Yahoo's Bulging $400 Million War Chest

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Buried in Yahoo's stellar Wednesday-night earnings report -- sales of $41.2 million, up 36 percent from the beginning of the year; traffic of 115 million daily pageviews in June, up from 95 million in March; a 2-for-1 stock split -- was news that the search standout was raising $250 million by selling new stock to Softbank, which already owns nearly a third of the company. We could all use another $250 million, but what does Yahoo need it for?

The company already has close to $150 million in the bank, is debt-free and -- amazingly enough, compared to its Net competitors -- is already profitable on an operating basis. Add to this the fact that any takeover targets would be happy to get Yahoo's gold-plated stock. How would you spend the money? Even product development cost only $5 million last quarter, which must buy a lot of server tweaks and Java applets. Noting that Amazon has a similar war chest, our best guess for the bucks: Look for Yahoo's $20 million marketing budget to go into Superbowl-style overdrive. Maybe they'll even start mailing out disks.