Statement Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Revenues	$ 6,460,315	$ 7,208,502	$ 6,969,274
Cost of revenues	2,871,746	3,023,362	2,838,758
Gross profit	3,588,569	4,185,140	4,130,516
Operating expenses:
Sales and marketing	1,245,350	1,563,313	1,610,357
Product development	1,210,168	1,221,787	1,084,238
General and administrative	580,352	705,136	633,431
Amortization of intangibles	39,106	87,550	107,077
Restructuring charges, net	126,901	106,854	0
Goodwill impairment charge	0	487,537	0
Total operating expenses	3,201,877	4,172,177	3,435,103
Income from operations	386,692	12,963	695,413
Other income, net	187,528	73,750	118,771
Income before provision for income taxes and earnings in equity interests	574,220	86,713	814,184
Provision for income taxes	(219,321)	(259,006)	(322,868)
Earnings in equity interests	250,390	596,979	150,689
Net income	605,289	424,686	642,005
Less: Net income attributable to noncontrolling interests	(7,297)	(5,765)	(2,850)
Net income attributable to Yahoo! Inc.	597,992	418,921	639,155
Net income attributable to Yahoo! Inc. common stockholders per share-basic	$ 0.43	$ 0.31	$ 0.48
Net income attributable to Yahoo! Inc. common stockholders per share-diluted	$ 0.42	$ 0.29	$ 0.47
Shares used in per share calculation-basic	1,397,652	1,369,476	1,338,987
Shares used in per share calculation-diluted	1,415,658	1,391,230	1,366,264
Stock-based compensation expense by function:
Cost of revenues	10,759	13,813	10,628
Sales and marketing	141,537	182,826	246,472
Product development	205,971	178,091	218,207
General and administrative	79,820	63,113	97,120
Restructuring expense (reversals) accelerations, net	$ 11,062	$ (30,236)	$ 0

Statement Of Financial Position Classified (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$ 1,275,430	$ 2,292,296
Short-term marketable debt securities	2,015,655	1,159,691
Accounts receivable, net of allowance of $51,600 and $41,003 as of December 31, 2008 and 2009, respectively	1,003,362	1,060,450
Prepaid expenses and other current assets	300,325	233,061
Total current assets	4,594,772	4,745,498
Long-term marketable debt securities	1,226,919	69,986
Property and equipment, net	1,426,862	1,536,181
Goodwill	3,640,373	3,440,889
Intangible assets, net	355,883	485,860
Other long-term assets	194,933	233,989
Investments in equity interests	3,496,288	3,177,445
Total assets	14,936,030	13,689,848
Current liabilities:
Accounts payable	136,769	151,897
Accrued expenses and other current liabilities	1,169,815	1,139,894
Deferred revenue	411,144	413,224
Total current liabilities	1,717,728	1,705,015
Long-term deferred revenue	122,550	218,438
Capital lease and other long-term liabilities	83,021	77,062
Deferred and other long-term tax liabilities, net	494,095	420,372
Total liabilities	2,417,394	2,420,887
Commitments and contingencies (Note 13)
Yahoo! Inc. stockholders' equity:
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued or outstanding	0	0
Common stock, $0.001 par value; 5,000,000 shares authorized; 1,600,220 shares issued and 1,391,560 shares outstanding as of December 31, 2008 and 1,413,718 shares issued and 1,406,075 shares outstanding as of December 31, 2009	1,410	1,595
Additional paid-in capital	10,640,367	11,643,635
Treasury stock at cost, 208,660 shares as of December 31, 2008 and 7,643 shares as of December 31, 2009	(117,331)	(5,267,484)
Retained earnings	1,599,638	4,752,920
Accumulated other comprehensive income	369,236	120,276
Total Yahoo! Inc. stockholders' equity	12,493,320	11,250,942
Noncontrolling interests	25,316	18,019
Total equity	12,518,636	11,268,961
Total liabilities and equity	$ 14,936,030	$ 13,689,848

Statement Of Financial Position Classified (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2009	Dec. 31, 2008
Accounts receivable, allowance	$ 41,003	$ 51,600
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000	10,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	5,000,000	5,000,000
Common stock, shares issued	1,413,718	1,600,220
Common stock, shares outstanding	1,406,075	1,391,560
Treasury stock at cost, shares	7,643	208,660

Statement Of Cash Flows Indirect (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 605,289	$ 424,686	$ 642,005
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	554,546	508,812	409,366
Amortization of intangible assets	184,309	281,221	249,829
Stock-based compensation expense, net	449,149	407,607	572,427
Non-cash restructuring charges	7,301	7,925	0
Goodwill impairment charge	0	487,537	0
Tax benefits from stock-based awards	6,860	117,716	76,138
Excess tax benefits from stock-based awards	(108,487)	(125,114)	(35,427)
Deferred income taxes	(90,562)	(39,035)	(227,137)
Earnings in equity interests	(250,390)	(596,979)	(150,689)
Dividends received from equity investees	27,628	18,942	15,156
Losses (gains) from sales of investments, assets, and other, net	(160,634)	(10,347)	8,060
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net	81,959	(62,082)	(88,738)
Prepaid expenses and other	21,585	(15,777)	132,437
Accounts payable	(19,684)	(23,840)	45,101
Accrued expenses and other liabilities	106,096	325,030	184,805
Deferred revenue	(104,619)	173,939	85,566
Net cash provided by operating activities	1,310,346	1,880,241	1,918,899
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net	(433,795)	(674,829)	(602,276)
Purchases of marketable debt securities	(5,048,462)	(2,317,004)	(1,105,043)
Proceeds from sales of marketable debt securities	136,538	285,753	571,199
Proceeds from maturities of marketable debt securities	2,884,926	1,663,569	1,672,521
Proceeds from sales of marketable equity securities	265,194	0	0
Acquisitions, net of cash acquired	(195,106)	(208,958)	(973,577)
Purchases of intangible assets	(32,185)	(71,310)	(110,378)
Other investing activities, net	3,652	10,996	(24,948)
Net cash used in investing activities	(2,419,238)	(1,311,783)	(572,502)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net	112,673	363,354	375,066
Repurchases of common stock	(113,444)	(79,236)	(1,583,919)
Structured stock repurchases, net	0	0	(250,000)
Excess tax benefits from stock-based awards	108,487	125,114	35,427
Tax withholdings related to net share settlements of restricted stock awards and restricted stock units	(73,119)	(76,752)	(6,456)
Other financing activities, net	0	(74)	(12,126)
Net cash (used in) provided by financing activities	34,597	332,406	(1,442,008)
Effect of exchange rate changes on cash and cash equivalents	57,429	(122,498)	39,670
Net change in cash and cash equivalents	(1,016,866)	778,366	(55,941)
Cash and cash equivalents at beginning of year	2,292,296	1,513,930	1,569,871
Cash and cash equivalents at end of year	$ 1,275,430	$ 2,292,296	$ 1,513,930

Statement Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Comprehensive income
Net income	$ 605,289	$ 424,686	$ 642,005
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities, net of taxes of $(8,131), $18,736, and $10,276 for 2007, 2008, and 2009, respectively	(9,652)	(21,195)	2,999
Reclassification adjustment for realized losses (gains) included in net income, net of taxes of $(1,384), $(785), and $(10,060) for 2007, 2008, and 2009, respectively	7,716	1,178	2,075
Net change in unrealized gains (losses) on available-for-sale securities, net of tax	(1,936)	(20,017)	5,074
Foreign currency translation adjustment, net of tax	250,896	(190,909)	175,623
Other comprehensive income (loss)	248,960	(210,926)	180,697
Comprehensive income	854,249	213,760	822,702
Less: Comprehensive income attributable to noncontrolling interests	(7,297)	(5,765)	(2,850)
Comprehensive income attributable to Yahoo! Inc.	$ 846,952	$ 207,995	$ 819,852

Statement Of Shareholders Equity And Other Comprehensive Income (USD $) In Thousands	Total	Common stock	Additional paid-in capital	Treasury stock	Retained earnings	Accumulated other comprehensive income	Total Yahoo! Inc. stockholders' equity
Balance, beginning of year at Dec. 31, 2006		$ 1,493	$ 8,615,915	$ (3,324,863)	$ 3,717,560	$ 150,505
Balance (in shares), beginning of year at Dec. 31, 2006		1,360,247
Common stock and stock-based awards issued			665,695
Net income attributable to Yahoo! Inc.	639,155				639,155
Repurchases of common stock				(1,833,920)
Net change in unrealized (losses) gains on available-for-sale securities, net of tax	5,074					5,074
Common stock issued (retired), net		34
Stock-based compensation expense			593,451
Adoption of new authoritative guidance relating to uncertain tax benefits effective January 1, 2007					46,304
Foreign currency translation adjustment, net of tax	175,623					175,623
Tax benefits from stock-based awards			76,138
Tax withholdings related to net share settlements of restricted stock awards			(4,466)	(1,989)
Debt conversions			287
Retirement of treasury stock			0	0	0
Adoption of new authoritative guidance relating to convertible debt instruments			95,242		(69,020)
Other			(10,010)
Common stock and restricted stock issued (in shares)		36,968
Repurchases of common stock (in shares)		(66,332)
Debt conversions (in shares)		13
Tax withholdings related to net share settlements of restricted stock awards (in shares)		(68)
Balance, end of year at Dec. 31, 2007		1,527	10,032,252	(5,160,772)	4,333,999	331,202	9,538,208
Balance (in shares), end of year at Dec. 31, 2007		1,330,828
Common stock and stock-based awards issued			363,322
Net income attributable to Yahoo! Inc.	418,921				418,921
Repurchases of common stock				(79,236)
Net change in unrealized (losses) gains on available-for-sale securities, net of tax	(20,017)					(20,017)
Common stock issued (retired), net		68
Stock-based compensation expense			434,639
Adoption of new authoritative guidance relating to uncertain tax benefits effective January 1, 2007					0
Foreign currency translation adjustment, net of tax	(190,909)					(190,909)
Tax benefits from stock-based awards			117,716
Tax withholdings related to net share settlements of restricted stock awards			(49,276)	(27,476)
Debt conversions			749,516
Retirement of treasury stock			0	0	0
Adoption of new authoritative guidance relating to convertible debt instruments			0		0
Other			(4,534)
Common stock and restricted stock issued (in shares)		28,609
Repurchases of common stock (in shares)		(3,388)
Debt conversions (in shares)		36,563
Tax withholdings related to net share settlements of restricted stock awards (in shares)		(1,052)
Balance, end of year at Dec. 31, 2008	11,250,942	1,595	11,643,635	(5,267,484)	4,752,920	120,276	11,250,942
Balance (in shares), end of year at Dec. 31, 2008		1,391,560
Common stock and stock-based awards issued			112,654
Net income attributable to Yahoo! Inc.	597,992				597,992
Repurchases of common stock				(113,444)
Net change in unrealized (losses) gains on available-for-sale securities, net of tax	(1,936)					(1,936)
Common stock issued (retired), net		(185)
Stock-based compensation expense			463,469
Adoption of new authoritative guidance relating to uncertain tax benefits effective January 1, 2007					0
Foreign currency translation adjustment, net of tax	250,896					250,896
Tax benefits from stock-based awards			6,860
Tax withholdings related to net share settlements of restricted stock awards			(68,344)	(4,780)
Debt conversions			0
Retirement of treasury stock			(1,516,895)	5,268,377	(3,751,274)
Adoption of new authoritative guidance relating to convertible debt instruments			0		0
Other			(1,012)
Common stock and restricted stock issued (in shares)		22,227
Repurchases of common stock (in shares)		(7,409)
Debt conversions (in shares)		0
Tax withholdings related to net share settlements of restricted stock awards (in shares)		(303)
Balance, end of year at Dec. 31, 2009	$ 12,493,320	$ 1,410	$ 10,640,367	$ (117,331)	$ 1,599,638	$ 369,236	$ 12,493,320
Balance (in shares), end of year at Dec. 31, 2009		1,406,075

THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2009

THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 1 THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company. Yahoo! Inc., together with its consolidated subsidiaries (“Yahoo!” or the “Company”), 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!’s vision is to be the center of people’s online lives by delivering personally relevant, meaningful Internet experiences. To users, the Company provides online properties and services (“Yahoo! Properties” or our “Owned and Operated sites”). To advertisers, the Company provides a range of marketing services designed to reach and connect with users of its Owned and Operated sites, as well as with Internet users beyond Yahoo! Properties, through a distribution network of third-party entities (“Affiliates”) that have integrated its advertising offerings into their Websites, referred to as Affiliate sites, or their other offerings. The Company believes that its marketing services enable advertisers to deliver highly relevant marketing messages to their target audiences. The Company generates revenues by providing marketing services to advertisers across a majority of Yahoo! Properties and Affiliate sites. Additionally, although many of the services the Company provides to users are free, Yahoo! does charge fees for a range of premium services.

Basis of Presentation. The consolidated financial statements include the accounts of Yahoo! Inc. and its majority-owned or otherwise controlled subsidiaries. Effective January 1, 2009, the Company adopted Financial Accounting Standards Board (“FASB”) authoritative guidance requiring that a noncontrolling interest held by others in a subsidiary be part of the equity of the controlling group and reported on the balance sheet within the equity section as a distinct item separate from the Company’s equity. In accordance with this guidance, minority interests have been re-captioned to noncontrolling interests and reported separately in equity for 2009 and prior periods. All significant intercompany accounts and transactions have been eliminated. Investments in entities in which the Company can exercise significant influence, but does not own a majority equity interest or otherwise control, are accounted for using the equity method and are included as investments in equity interests on the consolidated balance sheets. The Company has included the results of operations of acquired companies from the date of acquisition. Certain prior year amounts have been reclassified to conform to the current year presentation. Effective July 1, 2009, the Company adopted the Accounting Standards Codification^TM (the “Codification”), as issued by the FASB. The Codification became the single source of authoritative generally accepted accounting principles (“GAAP”) in the U.S.

The preparation of consolidated financial statements in conformity with GAAP in the U.S. requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to uncollectible receivables, the useful lives of long-lived assets including property and equipment, investment fair values, stock-based compensation, goodwill and other intangible assets, income taxes, contingencies, and restructuring charges. The Company bases its estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Actual results may differ from these estimates.

Revenue Recognition. The Company’s revenues are derived principally from services, which comprise marketing services for advertisers and publishers and offerings to users. The Company classifies these revenues as marketing services and fees.

In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the related fee is reasonably assured. The Company accounts for cash consideration given to customers, for which it does not receive a separately identifiable benefit or cannot reasonably estimate fair value, as a reduction of revenue rather than as an expense. Cash consideration received in an arrangement with a provider may require consideration of classification of amounts received as revenue or a reimbursement of costs incurred. Additionally, the Company reports revenue for which it is the primary obligor in the arrangement and for which it provided a product or service at the gross amount.

Marketing services revenues are generated from several offerings including the display of graphical advertisements (“display advertising”), the display of text-based links to an advertiser’s Website (“search advertising”), listing-based services, and commerce-based transactions.

The Company recognizes revenues from display advertising on Yahoo! Properties as “impressions” are delivered. An “impression” is delivered when an advertisement appears in pages viewed by users. Arrangements for these services generally have terms of up to one year and in some cases the terms may be up to three years. Certain advertising agreements often involve multiple elements (arrangements with more than one deliverable).

The Company also recognizes revenues from search advertising, which are placed on Yahoo! Properties. Search advertising revenue is recognized as “click-throughs” occur. A “click-through” occurs when a user clicks on an advertiser’s listing.

Marketing services revenues also includes listings and transaction revenues. Listings revenues are generated from a variety of consumer and business listings-based services, including access to the Yahoo! HotJobs database and classified advertising such as Yahoo! Autos, Yahoo! Real Estate, and other services. The Company recognizes listings revenues when the services are performed. Transaction revenues are generated from facilitating commercial transactions through Yahoo! Properties, principally from Small Business, Yahoo! Travel and Yahoo! Shopping. The Company recognizes transaction revenues when there is evidence that qualifying transactions have occurred (for example, when travel arrangements are booked through Yahoo! Travel).

In addition to delivering search and display advertising on Yahoo! Properties, the Company also generates revenues from search and/or display advertising offerings on Affiliate sites. The Company pays Affiliates for the revenues generated from the display of these advertisements on the Affiliates’ Websites. These payments are called traffic acquisition costs (“TAC”). The revenues derived from these arrangements that involve traffic supplied by Affiliates are reported gross of the payment to Affiliates. These revenues are reported gross due to the fact that the Company is the primary obligor to the advertisers who are the customers of the advertising service.

Fees revenues consist of revenues generated from a variety of consumer and business fee-based services, including Internet broadband services, royalties received from joint venture partners, premium mail, music and personals offerings as well as services for small businesses. The Company recognizes fees revenues when the services are performed.

Current deferred revenue is comprised of contractual billings in excess of recognized revenues and payments received in advance of revenue recognition. Long-term deferred revenue includes amounts received from customers for which services will not be delivered within the next 12 months.

Restructuring Charges. The Company has developed and implemented restructuring initiatives to improve efficiencies across the organization, reduce operating expenses, and better align its resources to market conditions. As a result of these plans, the Company has recorded restructuring charges comprised principally of employee severance and associated termination costs related to the reduction of its workforce, office closures, losses on subleases and contract termination costs. Liabilities for costs associated with an exit or disposal activity are recognized when the liability is incurred, as opposed to when management commits to an exit plan. In addition, (i) liabilities associated with exit and disposal activities are measured at fair value; (ii) one-time termination benefits are expensed at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period; and (iii) costs to terminate a contract before the end of its term are recognized when the entity terminates the contract in accordance with the contract terms. In addition, a portion of the Company’s restructuring costs related to international employees whose termination benefits are recognized when the amount of such termination benefits becomes estimable and payment is probable.

These restructuring initiatives require management to make estimates in several areas including: (i) realizable values of assets made redundant, obsolete or excessive; (ii) expenses for severance and other employee separation costs; and (iii) the ability to generate sublease income, and to terminate lease obligations at the estimated amounts.

Allowance for Doubtful Accounts. The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, the credit quality of its customers, current economic conditions, and other factors that may affect customers’ ability to pay to determine the level of allowance required.

TAC. TAC consist of payments made to Affiliates and payments made to companies that direct consumer and business traffic to Yahoo! Properties. The Company enters into agreements of varying duration that involve TAC. There are generally two economic structures of the Affiliate agreements: fixed payments based on a guaranteed minimum amount of traffic delivered, which often carry reciprocal performance guarantees from the Affiliate or variable payments based on a percentage of the Company’s revenue or based on a certain metric, such as the number of searches or paid clicks. The Company expenses, as cost of revenues, TAC under two different methods. Agreements with fixed payments are expensed ratably over the term the fixed payment covers. Agreements based on a percentage of revenue, number of searches, or other metrics are expensed based on the volume of the underlying activity or revenue multiplied by the agreed-upon price or rate.

Product Development. Product development expenses consist primarily of compensation related expenses (including stock-based compensation expense) incurred for research and development, the development of, enhancements to, and maintenance and operation of Yahoo! Properties, advertising products, technology platforms, and infrastructure. Depreciation expense, third-party technology and development expense, and other operating costs are also included in product development.

Advertising Costs. Advertising production costs are recorded as expense the first time an advertisement appears. Costs of communicating advertising are recorded as expense as advertising space or airtime is used. All other advertising costs are expensed as incurred. Advertising expense totaled approximately $220 million, $190 million, and $197 million for 2007, 2008, and 2009, respectively.

Stock-Based Compensation Expense. The Company recognizes stock-based compensation expense net of an estimated forfeiture rate and therefore only recognizes compensation costs for those shares expected to vest over the service period of the award. Stock-based awards granted on or after January 1, 2006 are valued based on the grant date fair value of these awards; the Company records stock-based compensation expense on a straight-line basis over the requisite service period, generally one to four years.

Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock options, stock price volatility, and the pre-vesting forfeiture rate of stock awards. The Company estimates the expected life of options granted based on historical exercise patterns, which the Company believes are representative of future behavior. The Company estimates the volatility of its common stock on the date of grant based on the implied volatility of publicly traded options on its common stock, with a term of one year or greater. The Company believes that implied volatility calculated based on actively traded options on its common stock is a better indicator of expected volatility and future stock price trends than historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected pre-vesting award forfeiture rate, as well as the probability that performance conditions that affect the vesting of certain awards will be achieved, and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of the Company’s stock-based awards that are granted and cancelled before vesting. If the Company’s actual forfeiture rate is materially different from the Company’s original estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period. Changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the effect of adjusting the forfeiture rate for all current and previously recognized expense for unvested awards is recognized in the period the forfeiture estimate is changed. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment will be made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment will be made to lower the estimated forfeiture rate, which will result in an increase to the expense recognized in the financial statements. See Note 12—“Employee Benefits” for additional information.

The Company uses the “with and without” approach in determining the order in which tax attributes are utilized. As a result, the Company only recognizes a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is realized after all other tax attributes currently available to the Company have been utilized. In addition, the Company accounts for the indirect effects of stock-based awards on other tax attributes, such as the research tax credit, through the statement of income.

Operating and Capital Leases. The Company leases office space and data centers under operating leases and certain data center equipment under a capital lease agreement with original lease periods up to 23 years. Assets acquired under capital leases are amortized over the shorter of the remaining lease term or its estimated useful life which is generally ten to fifteen years. Certain of the lease agreements contain rent holidays and rent escalation provisions. For purposes of recognizing these lease incentives on a straight-line basis over the term of the lease, the Company uses the date of initial possession to begin amortization. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the period of straight-line recognition. For the years ended December 31, 2008 and 2009, the Company expensed approximately $3 million and $5 million of interest, respectively. As of December 31, 2008 and 2009, the Company had a net lease commitment included in capital lease and other long-term liabilities in the consolidated balance sheets of $43 million, respectively.

Income Taxes. Deferred income taxes are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. The Company records a valuation allowance against particular deferred income tax assets if it is more likely than not that those assets will not be realized. The provision for income taxes comprises the Company’s current tax liability and change in deferred income tax assets and liabilities.

Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are in accordance with applicable tax laws. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation, or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties. Income taxes paid were $141 million, $70 million, and $114 million in the years ended December 31, 2007, 2008, and 2009, respectively. Interest paid was not material in any of the years presented. See Note 10—“Income Taxes” for additional information.

Comprehensive Income. Comprehensive income consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that are recorded as an element of stockholders’ equity but are excluded from net income. The Company’s other comprehensive income (loss) is comprised of foreign currency translation adjustments and unrealized gains and losses on marketable debt and equity securities categorized as available-for-sale, as well as the Company’s share of its equity investees’ foreign currency translation adjustments.

Cash and Cash Equivalents, Short and Long-Term Marketable Debt and Equity Securities. The Company invests its excess cash in money market funds, time deposits, and liquid debt instruments of the U.S. and foreign governments and their agencies, U.S. municipalities, and high-credit corporate issuers which are classified as marketable debt securities and cash equivalents. All investments with an original maturity of three months or less are considered cash equivalents. Investments with maturities of less than 12 months from the balance sheet date are classified as current assets. Investments with maturities greater than 12 months from the balance sheet date are classified as long-term assets.

The Company’s marketable debt and equity securities are classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss). Realized gains or losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are reported in other income, net. The Company evaluates the investments periodically for possible other-than-temporary impairment. A decline of fair value below amortized costs of debt securities is considered an other-than-temporary impairment if the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of the entire amortized cost basis. In those instances, an impairment charge equal to the difference between the fair value and the amortized cost basis is recognized in earnings. Regardless of the Company’s intent or requirement to sell a debt security, an impairment is considered other-than-temporary if the Company does not expect to recover the entire amortized cost basis; in those instances, a credit loss equal to the difference between the present value of the cash flows expected to be collected based on credit risk and the amortized cost basis of the debt security is recognized in earnings. The Company has no current requirement or intent to sell its debt securities as of December 31, 2009. The Company expects to recover up to (or beyond) the initial cost of investment for securities held. When assessing other-than-temporary impairment of equity securities, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the Company’s intent to hold the investment for a period of time which may be sufficient for an anticipated recovery in market value, and whether its cash flow needs may require the Company to sell the investment. If appropriate, the Company records impairment charges equal to the amount that the carrying value of an equity security exceeds the estimated fair value of such security as of the evaluation date. In computing realized gains and losses on available-for-sale securities, the Company determines cost based on amounts paid, including direct costs such as commissions to acquire the security, using the specific identification method. During the years ended December 31, 2007 and 2008, gross realized gains and losses on available-for -sale debt and equity securities were not material. During the year ended December 31, 2009 the Company recognized a gain of $42 million, net of tax, in connection with the sale of its investment in Gmarket.

Concentration of Risk. Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents, marketable debt securities, and accounts receivable. The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. A large portion of the Company’s cash is managed by external managers within the guidelines of the Company’s investment policy. The Company’s investment policy addresses the level of credit exposure by limiting the concentration in any one corporate issuer or sector and establishing a minimum allowable credit rating. To manage the risk exposure, the Company maintains its portfolio of cash and cash equivalents and short-term and long-term investments in a variety of fixed income securities, including government, municipal and highly rated corporate debt obligations and money market funds. Accounts receivable are typically unsecured and are derived from revenues earned from customers. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Historically, such losses have been within management’s expectations. As of December 31, 2008 and 2009, no one customer accounted for 10 percent or more of the accounts receivable balance and no one customer accounted for 10 percent or more of the Company’s revenues for 2007, 2008, or 2009.

Property and Equipment. Buildings are stated at cost and depreciated using the straight-line method over the estimated useful lives of 25 years. Leasehold improvements are amortized over the lesser of their expected useful lives and the remaining lease term. Computers and equipment and furniture and fixtures are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally two to five years.

Property and equipment to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets that management expects to hold and use is based on the excess of the carrying value of the asset over its fair value. No impairments of such assets were identified during any of the periods presented.

Internal Use Software and Website Development Costs. The Company capitalized certain internal use software and Website development costs totaling approximately $111 million, $149 million, and $90 million during 2007, 2008, and 2009, respectively. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from one to three years. During 2007, 2008, and 2009, the amortization of capitalized costs totaled approximately $48 million, $81 million, and $128 million, respectively. Capitalized internal use software and Website development costs are included in property and equipment, net. Included in the capitalized amounts above are $16 million, $22 million, and $14 million, respectively, of stock-based compensation expense in the years ended December 31, 2007, 2008, and 2009.

Goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment on an annual basis and between annual tests in certain circumstances. The performance of the goodwill impairment test involves a two-step process. The first step involves comparing the fair value of the Company’s reporting units to their carrying values, including goodwill. The Company’s reporting units are based on geography, either at the operating segment level or one level below operating segments. The fair values of the reporting units are estimated using an average of a market approach and an income approach as this combination is deemed to be the most indicative of the Company’s fair value in an orderly transaction between market participants. In addition, the fair values estimated under these two approaches are validated against each other to ensure consistency. Under the market approach, the Company utilizes publicly-traded comparable company information, specific to the regions in which the reporting units operate, to determine revenue and earnings multiples that are used to value the reporting units adjusted for an estimated control premium. Under the income approach, the Company determines fair value based on estimated future cash flows of each reporting unit discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. The cash flow projections for each reporting unit are based on a five-year forecast of cash flows, derived from the most recent annual financial forecast, and a terminal value based on the Perpetuity Growth Model. The sum of the fair values of the reporting units is reconciled to the Company’s market capitalization adjusted for an estimated control premium. If the carrying value of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed by comparing the carrying value of the goodwill in the reporting unit to its implied fair value. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. See Note 5—“Goodwill” for additional information.

Intangible Assets. Intangible assets are carried at cost and amortized over their estimated useful lives, generally on a straight-line basis over one to eight years. The Company reviews identifiable amortizable intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value.

Investments in Equity Interests. Investments in the common stock of entities in which the Company can exercise significant influence but does not own a majority equity interest or otherwise control are accounted for using the equity method and are included as investments in equity interests on the consolidated balance sheets. The Company records its share of the results of these companies one quarter in arrears within earnings in equity interests on the consolidated statements of income. The Company reviews its investments for other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. Investments identified as having an indication of impairment are subject to further analysis to determine if the impairment is other-than-temporary and this analysis requires estimating the fair value of the investment. The determination of fair value of the investment involves considering factors such as the stock prices of public companies in which the Company has an equity investment, current economic and market conditions, the operating performance of the companies including current earnings trends and forecasted cash flows, and other company and industry specific information.

Foreign Currency. The functional currency of the Company’s international subsidiaries is evaluated on a case-by-case basis and is often the local currency. The financial statements of these subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, historical rates of exchange for equity, and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. In addition, the Company records translation gains (losses) related to its foreign equity method investments in accumulated other comprehensive income (loss). The Company records foreign currency transaction gains and losses, realized and unrealized in other income, net in the consolidated statements of income. The Company recorded approximately $7 million of net gains in 2007, and $25 million and $1 million of net losses in 2008 and 2009, respectively.

Recent Accounting Pronouncements

In October 2009, the FASB amended the accounting standards for multiple deliverable revenue arrangements. The amendment will require the arrangement consideration to be allocated based on the relative selling price for each arrangement deliverable. The selling price for each arrangement deliverable can be established based on vendor specific objective evidence (“VSOE”), third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. The Company is in the process of evaluating the impact of the adoption of this guidance on the Company’s consolidated financial position, cash flows, and results of operations.

BASIC AND DILUTED NET INCOME ATTRIBUTABLE TO YAHOO! COMMON STOCKHOLDERS PER SHARE

12 Months Ended

Dec. 31, 2009

BASIC AND DILUTED NET INCOME ATTRIBUTABLE TO YAHOO! COMMON STOCKHOLDERS PER SHARE

Note 2 BASIC AND DILUTED NET INCOME ATTRIBUTABLE TO YAHOO! COMMON STOCKHOLDERS PER SHARE

Basic and diluted net income per share attributable to Yahoo! common stockholders is computed using the weighted average number of common shares outstanding during the period, excluding net income attributable to participating securities (restricted stock awards granted under the Company’s 1995 Stock Plan and restricted stock units granted under the 1996 Directors’ Stock Plan (the “Directors’ Plan”)) in accordance with authoritative guidance which became effective January 1, 2009 for stock-based awards with non-forfeitable rights to dividends. Accordingly, all prior period earnings per share have been adjusted. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares are calculated using the treasury stock method and consist of unvested restricted stock, shares underlying unvested restricted stock units, the incremental common shares issuable upon the exercise of stock options, and shares to be purchased under the employee stock purchase plan. In addition, potential common shares issuable upon an assumed conversion of the outstanding Notes prior to their maturity and conversion on April 1, 2008 were calculated using the “as if” converted method. These potential common shares were excluded from the denominator for the diluted calculation if including them in the calculation resulted in an increase to earnings per share. In applying the treasury stock method, the Company calculates potential tax windfalls and shortfalls by including the impact of pro forma deferred tax assets.

The Company takes into account the effect on consolidated net income per share of dilutive securities of entities in which the Company holds equity interests that are accounted for using the equity method.

For 2007, 2008, and 2009, potentially dilutive securities representing approximately 128 million, 140 million, and 122 million shares of common stock, respectively, were excluded from the computation of diluted earnings per share for these periods because their effect would have been anti-dilutive.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):


	Years Ended December 31,
	2007			2008			2009
*Basic:*
Numerator:
Net income attributable to Yahoo!	$	639,155		$	418,921		$	597,992
Less: Net income allocated to participating securities		(1,797	)		(435	)		(552	)

Net income attributable to Yahoo! common stockholders—basic	$	637,358		$	418,486		$	597,440

Denominator:
Weighted average common shares		1,338,987			1,369,476			1,397,652

Net income attributable to Yahoo! common stockholders per share—basic	$	0.48		$	0.31		$	0.43


	Years Ended December 31,
	2007			2008			2009
*Diluted:*
Numerator:
Net income attributable to Yahoo!	$	639,155		$	418,921		$	597,992
Less: Net income allocated to participating securities		(1,238	)		(265	)		(54	)
Less: Effect of dilutive securities issued by equity investees		—			(11,501	)		(343	)

Net income attributable to Yahoo! common stockholders—diluted	$	637,917		$	407,155		$	597,595

Denominator:
Denominator for basic calculation		1,338,987			1,369,476			1,397,652
Weighted average effect of Yahoo! dilutive securities:
Restricted stock and restricted stock units		4,785			5,240			10,371
Stock options and ESPP		22,492			16,514			7,635

Denominator for diluted calculation		1,366,264			1,391,230			1,415,658

Net income attributable to Yahoo! common stockholders per share—diluted	$	0.47		$	0.29		$	0.42

ACQUISITIONS

12 Months Ended

Dec. 31, 2009

ACQUISITIONS

Note 3 ACQUISITIONS

The following table summarizes significant acquisitions (including business combinations, asset acquisitions, and strategic investments) completed during the three years ended December 31, 2009 (in millions):


	Purchase Price		Goodwill		Amortizable Intangibles
2007
Right Media	$	524	$	440	$	104
Zimbra	$	303	$	245	$	79
BlueLithium	$	255	$	224	$	42
Other acquisitions	$	169	$	74	$	118
2008
Maven	$	143	$	87	$	65
Other acquisitions	$	97	$	51	$	51
2009
Maktoob	$	164	$	142	$	19
Other acquisitions	$	30	$	16	$	16

Transactions completed in 2007

Right Media. On July 11, 2007, the Company acquired Right Media Inc. (“Right Media”), an online advertising exchange. The Company believed the acquisition of Right Media was an integral piece of the Company’s strategy to build the industry’s leading advertising and publishing network and was a key step in executing the Company’s long-term strategy to change how online advertisers and publishers connect to their audiences in one open advertising community. The purchase price exceeded the fair value of net tangible and identifiable intangible assets acquired from Right Media and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of the agreement, the Company acquired all of the remaining equity interests (including all outstanding options and restricted stock units) in Right Media. Right Media stockholders were paid in approximately equal parts cash and shares of Yahoo! common stock (approximately 8 million shares) and outstanding Right Media options and restricted stock units were assumed. Assumed Right Media options and restricted stock units are exercisable for, or will settle in, shares of Yahoo! common stock. The acquisition followed the Company’s 20 percent investment in Right Media in October 2006.

The total purchase price of $524 million consisted of $245 million in cash consideration, $236 million in equity consideration, $40 million for the initial 20 percent investment, and $3 million of direct transaction costs. The $245 million of total cash consideration less cash acquired of $16 million resulted in a net cash outlay of $229 million. In connection with the acquisition, the Company issued stock-based awards valued at $177 million which is being recognized as stock-based compensation expense as the awards vest over a period of up to four years.

The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows (in thousands):


Cash acquired	$	15,508
Other tangible assets acquired		25,542
Deferred tax assets		8,422
Amortizable intangible assets:
Customer contracts and related relationships		42,300
Developed technology and patents		42,400
Trade name, trademark, and domain name		19,200
Goodwill		440,095

Total assets acquired		593,467
Liabilities assumed		(27,700	)
Deferred income taxes		(41,560	)

Total	$	524,207

The amortizable intangible assets have useful lives not exceeding seven years and a weighted average useful life of six years. No amounts have been allocated to in-process research and development and $440 million has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and is not deductible for tax purposes. The goodwill recorded in connection with this acquisition is included in the U.S. segment.

Zimbra. On October 4, 2007, the Company acquired Zimbra, Inc. (“Zimbra”), a provider of e-mail and collaboration software. The Company believed the acquisition of Zimbra further strengthened its position in Web mail and expanded the Company’s presence in universities, small and medium businesses, and service provider partners. The purchase price exceeded the fair value of net tangible and identifiable intangible assets acquired from Zimbra and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of the agreement, the Company acquired all of the equity interests (including all outstanding options and restricted stock units) in Zimbra. Zimbra stockholders were paid in cash and outstanding Zimbra options and restricted stock units were assumed. Assumed Zimbra options and restricted stock units are exercisable for, or will settle in, shares of Yahoo! common stock.

The total purchase price of $303 million consisted of $290 million in cash consideration, $11 million in equity assumed/exchanged, and $2 million of direct transaction costs. The $290 million of total cash consideration less cash acquired of $11 million resulted in a net cash outlay of $279 million. In connection with the acquisition, the Company issued stock-based awards valued at $38 million which is being recognized as stock-based compensation expense as the awards vest over a period of up to four years.

The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows (in thousands):


Cash acquired	$	10,663
Other tangible assets acquired		18,519
Amortizable intangible assets:
Customer contracts and related relationships		13,200
Developed technology and patents		65,400
Trade name, trademark, and domain name		700
Goodwill		244,655

Total assets acquired		353,137
Liabilities assumed		(18,910	)
Deferred income taxes		(31,720	)

Total	$	302,507

The amortizable intangible assets have useful lives not exceeding seven years and a weighted average useful life of four years. No amounts have been allocated to in-process research and development and $245 million has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and is not deductible for tax purposes. The goodwill recorded in connection with this acquisition is included in the U.S. segment.

In February 2010, the Company sold its Zimbra, Inc. business. Assets and liabilities sold were not material as of December 31, 2009 and their carrying value did not exceed the selling price.

BlueLithium. On October 15, 2007, the Company acquired BlueLithium, Inc. (“BlueLithium”), an online global advertising network. The Company believed that BlueLithium complements the Company’s leading advertising tools and capabilities. The purchase price exceeded the fair value of the net tangible and identifiable intangible assets acquired from BlueLithium and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of the agreement, the Company acquired all of the equity interests (including all outstanding options and restricted stock units) in BlueLithium. BlueLithium stockholders were paid in cash and outstanding BlueLithium options and restricted stock units were assumed. Assumed BlueLithium options and restricted stock units will be exercisable for, or will settle in, shares of Yahoo! common stock.

The total purchase price of $255 million consisted of $245 million in cash consideration, $8 million in equity assumed/exchanged, and $2 million of direct transaction costs. The $245 million of total cash consideration less cash acquired of $10 million resulted in a net cash outlay of $235 million. In connection with the acquisition, the Company issued stock-based awards valued at $47 million which is being recognized as stock-based compensation expense as the awards vest over a period of up to four years.

The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows (in thousands):


Cash acquired	$	10,235
Other tangible assets acquired		13,416
Amortizable intangible assets:
Customer contracts and related relationships		30,300
Developed technology and patents		11,000
Trade name, trademark, and domain name		100
In-process research and development		200
Goodwill		224,385

Total assets acquired		289,636
Liabilities assumed		(17,947	)
Deferred income taxes		(16,640	)

Total	$	255,049

The amortizable intangible assets have useful lives not exceeding six years and a weighted average useful life of five years. The Company allocated $224 million to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and is not deductible for tax purposes. The goodwill recorded in connection with this acquisition is included in the U.S. ($142 million) and International ($82 million) segments.

Other Acquisitions—Business Combinations. During the year ended December 31, 2007, the Company acquired two other companies which were accounted for as business combinations. The total purchase price for these acquisitions was $108 million and consisted of $106 million in cash consideration and $2 million of direct transaction costs. The total cash consideration of $106 million less cash acquired of $5 million resulted in a net cash outlay of $101 million. Of the purchase price, $74 million was allocated to goodwill, $33 million to amortizable intangible assets, $5 million to tangible assets, $5 million to cash acquired, and $9 million to net assumed liabilities. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and is not deductible for tax purposes.

Other Acquisitions—Asset Acquisitions. During the year ended December 31, 2007, the Company acquired five companies which were accounted for as asset acquisitions. The total purchase price for these acquisitions was $61 million and consisted of $23 million in cash consideration, $35 million in equity consideration, $2 million of assumed liabilities, and $1 million of direct transaction costs. The total cash consideration of $23 million less cash acquired of $3 million resulted in a net cash outlay of $20 million. For accounting purposes, approximately $85 million was allocated to amortizable intangible assets, $29 million to net assumed liabilities, primarily deferred income tax liabilities, $2 million to tangible assets, and $3 million to cash acquired. In connection with these acquisitions, the Company also issued stock-based awards valued at $19 million that will be recognized as stock-based compensation expense over the next three years.

The results of operations for Right Media, Zimbra, BlueLithium, and certain other business combinations have been included in the Company’s consolidated statements of operations since the completion of the acquisitions during the year ended December 31, 2007. The following unaudited pro forma financial information presents the combined results of the Company and the 2007 acquisitions as if the acquisitions had occurred at the beginning of 2007 (in thousands, except per share amounts):


	Year Ended December 31, 2007
Net revenues	$	7,054,888
Net income attributable to Yahoo!	$	491,013
Net income attributable to Yahoo! common stockholders per share—basic	$	0.37
Net income attributable to Yahoo! common stockholders per share—diluted	$	0.36

The above unaudited pro forma financial information includes adjustments for interest income on cash disbursed for the acquisitions, amortization of identifiable intangible assets, stock-based compensation expense, and related tax effects.

Transactions completed in 2008

Maven. On February 11, 2008, the Company acquired Maven Networks, Inc. (“Maven”), a leading online video platform provider. The Company believed that Maven assisted the Company in expanding state-of-the-art consumer video and advertising experiences on Yahoo! and the Company’s network of video publishers across the Web. The purchase price exceeded the fair value of the net tangible and identifiable intangible assets acquired from Maven and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of the agreement, the Company acquired all of the equity interests (including all outstanding options and restricted stock units) in Maven. Maven stockholders were paid in cash and outstanding Maven options and restricted stock units were assumed. Assumed Maven options and restricted stock units are exercisable for, or will settle in, shares of Yahoo! common stock.

The total purchase price of $143 million consisted of $141 million in cash consideration and $2 million of direct transaction costs. In connection with the acquisition, the Company issued stock-based awards valued at $21 million which is being recognized as stock-based compensation expense as the awards vest over a period of up to four years.

The allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows (in thousands):


Cash acquired	$	257
Other tangible assets acquired		16,869
Amortizable intangible assets:
Customer contracts and related relationships		7,100
Developed technology and patents		57,100
Trade name, trademark, and domain name		1,200
Goodwill		87,404

Total assets acquired		169,930
Liabilities assumed		(3,628	)
Deferred income taxes		(23,485	)

Total	$	142,817

The amortizable intangible assets have useful lives not exceeding six years and a weighted average useful life of five years. No amounts have been allocated to in-process research and development and $87 million has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and is not deductible for tax purposes. The goodwill recorded in connection with this acquisition is primarily included in the U.S. segment.

Other Acquisitions—Business Combinations. During the year ended December 31, 2008, the Company acquired two other companies, which were accounted for as business combinations. The total purchase price for these acquisitions was $71 million and consisted of $68 million in cash consideration and $3 million of direct transaction costs. The total cash consideration of $68 million less cash acquired of $25 million resulted in a net cash outlay of $43 million. Of the purchase price, $51 million was allocated to goodwill, $15 million to amortizable intangible assets, $9 million to tangible assets, $25 million to cash acquired, and $30 million to net assumed liabilities. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and is not deductible for tax purposes.

Other Acquisitions—Asset Acquisitions. During the year ended December 31, 2008, the Company acquired one company, which was accounted for as an asset acquisition. The total purchase price was $26 million and consisted of $25 million in cash consideration, and $1 million of direct transaction costs. For accounting purposes, approximately $36 million was allocated to amortizable intangible assets and $10 million to net assumed liabilities, primarily deferred income tax liabilities. In connection with the acquisition, the Company also issued stock-based awards valued at approximately $4 million which is being recognized as stock-based compensation expense as the awards vest over a period of up to three years.

The Company’s business combinations completed in 2008 do not have a material impact on the Company’s results of operations, and therefore pro forma disclosures have not been presented.

Transactions completed in 2009

Maktoob. On November 11, 2009, the Company acquired Maktoob.com, Inc. (“Maktoob”), a leading online portal in the Middle East. The Company believes the acquisition of Maktoob will accelerate the Company’s growth in the Middle East through Maktoob’s existing strong position in the region and the ability to deliver users a compelling local experience by combining Maktoob’s experienced team with Yahoo!’s scalable technology and products. The purchase price exceeded the fair value of the net tangible and identifiable intangible assets acquired from Maktoob and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of the agreement, the Company acquired all of the equity interests (including all outstanding options) in Maktoob. Maktoob stockholders and vested optionholders were paid in cash, and outstanding Maktoob unvested options were assumed. Assumed options are exercisable for shares of Yahoo! common stock.

The total purchase price of $164 million consisted of cash consideration. In connection with the acquisition, the Company issued stock-based awards valued at $1 million which is being recognized as stock-based compensation expense as the awards vest over a period of up to two years.

The preliminary allocation of the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows (in thousands):


Cash acquired	$	789
Other tangible assets acquired		6,986
Amortizable intangible assets:
Customer contracts and related relationships		1,900
Developed technology and patents		13,100
Trade name, trademark, and domain name		4,400
Goodwill		142,056

Total assets acquired		169,231
Liabilities assumed		(4,794	)

Total	$	164,437

The amortizable intangible assets have useful lives not exceeding five years and a weighted average useful life of five years. No amounts have been allocated to in-process research and development and $142 million has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and is not deductible for tax purposes. The goodwill recorded in connection with this acquisition is included in the International segment.

Other Acquisitions—Business Combinations. During the year ended December 31, 2009, the Company acquired two other companies, which were accounted for as business combinations. The total purchase price for these acquisitions was $30 million. The total cash consideration of $30 million less cash acquired of $2 million resulted in a net cash outlay of $28 million. Of the purchase price, $16 million was allocated to goodwill, $16 million to amortizable intangible assets, $2 million to tangible assets, $2 million to cash acquired, and $6 million to net assumed liabilities. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and is not deductible for tax purposes.

The Company’s business combinations completed in 2009 did not have a material impact on the Company’s results of operations, and therefore pro forma disclosures have not been presented.

INVESTMENTS IN EQUITY INTERESTS

12 Months Ended

Dec. 31, 2009

INVESTMENTS IN EQUITY INTERESTS

Note 4 INVESTMENTS IN EQUITY INTERESTS

As of December 31, investments in equity interests consisted of the following (dollars in thousands):


	2008		2009		Percent Ownership of Common Stock
Alibaba Group	$	2,216,659	$	2,167,007	44	%
Alibaba.com		51,999		—	0	%
Yahoo Japan		905,672		1,329,281	35	%
Other		3,115		—

Total	$	3,177,445	$	3,496,288

Equity Investment in Alibaba Group. On October 23, 2005, the Company acquired approximately 46 percent of the outstanding common stock of Alibaba Group, which represented approximately 40 percent on a fully diluted basis, in exchange for $1.0 billion in cash, the contribution of the Company’s China-based businesses, including 3721 Network Software Company Limited (“Yahoo! China”), and direct transaction costs of $8 million. Pursuant to the terms of a shareholder agreement, the Company has an approximate 35 percent voting interest in Alibaba Group, with the remainder of its voting rights subject to a voting agreement with Alibaba Group management. Other investors in Alibaba Group include SOFTBANK. Alibaba Group is a privately-held company. Through its investment in Alibaba Group, the Company has combined its search capabilities with Alibaba Group’s leading online marketplace and online payment system and Alibaba Group’s strong local presence, expertise, and vision in the China market. These factors contributed to a purchase price in excess of the Company’s share of the fair value of Alibaba Group’s net tangible and intangible assets acquired resulting in goodwill.

The investment in Alibaba Group is being accounted for using the equity method, and the total investment, including net tangible assets, identifiable intangible assets and goodwill, is classified as part of investments in equity interests on the Company’s consolidated balance sheets. The Company records its share of the results of Alibaba Group and any related amortization expense, one quarter in arrears, within earnings in equity interests in the consolidated statements of income.

The Company’s initial purchase price was based on acquiring a 40 percent equity interest in Alibaba Group on a fully diluted basis; however, the Company acquired a 46 percent interest based on outstanding shares. In allocating the initial excess of the carrying value of the investment in Alibaba Group over its proportionate share of the net assets of Alibaba Group, the Company allocated a portion of the excess to goodwill to account for the estimated reductions in the carrying value of the investment in Alibaba that may occur as the Company’s equity interest is diluted to 40 percent. As of December 31, 2008 and 2009, the Company’s ownership interest in Alibaba Group was approximately 44 percent.

In the initial public offering (“IPO”) of Alibaba.com on November 6, 2007, Alibaba Group sold an approximate 27 percent interest in Alibaba.com through the issuance of new Alibaba.com shares, the sale of previously held shares in Alibaba.com, and the exchange of certain Alibaba Group shares previously held by Alibaba Group employees for shares in Alibaba.com, resulting in a gain on disposal of interests in Alibaba.com. Accordingly, in the first quarter of 2008, the Company recorded a non-cash gain of $401 million, net of tax, within earnings in equity interests representing the Company’s share of Alibaba Group’s gain, and the Company’s ownership interest in Alibaba Group increased approximately 1 percent from 43 percent to 44 percent.

The Company also recognizes non-cash gains when dilution to its ownership interest in Alibaba Group occurs as these reductions in ownership interest are treated as incremental sales of additional equity interests in Yahoo! China. The Company previously recorded a non-cash gain of approximately $8 million during the year ended December 31, 2007 as a result of the exercise of Alibaba Group’s employee stock options described above. This gain was recorded in other income; net, to account for an approximate 1 percent reduction in the Company’s ownership interest in Alibaba Group from 44 percent in 2006 to 43 percent in 2007. Non-cash gains were not recognized in 2008 and 2009 as the Company’s ownership interest in Alibaba did not decrease from the Company’s 2007 ownership level.

As of December 31, 2009 the difference between the Company’s carrying value of its investment in Alibaba Group and its proportionate share of the net assets of Alibaba Group is summarized as follows (in thousands):


Carrying value of investment in Alibaba Group	$	2,167,007
Proportionate share of Alibaba Group stockholders’ equity		1,649,710

Excess of carrying value of investment over proportionate share of Alibaba Group’s stockholders’ equity	$	517,297

The excess carrying value has been primarily assigned to:
Goodwill	$	497,186
Amortizable intangible assets		20,213
Deferred income taxes		(102	)

Total	$	517,297

The amortizable intangible assets have useful lives not exceeding seven years and a weighted average useful life of approximately five years. No amount has been allocated to in-process research and development. Goodwill is not deductible for tax purposes.

The following table presents Alibaba Group’s U.S. GAAP financial information, as derived from the Alibaba Group financial statements (in thousands):


	Twelve Months Ended September 30,
	2007			2008			2009
Operating data:
Revenues	$	290,193		$	456,808		$	730,336
Gross profit	$	208,476		$	317,139		$	537,974
Loss from operations⁽¹⁾	$	(59,582	)	$	(236,017	)	$	(39,460	)
Net (loss) income⁽²⁾	$	(58,860	)	$	1,909,009		$	(19,932	)
Net (loss) income attributable to Alibaba Group⁽²⁾	$	(58,860	)	$	1,870,093		$	(57,346	)


	September 30, 2008		September 30, 2009
Balance sheet data:
Current assets	$	2,585,369	$	3,191,097
Long-term assets	$	2,193,374	$	2,308,099
Current liabilities	$	821,174	$	1,562,583
Long-term liabilities	$	20,131	$	24,082
Noncontrolling interests	$	187,570	$	184,180

⁽¹⁾	The loss from operations of $236 million for the twelve months ended September 30, 2008 is primarily due to Alibaba Group’s impairment loss on goodwill and intangible assets for which the Company has no basis in its investment balance.

⁽²⁾	The net income of $1.9 billion for the twelve months ended September 30, 2008 is primarily due to Alibaba Group’s sale of an approximate 27 percent ownership in Alibaba.com from Alibaba.com’s IPO.

Since acquiring its interest in Alibaba Group, the Company has recorded, in retained earnings, cumulative earnings in equity interests of $333 million and $308 million, respectively as of December 31, 2008 and 2009.

The Company also has commercial arrangements with Alibaba Group to provide technical, development, and advertising services. For the years ended December 31, 2008 and 2009, these transactions were not material.

Equity Investment in Alibaba.com Limited. As part of the IPO of Alibaba.com, the Company purchased an approximate 1 percent interest in the common stock of Alibaba.com. This investment was accounted for using the equity method, consistent with the Company’s investment in Alibaba Group, which holds the controlling interest in Alibaba.com. In September 2009, the Company sold its direct investment in Alibaba.com for net proceeds of $145 million and recorded a pre-tax gain of $98 million ($60 million after tax) in other income, net.

Equity Investment in Yahoo Japan. During April 1996, the Company signed a joint venture agreement with SOFTBANK, which was amended in September 1997, whereby Yahoo Japan Corporation (“Yahoo Japan”) was formed. Yahoo Japan was formed to establish and manage a local version of Yahoo! in Japan. The fair value of the Company’s approximate 35 percent ownership in the common stock of Yahoo Japan, based on the quoted stock price, was approximately $6 billion as of December 31, 2009.

The investment in Yahoo Japan is being accounted for using the equity method and the total investment, including net tangible assets, identifiable intangible assets and goodwill, is classified as part of the investments in equity interests balance on the Company’s consolidated balance sheets. The Company records its share of the results of Yahoo Japan and any related amortization expense, one quarter in arrears, within earnings in equity interests in the consolidated statements of income.

As of December 31, 2009, the Company’s ownership interest in Yahoo Japan was approximately 35 percent compared to 34 percent as of December 31, 2008. The 1 percent increase is primarily due to share repurchases undertaken by Yahoo Japan on the open market. The Company’s proportionate share of Yahoo Japan’s total share repurchase amount in excess of its book value was approximately $238 million and has been primarily allocated to goodwill. Prior to and during 2001, Yahoo Japan acquired the Company’s equity interests in certain entities in Japan for total consideration of approximately $65 million, paid partially in shares of Yahoo Japan common stock and partially in cash. As a result of the acquisition, the Company increased its investment in Yahoo Japan, which resulted in approximately $41 million of goodwill. The carrying value of the Company’s investment in Yahoo Japan differs from the amount of the underlying equity in net assets of Yahoo Japan primarily as a result of the goodwill resulting from these transactions. Goodwill is not deductible for tax purposes.

During the years ended December 31, 2007, 2008 and 2009, the Company received cash dividends from Yahoo Japan in the amounts of $15 million, $19 million, and $26 million, net of tax, respectively, which were recorded as reductions in the Company’s investment in Yahoo Japan.

The following table presents Yahoo Japan’s financial information, as derived from the Yahoo Japan financial statements (in thousands):


	Twelve Months Ended September 30,
	2007		2008		2009
Operating data:
Revenues	$	1,933,114	$	2,697,518	$	3,172,106
Gross profit	$	1,836,169	$	2,298,364	$	2,652,513
Income from operations	$	983,844	$	1,217,895	$	1,443,374
Net income	$	512,023	$	659,867	$	813,759
Net income attributable to Yahoo Japan	$	507,850	$	653,132	$	810,059


	September 30,
	2008		2009
Balance sheet data:
Current assets	$	1,202,164	$	1,599,624
Long-term assets	$	1,923,195	$	2,395,863
Current liabilities	$	778,110	$	997,722
Long-term liabilities	$	189,719	$	3,556
Noncontrolling interests	$	25,665	$	26,662

The differences between U.S. GAAP and accounting principles generally accepted in Japan, the standards by which Yahoo Japan’s financial statements are prepared, did not materially impact the amounts reflected in the Company’s consolidated financial statements.

Since acquiring its equity interest in Yahoo Japan, the Company has recorded cumulative earnings in equity interests, net of dividends received and related taxes, of $801 million and $1.1 billion as of December 31, 2008 and 2009, respectively.

During the year ended December 31, 2007, the Company completed the sale of Overture Japan to Yahoo Japan for cash consideration of approximately $19 million. The transaction was accounted for as a sale of assets. In connection with the transaction, the Company recorded a pre-tax gain of $6 million in other income, net.

On September 1, 2007, the Company commenced a new commercial arrangement with Yahoo Japan in which the Company provides search marketing services to Yahoo Japan for a service fee and exited the pre-existing commercial arrangement. Previously, the Company earned marketing services revenues from advertisers and paid TAC to Yahoo Japan. The Company no longer recognizes marketing services revenues and TAC for the delivery of sponsored search results and payments to Affiliates in Japan as Yahoo Japan is responsible for the fulfillment of all advertiser and Affiliate services. Under this new arrangement, the Company records marketing services revenues from Yahoo Japan for the provision of search marketing services based on a percentage of advertising revenues earned by Yahoo Japan for the delivery of sponsored search results. In addition to marketing services revenues, the Company continues to record revenues from license fees from Yahoo Japan. The prior commercial arrangement resulted in net costs of approximately $135 million for the year ended December 31, 2007. The new arrangement resulted in revenues of approximately $296 million and $303 million, respectively, for the years ended December 31, 2008 and 2009. As of December 31, 2008 and 2009, the Company had net receivable balances from Yahoo Japan of approximately $39 million and $41 million, respectively.

- Definition

Equity investment disclosure, or group of investments for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20% of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

+ References+ Details

CONSOLIDATED FINANCIAL STATEMENT DETAILS

12 Months Ended

Dec. 31, 2009

CONSOLIDATED FINANCIAL STATEMENT DETAILS

Note 7 CONSOLIDATED FINANCIAL STATEMENT DETAILS

Other income, net

Other income, net for 2007, 2008, and 2009 were as follows (in thousands):


	Years Ended December 31,
	2007			2008			2009
Interest and investment income	$	129,541		$	86,056		$	22,116
Investment gains (losses), net		1,730			(351	)		3,702
Gain on divestiture of Yahoo! China⁽¹⁾		8,066			—			—
Gain on sale of Overture Japan⁽¹⁾		6,175			—			—
Gain on sale of Kelkoo SAS		—			25,149			—
Gain on sales of marketable equity securities		—			—			164,851
Imputed interest on convertible debt⁽²⁾		(35,240	)		(9,088	)		—
Other		8,499			(28,016	)		(3,141	)

Total other income, net	$	118,771		$	73,750		$	187,528

⁽¹⁾	See Note 4—“Investments in Equity Interests” for additional information related to the gains on the divestiture of Yahoo! China and sale of Overture Japan.

⁽²⁾	See Note 9—“Debt” for additional information related to the retrospective adoption of new authoritative guidance on convertible debt instruments effective in 2009.

Interest and investment income consist of income earned from cash in bank accounts and investments made in marketable debt securities and money market funds.

Investment gains (losses), net includes realized gains and losses related to sales of marketable debt securities as well as any declines in the values of such investments judged to be other-than-temporary.

During the year ended December 31, 2008, the Company completed the sale of Kelkoo SAS and recorded a pre-tax gain of approximately $25 million in other income, net. The transaction was accounted for as a sale of a business.

Gains on sales of marketable equity securities include gains from sales of publicly traded companies. In May 2009, the Company sold all of its Gmarket shares for net proceeds of $120 million. The Company recorded a pre-tax gain of $67 million ($42 million after tax) in connection with the Company’s sale of its Gmarket shares. In September 2009, the Company sold its direct investment in Alibaba.com for net proceeds of $145 million. The Company recorded a pre-tax gain of $98 million ($60 million after tax) in connection with the Company’s sale of its Alibaba.com shares.

Other consists primarily of foreign exchange gains and losses due to re-measurement of assets and liabilities denominated in non-functional currencies.

Prepaid expenses and other current assets

As of December 31, prepaid expenses and other current assets consisted of the following (in thousands):


	2008		2009
Prepaid expenses	$	70,084	$	74,409
Deferred income taxes (Note 10)		143,131		201,614
Other		19,846		24,302

Total prepaid expenses and other current assets	$	233,061	$	300,325

Property and equipment, net

As of December 31, property and equipment, net consisted of the following (in thousands):


	2008			2009
Land	$	170,949		$	170,949
Buildings		256,131			256,215
Leasehold improvements		220,305			304,421
Computers and equipment⁽¹⁾		1,384,000			1,844,776
Furniture and fixtures		67,886			62,685
Assets not yet in use		206,216			142,899

		2,305,487			2,781,945
Less: accumulated depreciation and amortization⁽²⁾		(769,306	)		(1,355,083	)

Total property and equipment, net	$	1,536,181		$	1,426,862

⁽¹⁾	Includes data center equipment acquired under a capital lease of approximately $43 million as of both December 31, 2008 and 2009.

⁽²⁾	Includes $2 million and $6 million of accumulated depreciation related to the capital lease as of December 31, 2008 and 2009, respectively.

Other long-term assets

As of December 31, other long-term assets consisted of the following (in thousands):


	2008		2009
Deferred income taxes (Note 10)	$	36,821	$	74,299
Investments in privately-held companies		38,428		44,220
Investments in publicly-held companies		86,629		2,597
Other		72,111		73,817

Total other long-term assets	$	233,989	$	194,933

Accrued expenses and other current liabilities

As of December 31, accrued expenses and other current liabilities consisted of the following (in thousands):


	2008		2009
Accrued content, connection, traffic acquisition, and other costs	$	374,920	$	356,462
Deferred income taxes (Note 10)		865		2,622
Accrued compensation and related expenses		318,958		337,387
Accrued taxes payable		23,194		59,515
Accrued professional service expenses		77,032		56,684
Accrued sales and marketing related expenses		44,335		52,484
Accrued restructuring costs		82,268		45,936
Current liability for uncertain tax contingencies		5,519		53,858
Other		212,803		204,867

Total accrued expenses and other current liabilities	$	1,139,894	$	1,169,815

Deferred and other long-term tax liabilities, net

As of December 31, deferred and other long-term tax liabilities, net consisted of the following (in thousands):


	2008		2009
Deferred income taxes	$	68,097	$	59,473
Tax contingency accruals(*)		352,275		434,622

Total deferred and other long-term tax liabilities, net (Note 10)	$	420,372	$	494,095

(*)	Includes interest and penalties.

Accumulated other comprehensive income

As of December 31, the components of accumulated other comprehensive income were as follows (in thousands):


	2008		2009
Unrealized gains and losses on available-for-sale securities, net of tax	$	6,857	$	4,921
Foreign currency translation, net of tax		113,419		364,315

Accumulated other comprehensive income	$	120,276	$	369,236

INVESTMENTS

12 Months Ended

Dec. 31, 2009

INVESTMENTS

Note 8 INVESTMENTS

The following tables summarize the investments in available-for-sale securities (in thousands):


	December 31, 2008
	Gross Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government and agency securities	$	935,025	$	1,602	$	—		$	936,627
Municipal bonds		47,687		55		—			47,742
Corporate debt securities and commercial paper		247,554		739		(2,985	)		245,308
Corporate equity securities(*)		68,745		17,884		—			86,629

Total investments in available-for-sale securities	$	1,299,011	$	20,280	$	(2,985	)	$	1,316,306


	December 31, 2009
	Gross Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Government and agency securities	$	1,781,674	$	868	$	(1,825	)	$	1,780,717
Municipal bonds		465,823		739		(3	)		466,559
Corporate debt securities, commercial paper, and bank certificates of deposit		995,291		1,305	$	(1,298	)		995,298
Corporate equity securities		2,597		—		—			2,597

Total investments in available-for-sale securities	$	3,245,385	$	2,912	$	(3,126	)	$	3,245,171


	December 31,
	2008		2009
Reported as:
Short-term marketable debt securities	$	1,159,691	$	2,015,655
Long-term marketable debt securities		69,986		1,226,919
Other assets(*)		86,629		2,597

Total	$	1,316,306	$	3,245,171

(*)	As of December 31, 2008 these balances include the Company’s investment in Gmarket, which was included as part of other long-term assets in the consolidated balance sheet. The Company sold all of its Gmarket shares in May 2009.

Available-for-sale securities included in cash and cash equivalents on the consolidated balance sheets are not included in the table above as the gross unrealized gains and losses were immaterial for both 2008 and 2009 as the carrying value approximates fair value because of the short maturity of those instruments.

The contractual maturities of available-for-sale marketable debt securities were as follows (in thousands):


	December 31,
	2008		2009
Due within one year	$	1,159,691	$	2,015,655
Due after one year through five years		69,986		1,226,919

Total available-for-sale marketable debt securities	$	1,229,677	$	3,242,574

The following tables show all investments in an unrealized loss position for which an other-than-temporary impairment has not been recognized and the related gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):


	December 31, 2008
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Total investments in available-for-sale securities(*)	$	72,585	$	(2,521	)	$	18,640	$	(464	)	$	91,225	$	(2,985	)

(*)	Consists of corporate debt securities.


	December 31, 2009
	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Government and agency securities	$	886,657	$	(1,825	)	$	—	$	—	$	886,657	$	(1,825	)
Municipal bonds		8,760		(3	)		—		—		8,760		(3	)
Corporate debt securities and commercial paper		352,031		(1,298	)		—		—		352,031		(1,298	)

Total investments in available-for-sale securities	$	1,247,448	$	(3,126	)	$	—	$	—	$	1,247,448	$	(3,126	)

The Company’s investment portfolio consists of liquid high-quality fixed income government, agency, municipal, corporate debt securities, money market funds, and term deposits with financial institutions. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Fixed income securities may have their fair market value adversely impacted due to a deterioration of the credit quality of the issuer. The longer the term of the securities, the more susceptible they are to changes in market rates. Investments are reviewed periodically to identify possible other-than-temporary impairment. The Company has no current requirement or intent to sell these securities. The Company expects to recover up to (or beyond) the initial cost of investment for securities held.

The FASB’s authoritative guidance on fair value measurements establishes a framework for measuring fair value and requires disclosures about fair value measurements by establishing a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Basis of Fair Value Measurement


Level 1		Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2		Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3		Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy as of December 31, 2008 (in thousands):


	Fair Value Measurements at Reporting Date Using
Assets	Level 1		Level 2		Total
Money market funds⁽¹⁾	$	1,024,633	$	—	$	1,024,633
Available-for-sale securities:
U.S. Government and agency securities⁽¹⁾		—		1,274,388		1,274,388
Municipal bonds⁽¹⁾		—		52,816		52,816
Asset-backed securities ⁽¹⁾		—		8,933		8,933
Commercial paper⁽¹⁾		—		460,933		460,933
Corporate debt securities⁽¹⁾		—		116,811		116,811

Available-for-sale securities at fair value	$	1,024,633	$	1,913,881	$	2,938,514
Corporate equity securities⁽²⁾		86,629		—		86,629

Total assets at fair value	$	1,111,262	$	1,913,881	$	3,025,143

⁽¹⁾	The money market funds, U.S. Government and agency securities, municipal bonds, asset-backed securities, commercial paper, and corporate debt securities are classified as part of either cash and cash equivalents or investments in marketable debt securities in the consolidated balance sheet.

⁽²⁾	The corporate equity securities are classified as part of other long-term assets in the consolidated balance sheet.

The amount of cash and cash equivalents as of December 31, 2008 includes $583 million in cash deposited with commercial banks, of which $151 million are time deposits.

The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy as of December 31, 2009 (in thousands):


	Fair Value Measurements at Reporting Date Using
Assets	Level 1		Level 2		Total
Money market funds⁽¹⁾	$	364,602	$	—	$	364,602
Available-for-sale securities:
U.S. Government and agency securities⁽¹⁾		—		1,938,608		1,938,608
Municipal bonds⁽¹⁾		—		470,031		470,031
Commercial paper and bank certificates of deposit⁽¹⁾		—		445,786		445,786
Corporate debt securities⁽¹⁾		—		641,104		641,104

Available-for-sale securities at fair value	$	364,602	$	3,495,529	$	3,860,131
Corporate equity securities⁽²⁾		2,597		—		2,597

Total assets at fair value	$	367,199	$	3,495,529	$	3,862,728

⁽¹⁾	The money market funds, U.S. Government and agency securities, municipal bonds, commercial paper and bank certificates of deposit, and corporate debt securities are classified as part of either cash and cash equivalents or investments in marketable debt securities in the consolidated balance sheet.

⁽²⁾	The corporate equity securities are classified as part of the other long-term assets in the consolidated balance sheet.

The amount of cash and cash equivalents as of December 31, 2009 includes $658 million in cash deposited with commercial banks, of which $205 million are time deposits.

The fair value of the Company’s Level 1 financial assets is based on quoted market prices of the identical underlying security. The fair value of the Company’s Level 2 financial assets is obtained from readily-available pricing sources for the identical underlying security that may not be actively traded. As of December 31, 2009, the Company did not have any material Level 3 financial assets or liabilities.

- Definition

This item represents the entire disclosure related to Available-for-sale Securities which consist of all investments in certain debt and equity securities neither classified as trading or held-to-maturity securities. A debt security represents a creditor relationship with an enterprise. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities which are categorized as Available-for-sale.

+ References+ Details

INCOME TAXES

12 Months Ended

Dec. 31, 2009

INCOME TAXES

Note 10 INCOME TAXES

The components of income before income taxes and earnings in equity interests are as follows (in thousands):


	Years Ended December 31,
	2007		2008			2009
United States	$	631,293	$	448,175		$	387,212
Foreign(*)		182,891		(361,462	)		187,008

Income before provision for income taxes and earnings in equity interests	$	814,184	$	86,713		$	574,220

(*)	Includes a $488 million goodwill impairment charge in 2008.

The provision (benefit) for income taxes is composed of the following (in thousands):


	Years Ended December 31,
	2007			2008			2009
Current:
United States federal	$	380,923		$	228,209		$	191,845
State		87,725			16,603			51,662
Foreign		81,357			53,229			66,376

Total current provision for income taxes		550,005			298,041			309,883

Deferred:
United States federal		(148,319	)		8,987			(32,385	)
State		(40,217	)		(35,064	)		(58,660	)
Foreign		(38,601	)		(12,958	)		483

Total deferred provision (benefit) for income taxes		(227,137	)		(39,035	)		(90,562	)

Provision for income taxes	$	322,868		$	259,006		$	219,321

The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate to income before provision for income taxes and earnings in equity interests as follows (in thousands):


	Years Ended December 31,
	2007			2008			2009
Income tax at the U.S. federal statutory rate of 35 percent	$	284,963		$	30,349		$	200,976
State income taxes, net of federal benefit		30,881			(8,925	)		(4,549	)
Change in valuation allowance		9,806			25,674			13,521
Stock-based compensation expense		34,011			44,938			28,322
Research tax credits		(8,618	)		(13,954	)		(11,046	)
Effect of non-U.S. operations		(37,238	)		18,403			20,126
Meals and entertainment		2,770			2,816			1,386
Settlement with tax authorities		—			(5,245	)		—
Goodwill impairment charge		—			170,644			—
Tax restructuring, net of reserve		—			—			(25,583	)
Other		6,293			(5,694	)		(3,832	)

Provision for income taxes	$	322,868		$	259,006		$	219,321

The provision for income taxes for the year ended December 31, 2009 differs from the amount computed by applying the federal statutory income tax rate primarily due to the effect of non-U.S. operations, non-deductible stock-based compensation expense, benefits due to state taxes resulting from California state tax law changes and the net impact of tax restructuring.

The effective tax rate for the year ended December 31, 2009 was 38 percent, compared to 299 percent in 2008. The primary reasons for the lower effective tax rate in 2009 compared to 2008 were due to the fact that 2008 pre-tax income included a $488 million goodwill impairment charge, the majority of which was non-deductible for tax purposes, and that benefits resulted from tax restructuring activities implemented in 2009. The 2008 effective tax rate included the cumulative tax benefit of a favorable state tax ruling granted in 2008 and retroactive to 2007. The 2007 provision for income taxes reflects a tax benefit related to the release of deferred tax liabilities in connection with changes to the Company’s worldwide entity structure in 2007.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred income tax assets and liabilities are as follows (in thousands):


	December 31,
	2008			2009
Deferred income tax assets:
Net operating loss and tax credit carryforwards	$	195,306		$	171,883
Stock-based compensation expense		287,417			234,108
Non-deductible reserves and expenses		159,735			268,015
Intangible assets		36,664			14,336

Gross deferred income tax assets		679,122			688,342
Valuation allowance		(83,550	)		(63,364	)

Deferred income tax assets	$	595,572		$	624,978

Deferred income tax liabilities:
Unrealized investment gains	$	(4,838	)	$	4,404
Purchased intangible assets		(25,942	)		(9,684	)
Investments in equity interests		(453,802	)		(405,880	)

Deferred income tax liabilities	$	(484,582	)	$	(411,160	)

Net deferred income tax assets	$	110,990		$	213,818

As of December 31, 2009, the Company’s federal and state net operating loss carryforwards for income tax purposes were approximately $185 million and $113 million, respectively. If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2025. The Company’s federal and state research tax credit carryforwards for income tax purposes are approximately $112 million and $172 million, respectively. If not utilized, the federal research tax credit carryforwards will begin to expire in 2020. The state research tax credit carryforwards will not expire. Federal and state net operating loss and tax credit carryovers that result from the exercise of employee stock options were not recorded on the Company’s consolidated balance sheets. Federal and state net operating loss and tax credit carryovers that result from the exercise of employee stock options are accounted for as a credit to additional paid-in-capital if and when realized through a reduction in income taxes payable.

During 2008, the Company recorded a deferred tax liability of $276 million in connection with the non-cash gain recorded related to the IPO of Alibaba.com. This temporary difference and the corresponding deferred tax liability would be subject to reversal upon a taxable sale of the investment by the Company or upon the repatriation of earnings to the Company by Alibaba Group.

The Company has a valuation allowance of approximately $63 million as of December 31, 2009 against certain deferred income tax assets that are not more likely than not to be realized in future periods. In evaluating the Company’s ability to realize its deferred income tax assets, the Company considers all available positive and negative evidence, including operating results, ongoing tax planning, and forecasts of future taxable income on a jurisdiction by jurisdiction basis. The valuation allowance as of December 31, 2009 relates to foreign net operating loss and credit carryforwards that will reduce the provision for income taxes if and when recognized.

The Company provides U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside the U.S. As of December 31, 2009, U.S. income taxes were not provided for on a cumulative total of $2.0 billion of undistributed earnings for certain foreign subsidiaries and a corporate joint venture. If these earnings were to be repatriated, the Company would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits). It is not practicable to determine the income tax liability that might be incurred if these earnings were to be repatriated.

The Company adopted authoritative guidance on accounting for uncertainty in income taxes on January 1, 2007. As a result of the implementation of these provisions, the Company recognized a $46 million increase to the January 1, 2007 balance of retained earnings related to adjustments to certain unrecognized tax benefits. The total amount of gross unrecognized tax benefits was $893 million as of December 31, 2009, of which up to $699 million would affect the Company’s effective tax rate if realized. A reconciliation of the beginning and ending amount of unrecognized tax benefits in 2008 and 2009 is as follows (in thousands):


	2008			2009
Unrecognized tax benefits balance at January 1	$	685,672		$	798,057
Gross increase for tax positions of prior years		70,474			18,027
Gross decrease for tax positions of prior years		(15,065	)		(16,044	)
Gross increase for tax positions of current year		58,667			102,855
Gross decrease for tax positions of current year		—			—
Settlements		(1,691	)		(9,420	)
Lapse of statute of limitations		—			—

Unrecognized tax benefits balance at December 31	$	798,057		$	893,475

The total unrecognized tax benefits as of December 31, 2008 and 2009 include approximately $452 million and $420 million, respectively, of unrecognized tax benefits that have been netted against the related deferred tax assets. The remaining balances are recorded on the Company’s consolidated balance sheets as follows (in thousands):


	December 31,
	2008			2009
Total unrecognized tax benefits balance	$	798,057		$	893,475
Amounts netted against related deferred tax assets		(451,790	)		(419,782	)

Unrecognized tax benefits recorded on consolidated balance sheets	$	346,267		$	473,693

Amounts classified as accrued expenses and other current liabilities	$	5,519		$	53,858
Amounts classified as deferred and other long-term tax liabilities, net		340,748			419,835

Unrecognized tax benefits recorded on consolidated balance sheets	$	346,267		$	473,693

The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. During 2008 and 2009, interest and penalties recorded in the consolidated statements of income were $6 million and $3 million, respectively. The amounts of accrued interest and penalties recorded on the consolidated balance sheets as of December 31, 2008 and 2009 were approximately $12 million and $15 million, respectively.

The Company files income tax returns in the U.S. federal jurisdiction and in many U.S. states and foreign jurisdictions. The tax years 1995 to 2008 remain open to examination by the major taxing jurisdictions in which the Company is subject to tax. The examination of the Company’s federal income tax returns for the years ended December 31, 2003 and December 31, 2004 was completed in 2008 and resulted in no material adjustments.

The Company’s U.S. federal and California income tax returns for the years ended December 31, 2005 and 2006 are currently under examination by the Internal Revenue Service (“IRS”) and the California Franchise Tax Board. Additionally the Company is seeking early resolution of a 2009 U.S. federal income tax position by means of a pre-filing agreement with the IRS. The issues relate to capital losses available for carry forward, intercompany transactions and research and development tax credits. The IRS is expected to notify the Company of their conclusions during 2010. The Company believes adequate reserves have been provided for all issues; however, it is reasonably possible that our unrecognized tax benefits could increase once the results are known. An estimate of the range of possible outcomes cannot be made at this time.

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2009

STOCKHOLDERS' EQUITY

Note 11 STOCKHOLDERS’ EQUITY

Stockholder Rights Plan. The Company adopted a stockholder rights plan and initially declared a dividend distribution of one right for each outstanding share of common stock to stockholders of record as of March 20, 2001. As a result of the Company’s two-for-one stock split effective May 11, 2004, each share of common stock is now associated with one-half of one right. Each right entitles the holder to purchase one unit consisting of one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock for $250 per unit. Under certain circumstances, if a person or group acquires 15 percent or more of the Company’s outstanding common stock, holders of the rights (other than the person or group triggering their exercise) will be able to purchase, in exchange for the $250 exercise price, shares of its common stock or of any company into which the Company is merged having a value of $500. The rights expire on March 1, 2011, unless extended by the Company’s Board of Directors (the “Board”). Because the rights may substantially dilute the stock ownership of a person or group attempting to take over the Company without the approval of the Board, the Company’s rights plan could make it more difficult for a third-party to acquire the Company (or a significant percentage of its outstanding capital stock) without first negotiating with the Board regarding that acquisition.

In addition, the Board has the authority to issue up to 10 million shares of Preferred Stock (of which 2 million shares have been designated as Series A Junior Participating Preferred Stock) and to determine the price, rights, preferences, privileges, and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The stockholder rights plan was not adopted in response to any effort to acquire control of the Company. The Company repurchases its common stock from time to time in part to reduce the dilutive effects of our stock options, awards, and employee stock purchase plan.

Stock Repurchases. In October 2006, the Board authorized a new stock repurchase program allowing it to repurchase up to $3.0 billion of its outstanding shares of common stock from time to time over the next five years from the date of authorization, dependent on market conditions, stock price, and other factors. Repurchases may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.

Under this program, in the year ended December 31, 2007, the Company repurchased 58 million shares of common stock directly at an average price of $27.34 per share. Total cash consideration for the repurchased stock was $1.6 billion. Under this program, in the year ended December 31, 2008, the Company repurchased 3 million shares of common stock directly at an average price of $23.39 per share, for total consideration of $79 million. Under this program, in the year ended December 31, 2009, the Company repurchased 7 million shares of common stock directly at an average price of $15.31 per share, for total consideration of $113 million. The remaining authorization under the Company’s share repurchase program is approximately $973 million.

Structured Stock Repurchase. During the year ended December 31, 2007, the Company entered into a $250 million structured stock repurchase transaction. This transaction matured and settled in 2007. The Company received 8 million shares of its common stock at an effective buy-back price of $29.80 per share. The structured stock repurchase transaction was recorded in stockholders’ equity on the consolidated balance sheets. During the years ended December 31, 2008 and 2009, the Company had no structured stock repurchase transactions.

As of December 31, 2009, the Company has repurchased 216 million shares; 208 million have been retired, resulting in reductions of $0.2 million in common stock, $1.5 billion in additional paid-in-capital, and $3.8 billion in retained earnings, and 8 million are recorded as part of treasury stock. Treasury stock is accounted for under the cost method.

- Definition

Disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References+ Details

EMPLOYEE BENEFITS

12 Months Ended

Dec. 31, 2009

EMPLOYEE BENEFITS

Note 12 EMPLOYEE BENEFITS

Benefit Plans. The Company maintains a Yahoo! Inc. 401(k) Plan (the “401(k) Plan”) for its full-time employees in the U.S. The 401(k) Plan allows employees of the Company to contribute up to the Internal Revenue Code prescribed maximum amount. Employees may elect to contribute from 1 to 50 percent of their annual compensation to the 401(k) Plan. The Company matches employee contributions at a rate of 25 percent. Employee contributions are fully vested, whereas vesting in matching Company contributions occurs at a rate of 33 percent per year of employment. During 2007, 2008, and 2009, the Company’s contributions to the 401(k) Plan amounted to approximately $19 million, $21 million, and $18 million, respectively. The Company also contributed approximately $18 million, $26 million, and $20 million to its other benefit plans outside of the U.S. for 2007, 2008, and 2009, respectively.

Stock Plans. The 1995 Plan provides for the issuance of stock-based awards to employees, including executive officers, and consultants. The 1995 Plan permits the granting of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, and dividend equivalents.

Options granted under the 1995 Plan before May 19, 2005 generally expire 10 years after the grant date, and options granted after May 19, 2005 generally expire seven years after the grant date. Options generally become exercisable over a four-year period based on continued employment and vest either monthly, quarterly, semi-annually, or annually.

The 1995 Plan permits the granting of restricted stock and restricted stock units (collectively referred to as “restricted stock awards”). The Restricted stock award vesting criteria is generally the passing of time, meeting certain performance-based objectives, or a combination of both, and continued employment through the vesting period, (which varies but does not exceed four years). Restricted stock award grants are generally measured at fair value on the date of grant based on the number of shares granted and the quoted price of the Company’s common stock. Such value is recognized as an expense over the corresponding service period.

During 2009, the Board adopted an amended and restated version of the Yahoo! Inc. 1995 Stock Plan (the “Restated 1995 Plan”), subject to approval of the amendments by the Company’s stockholders. At the Company’s annual meeting of stockholders held on June 25, 2009, the Company’s stockholders approved the Restated 1995 Plan. Among other things, the Restated 1995 Plan reflects amendments to (i) increase the number of shares of the Company’s common stock available for award grants under the Restated 1995 Plan by 50 million shares (so that a maximum of 754 million shares of the Company’s common stock may be issued or delivered pursuant to awards granted under the Restated 1995 Plan); (ii) change the share-counting provisions so that each share issued in respect of restricted stock and other “full-value” awards under the Restated 1995 Plan will count as 1.75 shares against the share limits; (iii) extend the Company’s ability to grant new awards under the Restated 1995 Plan until April 2, 2019; (iv) extend the Company’s authority to grant awards under the Restated 1995 Plan intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the U.S. Internal Revenue Code through the 2014 annual meeting of stockholders as well as to grant such performance-based awards that would be payable only in cash; and (v) revise the performance criteria listed in Appendix A to the Restated 1995 Plan for use in connection with such performance-based awards.

The 1995 Restated Plan provides for the issuance of a maximum of 754 million shares of which 114 million shares were still available for issuance as of December 31, 2009.

The Directors’ Plan provides for the grant of nonqualified stock options and restricted stock units to non-employee directors of the Company. The Directors’ Plan provides for the issuance of up to 9 million shares of the Company’s common stock, of which approximately 5 million were still available for issuance as of December 31, 2009. Each share of the Company’s common stock issued in settlement of restricted stock units granted under the Directors’ Plan is counted as 1.75 shares against the Directors’ Plans’ share limit.

Options granted under the Directors’ Plan before May 25, 2006 generally become exercisable, based on continued service as a director, for initial grants to new directors, in equal monthly installments over four years, and for annual grants, with 25 percent of such options vesting on the one year anniversary of the date of grant and the remaining options vesting in equal monthly installments over the remaining 36-month period thereafter. Such options generally expire 10 years after the grant date. Options granted on or after May 25, 2006 become exercisable, based on continued service as a director, in equal quarterly installments over one year. Such options generally expire seven years after the grant date.

Restricted stock units granted under the Directors’ Plan generally vest in equal quarterly installments over a one year period following the date of grant and, once vested, are generally payable in an equal number of shares of the Company’s common stock on the earlier of the third anniversary of the grant date or the date the director ceases to be a member of the Board.

Non-employee directors are also permitted to elect an award of restricted stock units or a stock option under the Directors’ Plan in lieu of a cash payment of fees for serving as chairperson of a committee of the Board. Such stock options or restricted stock unit awards granted in lieu of cash for chairperson fees are fully vested on the grant date.

Employee Stock Purchase Plan. The Company’s 1996 Employee Stock Purchase Plan allows employees to purchase shares of the Company’s common stock through payroll deductions of up to 15 percent of their annual compensation subject to certain Internal Revenue Code limitations. The price of common stock purchased under the plan is equal to 85 percent of the lower of the fair market value of the common stock on the commencement date of each 24-month offering period or the specified purchase date.

During 2009, the Board adopted an amended and restated version of the Purchase Plan (“the Restated Purchase Plan”), subject to approval of the amendments by the Company’s stockholders. At the Company’s annual meeting of stockholders held on June 25, 2009, the Company’s stockholders approved the Restated Purchase Plan. Among other things, the Restated Purchase Plan reflects amendments to (i) increase the number of shares authorized for issuance under the Restated Purchase Plan by 30 million shares (so that the maximum aggregate number of shares that may be issued under the Restated Purchase Plan would increase to 75 million shares); and (ii) extend the term of the Restated Purchase Plan so that no new offering period would commence after May 10, 2029.

The Restated Purchase Plan provides for the issuance of a maximum of 75 million shares of common stock of which 40 million shares were available as of December 31, 2009. For the years ended December 31, 2007, 2008, and 2009, stock-based compensation expense related to the activity under the plan was $48 million, $52 million, and $55 million, respectively. As of December 31, 2009, there was $21 million of unamortized stock-based compensation cost related to the Restated Purchase Plan which will be recognized over a weighted average period of 0.7 years.

The Company’s Restated 1995 Plan, the Directors’ Plan, and other stock-based award plans assumed through acquisitions are collectively referred to as the “Plans.” Stock option activity under the Company’s Plans is summarized as follows (in thousands, except years and per share amounts):


	Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2008	135,442		$	30.10	3.88	$	89,688
Options granted	30,010		$	12.91
Options exercised⁽¹⁾	(5,376	)	$	5.72
Options cancelled/forfeited	(13,264	)	$	23.74
Options expired	(27,219	)	$	38.22

Outstanding at December 31, 2009	119,593		$	25.74	3.78	$	209,807

Vested and expected to vest at December 31, 2009⁽²⁾	113,706		$	26.02	3.67	$	194,215

Exercisable at December 31, 2009	76,551		$	29.75	2.78	$	103,672

⁽¹⁾	The Company issued new shares to satisfy stock option exercises.

⁽²⁾	The expected to vest options are the result of applying the pre-vesting forfeiture rate assumptions to total outstanding options.

The weighted average grant date fair value of options granted in the years ended December 31, 2007, 2008, and 2009 was $8.50, $7.66, and $5.59 per share, respectively.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate difference between the closing stock price of the Company’s common stock on December 31, 2009 and the exercise price for in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on December 31, 2009.

The total intrinsic value of options exercised in the years ended December 31, 2007, 2008, and 2009 was $393 million, $233 million, and $51 million, respectively.

As of December 31, 2009, there was $203 million of unamortized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of 2.2 years.

Cash received from option exercises and purchases of shares under the Restated Purchase Plan for the year ended December 31, 2009 was $113 million.

The total tax benefit attributable to stock options exercised in the year ended December 31, 2009 was $85 million.

The fair value of option grants is determined using the Black-Scholes option pricing model with the following weighted average assumptions:


	Stock Options						Purchase Plans⁽⁵⁾
	Years Ended December 31,						Years Ended December 31,
	2007		2008		2009		2007		2008		2009
Expected dividend yield⁽¹⁾	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%
Risk-free interest rate⁽²⁾	4.4	%	2.6	%	1.9	%	4.4	%	2.4	%	2.7	%
Expected volatility⁽³⁾	33.5	%	47.4	%	45.8	%	32.4	%	71.8	%	63.2	%
Expected life (in years)⁽⁴⁾	3.64		3.97		4.00		1.11		1.15		1.04

⁽¹⁾	The Company currently has no history or expectation of paying cash dividends on its common stock.

⁽²⁾	The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected term of the awards in effect at the time of grant.

⁽³⁾	The Company estimates the volatility of its common stock at the date of grant based on the implied volatility of publicly traded options on its common stock, with a term of one year or greater.

⁽⁴⁾

The expected life of stock options granted under the Plans is based on historical exercise patterns, which the Company believes are representative of future behavior. New grants issued by the Company had an expected life of 3.75 years in 2007 and 4 years in 2008 and 2009. Options assumed in acquisitions had expected lives of less than 4 years. The expected life of options granted under the Restated Purchase Plan represents the amount of time remaining in the 24-month offering period.

⁽⁵⁾	Assumptions for the Restated Purchase Plan relate to the annual average of the enrollment periods. Enrollment is currently permitted in May and November of each year.

Restricted stock awards activity for the year ended December 31, 2009 is summarized as follows (in thousands, except per share amounts):


	Shares		Weighted Average Grant Date Fair Value
Awarded and unvested at December 31, 2008	31,133		$	27.97
Granted	17,065		$	12.82
Vested	(14,367	)	$	24.93
Forfeited	(7,642	)	$	23.26

Awarded and unvested at December 31, 2009	26,189		$	21.14

As of December 31, 2009, there was $211 million of unamortized stock-based compensation cost related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 2.0 years. The total fair value of restricted stock awards vested during the years ended December 31, 2007, 2008, and 2009 was $27 million, $301 million, and $375 million, respectively.

During the year ended December 31, 2009, 14.4 million previously granted restricted stock awards and restricted stock units vested. A majority of these vested restricted stock awards and restricted stock units were net share settled. The Company withheld 4.7 million equivalent shares based upon the Company’s closing stock price on the vesting date to settle the employees’ minimum statutory obligation for the applicable income and other employment taxes. The Company then remitted the cash to the appropriate taxing authorities.

Total payments for the employees’ tax obligations to the relevant taxing authorities were $73 million for the year ended December 31, 2009 and are reflected as a financing activity within the consolidated statements of cash flows. Upon the vesting of shares of certain restricted stock awards, 0.3 million shares were reacquired by the Company to satisfy the tax withholding obligations and $5 million was recorded as treasury stock. Payments of $68 million related to the net share settlement of 4.4 million shares of restricted stock units had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued on the vest date and were recorded as a reduction of additional paid-in-capital.

In the year ended December 31, 2008, the Company reversed an amount of $51 million of stock-based compensation expense related to unvested stock awards as a result of an increase in its estimated forfeiture rate assumption based on updated information on actual forfeitures.

In 2007, 2008, and 2009, $35 million, $125 million, and $108 million, respectively, of excess tax benefits from stock-based awards for options exercised in current and prior periods were included as a source of cash flows from financing activities. These excess tax benefits represent the reduction in income taxes otherwise payable during the period, attributable to the actual gross tax benefits in excess of the expected tax benefits for options exercised in current and prior periods. The Company has accumulated excess tax deductions relating to stock options exercised prior to January 1, 2006 available to reduce income taxes otherwise payable. To the extent such deductions reduce income taxes payable in the current year, they are reported as financing activities in the consolidated statements of cash flows.

During 2007, the Company determined that income tax benefits of $127 million ($92 million related to 2006 and the remainder related to earlier years) should not have been recorded to additional paid-in capital as tax benefits from stock-based awards because for financial statement ordering purposes, the tax benefits should have been attributed to the utilization of acquired net operating losses first or should not have been recognized at all because the underlying tax amounts should not have been offset by tax benefits from stock-based awards. As a result, in the 2007 statement of cash flows, the Company reduced by $92 million, excess tax benefits from stock-based awards recorded in cash flows from operating activities with an equivalent reduction to the amount of excess tax benefits recorded in cash flows from financing activities. This reclassification had no impact on overall cash flows. The amounts that impacted income tax expense and earnings in equity interests also increased diluted earnings per share by $0.01 for the year ended December 31, 2007. The Company believes that the aforementioned amounts are not material to reported amounts for 2007, 2006, or earlier years and therefore the Company has corrected them in the 2007 consolidated financial statements.

CEO Inducement Option and Make-up Equity. On January 30, 2009, Carol Bartz, the Company’s CEO, was granted a stock option covering 5.0 million shares of the Company’s common stock, with a per share exercise price of $11.73 (the closing price of the common stock on the grant date) and a maximum term of seven years (“Inducement Option”). Vesting of the Inducement Option is dependent on whether the average closing price for the Company’s common stock for twenty consecutive trading days prior to January 1, 2013 (or the price immediately preceding a change in control of the Company if it occurs pursuant to an agreement signed before that date) exceeds certain levels that range from 150 percent to 300 percent ($17.60 to $35.19) of Yahoo!’s closing stock price on the date of grant of the Inducement Option. As of December 31, 2009, no portion of the award has vested. Any shares acquired by Ms. Bartz upon exercise of the Inducement Option must be held until January 1, 2013, except in the event of her death or a change in control. The Company determined the grant-date fair value of the Inducement Option to be $27 million and the weighted average derived requisite service period of the award to be 1.2 years. The grant-date fair value of the Inducement Option will be expensed over the weighted average derived requisite service period.

In addition, to compensate Ms. Bartz for the forfeiture of the value of equity grants and post-employment medical coverage from her previous employer, the Company granted Ms. Bartz an award comprised of $2.5 million in cash and restricted stock with a grant-date fair value of $7.5 million, which vested in four equal quarterly installments in 2009 (the “Make-Up Grant”). The Make-Up Grant is subject to certain clawback provisions in the event of a termination of Ms. Bartz’s employment by the Company for cause or by Ms. Bartz without good reason (as those terms are defined in her employment agreement) during the term of the employment agreement. The value of the Make-Up Grant was expensed ratably through 2009.

Performance-Based Executive Incentive Restricted Stock Units. In February 2009, the Compensation Committee approved long-term performance-based incentive equity awards to Ms. Bartz and other senior officers, including two types of restricted stock units that vest based on the Company’s achievement of certain performance goals. The first type of restricted stock unit generally will vest on the third anniversary of the grant date based on the Company’s attainment of certain annual operating cash flow targets as well as the executive’s continued employment through that vesting date. The second type of restricted stock unit generally will vest following the third anniversary of the grant date based on the Company’s attainment of certain levels of total stockholder return relative to the returns for the NASDAQ 100 Index companies as well as the executive’s continued employment through that vesting date. For both types of restricted stock units, the number of shares which ultimately vest will range from 0 percent to 200 percent of the target amount stated in each executive’s award agreement based on the performance of the Company relative to the applicable performance target. The amount of stock-based compensation recorded for the first type of restricted stock unit will vary depending on the Company’s attainment of the operating cash flow target and the completion of the service period. The amount of stock-based compensation recorded for the second type of restricted stock unit will vary depending only on the completion of the service period. The aggregate fair value of these two types of restricted stock units on the date of grant of $3 million and $13 million, respectively, will be recognized over the three-year service periods.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2009

COMMITMENTS AND CONTINGENCIES

Note 13 COMMITMENTS AND CONTINGENCIES

Lease Commitments. The Company leases office space and data centers under operating and capital lease agreements with original lease periods up to 23 years which expire between 2010 and 2027.

In 2008, the Company entered into an 11 year lease agreement for a data center in the western U.S. Of the total expected minimum lease commitment of $105 million, $21 million was classified as an operating lease for real estate and $84 million was classified as a capital lease for equipment. As of December 31, 2009, the Company had total expected and remaining minimum lease commitments of approximately $94 million over the lease term. The Company has the option to renew this lease for up to an additional ten years.

Rent expense for all operating leases was approximately $88 million, $103 million, and $90 million for 2007, 2008, and 2009, respectively.

Many of the Company’s leases contain one or more of the following options which the Company can exercise at the end of the initial lease term: (i) renewal of the lease for a defined number of years at the then fair market rental rate or at a slight discount to the fair market rental rate; (ii) purchase of the property at the then fair market value; or (iii) right of first offer to lease additional space that becomes available.

Gross and net lease commitments as of December 31, 2009 can be summarized as follows (in millions):


	Gross Operating Lease Commitments		Sublease Income			Net Operating Lease Commitments
Years ending December 31,
2010	$	161	$	(6	)	$	155
2011		139		(4	)		135
2012		113		(2	)		111
2013		97		(1	)		96
2014		85		(1	)		84
Due after 5 years		232		(1	)		231

Total gross and net lease commitments	$	827	$	(15	)	$	812


	Capital Lease Commitment
Years ending December 31,
2010	$	7
2011		7
2012		7
2013		8
2014		8
Due after 5 years		39

Gross lease commitment	$	76

Less: interest		(33	)

Net lease commitment included in capital lease and other long-term liabilities	$	43

Affiliate Commitments. In connection with contracts to provide advertising services to Affiliates, the Company is obligated to make payments, which represent TAC, to its Affiliates. As of December 31, 2009, these commitments totaled $143 million, of which $120 million will be payable in 2010 and $23 million will be payable in 2011.

Non-cancelable Obligations. The Company is obligated to make payments under various non-cancelable arrangements with vendors and other business partners, principally for marketing, bandwidth, co-location, and content arrangements. As of December 31, 2009, these commitments totaled $169 million, of which $76 million will be payable in 2010, $43 million will be payable in 2011, $22 million will be payable in 2012, $14 million will be payable in 2013, $5 million will be payable in 2014, and $9 million will be payable thereafter.

Intellectual Property Rights. The Company is committed to make certain payments under various intellectual property arrangements of up to $44 million through 2023.

Other Commitments. In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, joint ventures and business partners, purchasers of assets or subsidiaries, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of agreements or representations and warranties made by the Company, services to be provided by the Company, intellectual property infringement claims made by third parties or, with respect to the sale of assets or a subsidiary, matters related to the Company’s conduct of the business and tax matters prior to the sale. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The Company has also agreed to indemnify certain former officers, directors, and employees of acquired companies in connection with the acquisition of such companies. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and officers, and former directors and officers of acquired companies, in certain circumstances. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements might not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under these agreements and it has not accrued any liabilities related to such indemnification obligations in its consolidated financial statements.

As of December 31, 2009, the Company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, the Company is not exposed to any financing, liquidity, market, or credit risk that could arise if the Company had engaged in such relationships. In addition, the Company identified no variable interests currently held in entities for which it is the primary beneficiary.

Search and License Agreement with Microsoft. The Company has entered into a Search and Advertising Services and Sales Agreement and License Agreement with Microsoft, under which Microsoft will become Yahoo!’s exclusive platform technology provider for algorithmic and paid search services and Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. The Company derives a majority of revenue from marketing services, including search services. The parties commenced implementation of the Search Agreement on February 23, 2010.

Contingencies. Currently, the Company is engaged in lawsuits regarding patent issues and has been notified of other potential patent disputes. In addition, from time to time, the Company is subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, trade secrets, and other intellectual property rights, claims related to employment matters, and a variety of other claims, including claims alleging defamation, invasion of privacy, or similar claims arising in connection with the Company’s e-mail, message boards, photo and video sites, auction sites, shopping services, and other communications and community features.

On May 24, 2001, Arista Records, Inc., Bad Boy Records, BMG Music d/b/a The RCA Records Label (“BMG”), Capitol Records, Inc., Virgin Records America, Inc., Sony Music Entertainment, Inc., UMG Recordings, Inc., Interscope Records, Motown Record Company, L.P., and Zomba Recording Corporation filed a lawsuit alleging copyright infringement against LAUNCH Media, Inc. (“LAUNCH”) in the U.S. District Court for the Southern District of New York seeking declaratory and injunctive relief and damages. The plaintiffs alleged, among other things, that the consumer-influenced portion of LAUNCH’s LAUNCHcast service is “interactive” within the meaning of Section 114 of the Copyright Act and therefore does not qualify for the compulsory license provided for by the Copyright Act. Yahoo! acquired LAUNCH in August 2001. This lawsuit was settled with all plaintiffs, other than BMG. On April 27, 2007, after a two week jury trial, the jury returned a unanimous verdict in favor of LAUNCH finding no liability. On August 21, 2009, the U.S. Court of Appeals for the Second Circuit affirmed the trial verdict and affirmed the lower court’s denial of attorneys’ fees. In January 2010, the U.S. Supreme Court denied BMG’s petition for writ of certiorari, ending the action.

On July 12, 2001, the first of several purported securities class action lawsuits was filed in the U.S. District Court for the Southern District of New York against certain underwriters involved in Overture Services Inc.’s (“Overture”) IPO, Overture, and certain of Overture’s former officers and directors. The Court consolidated the cases against Overture. Plaintiffs allege, among other things, violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 (the “Exchange Act”) involving undisclosed compensation to the underwriters, and improper practices by the underwriters, and seek unspecified damages. Similar complaints were filed in the same court against numerous public companies that conducted IPOs of their common stock since the mid-1990s. All of these lawsuits were consolidated for pretrial purposes before Judge Shira Scheindlin. On April 1, 2009, the parties filed a motion with the Court for preliminary approval of a stipulated global settlement. On October 5, 2009, the Court granted class certification and granted final approval of the settlement and plan of allocation. Notices of appeal have been filed with the U.S. Court of Appeals for the Second Circuit.

On June 14, 2007, a stockholder derivative action was filed in the U.S. District Court for the Central District of California by Jill Watkins against members of the Board and selected officers. The complaint filed by the plaintiff alleged breaches of fiduciary duties and corporate waste, similar to the allegations in the former Brodsky/Hacker class action litigation relating to stock declines during the period April 2004 to July 2006, and alleged violation of Section 10(b) of the Exchange Act. On July 16, 2009, the plaintiff Watkins voluntarily dismissed the action against all defendants without prejudice. On July 17, 2009, plaintiff Miguel Leyte-Vidal, who had previously substituted in as plaintiff prior to the dismissal of the federal Watkins action, re-filed a shareholder derivative action in Santa Clara County Superior Court against members of the Board and selected officers. The Santa Clara County Superior Court derivative action purports to assert causes of action on behalf of the Company for violation of specified provisions of the California Corporations Code, for breaches of fiduciary duty regarding financial accounting and insider selling and for unjust enrichment.

Plaintiff Congregation Beth Aaron voluntarily dismissed an action filed in Santa Clara County Superior Court and on December 3, 2008 re-filed in the U.S. District Court for the Northern District of California alleging claims for breach of fiduciary duty and corporate waste in connection with Yahoo!’s consideration of proposals by Microsoft Corporation to purchase all or a part of Yahoo! in 2008, adoption of severance plans, and the June 12, 2008 agreement between Google Inc. and Yahoo!. Plaintiff filed an amended complaint on February 20, 2009. The complaint also alleges claims under Section 14(a) of the Exchange Act for alleged false statements or omissions in Yahoo!’s June 9, 2008 proxy statement regarding the severance plans and for control person liability under Section 20(a) of the Exchange Act, and also alleges that the defendants’ decision to settle similar Microsoft-related Delaware lawsuits constituted an independent breach of fiduciary duty. The complaint seeks unspecified compensatory damages, injunctive relief, and an award of plaintiffs’ attorneys’ fees and costs. On June 15, 2009, the Court granted defendants’ motion to dismiss all of Congregation Beth Aaron’s claims without leave to amend, which the Congregation has since appealed to the U.S. Court of Appeals for the Ninth Circuit.

While the outcome of the unsettled matters is currently not determinable, the Company does not believe, based on current knowledge, that any of the foregoing legal proceedings or claims is likely to have a material adverse effect on its financial position, results of operations, or cash flows. In the event of a determination in these matters that is adverse to Yahoo!, its subsidiaries, directors, or officers, the Company may incur substantial monetary liability, and be required to change its business practices. Either of these could have a material adverse effect on the Company’s financial position, results of operations, or cash flows. The Company may also incur substantial expenses in defending against these claims.

SEGMENTS

12 Months Ended

Dec. 31, 2009

SEGMENTS

Note 14 SEGMENTS

The Company manages its business geographically. The primary areas of measurement and decision-making are the U.S. and International. Management relies on an internal management reporting process that provides revenues and segment operating income before depreciation, amortization, and stock-based compensation expense for making financial decisions and allocating resources. Segment operating income before depreciation, amortization, and stock-based compensation expense includes income from operations before depreciation, amortization, and stock-based compensation expense. Management believes that segment operating income before depreciation, amortization, and stock-based compensation expense is an appropriate measure of evaluating the operational performance of the Company’s segments. However, this measure should be considered in addition to, not as a substitute for, or superior to, income from operations or other measures of financial performance prepared in accordance with U.S. GAAP.

In January 2010, the Company announced changes to its business management structure that are expected to be implemented by mid 2010. The Company is currently assessing the impact on segment reporting for 2010.

The following tables present summarized information by segment (in thousands):


	Years Ended December 31,
	2007			2008			2009
Revenues by segment:
United States	$	4,724,426		$	5,182,308		$	4,714,436
International		2,244,848			2,026,194			1,745,879

Total revenues	$	6,969,274		$	7,208,502		$	6,460,315

Segment operating income before depreciation, amortization, and stock-based compensation expense:
United States	$	1,430,923		$	1,205,262		$	1,095,601
International		496,112			5,341			486,954

Total segment operating income before depreciation, amortization, and stock-based compensation expense:		1,927,035			1,210,603			1,582,555
Depreciation and amortization		(659,195	)		(790,033	)		(746,714	)
Stock-based compensation expense		(572,427	)		(407,607	)		(449,149	)

Income from operations	$	695,413		$	12,693		$	386,692

Capital expenditures, net:
United States	$	515,709		$	581,906		$	380,626
International		86,567			92,923			53,169

Total capital expenditures, net	$	602,276		$	674,829		$	433,795


	December 31,
	2008		2009
Property and equipment, net:
United States	$	1,396,031	$	1,310,677
International		140,150		116,185

Total property and equipment, net	$	1,536,181	$	1,426,862

Revenues are attributed to individual countries according to the international online property that generated the revenues. No single foreign country accounted for more than 10 percent of revenues in 2007, 2008, and 2009, respectively. See also Note 5—“Goodwill” and Note 16—“Restructuring Charges, Net” for additional information regarding segments.

The following table presents revenues for groups of similar services (in thousands):


	Years Ended December 31,
	2007		2008		2009
Marketing services:
Owned and Operated sites	$	3,669,724	$	4,046,001	$	3,552,695
Affiliate sites		2,418,515		2,270,205		2,120,973

Marketing services		6,088,239		6,316,206		5,673,668
Fees		881,035		892,296		786,647

Total revenues	$	6,969,274	$	7,208,502	$	6,460,315

RESTRUCTURING CHARGES, NET

12 Months Ended

Dec. 31, 2009

RESTRUCTURING CHARGES, NET

Note 16 RESTRUCTURING CHARGES, NET

Restructuring charges, net consists of costs associated with the four restructuring activities initiated in 2008 and 2009. It includes employee severance pay and related costs, accelerations and reversals of stock-based compensation expense, facility restructuring costs, and other non-cash charges associated with the exit of facilities, as well as reversals of restructuring charges arising from changes in estimates. The Company had no restructuring charges or accruals in 2007.

For the years ended December, 31, 2008 and 2009, restructuring charges, net was comprised of the following (in thousands):


	Year Ended December 31,
	2008			2009
Employee severance pay and related costs	$	109,548		$	48,696
Non-cancelable lease, contract terminations, and other charges		19,617			59,285
Other non-cash charges		7,925			7,858

Sub-total before (reversals) accelerations of stock-based compensation expense		137,090			115,839
(Reversals) accelerations of stock-based compensation expense		(30,236	)		11,062

Restructuring charges, net	$	106,854		$	126,901

For the years ended December 31, 2008 and 2009, restructuring charges, net by segment consists of the following (in thousands):


	Year Ended December 31, 2008
	Q108 Restructuring Plan		Q408 Restructuring Plan		Total
United States	$	12,130	$	67,861	$	79,991
International		3,181		23,682		26,863

Restructuring charges, net	$	15,311	$	91,543	$	106,854


	Year Ended December 31, 2009
	Q408 Restructuring Plan		Q209 Restructuring Plan		Q409 Restructuring Plan		Total
United States	$	63,247	$	17,761	$	18,403	$	99,411
International		2,171		9,015		16,304		27,490

Restructuring charges, net	$	65,418	$	26,776	$	34,707	$	126,901

Q108 Restructuring Plan. During the first quarter of 2008, the Company implemented a strategic workforce realignment to more appropriately allocate resources to its key strategic initiatives. The strategic workforce realignment involved investing resources in some areas, reducing resources in others, and eliminating some areas of the Company’s business that did not support its strategic priorities. During the year ended December 31, 2008, the Company incurred total pre-tax charges of approximately $27 million in severance pay expenses and related cash expenses in connection with this workforce realignment, net of reversal for adjustments to original estimates totaling $2 million. The pre-tax cash charges were offset by a $12 million credit related to non-cash stock-based compensation expense reversals for unvested stock awards that were forfeited. Of the net estimated total strategic workforce realignment pre-tax expense of approximately $15 million, $12 million was related to the U.S. segment and $3 million was related to the International segment. As of December 31, 2008, there was no remaining restructuring accrual related to the strategic workforce realignment.

Q408 Restructuring Plan. During the fourth quarter of 2008, the Company implemented additional cost reduction initiatives, including a workforce reduction and consolidation of certain real estate facilities in the U.S. and International. The Company began to consolidate and exit selected facilities beginning in the fourth quarter of 2008 and expects to continue this process through the second quarter of 2010. The Company vacated and ceased use of most of the ten facilities in the U.S. and five international facilities identified under the plan. Non-cancelable lease costs were determined based on the present value of remaining lease payments reduced by estimated sublease income. Present value computations use discount rates based on published Treasury risk-free interest rates, adjusted for the Company’s credit spread, which is consistent with observable credit spreads of companies with similar credit standing. The cost of exiting and terminating the Company’s facility leases was determined by referring to the contractual terms of the agreements, by evaluating the current real estate market conditions, and, where applicable, by referring to amounts in negotiation. The Company’s ability to generate the estimated amounts of sublease income, as well as to terminate lease obligations at the estimated amounts, is dependent upon the commercial real estate market conditions in certain geographies at the time the Company negotiates the lease termination and sublease arrangements with third parties. These amounts represent the Company’s best estimate of the obligations the Company expects to incur and could be subject to adjustment as market conditions change. The fair value measurement of the liability related to exited facilities involves the use of certain significant unobservable inputs and therefore fall within level 3 of the fair value hierarchy established by accounting guidance. The remaining lease obligations will be settled over the remaining lease terms which expire through fiscal 2017 and will be adjusted for changes in estimates or the impact of sublease contracts. During the year ended December 31, 2008, the Company incurred severance, facility, and other restructuring costs of $110 million related to the Q408 restructuring plan offset by $18 million related to stock-based compensation expense reversals for unvested stock awards, resulting in a net restructuring charge of $92 million under the Q408 restructuring plan. Of the $92 million in restructuring charges, net recorded in the year ended December 31, 2008 related to the Q408 restructuring plan, $68 million related to the U.S. segment and $24 million related to the International segment. During the year ended December 31, 2009, the Company incurred total pre-tax cash charges for severance benefits provided and facilities vacated of approximately $57 million related to the Q408 restructuring plan in connection with the continued implementation of these initiatives, net of reversal for adjustments to original estimates totaling $8 million. Of the $65 million in restructuring charges, net recorded in the year ended December 31, 2009 related to the Q408 restructuring plan, $63 million related to the U.S. segment and $2 million related to the International segment.

Q209 Restructuring Plan. During the second quarter of 2009, the Company implemented new cost reduction initiatives to further reduce the Company’s worldwide workforce by approximately 5 percent. The restructuring plan involves reallocating resources to align with the Company’s strategic priorities including investing resources in some areas, reducing resources in others, and eliminating some areas of the Company’s business that do not support the Company’s strategic priorities. During the year ended December 31, 2009, the Company incurred total pre-tax cash charges of approximately $35 million in severance and other related costs related to the Q209 restructuring plan. The pre-tax charges were offset by an $8 million credit related to non-cash stock-based compensation expense reversals for unvested stock awards that were forfeited. Of the $27 million in restructuring charges, net recorded in the year ended December 31, 2009 related to the Q209 restructuring plan, $18 million related to the U.S. segment and $9 million related to the International segment.

Q409 Restructuring Charges. During the fourth quarter of 2009, the Company decided to close one of its international facilities and began implementation of a workforce realignment at the facility to focus resources on its strategic initiatives. The Company plans to exit the facility in the third quarter of 2010. During the fourth quarter of 2009, the Company incurred total pre-tax cash charges of approximately $16 million in severance and other costs related to this realignment. In connection with the strategic realignment efforts, an executive of one of the Company’s acquired businesses departed. The Company incurred $19 million of non-cash stock-based compensation expense for the acceleration of certain of the executive’s stock-based awards pursuant to the acquisition agreements. Of the $35 million in restructuring charges, recorded in the fourth quarter of 2009, $19 million related to the U.S. segment and $16 million related to the International segment.

In addition to the charges described above, the Company currently expect to incur future charges of approximately $28 million to $38 million for non-cancelable lease costs and relocation costs as we continue to exit facilities identified as part of the Q408 restructuring plan and Q409 restructuring activities of which $25 million to $33 million relates to the U.S. segment and $3 million to $5 million relates to the International segment. The expected future charges are expected to be recorded primarily in 2010 and 2011.

Restructuring Accruals. As of December 31, 2008 and 2009, the aggregate outstanding restructuring liability related to the cost reduction initiatives were $90 million and $79 million, respectively. Of the $79 million restructuring liability as of December 31, 2009, $20 million relates to employee severance pay expenses which the Company expects to substantially pay out by the end of the third quarter of 2010, and $59 million relates to non-cancelable lease costs which the Company expects to pay over the terms of the related obligations which extend to the second quarter of 2017.

The activity in the Company’s restructuring accruals for the years ended December 31, 2008 and 2009 are summarized as follows (in thousands):


	Q108 Restructuring Plan			Q408 Restructuring Plan			Total
Balance as of January 1, 2008	$	—		$	—		$	—
Employee severance pay and related costs		29,169			81,953			111,122
Reversals of stock-based compensation expense		(12,284	)		(17,952	)		(30,236	)
Non-cancelable lease, contract termination, and other charges(*)		—			19,617			19,617
Other non-cash charges		—			7,925			7,925
Reversal of previous charges		(1,574	)		—			(1,574	)

Restructuring charges, net for the year ended December 31, 2008	$	15,311		$	91,543		$	106,854
Cash paid		(27,595	)		(16,111	)		(43,706	)
Non-cash reversals of stock-based compensation expense		12,284			17,952			30,236
Non-cash adjustments		—			(3,497	)		(3,497	)

Balance as of December 31, 2008	$	—		$	89,887		$	89,887

(*)	Includes $3 million in professional services relating to the restructuring and $1 million in contract termination costs.


	Q408 Restructuring Plan			Q209 Restructuring Plan			Q409 Restructuring Charges			Total
Balance as of January 1, 2009	$	89,887		$	—		$	—		$	89,887
Employee severance pay and related costs		6,430			35,749			14,710			56,889
(Reversals) accelerations of stock-based compensation expense		—			(7,600	)		18,662			11,062
Non-cancelable lease, contract termination, and other charges		59,429			—			1,335			60,764
Other non-cash charges		7,858			—			—			7,858
Reversal of previous charges		(8,299	)		(1,373	)		—			(9,672	)

Restructuring charges, net for the year ended December 31, 2009	$	65,418		$	26,776		$	34,707		$	126,901
Cash paid		(94,668	)		(30,560	)		(863	)		(126,091	)
Non-cash reversals (accelerations) of stock-based compensation expense		—			7,600			(18,662	)		(11,062	)
Non-cash adjustments		(672	)		486			(417	)		(603	)

Balance as of December 31, 2009	$	59,965		$	4,302		$	14,765		$	79,032

As of December 31, restructuring accruals were included in the Company’s consolidated balance sheet as follows (in thousands):


	2008		2009
Accrued expenses and other current liabilities	$	77,445	$	42,940
Capital lease and other long-term liabilities		12,442		36,092

Total restructuring accruals	$	89,887	$	79,032

As of December 31, restructuring accruals by segment consisted of the following (in thousands):


	2008		2009
United States	$	68,410	$	52,802
International		21,477		26,230

Total restructuring accruals	$	89,887	$	79,032

Selected Quarterly Financial Data

12 Months Ended

Dec. 31, 2009

Selected Quarterly Financial Data

Selected Quarterly Financial Data

(Unaudited)


	Quarters Ended
	March 31, 2008⁽¹⁾		June 30, 2008		September 30, 2008		December 31, 2008⁽²⁾			March 31, 2009⁽³⁾		June 30, 2009⁽⁴⁾		September 30, 2009⁽⁵⁾		December 31, 2009⁽⁶⁾
	(In thousands, except per share amounts)
Revenues	$	1,817,602	$	1,798,085	$	1,786,426	$	1,806,389		$	1,580,042	$	1,572,897	$	1,575,399	$	1,731,977
Gross profit	$	1,062,519	$	1,032,174	$	1,014,149	$	1,076,298		$	879,305	$	860,444	$	866,501	$	982,319
Net income (loss) attributable to Yahoo! Inc.	$	536,840	$	131,161	$	54,348	$	(303,428	)	$	117,558	$	141,387	$	186,093	$	152,954

Net income (loss) attributable to Yahoo! Inc. common stockholders per share—basic	$	0.40	$	0.10	$	0.04	$	(0.22	)	$	0.08	$	0.10	$	0.13	$	0.11

Net income (loss) attributable to Yahoo! Inc. common stockholders per share—diluted	$	0.37	$	0.09	$	0.04	$	(0.22	)	$	0.08	$	0.10	$	0.13	$	0.11

Shares used in per share calculation—basic		1,333,730		1,372,629		1,383,786		1,387,758			1,391,526		1,394,783		1,401,961		1,402,339

Shares used in per share calculation—diluted		1,393,080		1,397,839		1,397,522		1,387,758			1,406,510		1,414,295		1,424,854		1,416,974

⁽¹⁾	Net income attributable to Yahoo! Inc. for the quarter ended March 31, 2008 includes a non-cash gain of $401 million related to Alibaba Group’s IPO of Alibaba.com, net of tax.

⁽²⁾	Net loss attributable to Yahoo! Inc. for the quarter ended December 31, 2008 includes a goodwill impairment charge of $488 million and net restructuring charges of $90 million.

⁽³⁾	Net income attributable to Yahoo! Inc. for the quarter ended March 31, 2009 includes net restructuring charges of $5 million.

⁽⁴⁾	Net income attributable to Yahoo! Inc. for the quarter ended June 30, 2009 includes a pre-tax gain of $67 million ($42 million after tax) in connection with the Company’s sale of its Gmarket shares and net restructuring charges of $65 million.

⁽⁵⁾	Net income attributable to Yahoo! Inc. for the quarter ended September 30, 2009 includes Yahoo!’s gain on sale of the Company’s direct investment in Alibaba.com of $98 million ($60 million after tax) and net restructuring charges of $17 million.

⁽⁶⁾	Net income attributable to Yahoo! Inc. for the quarter ended December 31, 2009 includes net restructuring charges of $40 million.

- Definition

This element can be used to disclose the entire quarterly financial data disclosure in the annual financial statements as a single block of text. The disclosure includes a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income (loss) before extraordinary items and cumulative effect of a change in accounting principle and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished. Alternatively, the details of this disclosure can be reported using the elements in this group, or by using other taxonomy elements and applying the appropriate quarterly date and period contexts when creating an instance document. For example, the element for "Interest and Dividend Income, Operating" may be used by financial institutions from the Statement of Income, applying the appropriate quarterly date and period context when creating an instance document.

+ References+ Details

Entity Information (USD $)	12 Months Ended
Entity Information (USD $)	Dec. 31, 2009	Feb. 19, 2010	Jun. 30, 2009
Trading Symbol	YHOO
Entity Registrant Name	YAHOO INC
Entity Central Index Key	0001011006
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,400,201,879
Entity Public Float			$ 17,311,784,462

Statement Of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Unrealized gains (losses) on available-for-sale securities, taxes	$ 10,276	$ 18,736	$ (8,131)
Reclassification adjustment for realized losses (gains) included in net income, taxes	$ (10,060)	$ (785)	$ (1,384)

Document Information	12 Months Ended
Document Information	Dec. 31, 2009
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2009