ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, April 13, 1996 TAG: 9604150042
SECTION: BUSINESS PAGE: A-4 EDITION: METRO
DATELINE: NEW YORK
SOURCE: EVAN RAMSTAD ASSOCIATED PRESS
WHAT'S ITS SECRET? A name that's hard to forget, a free-wheeling spirit, and a strategic partnership with Softbank Corp.
Yahoo! We're rich!
Yahoo Inc. proved Friday that a funny name pays as investors pounced on the company's stock in its first day of trading. Its two founders became instant multimillionaires - on paper.
The frenzy was more evidence of the appeal of Internet-related companies. The Sunnyvale, Calif.-based company provides a way for computer users to search for information on the World Wide Web.
Yahoo's stock, priced at $13 Thursday, opened at $24.50, rose as high as $43 and closed at $33 on the Nasdaq stock market.
About 17 million shares changed hands. The company only issued 2.6 million, 10 percent of its total 25.7 million.
The company ended the day with a market value of $848.1 million. Of course, that's unusual for a company with just $1.4 million in revenue during the last nine months of 1995.
But it follows a pattern with new Internet-related stocks.
Last August, Netscape Communications Corp., leading maker of software for using the World Wide Web, was given a valuation of $2.2 billion on its first day. Its annual revenue at the time was just a few million dollars.
Last week, two of Yahoo's rivals became publicly owned, and their shares also jumped on the first day - though not as high as Yahoo's - before settling lower.
Analysts expect Yahoo's value to fall soon, though interest among Main Street investors may sustain it better than the others.
``It has a wider base of individual investor appeal because more of those investors are using its product,'' said William Smith, analyst at Renaissance Capital Group in Greenwich, Conn., who follows Internet-related stocks.
Yahoo was started in 1994 by two Stanford University graduate students, Jerry Yang and David Filo, who wanted a way to organize the information they had found on the Web portion of the global data network. They each own 5 million shares in the company, worth $165 million as of Friday.
They called the program and the company Yahoo and themselves Chief Yahoos, even on their official filings with federal securities regulators. For people who needed one, they came up with a meaning for Yahoo - ``Yet Another Hierarchical Officious Oracle.''
The name may be a key reason for their success. It is simple to remember, making its Web address (www.yahoo.com) simple too, and embodies the free-wheeling spirit some associate with the Internet.
``They've done an exceptionally good job of placing themselves in the public consciousness,'' said David Coursey, editor of PC Letter.
``It's a little like Colgate toothpaste with MFP,'' he said. ``Yahoo is somehow perceived as having a secret ingredient that makes them better.''
Yahoo's secret may be its strategic partnership with Softbank Corp., Japan's biggest software distribution partner. Softbank raised its stake in Yahoo to 9.5 million shares before the initial public offering. It also owns Ziff-Davis Publishing Co., the largest chain of computer trade publications, and plans are under way for a Yahoo magazine.
``Their business plan is better because it really talks about building a diversified media company with different kinds of properties,'' said Tony Perkins, publisher of The Red Herring, a technology finance magazine.
LENGTH: Medium: 67 linesby CNB