Yahoo 2005 Annual Report Download - page 36

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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 2005, the closing sale prices of our common stock on the Nasdaq ranged from $30.87 to $42.50 per
share and the closing sale price on February 28, 2006 was $32.06 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
performance of companies in which we have an equity investment, including Yahoo! Japan and Alibaba;
the stock price of companies in which we have an equity investment, including Yahoo! Japan; and news
reports relating to trends in our markets or general economic conditions.
In addition, the stock market in general, and the market prices for Internet-related companies in
particular, have experienced volatility that often has been unrelated to the operating performance of such
companies. These broad market and industry fluctuations may adversely affect the price of our stock,
regardless of our operating performance. Additionally, volatility or a lack of positive performance in our
stock price may adversely affect our ability to retain key employees, all of whom have been granted stock
options or other equity-based awards.
Anti-takeover provisions could make it more difficult for a third party to acquire us.
We have adopted a stockholder rights plan and initially declared a dividend distribution of one right for
each outstanding share of common stock to stockholders of record as of March 20, 2001. As a result of our
two-for-one stock split effective May 11, 2004, each share of common stock is now associated with one-half
of one right. Each right entitles the holder to purchase one unit consisting of one one-thousandth of a
share of our Series A Junior Participating Preferred Stock for $250 per unit. Under certain circumstances,
if a person or group acquires 15 percent or more of our outstanding common stock, holders of the rights
(other than the person or group triggering their exercise) will be able to purchase, in exchange for the $250
exercise price, shares of our common stock or of any company into which we are merged having a value of
$500. The rights expire on March 1, 2011, unless extended by our Board of Directors. Because the rights
may substantially dilute the stock ownership of a person or group attempting to take us over without the
approval of our Board of Directors, our rights plan could make it more difficult for a third party to acquire
us (or a significant percentage of our outstanding capital stock) without first negotiating with our Board of
Directors regarding that acquisition.
In addition, our Board of Directors has the authority to issue up to 10,000,000 shares of Preferred Stock
(of which 2,000,000 shares have been designated as Series A Junior Participating Preferred Stock) and to
determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares
without any further vote or action by the stockholders.
The rights of the holders of our common stock may be subject to, and may be adversely affected by, the
rights of the holders of any Preferred Stock that may be issued in the future. The issuance of Preferred
Stock may have the effect of delaying, deterring or preventing a change of control of Yahoo! without
further action by the stockholders and may adversely affect the voting and other rights of the holders of
our common stock. Further, certain provisions of our charter documents, including provisions eliminating
the ability of stockholders to take action by written consent and limiting the ability of stockholders to raise
matters at a meeting of stockholders without giving advance notice, may have the effect of delaying or
preventing changes in control or management of Yahoo!, which could have an adverse effect on the
market price of our stock. In addition, our charter documents do not permit cumulative voting, which may
make it more difficult for a third party to gain control of our Board of Directors. Further, we are subject