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

January 26, 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))

Item 2.02  Results of Operations and Financial Condition.

On January 26, 2010, Yahoo! Inc., a Delaware corporation (“Yahoo!”), announced its financial results for the fourth quarter and year ended December 31, 2009.  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.

Item 9.01 Financial Statements and Exhibits.

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 Fourth Quarter 2009 Results

Company Exceeds Revenue Business Outlook, Demonstrates Ongoing Improvements in Search and Display Advertising

SUNNYVALE, Calif.--(BUSINESS WIRE)--January 26, 2010--Yahoo! Inc. (NASDAQ:YHOO) today reported results for the fourth quarter and full year ended December 31, 2009.

Revenues were $1,732 million for the fourth quarter of 2009, which exceeded the top end of the Company’s business outlook range. Revenues decreased 4 percent from the fourth quarter of 2008 and increased 10 percent from the third quarter of 2009. Excluding the impact of currency rate fluctuations and divested business lines, revenues for the fourth quarter of 2009 would have declined 5 percent compared to the fourth quarter of 2008. Revenues were $6,460 million for 2009, a decrease of 10 percent compared to 2008. Excluding the impact of currency rate fluctuations and divested business lines, revenues for 2009 would have declined 6 percent compared to 2008.

Income from operations for the fourth quarter of 2009 was $119 million, compared to a loss of $278 million in the fourth quarter of 2008. Income from operations for the fourth quarter of 2009 included $40 million in restructuring charges and $32 million in advisory and retention costs related to the Microsoft search agreement, which amounts were not included in the Company’s business outlook for the fourth quarter of 2009.

Net income per diluted share for the fourth quarter of 2009 was $0.11, including charges of $0.04 per share related to the Microsoft search agreement and restructuring charges. For fourth quarter of 2008, net loss per diluted share was $0.22, including a charge of $0.39 per share primarily related to a goodwill impairment.

Non-GAAP net income per diluted share for the fourth quarter of 2009 was $0.15, compared to $0.21 for the fourth quarter of 2008. Net income per diluted share for 2009 was $0.42, compared to $0.29 for 2008. Non-GAAP net income per diluted share for 2009 was $0.63 compared to $0.70 for 2008.

“The fourth quarter marked a strong finish to 2009, which was a transformative year for Yahoo!,” said Yahoo! Chief Executive Officer Carol Bartz. “We beat the high end of our revenue guidance, saw demand for premium display advertising improve significantly, and grew Owned & Operated search advertising revenue sequentially for the first time since the third quarter of 2008.

“Our business has positive momentum and we feel good as we head into 2010,” said Bartz. “We're pleased that the midpoint of our Q1 revenue outlook marks the first quarter of year-over-year growth in six quarters.”

Business Highlights

• Owned & Operated display advertising revenue grew 26 percent compared to the third quarter of 2009 – compared to a 16 percent increase during the same period in 2008.
• Owned & Operated search advertising revenue continued to stabilize, increasing 4 percent compared to the third quarter of 2009, the first sequential increase since the third quarter of 2008.
• Yahoo! finalized its Search and Advertising Services and Sales Agreement with Microsoft Corporation, and is still hopeful that the transaction can close early this year.
• Yahoo! formed a strategic partnership with Emmy- and Golden Globe-winning producer Ben Silverman’s newly formed content studio Electus, an operating business of IAC/InterActiveCorp. The partnership will produce original programming for Yahoo! users while providing advertisers new opportunities to integrate their brand messages into the next generation of online programming.
• The Company launched Yahoo! Ad Interest Manager, which takes transparency in online advertising to a new level—providing significantly greater control over users’ interactions with interest-based advertising to improve personal relevance and build trust.

N/M = Not Meaningful

“We’re intensely focused on improving execution in all areas of the company, and our solid financial results for the fourth quarter demonstrate the progress we're making,” said Yahoo! Chief Financial Officer Tim Morse. “We’ll continue to execute against our key financial objectives of accelerating revenue growth, and increasing our operating margin and returns on capital over the next few years.”

Q4 Revenue Results

• In the fourth quarter of 2009, marketing services revenues declined 4 percent and fees revenues declined 7 percent, compared to the fourth quarter of 2008.
• Marketing services revenues increased 11 percent and fees revenues decreased 1 percent, compared to the third quarter of 2009.
• Marketing services revenues from Owned and Operated sites were $971 million for the fourth quarter of 2009, a 9 percent decrease compared to $1,063 million for the same period of 2008. The decrease was primarily driven by a 15 percent decline in search advertising revenue and a 1 percent decline in display advertising revenue.
• Marketing services revenues from Affiliate sites were $564 million for the fourth quarter of 2009, a 6 percent increase compared to $531 million for the same period of 2008.

2009 Revenue Results

• In 2009, marketing services revenues declined 10 percent and fees revenues declined 12 percent, compared to 2008.
• Marketing services revenues from Owned and Operated sites were $3,553 million for 2009, a 12 percent decrease compared to $4,046 million for 2008. The decrease was primarily driven by a 13 percent decline in search advertising revenue and a 9 percent decline in display advertising revenue.
• Marketing services revenues from Affiliate sites were $2,121 million for 2009, a 7 percent decrease compared to $2,270 million for 2008.

Cash Flow and Cash Balance

• Cash flow from operating activities for the fourth quarter of 2009 was $351 million, a 9 percent increase compared to $321 million for the same period of 2008. Cash flow from operating activities for 2009 was $1,310 million, a 30 percent decrease compared to $1,880 million for 2008.
• Free cash flow of $220 million for the fourth quarter of 2009 was flat compared to $219 million for the same period of 2008. Free cash flow for 2009 was $957 million, a 27 percent decrease compared to $1,312 million in 2008.
• Cash, cash equivalents, and investments in marketable debt securities were $4,518 million at December 31, 2009 compared to $3,522 million at December 31, 2008, an increase of $996 million.

Business Outlook

Revenue for the first quarter of 2010 is expected to be in the range of $1,575 million to $1,675 million. Income from operations for the first quarter of 2010 is expected to be in the range of $90 million to $110 million. This business outlook excludes advisory and retention costs related to the Microsoft search agreement and restructuring charges, as these amounts are not currently estimable. See “Yahoo! Inc. Business Outlook.”

Conference Call

Yahoo! will host a conference call to discuss fourth quarter 2009 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: 72652623.

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”): 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 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 (Loss),” “Reconciliations to Unaudited Condensed Consolidated Statements of Income (Loss),” and “Reconciliation of GAAP Net Income (Loss) Attributable to Yahoo! Inc. and GAAP Net Income (Loss) Attributable to Yahoo! Inc. Common Stockholders per Share - Diluted to Non-GAAP Net Income and Non-GAAP Net Income Per Share - Diluted.”

About Yahoo!

Yahoo!'s vision is to be the center of people's online lives by delivering personally relevant, meaningful Internet experiences. Yahoo! attracts hundreds of millions of users every month through its engaging content and services and innovative technology, making it one of the most trafficked Internet destinations and a world-class online media company. 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 risks and uncertainties with respect to our search agreement with Microsoft Corporation. All information set forth in this press release and its attachments is as of January 26, 2010. 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, 2008, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, 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 Annual Report on Form 10-K for the year ended December 31, 2009, which will be filed with the SEC in the first 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 (Loss)

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 (also referred to as operating cash flow), free cash flow, non-GAAP net income, and non-GAAP net income per diluted share, which are reconciled to GAAP revenue, income from operations, cash flow from operating activities, net income (loss) attributable to Yahoo! Inc., and net income (loss) attributable to Yahoo! Inc. common stockholders per share-diluted, 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 (loss) attributable to Yahoo! Inc., and net income (loss) attributable to Yahoo! Inc. common stockholders per share-diluted 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 (loss) from operations before depreciation, amortization of intangible assets, and stock-based compensation expense. 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 expense enhances the ability of management and investors to understand the impact of stock-based compensation expense on our operating income. We have historically not included depreciation, amortization, and stock-based compensation expense in our internal measures. 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 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.

Non-GAAP net income is defined as net income (loss) attributable to Yahoo! Inc. excluding certain gains, losses, expenses, and their related tax effects that we do not believe are indicative of our ongoing operating results and further adjusted to exclude stock-based compensation expense. In our calculation of non-GAAP net income and non-GAAP net income per diluted share, we have excluded stock-based compensation expense and its related tax effects. 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 expense enhances the ability of management and investors to understand the impact of stock-based compensation expense on net income and net income per diluted share. We also consider non-GAAP net income and non-GAAP net income per diluted 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 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 and net income per diluted 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 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