Yahoo 2005 Annual Report Download - page 35

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29
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 spam, we could lose the confidence of our advertisers, thereby causing a loss of advertisers
and revenue.
We are exposed to the risk of clicks on our advertisements by persons seeking to increase the fees paid by
our advertisers. Click spam may occur when a click is generated on one of our advertiser’s listings
displayed on a website in order to generate a payment rather than to view the underlying content. This
type of activity could damage our brand. If click spam is not detected, the affected advertisers may
perceive a reduced return on their investment in our advertising programs because those 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. If this activity occurs and we
are unable to stop it, we may have to provide refunds of revenue that our advertisers have paid to us and
that was later attributed to click spam, in order to prevent damage to our brand.
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, which could result in a loss of users and damage to our
brand, and harm our operating results. We may not carry sufficient business interruption insurance to
compensate us for losses that may occur as a result of any events, which cause interruptions in our service.
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 impairment 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 consolidated
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.