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Task #2: What multiples are implied by Microsoft's bid of $31/share? Task #3: The spreadsheet titled Multiples analysis presents some multiples for companies that might

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Task #2: What multiples are implied by Microsoft's bid of $31/share? Task #3: The spreadsheet titled "Multiples analysis" presents some multiples for companies that might be comparable to Yahoo. Based on these comparisons, does Microsoft's bid appear justified? Yahoo! Inc. Multiples analysis Yahoo 5 As of 12/31/07: 6 Price per share ($) 7 Number of shares (millions) 8 Stock market capitalization (Smm 9 Long-term debt 10 Enterprise value (market value) Pre-bid 19.18 1408 27005 750 27755 At bid 31.00 1408 43648 750 44398 Comparable(?) firms Time Google Disney Warner 550.52 28.80 15.23 328.7 2005 3661 180956 57744 55757 611 18784 63101 181567 76528 118858 11 12 Key FY 2007 metrics: 13 Book value of assets 14 Revenues ($mm) 15 Earnings ($mm) 16 EPS 17 EBITDA 18 Cash flow from operations** ($mr 12230 6969 660 0.47 12230 6969 660 0.47 1499 1310 60928 35510 4687 25336 16594 4204 12.79 6052 5775 133830 46482 4387 1.20 13359 8475 2.34 1499 1310 9325 5421 2.3 7.2 1.3 2.2 8.2 20 Key multiples: 21 Market value/Book value 3.6 22 Market value/Revenues 4.0 6.4 10.9 23 Enterprise value to EBITDA 18.5 29.6 30.0 24 Enterprise value to cash flow 21.2 33.9 31.4 25 P/E (price to EPS) 40.9 66.1 43.0 26 27 Defined here as pre-tax income plus depreciation 28 ** Defined here as PAT plus depreciation 29 30 (Other comparables could include eBay, QuickLogic Corp, News Corp) 0.9 2.6 8.9 14.0 12.7 14.1 12.3 Task #2: What multiples are implied by Microsoft's bid of $31/share? Task #3: The spreadsheet titled "Multiples analysis" presents some multiples for companies that might be comparable to Yahoo. Based on these comparisons, does Microsoft's bid appear justified? Yahoo! Inc. Multiples analysis Yahoo 5 As of 12/31/07: 6 Price per share ($) 7 Number of shares (millions) 8 Stock market capitalization (Smm 9 Long-term debt 10 Enterprise value (market value) Pre-bid 19.18 1408 27005 750 27755 At bid 31.00 1408 43648 750 44398 Comparable(?) firms Time Google Disney Warner 550.52 28.80 15.23 328.7 2005 3661 180956 57744 55757 611 18784 63101 181567 76528 118858 11 12 Key FY 2007 metrics: 13 Book value of assets 14 Revenues ($mm) 15 Earnings ($mm) 16 EPS 17 EBITDA 18 Cash flow from operations** ($mr 12230 6969 660 0.47 12230 6969 660 0.47 1499 1310 60928 35510 4687 25336 16594 4204 12.79 6052 5775 133830 46482 4387 1.20 13359 8475 2.34 1499 1310 9325 5421 2.3 7.2 1.3 2.2 8.2 20 Key multiples: 21 Market value/Book value 3.6 22 Market value/Revenues 4.0 6.4 10.9 23 Enterprise value to EBITDA 18.5 29.6 30.0 24 Enterprise value to cash flow 21.2 33.9 31.4 25 P/E (price to EPS) 40.9 66.1 43.0 26 27 Defined here as pre-tax income plus depreciation 28 ** Defined here as PAT plus depreciation 29 30 (Other comparables could include eBay, QuickLogic Corp, News Corp) 0.9 2.6 8.9 14.0 12.7 14.1 12.3

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