In this article, the author is trying (1) to know more about the Internet industry, theoretically and practically, (2) to know the strengths and weaknesses of Internet companies with different business models, and the criteria that can be used to tell a winner from a would-be loser, and (3) to arrive fundamental approaches that could be used or that would be suitable to the valuation of a given Internet stock.

They are mainly because the law of increasing return, first mover advantage, brand name advantage and model consolidation that make the competitiveness of leading Internet companies increase continually, and make it harder and harder to survive for new entrants.

The author compares different valuation models including dividend discount model, discount free cash flow method, adjusted discount free cash flow method, EVA method, P/S, P/B, P/E multiples, and other non-financial multiples such as page view multiples and unique visitor multiples. Among them, the adjusted discount free cash flow method is the most suitable model to the valuation of Yahoo! and other leading portals that already report positive earnings or can be sure to make money in the near future. Other valuation models cannot be used to the valuation of portals.

1、Arthur, W. Brain (1996),"Increasing Returns and the New World Business," Harvard Business Reviews, July-August 1996 P100-P111.
2、 Aswath Damodaran(1999),"Value Creation and Enhancement :Back to the Future," FMA International / CIBC World Markets, p5-p57
3、Bane, P. William. And Bradley, Stephen P. and Collis, David J. (1997),"The Converging Worlds of Telecommunication, Computing, and Entertainment, Sense and Response—Capturing Value in the Network Era ", Boston: Harvard Business School Press, p31-p61.
4、Charron, Chris (1999), "The Content-Commerce Collision", The Forrester Report, March 3, 1999
5、Damodaran, Aswath (1996)," Investment Valuation—Tools and Techniques for Determining the value of any asset," John Wiley & Sons, Inc (1996)
6、Danielson, Morris G. (1998),"A Simple Valuation Model and Growth Expectations," Financial Analyst Journal, May/June 1998, P50-P57.
7、Driek Desmet (2000),"Valuing Dot-coms, " The McKinsey Quarterly 2000 number 1
8、Erik Brynjolfsson & Michael D. Smith (1999),"Frictionless Commerce: A comparison of Internet and conventional Retailers," Management Science, April 2000
9、Erik Brynjolfsson, Michael D. Smith (1999)& Joseph Bailey," Understanding Digital Markets: Review and Assessment," MIT Press, July 1999
10、Goldman Sachs Research Teams,"E-Commerce/Internet:B2B," Goldman Sachs, Nov.1999
11、Goldman Sachs Research Teams, " Internet Portals In Europe ," Goldman Sachs, March 1999
12、Goldman Sachs Research Teams," Internet Retailing ," Goldman Sachs, June 2000
13、Hagel, John and Armstrong, Arthur (1997),"Net Gain—Expanding markets through virtual communities," McKinsey & Company, 1997
14、Hagel, John and Singer, Marc (1999),"Net Worth—Shaping Markets When Customers Make the Rules," Harvard Business School Press, 1999.
15、Harmon, Steve (1999),"The Metrics for Evaluating Internet Companies," Morning Report of Internet.com, Feb 23, 1999.
16、Hirshey, Mark (1998)," How much is a Tulip Worth? " Financial Analysts Journal, July-August 1998, p11-P17
17、James L. Grant (1996),"Foundations of EVA for Investment Mangers," Journal of Portfolio Management, Fall 1996,P41-P47
18、Liberman, Marvin B. and Montgomery, David B (1988),"First-Mover Advantage," Strategic Management Journal, Vol.9, 1988 p41-p58
19、Martin L. Leibowitz,"Franchise Margins and the Sales-Driven Franchise Value," Financial Analysts Journal, Nov/Dec 1997,P43-P53
20、Merrill Lynch Research Teams," E-Commerce :Virtually Here, " Merrill Lynch, April 1999
21、Morgan Stanley Dean Witter Research Teams,” The Internet Data Services Report, " Morgan Stanley, Aug 1999
22、Nicholas Economides (1996),"The Economics of Network," International Journal of Industrial Organization, vol. 14, no. 2, March 1996.
23、Sandeep Dayal(2000),"Building digital brands ," The McKinsey Quarterly, 2000 Number 2
24、Shapiro, Carl and Varian, Hal R. (1999),"Information Rule: A Strategic Guide to the Network Economy," Harvard Business School Press, 1999.
25、Shikhar Ghosh(1998),"Making Business Sense of the Internet, " Harvard Business Reviews, March-April 1998t
26、Stabell, Charles B. and Fjeldstad, Qystein D. (1998), "Configuration Value for Competitive Advantage: On Chains and Shops and Networks," Strategic Management Journal. Vol. 19. 413-437, 1998.
27、Stefano Siglienti(1999),"Internet Valuations: Surveying the Landscape ," Stanford University,1999