Yahoo 2004 Annual Report Download - page 24

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will require a dedication of resources and in some cases are likely to be complex. If we are unable to adapt our systems
in a timely manner to accommodate our growth, our business may be adversely affected.
Additionally, we have experienced recent growth in personnel numbers and expect to continue to hire additional person-
nel in selected areas. This growth requires significant time and resource commitments from our senior management.
Further, as a result of recent acquisitions and international expansion, more than one-half of our employees are based
outside of our Sunnyvale, California headquarters. If we are unable to effectively manage a large and geographically
dispersed group of employees or to anticipate our future growth and personnel needs, our business may be adversely
affected.
If we are unable to retain our existing senior management and key personnel and hire new highly skilled personnel, we may not
be able to execute our business plan.
We are substantially dependent on the continued services of our senior management, including our two founders, our
chief executive officer, chief financial officer, chief operating officer, chief technical officer, and our executive and senior
vice presidents. These individuals have acquired specialized knowledge and skills with respect to Yahoo! and its opera-
tions. The loss of any of these individuals could harm our business. Our business is also dependent on our ability to
retain, hire and motivate talented, highly skilled personnel. The competition for such highly skilled personnel can be
intense, particularly in the San Francisco Bay Area, where our corporate headquarters is located. Many of our manage-
ment and key personnel have reached or will soon reach the four-year anniversary of their Yahoo! hiring date and, as a
result, have become or will shortly become fully vested in their initial stock option grants. Although employees receive
additional grants, an employee may be more likely to leave Yahoo! upon completion of the vesting period for the initial
option grant which is generally the largest. If we do not succeed in retaining and motivating our existing key employees
and attracting new key personnel, we may be unable to meet our business plan and as a result our stock price may
decline.
More individuals are utilizing non-PC devices to access the Internet, and versions of our service developed or optimized for these
devices may not gain widespread adoption by users of such devices.
The number of individuals who access the Internet through devices other than a personal computer, such as personal
digital assistants, mobile telephones and television set-top devices, has increased dramatically. Our services were originally
designed for rich, graphical environments such as those available on desktop and laptop computers. The lower resolution,
functionality and memory associated with alternative devices currently available may make the use of our services through
such devices difficult, and the versions of our service developed for these devices may not be compelling to users of
alternative devices. As we have limited experience to date in operating versions of our service developed or optimized for
users of alternative devices, it is difficult to predict the problems we may encounter in doing so, and we may need to
devote significant resources to the creation, support and maintenance of such versions. If we are unable to attract and
retain a substantial number of alternative device users to our online services, we may fail to capture a sufficient share of
an increasingly important portion of the market for online services and may fail to attract advertisers.
We may be required to record a significant charge to earnings if our goodwill or amortizable intangible assets become impaired.
We are required under generally accepted accounting principles to review our amortizable intangible assets for impair-
ment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required
to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that
the carrying value of our amortizable intangible assets may not be recoverable include a decline in stock price and market
capitalization, and slower growth rates in our industry. We may be required to record a significant charge to earnings in
our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is
determined. This may adversely impact our results of operations. As of December 31, 2004, our goodwill and amortiza-
ble intangible assets were $3 billion.
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