Listening to Yahoo!'s ( YHOO) presentation at the JPMorgan H&Q Technology Conference Monday, it was easy to forget that the company is primarily a banner ad-driven, free Web portal where millions of consumers go to check stock quotes or look up tomorrow's weather.
Jeff Mallett, Yahoo!'s president and COO, spent his time at the podium stressing everything but the company's core consumer business. Sure, he scored points by emphasizing the 67 million "active" users who log onto their My Yahoo! pages each day. But the words "portal" and "free" never crossed his lips. Instead, Mallett talked about getting those users to open their wallets for new "premium" services like digital music downloads. In short, Yahoo! wants to get paid. And that's a good thing because the Internet advertising smackdown has punished Yahoo!'s financial results, turning a once impervious Internet blue-chip into just another dented dot-com. "We're six months into the tough times, but we're managing our way through it," said Mallett, who was recently passed over for Yahoo!'s CEO spot in favor of former Warner Brothers executive Terry Semel. So to get out from under the dark skies, Yahoo! is selling itself as a strategic Internet marketing partner to corporate America. Forty-nine of the Fortune 100 already advertise on Yahoo!, but Mallett says the portal is pushing for these companies to think beyond the banner ad as a way to attract and retain their customers. And because most people access Yahoo! from work, the portal has linked with German software giant SAP ( SAP) to build corporate versions of My Yahoo! pages that combine corporate information and applications with outside content like sports scores and headline news. Sue Decker, Yahoo!'s CFO, says that about $145 million, or 20%, of the company's estimated 2001 revenue will come from "business services," of which half will come from "premium services." She declined to break out how this revenue is split between consumer and business customers. This emphasis on leveraging its huge Web traffic numbers, getting users to pay for services, and overall, boosting nonadvertising revenue, pricked up the ears of the assembled fund managers gathered to hear Mallett and Decker speak. The duo was peppered with detailed questions in the breakout session. The answers, while not exactly forthcoming, paint a clearer picture of what Yahoo!, wants, or needs, to become, if it's going to survive. Yahoo! is looking more and more like America Online ( AOL).