Yahoo 2004 Annual Report Download - page 20

if they are renewed, they may not be renewed on as favorable terms. The loss of affiliates providing significant users or
businesses or an adverse change in implementation of the sponsored search service by any of these affiliates could harm
our ability to generate revenue, our operating results, and cash flows from operations.
Some of our shared revenue arrangements may not generate anticipated revenues.
We typically receive co-branded revenue through revenue sharing arrangements and sponsorship fees or a portion of
transactions revenue in return for minimum levels of user impressions to be provided by us. These arrangements expose
us to potentially significant financial risks in the event our usage levels decrease, including the following:
• the revenue we are entitled to receive may be adjusted downwards;
• we may be required to ‘‘make good’’ on our obligations by providing additional or alternative services;
• the sponsors or co-brand services may not renew the arrangements or may renew at lower rates; and
• the arrangements may not generate anticipated levels of shared transactions revenue, or sponsors may default on
the payment commitments in such agreements as has occurred in the past.
Accordingly, any leveling off or decrease of our user base (or usage by our existing base) or the failure to generate
anticipated levels of shared transactions revenue could result in a significant decrease in our revenues.
Decreases or delays in advertising spending due to general economic conditions could harm our ability to generate advertising
revenue.
Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying
patterns. Since we derive the majority of our revenues from advertising, any decreases in or delays in advertising spending
due to general economic conditions could reduce our revenues or negatively impact our ability to grow our revenues.
Financial results for any particular period will not predict results for future periods.
There can be no assurance that the purchasing pattern of customers advertising on the Yahoo! Network will not continue
to fluctuate, that advertisers will not make smaller and shorter-term purchases, or that market prices for online advertis-
ing will not decrease due to competitive or other factors. In addition, there can be no assurance that the volume of
searches conducted, the amounts bid by advertisers for search listings or the number of advertisers that bid on our
sponsored search service will not vary widely from period to period. As revenues from new sources increase, it may
become more difficult to predict our financial results based on historical performance. You should not rely on the results
for any period as an indication of future performance.
We may not be able to generate substantial revenues from our alliances with Internet access providers.
Through alliances with Internet access providers, we offer access services that combine customized content and services
from Yahoo! (including browser and other communications services) and Internet access from the third party access
providers. We may not be able to retain the alliances with our existing Internet access providers or to obtain new
alliances with Internet access providers on terms that are reasonable. In addition, these Internet access services compete
with many large companies such as AOL, MSN, Comcast Corporation and other established Internet access providers. In
certain of these cases, our competition has substantially greater market presence (including an existing user base) and
greater financial, technical, marketing or other resources. As a result of these and other competitive factors, these Internet
access providers may not be able to attract, grow or retain a customer base, which would negatively impact our ability to
sell customized content and services through this channel. Any negative impact on our ability to sell content and services
through our alliances with Internet access providers could negatively impact our business and anticipated revenues from
our alliances.
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