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To: Bill Harmond who wrote (7964)	3/7/1998 1:32:00 PM
From: TheBigB	Read Replies (1) \| Respond to of 27307

Other stats also show that the number of browsers per installation is growing to two per person quickly. Basically a lot of users have both browsers. The biggest fallacy in the report at www.ms.com is the assumption that the top sites will get huge percentages of ad spending. The reality is that it makes it a lot easier to target your audience by advertising in special interest news groups. For instance at most of the finance related sites, I always see loads of advertising and yet quote.yahoo.com has only a small percentage (about 40 to 30%) of it's page views showing real adverts. So quote.yahoo.com is competing seriously with www.thestreet.com, www.siliconinvestor.com, investor.msn.com www.bloomberg.com, wsj.com (in the future) with quote.cnet.com (when that comes online), quicken.com, bigcharts.com etc, etc So - you can probably say that this is likely to happen on each special interest. Again : this is a lot more like direct mail where you can target your audience depending on the content of the site. Then in order for YHOO to remain as the top site in ad revenue, it will hav to be the top in all these categories in order to command that 50% of Ad revenue that they are getting. Of course, even in that situation it will compete headon with AOL & MSFT & NSCP to be the top destination on the web. I think that the odds are stacked against YHOO EVER having $ Billion in revenue from ads alone. hence it's forays into commerce. My bet is that in the future YHOO may have to transform itself into a commerce company. In any case, it's difficut to argue that YHOO is undervalued now. With the risks of slipping in so many ways not being discounted into the stock price at all. Sigh - But what do I know.

To: Bill Harmond who wrote (7964)	3/7/1998 2:46:00 PM
From: TheBigB	Respond to of 27307

William : this rate of growth of the net is misleading. If you start off on the first day that any product is released, the rate of growth is phenomenal in the first few days. For eg : The rate of growth of win95 adoption was HUGE in 1996 and then also in 1997. However, the rate of growth is probably lower now just because a lot of the people who can adopt have done so and the new customers are those who buy new computers. This is why Win98 is awaited. This is why MSFT has needs an upgrade market that is lucrative. Now let's consider AOL. The rate of growth of AOL subscribers is slowing down - correct ? But that does not put a brake on their revenues since they have a fixed cash flow from subscriptions and they even increased that monthly charge ! Now consider YHOO - if you are depending on the number of users on the net growing at the same rate to bring in more revenue, you may be disappointed to see a falloff in the rate of new users joining. Yes - eventually 100% of America will be on the net but my bet is that close to 50% of them will use WebTV or (a future version of it). Hence announcing that the battle for the Internet has been won (and by YHOO) when it is only just begining and when it may take 5 years to play it all out is quite premature. However : again my caveat : I have no clue how this stock will behave even though it ought to go down. Also StaggerLee : I question your statement that there is no revolution going on. People in the know who track the web will vouch that there is tremendous interest in the web. This is why companies like MSFT are investing such huge amounts in the web. And are willing to try again when the first shot fails. The argument is whether YHOO has already won this revolution so decisively that there is no hurdle to say 80% growth rate in the next 3 years. My bet is that this is incorrect. It has competitors galore. From MSFT, AOL, CD to AMZN, EGRP to every barnes and noble to TIME, NBC, CNN etc etc etc. Further, the rate of growth is plateauing. It is inevitable for all americans to be on the web one day but that will take more time. Currently about 1 in 3 american households have a PC in them (many have more than one, I have 4 PCs at home). Now, it appears that most of these people jumped on to the web in 2 short years. However, the remaining 70% is moving a lot more slowly. They are quite disillusioned when they use the web and they remain much more conservative in their browsing. Usually signing on via AOL or MSN and then limiting their browsing to links from there for the most part. It is this market that MSFT is going after with WebTV. these WebTV people may or may not be future YHOO visitors. However, in any case, the fact remains that these people first need to buy a PC before they get on. However, INTC and CPQ are telling us quite clearly that these people are not rushing to stores to buy PCs today. So - perhaps webtv will get them. I'd say, if you're long on YHOO - sell and buy MSFT. (Caveat : I'm short YHOO and hurting and long MSFT and hurting :-)