Yahoo 2005 Annual Report Download - page 30

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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 personnel 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.
We have dedicated considerable resources to provide a variety of premium services, which may not prove to be
successful in generating significant revenue for us.
We offer fee-based enhancements to many of our free services, including e-mail, personals, finance, games,
music and sports. The development cycles for these technologies are long and generally require significant
investment by us. We have previously discontinued certain non-profitable premium services. We must
however continue to provide new services that are compelling to our users while continuing to develop an
effective method for generating revenues for such services. General economic conditions may affect users’
willingness to pay for such services. If we cannot generate revenues from these services that are greater
than the cost of providing such services, our operating results could be harmed.
We expect our operating expenses to continue to increase as we attempt to expand the Yahoo! brand, fund product
development, develop media properties and acquire other businesses or technologies, which could harm our
operating results.
We currently expect that our operating expenses will continue to increase as we expand our operations in
areas of expected growth, continue to develop and extend the Yahoo! brand, fund greater levels of product
development, develop and commercialize additional media properties and premium services, and acquire
and integrate complementary businesses and technologies. If our expenses increase at a greater pace than
our revenues, our operating results could be harmed.
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 operations. 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 management 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 option grant an employee
receives. If we do not succeed in retaining and motivating our existing key employees and in attracting new
key personnel, we may be unable to meet our business plan and as a result, our stock price may decline.