Jackson Securities, LLC Equity News

Research for the Prudent Investor April 30, 2007

Brian Bolan
Director of Research;
312-253-0578; BBolan@JacksonSecurities.com

Current Price: $28.04 Rating: Hold Target Price: $26.00

Updating Estimates for Yahoo!

Quick Discussion

Following a less than stellar earnings report, we are adjusting our estimates on Yahoo!. We trimmed the
top line estimate for the remaining quarters. Our share count number has also been relaxed. For the
calendar year 2007, we are slightly ahead of the consensus estimate on the top line, but a full two cents
lower than consensus on the bottom line. Our previous estimates were simply too aggressive and our
lowered expectations for second half of the year are reflected in the new numbers.

Today the company announced that it will acquire the remaining 80% of Right Media for $680M
following an initial purchase of 20% of the company for $40M in October of 2006. To fund the
transaction, Yahoo will use 50% stock and 50% cash. There is no “earn out” clause associated with the
transaction. Simply put, what once cost $200M now goes for about $850M.

There is some anecdotal evidence that Right Media is gaining traction with publishers, however, it may be
some time before the idea of an exchange really takes off. On the conference call, Yahoo! disclosed that
Right Media is expecting $70M in revenue in 2007 which will be more than double the 2006 number
which was not released. Being still in start up mode, Right Media expects to break even in 2007 and
become free cash flow positive in 12 months. Another key stat that was disclosed was that the Right
Media exchange handles some 6 billion transactions a day, and they have a7% charge on each transaction.

We note that our target price is still below the current stock price, yet we maintain a hold rating. We have
been asked several times why that is the case and shouldn’t the stock be a sell if our target price is below
the current price. We believe that Yahoo!, while currently overvalued, is a core internet holding, and thus
not a stock that one should buy or sell based on price targets alone.

Important Disclosures
Jackson Securities, LLC does or seeks to do business with companies covered in its
research reports. As a result, investors should be aware that the firm may have a conflict
of interest that could affect the objectivity of this report. Investors should consider this
report as only a single factor in making their investment decisions. Please also refer to
the important disclosures found on pages 3 thru 5. Analyst Certification is found on
page 3.
 Yahoo! Income Statement
Source: Company reports and Jackson Securities estimates
 Buy initiated 7/14/06: $32.23 Downgrade to Hold 7/19/06: Hold 12/14/06: $26.60 Target:
Target: $37.00 $32.24 Target: $33.00 $26.00

Source: BigCharts.com
Disclosures:

Analyst Certification
I, Brian Bolan, hereby certify that the views expressed in this research report accurately reflect
my personal views about the subject securities and issuers. I also certify that no part of my
compensation was, is, or will be, directly or indirectly, related to the specific recommendations or
views expressed in this research report. I may be compensated in part based on the overall
profitability of Jackson Securities, LLC, which includes earnings from investment banking and all
other aspects of the firm’s business.

Conflicts of interest:
Neither Jackson Securities nor any of its publishing analysts or their immediate family members
has a position in the securities described herein.

Compensation:
• The research analyst has not received compensation based upon investment banking
revenues or from the subject company in the last 12 months.
• Jackson Securities has not in the last 12 months managed or co-managed a public
offering of securities, received compensation for investment banking services from the
subject company or any compensation for products or services other than investment
banking
• Jackson Securities will seek investment banking compensation from the subject company
in the next 3 months.

Position as Officer or Director:

Neither the research analysts nor members of their immediate households occupy positions as
an officer or director with the company/companies mentioned in this report.
Market Making:
Jackson Securities does not make a market in this stock

Explanation of Ratings:
Buy - Expected 12-month absolute performance of +10% or higher than the market price at which time
the rating was issued.
Hold - Expected 12-month absolute performance of +5% to –5% from the price at the time the rating was
issued.
Sell - Expected 12-month absolute performance of –10% or lower than the market price at which time the
rating was issued.

Distribution of Ratings:
Jackson Securities, LLC has a distribution of ratings among its coverage universe as follows:

Buys – 51.4% (18 of 35 active recommendations)

Holds – 45.7% (16 of 35 active recommendations)
Sells – 2.9% (1 of 35 active recommendations)

Jackson Securities has provided investment banking services within the previous 12 months with the
following percentage of the companies they have rated:

Buys – 0.0% (0 of 35 active recommendations)

Holds – 0.0% (0 of 35 active recommendations)
Sells – 0.0% (0 of 35 active recommendations)

Risks: General economic conditions, economic slowdown/recession, adverse industry news.

Other Important Disclosures and Disclaimers

Disclaimer: This communication is neither an offer to sell nor a solicitation of an offer to buy any
securities mentioned herein. This material should not be construed as an offer to sell or the solicitation of
an offer to buy any securities mentioned herein in any jurisdiction where such an offer or solicitation
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advise or recommendation in this research report, clients should consider seek professional advice. Past
performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original
capital may occur.

The information contained herein has been obtained from sources that we believe to be reliable, but we do
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