Tech Industry

Yahoo CEO Semel: Search is everywhere in 2004

Terry Semel says Yahoo has "only just begun" with its grand plans to grow its Web search business, highlighting 2004 as a year when search will become omnipresent throughout its family of sites.

Yahoo CEO Terry Semel said Monday that the company has "only just begun" with its grand plans to grow its Web search business, highlighting 2004 as a year when search will become omnipresent throughout its family of sites.

Semel's comments, made during a question-and-answer session at Smith Barney Citigroup's Entertainment, Media & Telecommunications Conference, come after a year marked by high-profile acquisitions in the search arena. The Web giant acquired algorithmic search provider Inktomi for $235 million and then closed a $1.6 billion purchase of Overture Services to add the lucrative paid-search business.

The acquisition spree highlights the rivalry with Google, which competes with Yahoo despite powering a significant volume of Yahoo's algorithmic search results. The competition will only increase now that Google has named bankers to manage its initial public offering, according to reports Monday. Google has supplanted Yahoo as a name synonymous with Web search and has created a lucrative paid search business that mirrors Overture's.

"We woke up in time and we saw search ever present in the entire network," Semel said during the session, which was broadcast live on the Web. "We saw an enormous opportunity to be the other major player in search."

Semel added that the Overture and Inktomi acquisitions will allow Yahoo to more widely spread its search services throughout its many content sites. The move would prevent audiences of popular areas such as finance, news and music from defecting to outside search providers such as Google.

"Why not have music search in music or finance search in finance?" Semel said. "The answer is we will."

Many industry watchers expect Yahoo will replace Google's search technology with its own, given moves such as the Inktomi acquisition and related development efforts.

During his keynote, Semel praised other areas at Yahoo that have grown since he took the helm in May 2001, namely the area of paid services. Semel said Yahoo now has 5 million paid users after starting from nearly zero when he began his tenure. He added that he is "not at all concerned" about his goal of 10 million paid users, a benchmark set during his first analyst day in 2001.

"We had no infrastructure and no direct sales," Semel said during the conference. "We fundamentally sold advertising."

Central to this paid services business is Yahoo's partnership to bundle its content and services into SBC Communications' DSL (digital subscriber line) service. Last quarter, SBC reported a gain of 365,000 new subscribers for a total of 3.1 million. All of the new subscribers were also counted as new Yahoo subscribers.

Despite aggressive DSL price promotions by SBC for as low as $26.95 a month, Semel said Yahoo will continue to benefit every time a subscriber is added.

"Generally speaking, the more subscribers we sign, the more lucrative it is to Yahoo," he said.