Yahoo 2003 Annual Report Download - page 27

corporation, or a combination of cash and shares of the of a geographical or other disaster impacting our business,
applicable common stock. We may not have enough cash we are continually distributing our servers among addi-
on hand or have the ability to access cash to pay the tional data centers located around the world. Failure to
notes if presented on a fundamental change or at matur- execute these changes properly or in a timely manner
ity. In addition, the purchase of our notes with shares of could result in delays or interruptions to our service. In
our common stock or the conversion of the notes into addition, despite our implementation of network security
our common stock could result in dilution of our earn- measures, our servers are vulnerable to computer viruses,
ings per share. physical and electronic break-ins, and similar disruptions
from unauthorized tampering with our computer systems.
Our stock price has been volatile historically and may continue
to be volatile. Technological or other assaults on our service could harm our
business.
The trading price of our common stock has been and
may continue to be subject to wide fluctuations. During We are vulnerable to coordinated attempts to overload our
2003, the closing sale prices of our common stock on the systems with data, resulting in denial or reduction of ser-
Nasdaq ranged from $17.54 to $45.03 per share and the vice to some or all of our users for a period of time. We
closing sale price on February 25, 2004 was $43.34 per have experienced a coordinated denial of service attack in
share. Our stock price may fluctuate in response to a the past, and may experience such attempts in the future.
number of events and factors, such as quarterly variations We may not carry sufficient business interruption insur-
in operating results; announcements of technological inno- ance to compensate us for losses that may occur as a
vations or new products and media properties by us or result of any of these events. Any such event could reduce
our competitors; changes in financial estimates and recom- our revenue and harm our operating results and financial
mendations by securities analysts; the operating and stock condition.
price performance of other companies that investors may
Anti-takeover provisions could make it more difficult for a
deem comparable to us; the operating performance and
third party to acquire us.
stock price of companies in which we have an equity
investment, including Yahoo! Japan; and news reports We have adopted a stockholder rights plan and declared a
relating to trends in our markets or general economic dividend distribution of one right for each outstanding
conditions. share of common stock to stockholders of record as of
March 20, 2001. Each right entitles the holder to pur-
In addition, the stock market in general, and the market chase one unit consisting of one one-thousandth of a
prices for Internet-related companies in particular, have share of our Series A Junior Participating Preferred Stock
experienced volatility that often has been unrelated to the for $250 per unit. Under certain circumstances, if a per-
operating performance of such companies. These broad son or group acquires 15 percent or more of our out-
market and industry fluctuations may adversely affect the standing common stock, holders of the rights (other than
price of our stock, regardless of our operating perform- the person or group triggering their exercise) will be able
ance. Additionally, volatility or a lack of positive perform- to purchase, in exchange for the $250 exercise price,
ance in our stock price may adversely affect our ability to shares of our common stock or of any company into
retain key employees, all of whom have been granted which we are merged having a value of $500. The rights
stock options. expire on March 1, 2011 unless extended by our board of
directors. Because the rights may substantially dilute the
Our operations could be significantly hindered by the
stock ownership of a person or group attempting to take
occurrence of a natural disaster or other catastrophic event.
us over without the approval of our board of directors,
Our operations are susceptible to outages due to fire, our rights plan could make it more difficult for a third
floods, power loss, telecommunications failures, break-ins party to acquire us (or a significant percentage of our
and similar events. In addition, a significant portion of outstanding capital stock) without first negotiating with
our network infrastructure is located in Northern Califor- our board of directors regarding such acquisition.
nia, an area susceptible to earthquakes. We do not have
multiple site capacity for all of our services in the event of
any such occurrence. In an effort to reduce the likelihood
21