• Answer each question.
• Write a conclusion (a paragraph) that addresses Yahoo! Overall financial condition and any recommendations to senior management.

YAHOO! INC. Consolidated Statements of Cash Flows YEAR ENDED DECEMBER 31, (in thousands) Year 8 Year 7 Year 6 Cash flows from operating activities Net income (loss). $ 25,588 $(25,520) $ (6,427) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 10,215 2.737 639 Tax benefits from stock options 17,827 Noncash charges related to stock option grants and warrant issuances 926 1,676 197 Minority interests in operations of consolidated subsidiaries... (68) (727) (540) Purchased in-process research and development. 17.300 Other noncash charge. 21.245 Changes in assets and liabilities: Accounts receivable, net. $(13,616) $ (5.963) $ (4.269) Prepaid expenses 2.144 (6.110) (386) Accounts payable 515 2,425 1,386 Accrued expenses and other current liabilities 16,688 7,404 4,393 Deferred revenue 33,210 2.983 1.665 Due to related parties. (451) 330 948 Net cash provided by (used in) operating activities. 110,278 480 (2,394) Cash flows from investing activities Acquisition of property and equipment. (11,911) (6,722) (3,442) Cash acquired in acquisitions 199 Purchases of marketable securities (471,135) (58,753) (115,247) Proceeds from sales and maturities of marketable securities 158,350 86,678 43,240 Other investments. (5,445) (1,649) (729) Net cash provided by (used in) investing activities. (329,942) 19,554 (76,178) (continued) YEAR ENDED DECEMBER 31, Year 8 Year 7 Year 6 280,679 7,516 600 (in thousands) Cash flows from financing activities Proceeds from issuance of common stock, net. Proceeds from issuance of convertible preferred stock Proceeds from minority investors .... Other..... Net cash provided by financing activities ..... Effect of exchange rate changes on cash and cash equivalents.... Net change in cash and cash equivalents.. Cash and cash equivalents at beginning of year. Cash and cash equivalents at end of year... 999 1,106 9,621 42,484 63.750 1,050 (128) 107.156 281,279 288 $ 61,903 63,571 $125,474 (380) $ 29,275 34,296 $ 63,571 (63) $ 28,521 5,775 $ 34.296 Case Questions 1. Yahoo!'s operations did not produce significant cash flows during Year 6 and Year 7. How does Yahoo! Finance its growth in the absence of sufficient operating cash flows? 2. What appears to drive the operating cash flows of Yahoo!? 3. Yahoo! engages in purchases and sales of marketable securities. Why do you believe Yahoo! Pursues this activity? 4. Yahoo! Reports $33.21 million of deferred revenue. Based on your understanding of Yahoo!'s operations, what do you believe this amount