Yahoo 2003 Annual Report Download - page 18

In the event that there is a determination that we have and access to significant financial or strategic resources in
infringed third-party proprietary rights such as patents, such local markets. We must continue to improve our
copyrights, trademark rights, trade secret rights or other product offerings, obtain more knowledge about our users
third party rights such as publicity and privacy rights, we and their preferences, deepen our relationships with our
could incur substantial monetary liability, be required to users as well as increase our branding and other marketing
enter into costly royalty or licensing agreements, if avail- activities in order to remain competitive and strengthen
able, or be prevented from using the rights, which could our international market position.
require us to change our business practices in the future.
Financial results for any particular period will not predict
We may also incur substantial expenses in defending
results for future periods.
against third-party infringement claims regardless of the
merit of such claims. As a result, these claims could harm There can be no assurance that the purchasing pattern of
our business. customers advertising on the Yahoo! network will not con-
tinue to fluctuate, that advertisers will not make smaller
Our intellectual property rights are valuable and any inability
and shorter-term purchases, or that market prices for
to protect them could dilute our brand image or harm our
online advertising will not decrease due to competitive or
business.
other factors. In addition, there can be no assurance that
We regard our copyrights, patents, trademarks, trade dress, the volume of searches conducted, the amounts bid by
trade secrets, and similar intellectual property, including advertisers for search listings or the number of advertisers
our rights to certain domain names, as important to that bid on the Overture service will not vary widely from
Yahoo!’s success. Effective trademark, patent, copyright, period to period. As revenues from sources other than
and trade secret protection may not be available in every advertising increase, it may become more difficult to pre-
country in which our products and media properties are dict our financial results based on historical performance.
distributed or made available through the Internet. Fur- Because of the rapidly changing market we serve,
ther, the efforts we have taken to protect our proprietary period-to-period comparisons of operating results are not
rights may not be sufficient or effective. If we are unable likely to be meaningful. You should not rely on the results
to protect our trademarks from unauthorized use, our for any period as an indication of future performance.
brand image may be harmed. While we attempt to ensure
We expect our operating expenses to continue to increase as
that the quality of our brand is maintained by our licen-
we attempt to expand the Yahoo! brand, fund product
sees, our licensees may take actions that could impair the
development, develop media properties and acquire other
value of our proprietary rights or the reputation of our
businesses.
products and media properties. We are aware that third
parties have, from time to time, copied significant content Yahoo! currently expects that its operating expenses will
available on Yahoo! for use in competitive Internet ser- continue to increase as we expand our operations in areas
vices. Protection of the distinctive elements of Yahoo! may of expected growth, continue to develop and extend the
not be available under copyright law. Any impairment of Yahoo! brand, fund greater levels of product development,
our brand image could harm our business and cause develop and commercialize additional media properties
our stock price to decline. In addition, protecting our and premium services, and acquire and integrate comple-
intellectual property and other proprietary rights can be mentary businesses and technologies. If our expenses
expensive. Any increase in the unauthorized use of our increase at a greater pace than our revenues, our operating
intellectual property could make it more expensive to do results could be harmed.
business and consequently harm our operating results. In
turn, this could harm the results of our business and We may be required to record a significant charge to earnings
if we must reassess our goodwill or amortizable intangible
lower our stock price.
assets.
Our international segment competes with local Internet service
We are required under generally accepted accounting prin-
providers that may have a competitive advantage.
ciples to review our amortizable intangible assets for
On an international level, we compete directly with local impairment when events or changes in circumstances indi-
ISPs; they may have several advantages, including greater cate the carrying value may not be recoverable. Goodwill
knowledge about the particular country or local market is required to be tested for impairment at least annually.
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