Yang and Filo were graduate students in electrical engineering at Stanford University when they created “Jerry and David’s Guide to the World Wide Web” in January 1994. As opposed to a searchable index of pages, the site was a directory of other websites organized in a hierarchy. “Jerry and David’s Guide to the World Wide Web” was renamed “Yahoo!” in March 1994, the human-edited Yahoo! Directory, which allowed users to surf the internet, was their first product and original purpose. On January 18, 1995, the “yahoo.com” domain was established.
Yahoo is an abbreviation for “Yet Another Hierarchically Organized Oracle” or “Yet Another Hierarchically Officious Oracle.” The Yahoo database was organized in layers of subcategories, which were described as “hierarchical.” The term “oracle” was intended to mean “source of truth and wisdom,” and the term “officious” was intended to describe the many office workers who would use the Yahoo database while surfing from work, rather than the word’s normal meaning. Filo and Yang, on the other hand, insist that they chose the name primarily because they liked the slang definition of a “yahoo” (a term used by college students in David Filo’s native Louisiana in the late 1980s and early 1990s to refer to an unsophisticated, rural Southerner): “rude, unsophisticated, uncouth.” This meaning derives from the Yahoo race of fictional beings from Gulliver’s Travels.
Throughout the 1990s, Yahoo expanded rapidly. Yahoo, like many other search engines and web directories, has a web portal. By 1998, Yahoo had become the most popular portal for web users, and the human-edited Yahoo Directory had become the most popular search engine. It also made several notable acquisitions. During the dot-com bubble, the stock price of Yahoo reached an all-time high of $118.75 per share on January 3, 2000. However, following the deflation of the dot-com bubble, it fell to a post-bubble low of $8.11 on September 26, 2001.
In the year 2000, Yahoo began using Google for searches. It developed its search technologies over the next four years, which it began using in 2004. Yahoo began offering unlimited email storage in 2007 in response to Google’s Gmail. Through 2008, the company struggled, with several large layoffs.
Microsoft Corporation made an unsolicited bid for Yahoo in February 2008 for $44.6 billion. Yahoo formally rejected the offer, claiming that it “significantly undervalues” the company and is not in the best interests of its shareholders. Yahoo’s market capitalization was $22.24 billion three years later. Carol Bartz took over as CEO in January 2009. In September 2011, she was fired from Yahoo by the company’s chairman, Roy Bostock, and CFO Tim Morse was appointed as Interim CEO.
Rumors of impending layoffs began to circulate in early 2012, following the appointment of Scott Thompson as CEO. Several key executives, including Chief Product Officer Blake Irving, have departed. Yahoo announced 2,000 job cuts, or about 14% of its 14,100 employees, on April 4, 2012. After the layoffs were completed at the end of 2012, the cut was expected to save around $375 million per year. Thompson reiterated his belief that customers should come first at Yahoo in an email sent to employees in April 2012. He also completely restructured the business.
On May 13, 2012, Yahoo issued a press release announcing that Thompson had left the company and would be replaced on an interim basis by Ross Levinsohn, who had recently been appointed head of Yahoo’s new Media group. Thompson received at least $7.3 million in total compensation during his 130-day tenure with Yahoo.
Marissa Mayer was appointed president and CEO of Yahoo the following day, on July 16, 2012. Yahoo’s board of directors approved a $1.1 billion purchase of the blogging site Tumblr on May 19, 2013. David Karp, the CEO, and founder of Tumblr, would remain a significant shareholder. According to reports, the announcement signaled a shift in the technology industry, as large corporations such as Yahoo, Facebook, and Google acquired start-up Internet companies with low revenue to connect with large, rapidly growing online communities. According to the Wall Street Journal, Yahoo’s acquisition of Tumblr will meet the company’s need for “a thriving social networking and communications hub.” On May 20, the company officially announced the acquisition of Tumblr. The company also announced plans to open a San Francisco office in July 2013.
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