Yahoo 2004 Annual Report Download - page 25

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We plan to continue to operate in international markets in which we may have limited experience or rely on business partners,
and in which we are faced with relatively higher costs.
We plan to expand Yahoo! branded online properties and search offerings in international markets. We have currently
developed, through joint ventures, subsidiaries and branch offices, localized offerings in over 20 countries outside of the
United States. As we expand to new international markets, we will have only limited experience in marketing and
operating our products and services in such markets and we may rely on the efforts and abilities of foreign business
partners in such markets. We have experienced and expect to continue to experience higher costs as a percentage of
revenues in connection with the development and maintenance of our international online properties relative to our
domestic experience. Certain international markets may be slower than domestic markets in adopting the Internet as an
advertising and commerce medium and so our operations in international markets may not develop at a rate that
supports our level of investment.
In international markets we compete with local Internet service providers that may have competitive advantages.
In a number of international markets, especially those in Asia, Europe, and Latin America, we face substantial competi-
tion from local Internet service providers and other portals that offer search, communications and other commercial
services. Many of these companies have a dominant market share in their territories and are owned by local telecommu-
nication providers which give them a competitive advantage. Local providers of competing online services may also have a
substantial advantage over us in attracting users in their country due to more established branding in that country,
greater knowledge with respect to the tastes and preferences of users residing in that country and/or their focus on a
single market. Further, the local providers may have greater regulatory and operational flexibility than Yahoo! due to the
fact that we are subject to both domestic and foreign regulatory requirements. We must continue to improve our local
offerings, become more knowledgeable about our local users and their preferences, deepen our relationships with our local
users as well as increase our branding and other marketing activities in order to remain competitive and strengthen our
international market position.
Our international operations are subject to increased risks which could harm our business, operating results and financial
condition.
In addition to uncertainty about our ability to continue to generate revenues from our foreign operations and expand our
international market position, there are certain risks inherent in doing business internationally, including:
• trade barriers and changes in trade regulations;
• difficulties in developing, staffing and simultaneously managing a large number of varying foreign operations as a
result of distance, language and cultural differences;
• stringent local labor laws and regulations;
• longer payment cycles;
• currency exchange rate fluctuations;
• political or social unrest or economic instability;
• import or export restrictions;
• seasonal volatility in business activity;
• risks related to government regulation including those more fully described below; and
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