Yahoo 2003 Annual Report Download - page 22

We may have difficulty scaling and adapting our existing
•risks related to government regulation including
architecture to accommodate increased traffic and technology
those more fully described below; and
advances or customer requirements.
•potentially adverse tax consequences. Yahoo! is one of the most highly trafficked Websites on
the Internet and is regularly serving numbers of users and
One or more of these factors could harm our future inter- delivering daily page views which are beyond previous
national operations and consequently, could harm our standards for Internet usage. In addition, the services
business, operating results, and financial condition. offered by Yahoo!, and popular with users and customers,
have changed significantly in the past, are expected to
If key personnel leave unexpectedly and are not replaced, we
change rapidly in the future, and are difficult to predict.
may not be able to execute our business plan.
Rapid increases in the levels or types of use of our online
We are substantially dependent on the continued services properties and services could result in delays or interrup-
of our key personnel, including our two founders, our tions in our service. In particular, the architectures utilized
chief executive officer, chief financial officer, chief operat- for our services are highly complex and may not provide
ing officer, chief technical officer, and our executive and satisfactory service in the future, especially as the usage
senior vice presidents. These individuals have acquired levels of email and certain other services increase, the rate
specialized knowledge and skills with respect to Yahoo! of unsolicited email continues to increase in volume and
and its operations. In addition, as part of our integration complexity and the number of advertisers utilizing the
of Overture’s personnel and operations, we may lose key Overture service increases. In the future, we may be
employees of Overture. If any of these individuals were to required to make significant changes to our architectures,
leave unexpectedly, we could face substantial difficulty in including moving to completely new architectures. If we
hiring qualified successors and could experience a loss in are required to switch architectures, we may incur sub-
productivity while any such successor obtains the neces- stantial costs and experience delays or interruptions in our
sary training and experience. Many of our management service. These delays or interruptions in our service may
personnel have reached or will soon reach the four-year cause users and customers to become dissatisfied with our
anniversary of their Yahoo! hiring date and, as a result, service and move to competing providers of online ser-
have become or will shortly become fully vested in their vices. Further, to the extent that demand for our services
initial stock option grants. While management personnel increases, we will need to expand our infrastructure,
are typically granted additional stock options subsequent including the capacity of our hardware servers and the
to their hire date, which will usually vest over a period of sophistication of our software. This expansion is likely to
four years to provide additional incentive to remain at be expensive and complex, and require additional techni-
Yahoo!, the initial option grant is typically the largest for cal expertise. As we acquire users who rely upon us for a
a given position, and an employee may be more likely to wide variety of services, it becomes more technologically
leave Yahoo! upon completion of the vesting period for complex and costly to retrieve, store and integrate data
the initial option grant. that will enable us to track each user’s preferences. An
unanticipated loss of traffic, increased costs, inefficiencies
If we are unable to hire qualified personnel in designated
or failures to adapt to new technologies or user require-
growth areas, we may not be able to execute our business
ments and the associated adjustments to our architecture
plan.
could harm our operating results and financial condition.
We expect that we will need to hire additional personnel
Our competitors often provide Internet access or computer
in designated growth areas. The competition for qualified
hardware to our users, and our competitors could make it
personnel can be intense, particularly in the San Francisco
difficult for our users to access our services, which in turn,
Bay Area, where our corporate headquarters are located.
could reduce the number of our users.
At times, we have experienced difficulties in hiring per-
sonnel with the right training or experience, particularly Our users must access our services through an Internet
in technical areas. If we do not succeed in attracting new access provider, including providers of cable and DSL
personnel, or retaining and motivating existing personnel, Internet access, with which the user establishes a direct
we may be unable to meet our business plan and as a billing relationship using a personal computer or other
result our stock price may decline. access device. To the extent that an access provider (other
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