BUSINESSWEEK ONLINE : JUNE 19, 2000 ISSUE
COVER STORY Yahoo Japan Wins Hoorays The market has really opened up for the country's No. 1 Web portal In a market littered with Internet wannabes, Yahoo! Japan is the real deal. The company's revenues more than tripled last year, to $52.7 million, while its net income soared to $10.6 million. And Japan's largest portal racked up a scorching stock market return of 413% over the past year. All that helped to make Yahoo Japan the top-performing Internet company on the Info Tech 100 this year, taking the No. 15 spot overall. It even outpaced Yahoo! Inc. (YHOO), the portal pioneer that owns 34% of the company and ranked No. 94. Like its U.S. affiliate, Yahoo Japan has worked hard to make its name synonymous with the Net. Today, more than 85% of all Japanese Net users visit the site each month. That makes it the most popular site in Japan, with about twice the market share of Yahoo in the U.S. Its strategy is straightforward: borrow the best ideas from its American counterpart and milk the name for all it's worth. ''We are actually trying to figure out why our share of the Internet traffic in Japan is so high,'' says Masahiro Inoue, president and CEO. ''One of the reasons is that in Japan, we do not have America Online or [Microsoft's] MSN.'' JACKED-UP FEES. In addition, Yahoo Japan has blown away local competitors such as Sony Corp.'s So-net and phone giant Nippon Telegraph & Telephone Corp.'s Goo. ''They are virtually alone,'' says Jean-Pascal Rolandez, head of research at BNP Paribas Group in Tokyo. That helped Yahoo Japan's advertising sales quadruple last year, to $47 million. Demand is so strong that the company raised the price of ads on its front page by a third, to $37,400 a month. That's double what Goo, the second-largest portal in Japan, charges. Yet the higher fees aren't scaring away customers. The number of ads on Yahoo Japan surged more than 40% in the first quarter, compared with flat advertising at Yahoo. Two critical relationships are giving the company advantages over its rivals. In exchange for paying Yahoo 3% of its revenues, Yahoo Japan can adapt whatever it wants from the U.S. site, including e-mail and customized home pages. That means the Japanese company doesn't need to spend as much money on people or advertising. It also is getting a helping hand from incubator Softbank Corp., which owns 51% of the company. Softbank has hundreds of Web ventures that provide content or advertising to Yahoo Japan. There are risks to being so dependent. Softbank is rapidly starting up new ventures--and some are likely to end up cannibalizing Yahoo Japan. For instance, Softbank Finance, which will be spun off this year, could steal business from Yahoo Japan's finance site. ''I am almost sure that we will compete with one of those Softbank companies,'' says Inoue. Not that the company is suffering these days. Profits are expected to rise by at least 50% in the next two years as online advertising expands, according to BNP Paribas. And analysts say the company's entry into online shopping, real estate, and travel services will bolster growth. All of which means that in the Japanese Net market, Yahoo Japan is the leader for others to follow. By Ken Belson in Tokyo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Dot-Coms: Can They Climb Back? TABLE: What a Difference a Year Makes TABLE: The Internet Champs Yahoo Japan Wins Hoorays INTERACT E-Mail to Business Week Online

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