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

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 0-28018

YAHOO! INC.
(Exact name of registrant as specified in its charter)

California 77-0398689
- ----------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

3400 Central Expressway, Suite 201
Santa Clara, California 95051
----------------------------------------
(Address of principal executive offices)

Registrant's telephone number, including area code: (408) 731-3300

Indicate by check mark whether the Registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days: Yes[X] No[ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class Outstanding at September 30, 1997
- -------------------------------------- ----------------------------------
Common Stock, $0.00067 par value 43,099,792

YAHOO! INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION PAGE NO.

Item 1. Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets
at September 30, 1997 and December 31, 1996 3

Condensed Consolidated Statements of Operations
for the three months ended September 30, 1997 and 1996;
and the nine months ended September 30, 1997 and 1996 4

Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 1997 and 1996 5

Notes to Condensed Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 22

Item 2. Changes in Securities 23

Item 3. Defaults Upon Senior Securities 24

Item 4. Submission of Matters to a Vote of Security Holders 24

Item 5. Other Information 24

Item 6. Exhibits and Reports on Form 8-K 24

Signatures 25

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

YAHOO! INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, December 31,
1997 1996
---------------- ----------------
ASSETS (unaudited)

Current assets:
Cash and cash equivalents $ 55,754,000 $ 31,865,000
Short-term investments in marketable securities 42,748,000 60,689,000
Accounts receivable, net 8,331,000 4,648,000
Prepaid expenses 7,190,000 353,000
---------------- ----------------
Total current assets 114,023,000 97,555,000

Long-term investments in marketable securities 4,003,000 9,748,000
Property and equipment, net 4,214,000 2,223,000
Investment in unconsolidated joint venture 1,228,000 729,000
Other assets 2,286,000 -
---------------- ----------------
$ 125,754,000 $ 110,255,000
---------------- ----------------
---------------- ----------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,867,000 $ 992,000
Accrued expenses and other current liabilities 7,958,000 4,367,000
Deferred revenue 4,332,000 1,229,000
Due to related parties 760,000 1,082,000
---------------- ----------------
Total current liabilities 14,917,000 7,670,000
---------------- ----------------

Minority interests in consolidated subsidiaries 809,000 510,000

Shareholders' equity:
Common Stock 19,000 17,000
Additional paid-in capital 131,674,000 105,026,000
Accumulated deficit (21,665,000) (2,968,000)
---------------- ----------------
Total shareholders' equity 110,028,000 102,075,000
---------------- ----------------
$ 125,754,000 $ 110,255,000
---------------- ----------------
---------------- ----------------

The accompanying notes are an integral part of these
condensed consolidated financial statements.

YAHOO! INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended Nine Months Ended
---------------------------------- ---------------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
--------------- --------------- --------------- ---------------

Net revenues $ 17,320,000 $ 5,515,000 $ 40,355,000 $ 10,522,000
Cost of revenues 1,992,000 1,038,000 5,268,000 1,725,000
--------------- --------------- --------------- ---------------
Gross profit 15,328,000 4,477,000 35,087,000 8,797,000
--------------- --------------- --------------- ---------------

Operating expenses:
Sales and marketing 11,187,000 4,015,000 26,444,000 8,165,000
Product development 2,557,000 1,362,000 6,562,000 2,729,000
General and administrative 1,362,000 1,673,000 3,981,000 2,922,000
Other - nonrecurring costs - - 21,245,000 -
--------------- --------------- --------------- ---------------
Total operating expenses 15,106,000 7,050,000 58,232,000 13,816,000
--------------- --------------- --------------- ---------------

Income (loss) from operations 222,000 (2,573,000) (23,145,000) (5,019,000)
Investment income, net 1,168,000 1,262,000 3,817,000 2,423,000
Minority interests in losses from operations
of consolidated subsidiaries 247,000 166,000 631,000 166,000
--------------- --------------- --------------- ---------------

Income (loss) before income taxes 1,637,000 (1,145,000) (18,697,000) (2,430,000)

Provision for income taxes - - - -
--------------- --------------- --------------- ---------------

Net income (loss) $ 1,637,000 $ (1,145,000) $ (18,697,000) $ (2,430,000)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------

Net income (loss) per share $0.03 ($0.03) ($0.45) ($0.07)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------

Weighted average common shares 50,096,000 39,756,000 41,742,000 36,140,000

The accompanying notes are an integral part of these
condensed consolidated financial statements.

YAHOO! INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended
----------------------------------
September 30, September 30,
1997 1996
--------------- --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (18,697,000) $ (2,430,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,157,000 441,000
Minority interests in losses from operations of
consolidated subsidiaries (631,000) (166,000)
Non-cash charge 21,245,000 -
Changes in assets and liabilities:
Accounts receivable, net (3,683,000) (2,286,000)
Prepaid expenses and other assets (8,011,000) (651,000)
Accounts payable 875,000 1,191,000
Accrued expenses and other current liabilities 3,330,000 2,553,000
Deferred revenue 3,103,000 105,000
Due to related parties (322,000) 128,000
--------------- ---------------
Net cash used in operating activities (1,634,000) (1,115,000)
--------------- ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (2,943,000) (1,759,000)
(Purchases) sales and maturites of investments in
marketable securities, net 23,686,000 (73,077,000)
Investment in unconsolidated joint venture (299,000) (729,000)
--------------- ---------------
Net cash provided by (used in) investing activities 20,444,000 (75,565,000)
--------------- ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of capital stock, net 4,083,000 98,769,000
Proceeds from minority investors 996,000 450,000
Repayment of lease obligations - (128,000)
--------------- ---------------
Net cash provided by financing activities 5,079,000 99,091,000
--------------- ---------------

Net change in cash and cash equivalents 23,889,000 22,411,000
Cash and cash equivalents at beginning of period 31,865,000 5,297,000
--------------- ---------------

Cash and cash equivalents at end of period $ 55,754,000 $ 27,708,000
--------------- ---------------
--------------- ---------------

SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS:
Purchase of NetControls through issuance of Common Stock $ 1,400,000 $ -
--------------- ---------------
--------------- ---------------

The accompanying notes are an integral part of these
condensed consolidated financial statements.

YAHOO! INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION

Yahoo! Inc. (the "Company") is an Internet media company that offers a
network of globally-branded properties, specialty programming, and aggregated
content distributed primarily on the World Wide Web (the "Web") serving business
professionals and consumers, and is among the most widely used guides for
information and discovery on the Web. The Company was incorporated in
California on March 5, 1995 and commenced operations on that date. The Company
conducts its business within one industry segment.

The accompanying unaudited condensed consolidated financial statements
reflect all adjustments which, in the opinion of management, are necessary for a
fair presentation of the results for the periods shown. The results of
operations for such periods are not necessarily indicative of the results
expected for the full fiscal year or for any future period.

These financial statements should be read in conjunction with the financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended December 31, 1996. Certain prior period balances have
been reclassified to conform with current period presentation.

NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income."
SFAS 130 establishes standards for reporting comprehensive income and its
components in a financial statement. Comprehensive income as defined includes
all changes in equity (net assets) during a period from non-owner sources.
Examples of items to be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustment and unrealized
gain/loss on available for sale securities. The disclosure prescribed by SFAS
130 must be made beginning with the first quarter of 1998 and is not anticipated
to have a material impact on the Company's financial position or results of
operations.

In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement establishes standards for
the way companies report information about operating segments in annual
financial statements. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. The Company
has not yet determined the impact, if any, of adopting this standard. The
disclosures prescribed by SFAS 131 are effective in 1998.

NOTE 3 - COMMITMENTS

NETSCAPE GUIDE BY YAHOO!

During March 1997, the Company entered into certain agreements with
Netscape Communications Corporation (Netscape) under which the Company has
developed and operates an Internet information navigation service called
"NETSCAPE GUIDE BY YAHOO!" (the GUIDE). The Co-Marketing agreement provides
that revenue from advertising on the GUIDE, which is managed by the Company, is
to be shared between the Company and Netscape. Under the terms of the Trademark
License agreement, the Company made a one-time non-refundable trademark license
fee payment of $5,000,000 in March 1997 which is being amortized over the
initial two-year term, which commenced in May 1997. Under the terms of the
Co-Marketing agreement as amended in June 1997, the Company also provided
Netscape with a minimum of $4,660,000 in guarantees against shared advertising
revenues in the first year of the agreement and up to $15,000,000 in the second
year of the agreement, subject in the second year to certain minimum levels of
impressions being reached on the GUIDE. Actual payments may be higher and will
relate directly to the overall revenue recognized from the GUIDE. As of
September 30, 1997, $1,160,000 had been paid to Netscape under this agreement.

NETSCAPE PREMIER PROVIDER

Also during March 1997, the Company entered into an agreement with Netscape
whereby it was designated as one of four "Premier Providers" of domestic
navigational services within the Netscape Web Site. Under the terms of the
agreement, the Company is required to make minimum payments of $3,200,000 in
cash and is obligated to provide $1,500,000 in the Company's advertising
services in return for certain minimum guaranteed exposures over the course of
the one-year term of the agreement, which commenced in May 1997. The minimum
payments are amortized over the term of the agreement. As of September 30,
1997, the Company had paid $1,637,000 in cash and an additional $600,000 was
paid in October under the terms of the agreement. Expenses incurred to date as
of September 30, 1997 under the agreement were approximately $2,650,000. To the
extent that the minimum guaranteed exposures are exceeded, the Company is
obligated to remit to Netscape additional payments of cash and the Company's
advertising services. At September 30, 1997, approximately $700,000 has been
expensed over and above the amortization of the minimum guaranteed payments.

During June 1997, the Company entered into certain agreements with Netscape
whereby it was designated as a Premier Provider of international search and
navigational guide services for the Netscape Net Search program. Under the
terms of the agreements, the Company will provide services in 12 countries,
including Australia, Denmark, France, Germany, Italy, Japan, Korea, The
Netherlands, Portugal, Spain, Sweden, and the United Kingdom. Under the terms
of the agreements, the Company made a cash payment of $2,900,000 in July 1997
and is obligated to provide $100,000 in the Company's advertising services in
return for certain minimum guaranteed exposures over the course

of the one-year term of the agreements, which commenced in July 1997. The
Company amortizes the total cost of these agreements over their one year term.

NOTE 4 - NET INCOME (LOSS) PER SHARE

Net income per share is computed using the weighted average number of
common and common equivalent shares outstanding during the period. Common
equivalent shares consist of the incremental common shares issuable upon the
exercise of stock options and warrants (using the treasury stock method or the
modified treasury stock method, whichever applies). Net loss per share is
computed using the weighted average number of common shares outstanding during
the period. Common equivalent shares are excluded from the computation as their
effect is antidilutive, except that for the nine month period ended September
30, 1996, pursuant to the Securities and Exchange Commission Staff Accounting
Bulletin, the convertible preferred stock (using the if-converted method) and
common equivalent shares (using the treasury stock method and the assumed public
offering price) issued subsequent to March 5, 1995 through April 11, 1996 have
been included in the computation as if they were outstanding for the entire
period.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 128, "Earnings per Share." This Statement
is effective for the Company's fiscal year ending December 31, 1997. The
Statement redefines earnings per share under generally accepted accounting
principles. Under the new standard, primary earnings per share is replaced by
basic earnings per share and fully diluted earnings per share is replaced by
diluted earnings per share. The impact of this Statement for the three and nine
month periods ended September 30, 1997 and 1996 on the calculation of primary
and fully diluted earnings per share is not material.

NOTE 5 - STOCK SPLIT

During July 1997, the Company's Board of Directors approved a three-for-two
Common Stock split. Shareholders of record on August 11, 1997 (the record date)
received one additional share for every two shares held on that date. Weighted
average common shares have been adjusted in the notes to the financial
statements and on the statements of operations for the three and nine month
periods ended September 30, 1997 and 1996 to reflect the three-for-two split.

NOTE 6 - MARKETPLACE RESTRUCTURING

property, and included other contractual commitments by the Company to Visa. In
July 1997, prior to the completion of significant business activities and public
launch of the property, the Company and Visa entered into an agreement under
which the Visa Group released the Company from certain obligations and claims,
and the Company returned the Visa Group's original equity contribution to the
L.L.C. In connection with this agreement, Yahoo! issued 699,481 shares of
Yahoo! Common Stock to the Visa Group, for which the Company recorded a
one-time, non-cash, pre-tax charge of $21,245,000 in the second quarter ended
June 30, 1997.

NOTE 7 - PURCHASE OF NETCONTROLS

On July 31, 1997, the Company entered into a stock purchase agreement to
acquire all of the outstanding capital stock of NetControls, Inc. for 37,167
shares of the Company's Common Stock. The acquisition was recorded as a
purchase for accounting purposes and the majority of the purchase price of
approximately $1,400,000 will be amortized over the estimated useful life of the
technology acquired. Upon acquisition, the historical financial results of
NetControls, Inc. were deminimis.

NOTE 8 - YAHOO! KOREA

During August 1997, the Company signed a joint venture agreement with
SOFTBANK, a holder of approximately 33% of the Company's Common Stock at
September 30, 1997, and other SOFTBANK affiliate companies whereby Yahoo!
Korea was formed to develop and operate a version of the YAHOO! Internet
Guide in the native Korean language. The parties have invested a total of
$1,000,000 in proportion to their respective equity interests. The Company
has a majority share of approximately 60% in the joint venture, and
therefore, has consolidated the financial results, which were insignificant
during the quarter.

NOTE 9 - SUBSEQUENT EVENT

On October 20, 1997, the Company completed the acquisition of Four11
Corporation, a privately held, online communications and directory company.
Under the terms of the acquisition, which will be accounted for as a pooling of
interests, the Company exchanged 1,505,720 shares of Common Stock for all of
Four11's outstanding shares and assumed 148,336 options and warrants to purchase
Yahoo! Common Stock, at a common exchange ratio of 0.2318121 of a share of the
Company's Common Stock for each share of Four11's common stock. All outstanding
Four11 preferred stock was converted into common stock immediately prior to the
acquisition.

Presented below is unaudited selected pro forma financial information,
reflecting the combination, for the three and nine month periods ended September
30, 1997 and 1996 (in thousands except per share amounts):

Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996

Total revenues $18,134 $ 5,626 $42,306 $10,754
Net income (loss) $ 715 ($ 1,718) ($21,611) ($3,619)

Net income (loss) per share $0.01 ($0.04) ($0.50) ($0.10)

Shares used in per share computation 51,575 40,740 43,201 37,124

The unaudited pro forma results for the nine months ended September 30,
1997 do not include non-recurring costs of approximately $4,000,000 arising
from the acquisition of Four11 which will be recorded as expenses in the
quarter ending December 31, 1997. The charges consist of investment banker
fees, legal and accounting fees, redundancy costs, and certain other expenses
directly related to the acquisition.

The unaudited pro forma information is not necessarily indicative of the
actual results of operations had the acquisition occurred at the beginning of
the periods indicated, nor should it be used to project the Company's results of
operations for any future date or period.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

THE DISCUSSION IN THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE
TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW, AND
THE RISKS DISCUSSED UNDER THE CAPTION, "RISK FACTORS" IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IN THE REGISTRATION
STATEMENT FILED ON FORM S-3 ON AUGUST 4, 1997 (COPIES OF WHICH ARE AVAILABLE
AT BIZ.YAHOO.COM/PROFILES/YHOO.HTML OR UPON REQUEST FROM THE COMPANY).

OVERVIEW

Yahoo! Inc. is an Internet media company that offers a network of
globally-branded properties, specialty programming, and aggregated content
distributed primarily on the World Wide Web serving business professionals and
consumers, and is among the most widely used guides for information and
discovery on the Web. The Company was incorporated in California on March 5,
1995 and commenced operations on that date. In August 1995, the Company
commenced selling advertisements on its Web pages and recognized its initial
revenues. In April 1996, the Company completed its initial public offering.

The Company's revenues are derived principally from the sale of
advertisements on short-term contracts. The Company's standard rates for
advertising currently range from $0.02 per impression for general rotation to
$0.08 per impression for highly targeted audiences and properties. To date, the
duration of the Company's advertising commitments has ranged from one week to
one year. Advertising revenues are recognized ratably in the period in which
the advertisement is displayed, provided that no significant Company obligations
remain and collection of the resulting receivable is probable. Company
obligations typically include guarantees of minimum number of "impressions," or
times that an advertisement appears in pages viewed by users of the Company's
online properties. To the extent minimum guaranteed impressions are not met,
the Company defers recognition of the corresponding revenues until the remaining
guaranteed impression levels are achieved. Deferred revenue is primarily
comprised of billings in excess of recognized revenue relating to advertising
contracts. The Company has recently started to sell a combination of
sponsorship and banner advertising contracts in addition to the banner
advertising contracts historically sold by the Company. In general, these
sponsorship advertising contracts have longer terms than standard banner
advertising contracts, and also involve more integration with Yahoo! services,
such as the placement of buttons which provide users with direct links to the
advertiser's Web site.

During March 1997, the Company entered into certain agreements with
Netscape under which the Company has developed and operates an Internet
information navigation service called "NETSCAPE GUIDE BY YAHOO!" (the GUIDE).
The personalized guide has been designed to provide Internet users with a
central comprehensive source of sites, news, and other valuable services on the
Web. NETSCAPE GUIDE BY YAHOO! is accessible through the Netscape Internet site
and from the tool bar of Netscape Communicator. The navigational service
provides users with central access to eight of the most popular information
categories on the Web. The Co-Marketing agreement provides that revenue from
advertising on the GUIDE, which is managed by the Company, is to be shared
between the Company and Netscape. The Company is selling advertising space on
the GUIDE by hiring a significant number of direct sales personnel. Under the
terms of the Trademark License agreement, the Company made a one-time
non-refundable trademark license fee payment of $5,000,000 in March 1997 which
is being amortized over the initial two-year term, which commenced in May 1997.
Under the terms of the Co-Marketing agreement as amended in June 1997, the
Company also provided Netscape with a minimum of $4,660,000 in guarantees
against shared advertising revenues in the first year of the agreement and up to
$15,000,000 in the second year of the agreement, subject in the second year to
certain minimum levels of advertising impressions being reached on the GUIDE.
Actual payments may be higher and will relate directly to the overall revenue
recognized from the GUIDE.

During June 1997, the Company entered into certain agreements with Netscape
whereby it was designated as a Premier Provider of international search and
navigational guide services for the Netscape Net Search program. Under the
terms of the agreements, the Company will provide services in 12 countries,
including Australia, Denmark, France, Germany, Italy, Japan, Korea, The
Netherlands, Portugal, Spain, Sweden, and the United Kingdom. Under the terms of
the agreements, the Company made a cash payment of $2,900,000 in July 1997 and
is obligated to provide $100,000 in the Company's advertising services in return
for certain minimum guaranteed exposures over the course of the one-year term of
the agreements, which commenced in July 1997. The Company amortizes the total
cost of these agreements over their one year term.

In August 1996, the Company entered into a joint venture arrangement with
Visa Marketplace, Inc. and another party (the "Visa Group") for the development
of an online property relating to electronic commerce. The arrangements
included the creation of a limited liability company (Yahoo! Marketplace L.L.C.)
owned by the Company and the Visa Group, to which the Company licensed certain
trademarks and other intellectual property, and included other contractual
commitments by the Company to Visa. In July 1997, prior to the completion of
significant business activities and public launch of the property, the Company
and Visa entered into an agreement under which the Visa Group released the
Company from certain obligations and claims, and the Company returned the Visa
Group's original equity contribution to the L.L.C. In connection with this
agreement, Yahoo! issued 699,481 shares of Yahoo! Common Stock to the Visa
Group, for which the Company recorded a one-time, non-cash, pre-tax charge of
$21,245,000 in the second quarter ended June 30, 1997.

In July 1997, GTE New Media Services Incorporated ("GTE New Media"), an
affiliate of GTE, filed suit in Dallas, Texas, against Netscape and the Company,
in which GTE New Media made a number of claims relating to the inclusion of
certain Yellow Pages hypertext links in the NETSCAPE GUIDE BY YAHOO!, an online
navigational property operated by the Company under an agreement with Netscape.
In this lawsuit, GTE New Media has alleged, among other things, that by
including such links to the Yellow Pages service operated by several Regional
Bell Operating Companies (the "RBOCs") within the NETSCAPE GUIDE, the Company
has tortiously interfered with an alleged contractual relationship between GTE
New Media and Netscape relating to placement of links by Netscape for a Yellow
Pages service operated by GTE New Media. GTE New Media seeks injunctive relief
as well as actual and punitive damages. In October 1997, GTE New Media brought
suit in the U.S. District Court for the District of Columbia, against the RBOCs,
Netscape and the Company, in which GTE alleges, among other things, that the
alleged exclusion of the GTE New Media Yellow Pages from the NETSCAPE GUIDE
Yellow Pages service violates federal antitrust laws, and GTE New Media seeks
injunctive relief and damages (trebled under federal antitrust laws) from such
alleged actions. The Company believes that the claims against the Company in
these lawsuits are without merit and intends to contest them vigorously.
Although the Company cannot predict with certainty the outcome of these lawsuits
or the expenses that may be incurred in defending the lawsuits, the Company does
not believe that the result in the lawsuits will have a material adverse effect
on the Company's financial position or results of operations.

During August 1997, the Company signed a joint venture agreement with
SOFTBANK, a holder of approximately 33% of the Company's Common Stock at

September 30, 1997, and SOFTBANK affiliate companies whereby Yahoo! Korea was
formed to develop and operate a version of the YAHOO! Internet Guide in the
native Korean language. The parties have invested a total of $1,000,000 in
proportion to their respective equity interests. The Company has a majority
share of approximately 60% in the joint venture, and therefore, has consolidated
the financial results, which were insignificant during the quarter.

On October 20, 1997, the Company completed the acquisition of Four11
Corporation, a privately held, online communications and directory company.
Under the terms of the acquisition agreement, the Company issued or reserved for
issuance 1,654,099 shares of the Company's Common Stock for all outstanding
Four11 shares, options, and warrants. The transaction will be recorded as a
pooling of interests for accounting purposes. The Company expects to record a
one-time charge of approximately $4,000,000 in the fourth quarter of 1997
relating to expenses incurred with the transaction. For the nine months ended
September 30, 1997 Four11 incurred a net loss of $2,914,000. The Company is
in the process of integrating Four11's technology and operations with its
operations and any difficulties in successfully integrating this acquired
business could have an adverse impact on the Company's short-term operating
results.

Yahoo! has a limited operating history and its prospects are subject to
the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving markets for Internet products and services,
including the Web-based advertising market. Specifically, such risks
include, without limitation, the failure to continue to develop and extend
the "Yahoo!" brand, the failure to develop new media properties, the
inability of the Company to maintain and increase the levels of traffic on
YAHOO! properties, the development of equal or superior services or products
by competitors, the failure of the market to adopt the Web as an advertising
medium, the failure to successfully sell Web-based advertising through the
Company's recently developed internal sales force, potential reductions in
market prices for Web-based advertising as a result of competition or other
factors, the failure of the Company to effectively generate commerce-related
revenues through sponsored services and placements in Yahoo! properties, the
inability of the Company to effectively integrate the technology and
operations or any other acquired businesses or technologies with its
operations, such as the recent acquisition of Four11 Corporation, the failure
of the Company to successfully offer personalized Web-based services, such as
e-mail services, to consumers without errors or interruptions in service, and
the inability to continue to identify, attract, retain and motivate qualified
personnel. There can be no assurance that the Company will be successful in
addressing such risks.

As of September 30, 1997, the Company had an accumulated deficit of
$21,665,000. The extremely limited operating history of the Company and the
uncertain nature of the markets addressed by the Company make the prediction of
future results of operations difficult or impossible and, therefore, the recent
revenue growth experienced by the Company should not be taken as indicative of
the rate of revenue growth, if any, that can be expected in the future. The
Company believes that period to period comparisons of its operating results are
not meaningful and that the results for any period should not be relied upon as
an indication of future performance. The Company currently expects to
significantly increase its operating expenses to expand its sales and marketing
operations, to fund greater levels of product development and to develop and
commercialize additional media properties. The Company also has remaining
guaranteed payments of up to $18,500,000 in advertising revenue guarantees to
Netscape over the next 18 months in connection with the NETSCAPE GUIDE BY YAHOO!
agreement. As a result of these factors, there can be no assurance that the
Company will not incur significant losses on a quarterly and annual basis for
the foreseeable future.

As a result of the Company's limited operating history, the Company does
not have historical financial data for a significant number of periods on which
to base planned operating expenses. The Company derives the majority of its
revenues from the sale of advertisements under short-term contracts, which are
difficult to forecast accurately. The Company's expense levels are based in
part on its expectations concerning future revenue and to a large extent are
fixed. The Company also has fixed expenses in the form of advertising revenue
guarantees of up to $18,500,000 over the next 18 months relating to the NETSCAPE
GUIDE BY YAHOO!, which subject the Company to additional risk in the event that
advertising revenues from this property are not sufficient to offset guaranteed
payments and related operating expenses. Quarterly revenues and operating
results depend substantially upon the advertising revenues received within the
quarter, which are difficult to forecast accurately. Accordingly, the
cancellation or deferral of a small number of advertising contracts could have a
material adverse effect on the Company's business, results of operations and
financial condition. The Company may be unable to adjust spending in a timely
manner to compensate for any unexpected revenue shortfall, and any significant
shortfall in revenue in relation to the Company's expectations would have an
immediate adverse effect on the Company's business, operating results and
financial condition. In addition, the Company plans to continue to
significantly increase its operating expenses to expand its sales and marketing
operations, to continue to develop and extend the "Yahoo!" brand, to implement
and operate the NETSCAPE GUIDE BY YAHOO!, to fund greater levels of product
development and to develop and commercialize additional media properties. To
the extent that such expenses precede or are not subsequently followed by
increased revenues, the Company's business, operating results and financial
condition will be materially and adversely affected.

The Company's operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside the Company's
control. These factors include the level of usage of the Internet, demand for
Internet advertising, seasonal trends in Internet usage and advertising
placements, the addition or loss of advertisers, the level of user traffic on
YAHOO! and the Company's other online media properties, the advertising
budgeting cycles of individual advertisers, the amount and timing of capital
expenditures and other costs relating to the expansion of the Company's
operations, the introduction of new products or services by the Company or its
competitors, pricing changes for Web-based advertising, the timing of initial
set-up, engineering or development fees that may be paid in connection with
larger advertising and distribution arrangements, technical difficulties with
respect to the use of YAHOO! or other media properties developed by the Company,
incurrence of costs relating to acquisitions such as those to be incurred for
the acquisition of Four11 Corporation, general economic conditions, and economic
conditions specific to the Internet and online media. As a strategic response
to changes in the competitive environment, the Company may from time to time
make certain pricing, service or marketing decisions or business combinations
that could have a material adverse effect on the Company's business, results of
operations and financial condition. The Company also has experienced, and
expects to continue to experience, seasonality in its business, with user
traffic on YAHOO! and the Company's other online media properties being lower
during the summer and year-end vacation and holiday periods, when usage of the
Web and the Company's services typically experience slower growth or decline.
Additionally, seasonality may also affect the amount of customer advertising
dollars placed with the Company in the

first and third calendar quarters as advertisers historically spend less during
these quarters.

Due to all of the foregoing factors, in some future quarter the Company's
operating results may fall below the expectations of securities analysts and
investors. In such event, the trading price of the Company's Common Stock would
likely be materially and adversely affected.

RESULTS OF OPERATIONS

NET REVENUES

Net revenues increased 214% and 284% in the three and nine month periods
ended September 30, 1997, respectively, as compared to the corresponding periods
in fiscal 1996. The increases were due primarily to an increase in the number
of advertisers, from 340 during the quarter ended September 30, 1996 to over
1,200 in the quarter ended September 30, 1997. Most of the Company's customers
purchase advertisements on a short-term basis. There can be no assurance that
customers will continue to purchase advertising on the Company's Web pages.
Advertising purchases by SOFTBANK, a 33% shareholder of the Company at September
30, 1997, and its related companies accounted for approximately 4% and 5% of net
revenues in the three and nine month periods ended September 30, 1997,
respectively, as compared to 15% and 8% in the corresponding periods in fiscal
1996. Contracted prices on these orders are comparable to those given to other
major customers of the Company. Except for SOFTBANK as indicated above, no one
customer accounted for 10% or more of revenues during the three and nine month
periods ended September 30, 1997 and 1996. International revenues were not
significant during the three and nine month periods ended September 30, 1997 and
1996. Barter revenues represented less than 10% of net revenues during those
periods.

COST OF REVENUES

Cost of revenues consists of the expenses associated with the production
and usage of the Company's online properties. These costs primarily consist of
fees paid to

third parties for content included in the online properties, Internet
connection charges, equipment depreciation, and compensation. Cost of revenues
were 12% and 13% of net revenues in the three and nine month periods ended
September 30, 1997, respectively, as compared to 19% and 16% in the
corresponding periods in fiscal 1996. The absolute dollar increase in cost of
revenues from the year ago periods was primarily attributable to increases in
the quantity and quality of content available on the Company's online
navigational guide YAHOO! and its other online properties, and increased usage
of YAHOO! and the Company's other online properties. The Company anticipates
that its content and Internet connection expenses will continue to increase with
the quantity and quality of content available on the Company's online
properties, and increased usage of Company's online properties.

OPERATING EXPENSES

The Company's operating expenses have increased significantly since the
Company's inception. This trend reflects the costs associated with the
formation of the Company, the development of the corporate infrastructure, the
marketing and promotion of the Company's brand name, and increased efforts to
develop and commercialize the Company's products and services. The Company
believes that continued expansion of its operations is essential to enhance and
extend the YAHOO! main site, establish branded properties in targeted markets,
and expand the Company's user and advertising base. As a consequence, the
Company intends to continue to significantly increase expenditures in all
operating areas.

SALES AND MARKETING

Sales and marketing expenses were $11,187,000 for the quarter ended
September 30, 1997, or 65% of net revenues as compared to $4,015,000, or 73% of
net revenues for the quarter ended September 30, 1996. For the nine months
ended September 30, 1997, sales and marketing expenses were $26,444,000, or 66%
of net revenues as compared to $8,165,000, or 78% of net revenues for the nine
months ended September 30, 1996. The absolute dollar increase from the year ago
periods is primarily attributable to additional compensation expense associated
with an increase in sales and marketing personnel related to the addition of a
direct sales force which the Company began building in the fourth quarter of
1996, the addition of and growth in the various international subsidiaries, an
increase in advertising costs associated with the Company's aggressive brand
building strategy, costs associated with the NETSCAPE GUIDE BY YAHOO!, an
increase in the total costs incurred from the Netscape search programs, and an
increase in commissions associated with the increase in revenues. The Company
anticipates that sales and marketing expenses will increase in future periods in
absolute dollars as it continues to pursue an aggressive brand building strategy
and continues to build a direct sales organization.

PRODUCT DEVELOPMENT

Product development expenses were $2,557,000 for the quarter ended
September 30, 1997, or 15% of net revenues as compared to $1,362,000, or 25% of
net revenues for

the quarter ended September 30, 1996. For the nine months ended September 30,
1997, product development expenses were $6,562,000, or 16% of net revenues as
compared to $2,729,000, or 26% of net revenues for the nine months ended
September 30, 1996. The increase in absolute dollars from the year ago periods
is primarily attributable to the development of new online media properties and
the addition of engineers. Product development expenses consist primarily of
employee compensation relating to developing and enhancing the features and
functionality of YAHOO! and other online media properties. To date, all
internal product development costs have been expensed as incurred. Acquired
technology for which technological feasibility has been established, including
the technology purchased in the acquisition of NetControls, is capitalized and
amortized over the useful life. The Company believes that significant
investments in product development are required to remain competitive. As a
consequence, the Company intends to incur increased product development
expenditures in absolute dollars in future periods.

GENERAL AND ADMINISTRATIVE

General and administrative expenses were $1,362,000 for the quarter ended
September 30, 1997, or 8% of net revenues as compared to $1,673,000, or 30% of
net revenues for the quarter ended September 30, 1996. The decrease in absolute
dollars from the year ago quarter is primarily attributable to lower legal
expenses, partially offset by an increase in personnel. For the nine months
ended September 30, 1997, general and administrative expenses were $3,981,000,
or 10% of net revenues as compared to $2,922,000, or 28% of net revenues for the
nine months ended September 30, 1996. The increase in absolute dollars from the
year ago period is primarily attributable to increases in personnel, partially
offset by lower legal expenses. The Company believes that the absolute dollar
level of general and administrative expenses will increase in future periods, as
a result of increased staffing, fees for professional services, and costs
associated with registering the Company's trademarks in various countries.

OTHER - NONRECURRING COSTS

In July 1997, the Company and Visa entered into an agreement under which
the Visa Group released the Company from certain obligations and claims, and the
Company returned the Visa Group's original equity contribution to Yahoo!
Marketplace L.L.C. In connection with this agreement, Yahoo! issued 699,481
shares of Yahoo! Common Stock to the Visa Group, for which the Company recorded
a one-time, non-cash, pre-tax charge of $21,245,000 in the second quarter ended
June 30, 1997. In conjunction with the October 1997 acquisition of Four11
Corporation, the Company expects to record a one-time charge of approximately
$4,000,000 in the fourth quarter of 1997 relating to expenses incurred with the
transaction.

INVESTMENT INCOME, NET

Investment income, net of investment expense, was $1,168,000 for the
quarter ended September 30, 1997. For the quarter ended September 30, 1996,
investment income was $1,262,000. Investment income for the nine months ended
September 30,

1997 was $3,817,000 as compared to $2,423,000 for the nine months ended
September 30, 1996. The increase in investment income from the year ago nine
month period is attributable to a higher average investment balance as a result
of private and public offering proceeds received during March and April of 1996.
Investment income in future periods may fluctuate as a result of fluctuations in
average cash balances maintained by the Company and changes in the market rates
of its investments.

MINORITY INTERESTS IN OPERATIONS OF CONSOLIDATED SUBSIDIARIES

Minority interests in losses from operations of consolidated subsidiaries
were $247,000 for the quarter ended September 30, 1997 as compared to $166,000
for the year ago quarter. For the nine months ended September 30, 1997,
minority interests in losses from operations of consolidated subsidiaries were
$631,000 as compared to $166,000 for the nine months ended September 30, 1996.
The increase from the year ago periods is primarily attributable to the
staggered launch dates of the joint ventures. Yahoo! Marketplace and Yahoo!
Europe operations began during the third quarter of 1996 and Yahoo! Korea
operations started in the third quarter of 1997. The joint venture agreement
for Yahoo! Marketplace was terminated during the second quarter of 1997 and the
Yahoo! Europe and Yahoo! Korea subsidiaries are still in the early stages of
development. The Company expects that minority interests in operations of
consolidated subsidiaries in the aggregate will continue to fluctuate in future
periods as a function of the results from consolidated subsidiaries.

INCOME TAXES

Based on the current estimate of expected operating results and
certain other factors, the Company expects its effective tax rate to be 0%
through fiscal year 1997. The Company believes sufficient uncertainty exists
regarding the realizability of its deferred tax assets such that a full
valuation allowance continues to be required. The portion of the deferred tax
asset attributable to the U.S. operating loss carryforwards resulting from the
exercise of employee stock options is expected to increase through fiscal year
1997. The tax benefit of this portion of the deferred tax asset, when
recognized, will be accounted for as a credit to additional paid-in capital
rather than a reduction of the income tax provision.

NET INCOME (LOSS)

The Company recorded net income of $1,637,000 or $0.03 per share for the
quarter ended September 30, 1997. For the year ago quarter ended September 30,
1996, the Company recorded a net loss of $1,145,000 or $0.03 per share. For the
nine month period ended September 30, 1997, the Company recorded a net loss of
$18,697,000 or $0.45 per share. Excluding the effect of the one-time, non-cash,
pre-tax charge of $21,245,000 recorded during the second quarter of 1997, the
Company earned $2,548,000 on a pre-tax basis. For the year ago nine month
period ended September 30, 1996, the Company recorded a net loss of $2,430,000
or $0.07 per share.

LIQUIDITY AND CAPITAL RESOURCES

Yahoo! invests predominantly in instruments that are highly liquid, of high
quality investment grade, and predominantly have maturities of less than one
year with the intent to make such funds readily available for operating
purposes. At September 30, 1997, the Company had cash and cash equivalents and
investments totaling $102,505,000 comprised of $55,754,000 in cash and cash
equivalents, $42,748,000 in short-term investments, and $4,003,000 in long-term
investments.

For the nine months ended September 30, 1997, cash used in operating
activities of $1,634,000 was primarily due to increases in prepaid expenses and
other assets, which resulted primarily from a $5,000,000 one-time non-refundable
license payment to Netscape under the NETSCAPE GUIDE BY YAHOO! agreement and a
$2,900,000 payment to Netscape under the international Netscape Net Search
program agreement, and an increase in accounts receivable, partially offset by
increases in accrued liabilities, deferred revenue, and investment income. For
the nine months ended September 30, 1996, $1,115,000 of cash was used in
operating activities.

Cash provided by investing activities was $20,444,000 for the nine months
ended September 30, 1997. Sales and maturities (net of purchases) of
investments in marketable securities during the period were $23,686,000 and
capital expenditures totaled $2,943,000. Capital expenditures have generally
been comprised of purchases of computer hardware and software as well as
leasehold improvements related to leased facilities, and are expected to
increase in future periods. For the nine months ended September 30, 1996,
$75,565,000 was used in investing activities. Purchases (net of sales and
maturities) of investments in marketable securities during the period were
$73,077,000 and capital expenditures totaled $1,759,000.

For the nine months ended September 30, 1997, cash provided by financing
activities of $5,079,000 was due to $4,083,000 from the issuance of Common Stock
pursuant to the exercise of stock options and $996,000 of proceeds received from
minority investors. For the nine months ended September 30, 1996, cash provided
by financing activities of $99,091,000 was primarily due to the March 1996
issuance of 5,100,000 shares of Mandatorily Redeemable Convertible Series C
Preferred Stock for aggregate proceeds of $63,750,000 and the April 1996 initial
public offering of 2,990,000 shares of Common Stock for net proceeds of
$35,043,000.

The Company currently has no material commitments other than those under
the Netscape Co-Marketing agreement, the Netscape Premier Provider
agreements, and operating lease agreements. During September 1997, the
Company entered into a sublease agreement which will provide the Company with
additional office space at its existing Santa Clara location. Under this
sublease agreement, the Company has committed to approximately $12,000,000 in
sublease payments over the seven year period beginning January 1, 1998.
Under the terms of the amended Co-Marketing agreement, the Company has fixed
expenses in the form of advertising revenue guarantees of up to $18,500,000
over the next 18 months, subject in the second year to certain minimum

levels of advertising impressions being reached on the GUIDE. Under the terms
of the Premier Provider agreements, the Company has remaining minimum payments
to Netscape at September 30, 1997 of $1,563,000 in cash and $850,000 in the
Company's advertising services which are due during the one-year terms of the
agreements, of which $600,000 in cash was paid in October 1997. The Company has
experienced a substantial increase in its capital expenditures and operating
lease arrangements since its inception which is consistent with increased
staffing and anticipates that this will continue in the future. Additionally,
the Company will continue to evaluate possible acquisitions of or investments
(including through joint ventures) in businesses, products, and technologies
that are complementary to those of the Company, which may require the use of
cash. Management believes existing cash and investments will be sufficient to
meet the Company's operating requirements for at least the next twelve months.
Thereafter, the Company may sell additional equity or debt securities or obtain
credit facilities. The sale of additional equity or convertible debt securities
could result in additional dilution to the Company's shareholders.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In July 1997, GTE New Media Services Incorporated ("GTE New Media"), an
affiliate of GTE, filed suit in Dallas, Texas, against Netscape
Communications Corporation ("Netscape") and the Company, in which GTE New
Media made a number of claims relating to the inclusion of certain Yellow
Pages hypertext links in the NETSCAPE GUIDE BY YAHOO!, an online navigational
property operated by the Company under an agreement with Netscape. In this
lawsuit, GTE New Media has alleged, among other things, that by including
such links to the Yellow Pages service operated by several Regional Bell
Operating Companies (the "RBOCs") within the NETSCAPE GUIDE, the Company has
tortiously interfered with an alleged contractual relationship between GTE
New Media and Netscape relating to placement of links by Netscape for a
Yellow Pages service operated by GTE New Media. GTE New Media seeks
injunctive relief as well as actual and punitive damages. In October 1997,
GTE New Media brought suit in the U.S. District Court for the District of
Columbia, against the RBOCs, Netscape and the Company, in which GTE alleges,
among other things, that the alleged exclusion of the GTE New Media Yellow
Pages from the NETSCAPE GUIDE Yellow Pages service violates federal antitrust
laws, and GTE New Media seeks injunctive relief and damages (trebled under
federal antitrust laws) from such alleged actions. The Company believes that
the claims against the Company in these lawsuits are without merit and
intends to contest them vigorously. Although the Company cannot predict with
certainty the outcome of these lawsuits or the expenses that may be incurred
in defending the lawsuits, the Company does not believe that the result in
the lawsuits will have a material adverse effect on the Company's financial
position or results of operations.

From time to time the Company has been, and expects to continue to be,
subject to other legal proceedings and claims in the ordinary course of its
business, including, among others, contractual disputes with advertisers and
content distribution providers, and claims of alleged infringement of the
trademarks and other intellectual property rights of third parties by the
Company and its licensees. Such claims, even if not meritorious, could result
in the expenditure of significant financial and managerial resources. Although
the Company cannot predict the outcome of any proceeding, the Company is not
currently aware of any such legal proceedings or claims that the Company
believes will have, individually or in the aggregate, a material adverse effect
on the Company's financial position or results of operations.

ITEM 2. CHANGES IN SECURITIES

Yahoo! Inc. made the following unregistered sales of the Company's Common
Stock since July 1, 1997. All shares and price information have been
adjusted to reflect the 3-for-2 stock split effected on August 11, 1997.

- ------------------------------------------------------------------------------------------------------------------------------------
TRANSACTION AMOUNT OF NAME OF CONSIDERATION PERSONS OR CLASS EXEMPTION
DATE SECURITIES SOLD UNDERWRITER OR RECEIVED OF PERSONS TO FROM
PLACEMENT WHOM THE REGISTRATION
AGENT SECURITIES WERE CLAIMED
SOLD
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
07/29/97 699,481 Shares (1) None (1) Accredited Persons Section 4(2)
("SECTION 4(2)")
of the Securities
Act of 1933, as
amended
("1933 ACT")
- ------------------------------------------------------------------------------------------------------------------------------------
07/31/97 37,167 Shares (2) None (2) Accredited Person Section 4(2)
- ------------------------------------------------------------------------------------------------------------------------------------
10/06/97 17,958 Shares (3) None (3) Accredited Person Section 4(2)
- ------------------------------------------------------------------------------------------------------------------------------------
10/20/97 1,521,834 Shares (4) None (4) Shareholders and Section 4(2)
warrantholders
of Four11
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------

(1) In connection with a Restructuring Agreement among the Company, Visa
International Service Association, Visa Marketplace, Inc. ("VISA
MARKETPLACE"), Sterling Payot Capital, L.P. ("STERLING CAPITAL") and Sterling
Payot Company dated July 29, 1997, the Company issued an aggregate of 699,481
shares of Common Stock to Visa Marketplace and Sterling Capital as described
in Part 1 Item 2. Of the 699,481 shares of Common Stock issued by the
Company, the resale of 388,603 shares was subsequently registered by the
Company on behalf of Visa Marketplace and Sterling Capital on a Registration
Statement on Form S-3 ("FORM S-3") filed with the Securities and Exchange
Commission (the "SEC") on August 4, 1997.

(2) This transaction involved the issuance of 37,167 shares of Common Stock by
the Company to Michael Burmeister-Brown in connection with the acquisition by
the Company of all the outstanding stock of NetControls, Inc. on July 31, 1997.
Of the 37,167 shares issued by the Company, the resale of 31,593 shares was
subsequently registered by the Company on behalf of Mr. Burmeister-Brown on a
Form S-3 filed with the SEC on August 4, 1997.

(3) This transaction involved the net issue exercise by the Company to Phoenix
Leasing Incorporated ("PHOENIX") of a warrant issued by the Company to Phoenix
on October 6, 1995.

(4) Pursuant to an Agreement and Plan of Reorganization dated October 7, 1997,
among the Company, ST Acquisition Corporation, a California corporation and a
wholly-owned subsidiary of the Company, and Four11 Corporation, a California
corporation ("FOUR11"), on October 20, 1997 (the effective date of the merger),
all outstanding shares of Four11 Common Stock and Four11 Preferred Stock were
converted into an aggregate of 1,505,720 shares and all outstanding warrants to
purchase shares of Four11 capital stock were assumed and have become warrants to
purchase 16,114 shares of the Company's Common Stock at an exercise price of
$7.68 per share. The Company intends to file a Form S-3 with the SEC for the
resale of the shares issued to Four11's shareholders and warrantholders.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. The exhibits listed in the accompanying Index to Exhibits are filed as
part of this Report on Form 10-Q.

b. Reports on Form 8-K:
On July 29, 1997, the Company filed a report on Form 8-K in
conjunction with the signing of a restructuring agreement whereby the
Visa Group released Yahoo! from certain obligations and claims, and
Yahoo! purchased the Visa Group's interest in Yahoo! Marketplace LLC.

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

YAHOO! INC.

Dated: October 30, 1997 By: /s/ Gary Valenzuela
------------------------
Senior Vice President, Finance
and Administration, and Chief
Financial Officer
(Principal Financial Officer)

Dated: October 30, 1997 By: /s/ James J. Nelson
------------------------
Vice President, Finance
(Principal Accounting Officer)

YAHOO! INC.

INDEX TO EXHIBITS

Title Exhibit No.
- ----- -----------

Joint Venture Agreement, dated August 31, 1997 between . . . . . . . .10.1
Yahoo! Inc., SoftBank Korea Corporation, SoftBank Corporation,
and Yahoo! Japan Corporation

Sublease Agreement, dated September 11, 1997 between . . . . . . . . .10.2
Yahoo! Inc. and Amdahl Corporation

Computation of Net Income (Loss) Per Share . . . . . . . . . . . . . . .11

Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . .27