Yahoo 2004 Annual Report Download - page 29

fail to obtain distribution or to obtain distribution on terms that are reasonable, we may not be able to fully execute our
business plan.
We rely on third party providers of streaming media products to broadcast streaming audio and video content to our users and
any change in the licensing terms, costs or user acceptance of these products could adversely affect our business.
We rely on leading providers of streaming media products to license the software necessary to broadcast streaming audio
and video content to our users. There can be no assurance that these providers will continue to license these products to
us on reasonable terms, or at all. Our users are currently able to electronically download copies of the software to play
streaming media free of charge, but providers of streaming media products may begin charging users for copies of their
player software or otherwise change their business model in a manner that slows the widespread acceptance of these
products. In order for our rich media services to be successful, there must be a large base of users of these streaming
media products. We have limited or no control over the availability or acceptance of streaming media software, and to
the extent that any of these circumstances occur, our business may be adversely affected.
If we fail to detect click-through fraud, we could lose the confidence of our advertisers, thereby causing a loss of advertisers and
revenue.
We are exposed to the risk of fraudulent clicks on our ads by persons seeking to increase advertising fees. Click-through
fraud occurs when a person clicks on one of our advertiser’s listings displayed on a web site in order to generate a
payment rather than to view the underlying content. If this fraudulent activity occurs and we are unable to stop it, we
will have to provide refunds of revenue that our advertisers have paid to us and that was later attributed to click-through
fraud. These types of fraudulent activities could damage our brand. If fraudulent clicks are not detected, the affected
advertisers may experience a reduced return on their investment in our advertising programs because the fraudulent clicks
will not lead to potential revenue for the advertisers. This could lead the advertisers to become dissatisfied with our
advertising programs, which could lead to loss of advertisers and revenue.
Interruptions, delays or failures in the provision of our services could damage our brand and harm our operating results.
Our operations are susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist attacks and
similar events. In addition, a significant portion of our network infrastructure is located in Northern California, an area
subject to earthquakes. Despite our implementation of network security measures, our servers are vulnerable to computer
viruses, worms, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our
computer systems. For example, we are vulnerable to coordinated attempts to overload our systems with data, resulting in
denial or reduction of service to some or all of our users for a period of time. We have experienced a coordinated denial
of service attack in the past, and may experience such attempts in the future. We do not have multiple site capacity for
all of our services and some of our systems are not fully redundant in the event of any such occurrence. In an effort to
reduce the likelihood of a geographical or other disaster impacting our business, we have distributed and intend to
continue distributing our servers among additional data centers located around the world. Failure to execute these
changes properly or in a timely manner could result in delays or interruptions to our service. We may not carry sufficient
business interruption insurance to compensate us for losses that may occur as a result of any of these events which cause
interruptions in our service and could result in damage to our brand if users believe are systems are unreliable and could
adversely affect are operating results.
Our stock price has been volatile historically and may continue to be volatile regardless of our operating performance.
The trading price of our common stock has been and may continue to be subject to wide fluctuations. During 2004, the
closing sale prices of our common stock on the Nasdaq ranged from $20.83 to $39.14 per share and the closing sale
price on March 4, 2005 was $32.36 per share. Our stock price may fluctuate in response to a number of events and
factors, such as quarterly variations in operating results; announcements of technological innovations or new services and
media properties by us or our competitors; changes in financial estimates and recommendations by securities analysts; the
operating and stock price performance of other companies that investors may deem comparable to us; the operating
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