TeleSoft Partners Fifth Annual Limited Partner Meeting Doug Garland Vice President & General Manager Access & Distribution October 25, 2002

2 Presentation Outline Yahoo! Background Broadband Market Users Want Applications Not Pipes Premium Services SBC Relationship Future Strategy

3 Yahoo! Background

4 The Power of Yahoo! #1 Internet brand in the U.S. #1 global Internet destination 20 verticals in the top three

5 Past Strategy Get big fast… by providing a broad set of Web services to attract the largest possible audience…

6 What’s Different? Access agnosticAccess & subscriber relationships Aggregator of contentOWN & aggregate content Everything for freeFor pay and free One of manyPartner of choice Order takers Solutions and relationships YESTERDAY TODAY

7 What’s Different? YESTERDAY TODAY

8 Today’s Strategy Build a diversified global business by focusing our efforts and leveraging our core strengths to provide deeper, more valuable solutions for our consumers & business partners

9 High-Performance Organization – New Business Structure SBC Yahoo! DSL SBC Yahoo! Dial Mobile/Voice Services Access Search & Directory Autos Careers Real Estate Listings Shopping Warehouse Travel Auctions Commerce Mail Messenger Communities Photos/BC Personals Small Biz Commun- ications Finance Entertainment News Sports Media & Information Portal Solutions Broadcast Solutions Enterprise Solutions Technology Marketing Sales Product Development

10 Financial Results Q Revenues of $249 million - 50 Percent Year over Year Growth 2002 Revenues are expected to be between $930 and $955 million for the full year Revenues are expected to be between $1.075 and $1.175 billion for the full year 2003

11 Quarterly Revenue Trends $166 $189 $193 $226 Five quarters of revenue growth $ in millions $249

12 Revenue Mix Revenue is becoming increasingly balanced: Fees, Listings and Transactions now comprise 41% of revenue as opposed to 27% a year ago Marketing Services Fees & Listings Transactions Q3 ’02 Revenue Mix Q3 ’01 Revenue Mix

13 Deeper Consumer Relationships Yahoo! Consumers 200MM+ Search News Entertainment Active Registered Consumers 93MM+ My Yahoo! Mail & Messenger Games Direct Billing Relationship 1.5MM Today 10MM+ Goal Access Personals Real Time Quotes

14 Access Is Key to Revenue Diversification Clear goal to diversify beyond marketing services and establish direct billing relationships with users Access partnerships form the foundation of our paid subscriber base Once engaged with users via access partnership, we believe we are will positioned to upsell additional premium services.

15 Broadband Market

16 The Broadband Opportunity Yahoo! positioned to take share –Growing market –Brand strength, trust –Enables acceleration in the growth of our subscriber base

17 Market Share Data Yankee Group, September 2002

18 Forrester Research, October 2002

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20 NOT Users Want Applications NOT Pipes

21 Strength of Yahoo! in a Segmented Market Extremely flexible platform to unique service on a per user basis Broad-reaching brand with appeal across all segments Sufficient scale to aggregate the content library necessary to serve all segments

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23 Crossing the Broadband Chasm Early adopters have adopted For the mass market: –Speed is not enough –Always on is not enough Broadband providers need applications that will be meaningful and relevant to an increasingly segmented market

24 Creating the Need... Forrester Research, October 2002

25 Creating the Need...

26 Premium Content and Applications Are Key

27 Lisa Hooks, President of AOL Broadband: “we will be a channel…” –NY Times DOUG: See article...

28 Premium Services

29 Premium Services Today Jupiter Media Metrix, Yahoo! analysis

30 Premium Services Tomorrow Source: Jupiter Media Metrix, Yahoo! analysis CAGR: 48% $2.2B $3.4B $5.0B $7.1B Yahoo: Choice of format for data Yahoo: Choice of format for data

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32 SBC Relationship

MM DSL and dial Internet customers Top 5 ISP Serves 90% of U.S. Leader in reliability, performance and customer satisfaction 200 MM+ unique monthly users, 93 MM+ active registered members #1 global Internet destination, ahead of AOL and MSN Leader in innovation, Internet products and services 1 # DSL Internet provider 1 # Internet destination

34 A Landmark Alliance The Yahoo! & SBC alliance –Broad-based Dial, DSL, Small Business, Yellow Pages and more to come –Huge SBC coverage area and large user base 13 states for DSL, national for Dial –Shared revenue model SBC shares monthly access fees with Yahoo! Yahoo! shares premium service and marketing revenue with SBC

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36 Joint Marketing Samples? Launch (Monster) Dial Frustration / Career (Super) Speed Splash Page

37 New business model: Yahoo! and SBC change the rules of the game AOLMSNYahoo! & SBC Preferred Broadband Platforms CableCable & DSLDSL StructureVertical integration of distribution and content Wholesale relationships with access providers Partnerships with access providers Retail Environment“House brand” or TW Cable, “open access” elsewhere Buy exclusivity or compete as “open access” provider Exclusive at retail MarketingSolo efforts Combined efforts Advanced featuresSolo efforts Joint development and marketing

38 The Value Yahoo! Delivers Yahoo!: Uniquely Valuable Partner for SBC –Independent player with the most compelling user experience –Online marketing powerhouse –Yahoo! meets key challenges Cost of customer acquisition, churn, lack of upside and cost of programming SBC “Goes Exclusive” with Yahoo! for Retail Customers

39 Future Strategy

40 Mobile & Voice Services Demand for integration for wireless and voice into broadband Application development stunted in early WAP implementations due to lack of viable business model Mobile experience not distinct from PC experience – rather an extension of one’s online life –Preferences and user profile accessed via mobile devices Yahoo! investment in Zed

41 Our Access Strategy Going Forward Drive subscribers on broadband and narrowband Offer a differentiated, uniquely personalizable product Drive direct financial relationships with consumers DOUG... Mobile tie-in????

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