When Terry Met Jerry, Yahoo!

By RICHARD SIKLOS The New York Times January 29, 2006

WHEN Yahoo Inc. announced nearly five years ago that Terry S. Semel, then a former leader of the Warner Brothers motion picture studio, would become its chairman and chief executive, the reaction both outside and within Yahoo was not exactly one of wild encouragement.

Despite a hugely successful career running companies that make movies, television shows and music, Mr. Semel was immediately labeled an "old media" guy. Worse, he was a Hollywood guy, and had barely touched a computer during the nearly two decades he oversaw Warner Brothers with Robert A. Daly.

Even though he had been making private Internet investments since resigning from the studio two years earlier, when people associated "Semel" and "Yahoo," they were more likely to think of an Australian comic named Yahoo Serious who starred in the 1988 Warner Brothers flop "Young Einstein." Mr. Semel's former boss at Time Warner, Gerald M. Levin, who had just completed his merger with America Online, laughed incredulously when he heard the news of Mr. Semel's new gig in April 2001, according to an executive who was with Mr. Levin at the time.

At Yahoo, where the collapse of the dot-com bubble and the evaporation of online advertising had just helped sink the company's market value from a peak of $127 billion to just $12.6 billion when he joined, the reception wasn't much warmer. Mr. Semel, then 58, had neither geek cred like that of Yahoo's co-founders, Jerry Yang and David Filo, nor Silicon Valley venture-capitalist swagger. Mr. Semel looked like a self-assured but unassuming guy who originally hailed from Queens, which he was. Word spread quickly in Yahoo's headquarters in Sunnyvale, Calif., that - horrors! - he even wore a gold chain on his wrist. (This, too, was true, but the chain is not a fashion statement; it's a medical bracelet for a shellfish allergy.)

The story line at Yahoo is much different today. Having lost $98 million on revenue of $717 million in the year when Mr. Semel joined it, Yahoo earned $1.2 billion last year on sales of $5.3 billion. With a market capitalization nudging $50 billion, it is worth roughly the same as the newly Pixar-ized Walt Disney Company or the combined value of the recently split Viacom and CBS.

Dollars aside, Yahoo has the widest global reach of any Internet site. It counts more than 420 million registered users around the world, and it owns the most-used e-mail, instant-messaging and music Web sites on the planet. In the United States alone, Yahoo attracted

103 million unique visitors in December, making it the country's most-visited Web destination, according to Nielsen NetRatings.

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