Yahoo! announced that it will bring hit games from social gaming company Zynga to the Yahoo! network.
• Yahoo! acquired Koprol, Indonesia’s popular location-based social network.
• Yahoo! expanded its partnership with Sony to increase the number of countries where Yahoo! TV Widgets are available, enabling Yahoo! to connect millions of additional consumers on their TVs.
• Yahoo! hosted its third annual Hadoop Summit with more than 1,000 developers. Hadoop is an open source technology pioneered by Yahoo! for big data sets and cloud computing, helping companies get value from their data and better manage their businesses.
• Brad Smith, president and CEO of Intuit, and Patti Hart, CEO of International Game Technology (IGT), joined Yahoo!’s Board of Directors.
• Blake Irving joined as Chief Product Officer, bringing to Yahoo! large scale Internet expertise and will lead Yahoo!’s products organization, which is responsible for the vision, strategy, design and development of Yahoo!’s global consumer and advertiser product portfolio.

Search Alliance Costs and Reimbursements

Yahoo!’s results for the three months ended June 30, 2010 reflect $86 million in search operating cost reimbursements from Microsoft under our Search and Advertising Services and Sales Agreement (“Search Agreement”). This amount is equivalent to the search operating costs incurred by Yahoo! related to the Search Agreement in the second quarter. Search operating cost reimbursements are expected to continue until Yahoo! has fully transitioned to Microsoft’s search platform. Yahoo! views search operating cost reimbursements as an indicator of the long-term cost savings associated with full implementation of the Search Agreement. Our business outlook for total expenses reflects these savings as well as planned reinvestments.

Yahoo!’s results for the three months ended June 30, 2010 also reflect transition cost reimbursements from Microsoft under the Search Agreement, which were equivalent to the transition costs of $18 million incurred by Yahoo! related to the Search Agreement in the second quarter. Therefore, the net impact of the transition costs and reimbursements were neutral to total operating expenses in the second quarter, as expected. In the future, quarterly transition cost reimbursements are expected to continue to be roughly equivalent to quarterly transition costs.

Second Quarter 2010 Revenue Results

• Marketing services revenue increased four percent and fees revenue decreased 16 percent, compared to the second quarter of 2009.
• Marketing services revenue increased one percent and fees revenue decreased seven percent, compared to the first quarter of 2010.
• Marketing services revenue from Owned and Operated sites of $881 million increased three percent compared to $858 million for the same period of 2009. This was primarily driven by a 19 percent increase in display advertising revenue, partially offset by an eight percent decline in search advertising revenue.
• Marketing services revenue from Affiliate sites were $557 million, a seven percent increase compared to $520 million for the same period of 2009.

Second Quarter 2010 Cash Flow and Cash Balance

• Cash flow from operating activities was $347 million, a two percent increase compared to $342 million for the same period of 2009.
• Free cash flow was $127 million, a 52 percent decrease compared to $266 million for the same period of 2009.
• Cash, cash equivalents, and investments in marketable debt securities were $3,799 million at June 30, 2010 compared to $4,518 million at December 31, 2009, a decline of $719 million. During the second quarter of 2010, Yahoo! repurchased 32 million shares for $496 million.

Business Outlook

Revenue for the third quarter of 2010 is expected to be in the range of $1,570 million to $1,650 million. Income from operations for the third quarter of 2010 is expected to be in the range of $160 million to $200 million. Total expenses (cost of revenue plus total operating expenses) for the third quarter of 2010 is expected to be in the range of $1,410 million to $1,450 million. Total expenses less traffic acquisition costs (“TAC”) for the third quarter of 2010 is expected to be in the range of $945 million to $965 million. Total expenses less TAC, depreciation and amortization (“D&A”), and stock-based compensation expense (“SBC”) for the third quarter of 2010 is expected to be in the range of $735 million to $745 million.

Conference Call

Yahoo! will host a conference call to discuss second quarter 2010 results at 5 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: 38398529.

Note Regarding Non-GAAP Financial Measures

This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (“SEC”): free cash flow, total expenses less TAC, total expenses less TAC, D&A, and SBC, non-GAAP net income, and non-GAAP net income per diluted share. These measures may be different than 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”). Explanations of the Company’s non-GAAP financial measures and reconciliations of these financial measures to the GAAP financial measures the Company considers most comparable are included in the accompanying “Note to Unaudited Condensed Consolidated Statements of Income,” “Reconciliation of cash flow from operating activities to free cash flow,” “GAAP to Non-GAAP Reconciliations,” and “Business Outlook”.

About Yahoo!

Yahoo! attracts hundreds of millions of users every month through its innovative technology and engaging content and services, making it one of the most trafficked Internet destinations and a world class online media company. Yahoo!'s vision is to be the center of people's online lives by delivering personally relevant, meaningful Internet experiences. Yahoo! is headquartered in Sunnyvale, California. For more information, visit http://pressroom.yahoo.com or the company's blog, Yodel Anecdotal (http://yodel.yahoo.com).

“Owned and Operated sites” refers to Yahoo!’s owned and operated online properties and services.

“Affiliate sites” refers 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 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 impact of management and organizational changes; the implementation and results of Yahoo!'s ongoing strategic and cost initiatives; 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; and transition and implementation risks associated with our search agreement with Microsoft Corporation. All information set forth in this press release and its attachments is as of July 20, 2010. Yahoo! does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstance; however, Yahoo! may update its business outlook or any portion thereof at any time in its discretion. 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, 2009, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, which are on file with the SEC and available on 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, 2010, which will be filed with the SEC in the third quarter of 2010.

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.
Note to Unaudited Condensed Consolidated Statements of Income

This press release and its attachments include the non-GAAP financial measures of free cash flow, total expenses (GAAP cost of revenue plus GAAP total operating expenses) less traffic acquisition costs (“TAC”), total expenses less TAC, depreciation and amortization (“D&A”), and stock-based compensation expense (“SBC”), non-GAAP net income, and non-GAAP net income per diluted share, which are reconciled to cash flow from operating activities, total expenses (GAAP cost of revenue plus GAAP total operating expenses), net income attributable to Yahoo! Inc., and net income attributable to Yahoo! Inc. common stockholders per share-diluted, which we believe are the most comparable GAAP measures. We use these non-GAAP financial measures for internal managerial purposes 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 and operating costs. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, cash flow from operating activities, total expenses, net income attributable to Yahoo! Inc., and net income attributable to Yahoo! Inc. common stockholders per share-diluted calculated in accordance with GAAP.

Free cash flow is a non-GAAP financial 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.

Total expenses less TAC is a non-GAAP financial measure defined as total expenses 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 consider total expenses less TAC to be a useful indicator of our operating costs. We exclude TAC from this measure because TAC generally varies based on the revenue we earn from traffic supplied by our Affiliates, and doing so assists investors in understanding the operating cost structure of our business. A limitation associated with the non-GAAP measure of total expenses less TAC is that it does not reflect TAC. Management compensates for this limitation by also relying on the comparable GAAP financial measures of cost of revenue and income from operations, each of which includes TAC.

Total expenses less TAC, D&A, and SBC is defined as total expenses less TAC, D&A, and SBC. We consider this measure to be a useful indicator of our cash operating costs. We exclude TAC from this measure because, as noted above, TAC generally varies based on the revenue we earn from traffic supplied by our Affiliates, and doing so assists investors in understanding the operating cost structure of our business. We exclude D&A because while tangible and intangible assets support our businesses, we believe excluding the related non-cash D&A costs will aid investors in understanding the cash costs associated with operating our business. We exclude SBC due to the variety of equity awards used by companies, the varying methodologies for determining SBC, and the assumptions involved in those determinations, we believe excluding SBC enhances the ability of management and investors to understand the impact of SBC on our operating results. There are limitations associated with the non-GAAP measure of total expenses less TAC, D&A, and SBC. First, it does not reflect TAC. Management compensates for this limitation by also relying on the comparable GAAP financial measures of cost of revenue and income from operations (each of which includes TAC). Second, it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in our businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. Third, it does not include SBC related to the Company’s workforce. Management compensates for the second and third limitations by also relying on the comparable GAAP financial measures of operating expenses and income from operations (each of which includes D&A and SBC).

Non-GAAP net income is defined as net income attributable to Yahoo! Inc. excluding certain gains, losses, expenses, and their related tax effects that we do not believe are indicative of our ongoing results. In reporting results for fiscal 2009 and its interim periods, we adjusted non-GAAP net income to exclude stock-based compensation expense and its related tax effects. Beginning in the first quarter of 2010, we no longer exclude stock-based compensation expense and its related tax effects. For comparison purposes, prior period amounts have been revised to conform to the current presentation. We consider non-GAAP net income and non-GAAP net income per diluted share to be profitability measures which facilitate the forecasting of our 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 diluted share is that they do not include all items that impact our net income and net income per diluted share for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measures of net income attributable to Yahoo! Inc. and net income attributable to Yahoo! Inc. common stockholders per share - diluted, 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 diluted share.

CONTACTS:
Yahoo! Inc.
Dana Lengkeek, 408-349-1130 (Media Relations)
danal@yahoo-inc.com
Cathy La Rocca, 408-349-5188 (Investor Relations)
cathy@yahoo-inc.com