Jerry Yang's Letter to Stockholders

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, and we are building a superior mobile experience for Yahoo! users globally so we can further capitalize on this opportunity.

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

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

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

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

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

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

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

Jerry Yang