Yahoo! Birthday Boys Are Busy

Celebrating 10th Anniversary, Company Eyes Plans For Future

(CBS/AP)  On this date in history, Texas declared its independence from Mexico, Puerto Rico became a U.S. territory, Fay Wray's screams in "King Kong" filled the theaters for the very first time, and Wilt Chamberlain scored a record 100 points in a single NBA game.

If you'd like to know the details on any of those events, chances are the Internet will be your first stop.

That was the theory behind another big March 2nd event - the incorporation of Yahoo as a company, ten years ago - a move that eventually made billionaires of Jerry Yang and David Filo.

Yahoo began life as a bunch of links to the favorite sites of its co-founders but it's grown into a major media company that's worth more than $44 billion - more than twice the value of General Motors. The company was able to survive the dot com bust and thrive even when competing with Google.

Diversification, says CBS News Tech Analyst Larry Magid, paid off for Yahoo, which has become a web destination not just for finding other web sites but for finding financial information, jobs, movie listings, phone numbers, shipping and much more.

Yang and Filo teamed up as grad students in a trailer at Stanford University, lined up several rounds of financing, and hired tech industry veterans to help them grow their dream.

"I remember going out to lunch with Yahoo! co-founder David Filo ten years ago," says Magid, "and talking about his plans to grow the company. He had no idea how far it would go or that he'd turn out to be a multi-billionaire."

Yang and Filo - who call themselves the Chief Yahoos - are still on board, managing the company. But they have delegated the CEO duties to entertainment industry veteran Terry Semel.

Speaking at a media conference Tuesday, Semel downplayed speculation about whether Yahoo might get into the movie or television business.

Semel said it would be ridiculous for Yahoo to produce its own movies or television shows because the Internet requires more interactive experiences than traditional media.

The comments are Semel's most direct so far on the issue of whether the Internet giant plans to create more original programming for its Web site, instead of compiling material from other sources.

The buzz about Yahoo possibly heading in a new direction began late last year when Semel, who ran Warner Brothers studios for years, hired former ABC television executive Lloyd Braun to oversee the company's media division.

The talk amplified in late January after Yahoo agreed to lease a Santa Monica office with enough room to accommodate about 1,000 workers.

Semel said he brought in Braun to help improve Yahoo's existing content, as well as explore other entertainment avenues such as the company's recent distribution deal with the online animation studio, JibJab Inc., which made a big splash with political parodies during the presidential election campaign.

Without providing specifics, Semel indicated Yahoo believes it can provide more compelling material simply by developing additional ways for its 345 million users to create and share more of their own content.

Like most other major Internet companies, Yahoo has been studying ways to capitalize on the increasing popularity of blogs - online personal journals that discuss major current events as well as more esoteric topics.

Whatever content Yahoo produces, "it has to be more unique and hopefully more clever" than other mass media, Semel said.

As for advertising, Semel acknowledged Yahoo probably can't count on continuing a lucrative partnership with Microsoft Corp.'s MSN.com.

Under a contract that runs through June 2006, the two companies currently share revenue generated from text-based advertising that Yahoo delivers to MSN, based on the words entered into the search engine's request box.

Semel is predicting that Microsoft is likely to break away and form its own advertising network to compete with the ones run by Yahoo and online search engine leader Google Inc.

MSN recently ended a separate licensing agreement with Yahoo and began delivering noncommercial search results based on its own algorithmic formulas.

"My guess is that they will do a good job," Semel said of Microsoft's increasing emphasis on search engine technology. "I welcome that. It's good to have good competition."

Part of Yahoo's strategy in that competition is a beefing up of its already famed brand name.

The company announced Tuesday that it is stamping its well-known brand on Overture Services, an online advertising pioneer that it bought for $1.7 billion nearly 17 months ago.

Overture will be renamed Yahoo Search Marketing Solutions in the United States and most international markets. The change, to be made early in the second quarter, is part of an overhaul designed to make it easier to find Yahoo's different advertising options.

Overture auctions off the right to have text-based advertising links displayed after specific words are entered into a search engine's query box.

Overture's popularity helped boost Yahoo's 2004 sales to $3.6 billion last year, more than doubling the company's revenue from the previous year.